EXHIBIT 10.55
AGREEMENT
BETWEEN
COGEN TECHNOLOGIES NJ VENTURE
("SELLER")
AND
EXXON COMPANY, U.S.A.
("BUYER")
FOR THE SALE OF STEAM
FROM
A COGENERATION PLANT
TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS.............................................................. 1
1.1 "Agreement".............................................. 1
1.2 "Annual Period".......................................... 1
1.3 "Btu".................................................... 1
1.4 "Buyer's Plant" or "Plant"............................... 2
1.5 "Buyer's Steam Producing Facilities"..................... 2
1.6 "Cogeneration Facility" or "Seller's Facility"........... 2
1.7 "Date of Initial Commercial Operation"................... 2
1.8 "Deliverable Steam"...................................... 2
1.9 "K lbs."................................................. 2
1.10 "Party" or "Parties"..................................... 2
1.11 "Point of Delivery"...................................... 2
1.12 "p.s.i.g."............................................... 2
1.13 "Steam Interconnection Facilities"....................... 2
1.14 "Financier".............................................. 2
ARTICLE 2
TERM..................................................................... 3
2.1 Term of Agreement........................................ 3
2.2 Notice of Termination.................................... 3
ARTICLE 3
BASIC RIGHTS AND OBLIGATIONS............................................. 3
3.1 General.................................................. 3
3.2 Annualized Average Calculation........................... 4
ARTICLE 4
SALE OF STEAM............................................................ 5
4.1 Scheduling............................................... 5
4.2 Buyer's Furnishing Steam to Seller....................... 5
4.3 Monthly Steam Charge..................................... 5
4.4 Adjustment to Monthly Steam Charge....................... 6
4.5 Recalculation of Price................................... 6
ARTICLE 5
OTHER RIGHTS AND OBLIGATIONS OF PARTIES.................................. 6
5.1 Other Rights and Obligations of Seller................... 6
5.2 Other Rights and Obligations of Buyer.................... 7
5.3 Limitation on Seller's Liabilities....................... 7
COPY MISSING
TABLE OF CONTENTS
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ARTICLE 13
LIABILITY................................................................ 16
13.1 Liability of Seller...................................... 16
13.2 Specific Performance..................................... 16
13.3 Liability of Buyer....................................... 16
ARTICLE 14
INDEMNIFICATION.......................................................... 16
14.1 Indemnification by Seller................................ 16
14.2 Indemnification by Buyer................................. 16
14.3 (Deleted)................................................ 17
ARTICLE 15
ARBITRATION OF DISPUTES.................................................. 17
15.1 Notice................................................... 17
15.2 Arbitration Procedures................................... 17
15.3 Decision................................................. 17
15.4 Expenses................................................. 18
ARTICLE 16
BREACH OF CONTRACT....................................................... 18
16.1 Definition............................................... 18
16.2 Remedies for Breach...................................... 19
16.3 Parties' Rights and Obligations.......................... 19
16.4 Waiver of Breach......................................... 19
16.5 Notice to Financiers and Opportunity to Cure............. 19
ARTICLE 17
17.1 (Deleted)................................................ 21
17.2 (Deleted)................................................ 21
ARTICLE 18
NOTICE AND SERVICE....................................................... 21
18.1 Notice................................................... 21
18.2 Service.................................................. 21
ARTICLE 19
AMENDMENTS............................................................... 22
TABLE OF CONTENTS
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ARTICLE 20
SUCCESSORS AND ASSIGNS................................................... 22
20.1 Release.................................................. 22
20.2 Assignment............................................... 22
ARTICLE 21
CHOICE OF LAW............................................................ 23
ARTICLE 22
SEVERABILITY AND RENEGOTIATION........................................... 23
22.1 Severability............................................. 23
22.2 Renegotiation............................................ 23
ARTICLE 23
OTHER AGREEMENTS......................................................... 23
ARTICLE 24
CAPTIONS................................................................. 24
ARTICLE 25
COUNTERPARTS............................................................. 24
ARTICLE 26
BUSINESS STANDARDS....................................................... 24
ATTEST:.................................................................. 25
APPENDIX A
APPENDIX B
APPENDIX C
EXHIBIT 1
AGREEMENT entered into this 27th day of February, 1987, by and between COGEN
TECHNOLOGIES NJ VENTURE ("Seller"), a New Jersey venture, and EXXON COMPANY,
U.S.A. ("Buyer"), a division of Exxon Corporation, a New Jersey corporation
(collectively "Parties").
WHEREAS, Buyer owns and operates a Terminal Facility located at Bayonne, New
Jersey ("Buyer's Plant" or "Plant"), which Plant utilizes steam for industrial
purposes;
WHEREAS, Seller plans to construct and operate a facility for the cogeneration
of steam and electricity ("Seller's Facility" or "Cogeneration Facility") in
proximity of Buyer's Plant;
WHEREAS, Buyer desires to purchase certain quantities of steam for the operation
of its Plant and other uses as deemed appropriate from Seller; and
WHEREAS, the Parties desire to set forth in writing their respective rights and
obligations with respect to the matters set forth above;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other valuable consideration, receipt of which is hereby acknowledged, the
Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
The following terms when used herein shall have the following meanings, unless a
different meaning shall be expressly stated or shall be apparent from the
context:
1.1 "Agreement" means this contract, including all exhibits an amendments
thereto that may be made from time to time.
1.2 "Annual Period" means any one of a succession of consecutive 12-month
periods, the first of which shall begin on the Date of Initial Commercial
Operation, if such date is the first day of a calendar month, or
otherwise on the first day of the month immediately following the month
in which the Date of Initial Commercial Operation occurs.
1.3 "Btu" means British Thermal Unit.
1.4 "Buyer's Plant" or "Plant" means the Buyer's Terminal Facility located at
Bayonne, New Jersey, an all appurtenant property owned by Buyer at that
location, including Buyer's steam supply system beginning at the Point of
Delivery.
..2..
1.5 "Buyer's Steam Producing Facilities" means the existing boilers and
appurtenant structures and equipment located at Buyer's Plant and
presently operated by Buyer for the purpose of producing steam for
industrial use at Buyer's Plant and for sale to customers.
1.6 "Cogeneration Facility" or "Seller's Facility" means the boilers,
turbines, generators and all appurtenant structures, equipment and real
property interests owned or leased and operated by Seller for the purpose
of producing steam and electricity.
1.7 "Date of Initial Commercial Operation" means 12:01 a.m. on the day Seller
designates as the initial date of commercial operation of the Cogeneration
Facility.
1.8 "Deliverable Steam" means steam at the "Point of Delivery" at a minimum
pressure of 150 p.s.i.q. and a minimum temperature of 425 degrees F. and
having a minimum enthalpy of 1231 BTU/lb. produced by the Cogeneration
Facility.
1.9 "K lbs." means 1,000 pounds of steam mass.
1.10 "Party" or "Parties" means the signatories to this Agreement and their
permitted successors and assigns.
1.11 "Point of Delivery" means the point as shown in Exhibit 1 where Seller's
steam supply system connects to Buyer's steam pipeline, or the steam
pipeline system of any other person acting as agent for Seller for this
purpose.
1.12 "p.s.i.g." means pound per square inch gauge.
1.13 "Steam Interconnection Facilities" means those facilities required for the
receipt or delivery of steam at Buyer's Point of Delivery, including
service stop valves, meter stop values, primary and secondary service
pressure reducing values, meter supports, protection devices, meters and
remote meter readouts, pipe systems, pipelines, and other facilities
required to connect Buyer's Plant to the Cogeneration Facility in order to
effectuate the purposes of this Agreement.
1.14 "Financier" means any individual(s) or entity(ies) lending money to Seller
for:
(i) the construction of the Cogeneration Facility:
(ii) the establishment and/or maintenance of working capital
requirements; and/or
..3..
(iii) the refinance of take-out of any such loan(s).
ARTICLE 2
TERM
2.1 Term of Agreement. This Agreement shall be effective upon its execution
and shall continue for base term of five (5) Annual Periods from the Date
of Initial Commercial Operation and shall continue thereafter, unless
terminated at the end of the base term or until otherwise terminated, as
provided herein.
2.2 Notice of Termination. Beginning one year prior to the end of the base
term, either party may notify the other by written notice of its desire to
terminate this Agreement, whereupon the parties shall negotiate a mutually
acceptable effective date for termination of this Agreement. If the
Parties fail to negotiate a mutually acceptable termination date, this
Agreement shall terminate effective one (1) year after the date of such
notice. If Buyer's Plant is permanently shut down or sold, this Agreement
shall terminate on the effective date of such shutdown or sale.
ARTICLE 3
BASIC RIGHTS AND OBLIGATIONS
3.1 General. Subject to the terms and conditions set forth in this Agreement
and commencing with the Date of Initial Commercial Operation, the Parties
agree that:
A. Buyer agrees to purchase from Seller 35,000 pounds per hour of
Deliverable Steam averaged on an annualized basis during all times
that Seller has a minimum of 50,000 pounds per hour of Deliverable
Steam available for Buyer. The calculation period for the annual
average shall be from November 1 through October 31. The 35,000 pound
per hour average is based on Buyer's current operation and steam
demand and may be modified as provided for in Article 3.2.
B. Buyer agrees to advise Seller in advance of its desire to purchase
Deliverable Steam in excess of 50,000 pounds per hour, which Seller is
not obligated to supply under this Agreement.
..4..
C. Seller agrees to use best efforts to advise Buyer of changes in
Deliverable Steam availability.
D. Buyer agrees that Seller has obligations and rights to supply steam to
IMTT-Bayonne and electricity to Jersey Central Power & Light Company,
which obligations and rights come before any right Buyer may have
under this Agreement to receive Deliverable Steam from Seller except
that Seller shall not provide steam to IMTT-Bayonne during any hour in
excess of 57,000 pounds per hour, unless Seller has first made
available during such hour 50,000 pounds per hour to Buyer under this
Agreement.
3.2 Annualized Average Calculation.
A. Any hour that Seller does not have at least 50,000 pounds per hour of
Deliverable Steam available for Buyer shall be excluded from the
annual average calculation. Any steam purchased by Buyer from Seller
during any such hour shall also be excluded from the annual average
calculation. If this occurs between September 1 and May 31 of any
year, then Buyer shall be credited for 15,000 pounds for each hour of
unavailability. At Buyer's discretion, the provisions of this
paragraph may be waived with written notice to Seller within thirty
(30) days of the date of such waiver so long as such waiver applies to
each of the foregoing provisions of this paragraph (3.2A).
B. Any hour that Buyer's steam demand, including sales by Buyer, is under
75,000 pounds per hour shall also be excluded from the annualized
average calculation, along with any steam purchase by Buyer from
Seller during the same period. If this occurs between September 1 and
May 31 of any year, then Buyer shall also be credited for 15,000
pounds for each such hour as provided herein (3.2B).
C. The 35,000 pound per hour annual average is based on Buyer's 1986
actual and projected steam demand for its operation, including outside
sales. Buyer shall have the right to reduce the 35,000 pound per hour
annual average to the extent that Buyer demonstrates that there are
changes in Buyer's operation, including outside sales, which will
result in lower annual steam requirements, provided, however, that in
such event, Seller's 50,000 pounds per hour minimum Deliverable Steam
obligation shall be reduced on a pro rata basis. (See Appendix C.)
Such right may be exercised no earlier than sixty (60) days after
Buyer presents supporting documentation to Seller.
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ARTICLE 4
SALE OF STEAM
4.1 Scheduling. Commencing with the Date of Initial Commercial Operation and
thereafter during the term of this Agreement, Buyer shall give Seller its
best estimate of its expected steam requirements for the next calendar
year, at least by September 24 of the preceding calendar year.
At least thirty (30) days in advance, Seller shall notify Buyer of any
planned outages which will result in an interruption of steam deliveries to
Buyer.
4.2 Buyer's Furnishing Steam to Seller. In the event that Seller is unable to
produce steam at the Cogeneration Facility, by reason of Force Majeure,
Buyer may, at its sole option, supply Seller with steam subject to the
terms of this Article 4.2 so that Seller may fulfill its obligation to
furnish steam to third parties. Seller shall verbally notify the Buyer's
Shift Superintendent as soon as practical of the time at which Seller
requests to receive steam from Buyer. Such verbal notice to be confirmed in
writing within two (2) days, shall include the following:
(i) an estimate of the period during which Seller expects to request steam
from Buyer; and
(ii) the amount of steam that Seller desires from Buyer.
Steam purchased from Buyer by Seller shall be measured, billed and
collected in the same manner provided for tales by Seller to Buyer under
this Agreement. Pricing basis shall be per Appendix A plus ten percent.
Buyer's decision to supply steam to Seller shall be conditioned upon the
following:
(i) any sale of steam to Seller under this Article 4.2 shall not interfere
with Buyer's normal operations; and
(ii) any sale of steam to Seller under this Article 4.2 shall not result
in any liability to Buyer.
4.3 Monthly Steam Charge. Buyer shall pay Seller a Monthly Steam Charge which
shall be equal to the steam charge calculated according to Appendix B,
subject to adjustment in order according to Article 4.4.
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4.4 Adjustment to Monthly Steam Charge. The following adjustments may apply to
the calculations made in Article 4.3 and shall be made in the order listed:
A. If the price per thousand pounds of Deliverable Steam as calculated in
Appendix B is not at least $0.50 less then the incremental cost of
steam calculated in Appendix A, then Seller's price shall be adjusted
by Seller to be $0.50 less than the incremental cost as calculated in
Appendix A.
B. If the steam delivered by Seller fails to conform to the specifications
for steam contained in Article 1.8 for more than one hour after Seller
has been notified by Buyer of such non-conforming deliveries, then
(i) Buyer may, at its sole option, continue to accept delivery of
steam to the extent usable by it, and
(ii) the Monthly Steam Charge shall be reduced in proportion to the
extent that the steam taken by Buyer falls short, as determined on
a Btu basis, of the specifications for Deliverable Steam in
Article 1.8.
4.5 Recalculation of Price. Buyer reserves the right to convert, at its sole
option, Buyer's Steam Producing Facilities to fuels other than low sulfur
fuel oil. Buyer shall provide Seller with written notice of such
conversion a minimum of 120 days prior to converting to an alternate fuel.
Within ninety (90) days prior to the conversion, the Parties will establish
the Monthly Steam Charge per Article 4.3.
ARTICLE 5
OTHER RIGHTS AND OBLIGATIONS OF PARTIES
5.1 Other Rights and Obligations of Seller.
In addition to other rights or obligations of Seller specified in this
Agreement, Seller shall:
A. Have the right to use steam produced at the Cogeneration Facility first
for purposes; of sales to IMTT-Bayonne under the terms and conditions
of the Agreement between Cogen Technologies NJ, Incorporated ("Seller")
and IMTT-Bayonne ("Buyer") for the Sale of Steam and Electricity from a
Cogeneration Plant, dated June 13, 1985, as amended as of May 22, 1986;
to produce electric energy to
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sell to Jersey Central Power & Light Company under the terms and
conditions of the Agreement for Purchase of Electric Power between
Cogen Technologies NJ, Incorporated and Jersey Central Power & Light
Company, dated October 29, 1985, as may be amended, and to put its
obligations and rights under those agreements ahead of its obligations
to the Buyer under this Agreement except that Seller shall not provide
steam to IMTT-Bayonne during any hour in excess of 57,000 pounds per
hour, unless Seller has first made available during such hour 50,000
pounds per hour to Buyer under this Agreement.
B. Have the right to sell any and all steam produced at the Cogeneration
Facility and not purchased by Buyer pursuant to this Agreement to any
other person on such terms and conditions as Seller and such person
shall agree, without interference by Buyer, except that such sale shall
not be conducted in such manner as to interfere with Buyer's steam
purchases under this Agreement or with Buyer's reasonable and normal
operation of its Plant.
C. Have the right to own, operate and maintain all Steam Interconnection
Facilities necessary for the delivery of steam from its Facility to and
including the Point of Delivery.
D. Have the obligation to cause steam to be treated with a neutralizing
amine equal to Nalco Triacamine so as to be reasonably compatible with
steam produced in Buyer's Steam Producing Facilities.
5.2 Other Rights and Obligations of Buyer.
In addition to other rights or obligations of Buyer specified in this
Agreement, Buyer shall:
A. Have the right to own, operate and maintain all Steam Interconnection
Facilities necessary for the receipt of steam from the Point of
Delivery to its Plant.
B. Have the obligation to provide and install a valve for the Seller to
interconnect the Steam Interconnection Facilities at the Point of
Delivery.
5.3 Limitation an Seller's Liabilities. If the Seller does not make
Deliverable Steam available to Buyer under this Agreement by reason of
carrying out its obligations or exercising its rights under its
Agreements with IMTT-Bayonne or Jersey Central Power & Light Company,
described in Article 5.1A, or by reason of Force Majeure, such failure
shall not be a cause of breach or otherwise subject Seller to any
liability, damages, or penalty under this Agreement. If, after the end of
8
any Force Majeure period which continues for more than six (6) months,
Buyer must obtain alternate sources of steam due to operational
necessities, end is required to enter take-or-pay commitments to do so,
Buyer shall be relieved of any take-or-pay obligations under this
Agreement for a period c up to twelve (12) months to the extent the new
take-or-pay commitment overlaps with the take-or-pay commitment under this
Agreement.
ARTICLE 6
MEASUREMENT AND METERING
6.1 Units of Measurement. For the purposes of this Agreement, steam shall
measured in units of K lbs. of steam mass.
6.2 Seller's Measuring Equipment and Stations. Seller shall:
(i) own, operate and maintain a steam measuring station and all measuring
equipment necessary to permit an accurate determination of the
quantity and quality as determined by pressure and temperature of
steam delivered to Buyer;
(ii) exercise reasonable care in the maintenance and operation of metering
equipment so as to assure to the maximum extent practicable an
accurate determination of such quantities; and
(iii) provide for the installation of a remote meter readout for Buyer's
use in Buyer's Steam Producing Facilities at no cost to Buyer.
6.3 Buyer. Buyer may own, maintain and operate, at its sole expense, steam
measuring equipment, provided that such equipment shall be operated and
maintained in a manner that does not interfere with the Seller's Steam
Interconnection Facilities or with the operation of Seller's measuring
equipment.
6.4 Measurements and Adjustments. Seller's meters shall be used for quantity
measurement under this Agreement, except that, in the event one of Seller's
meters is out of service or registers inaccurately, measurement shall be
determined by:
A. Using the registration of any check meter or meters of Buyer, if
installed and accurately registering; or
9
B. In the absence of an installed and accurately registering meter, making
a calibration test or mathematical calculation, if the percentage of
error is ascertainable; or
C. In the absence of both an installed and accurately registering meter
and an ascertainable percentage of error, estimating by reference to
quantities measured during periods under similar conditions then the
Seller's meter was registering accurately.
6.5 Testing and Corrections
A. Testing. The accuracy of Seller's measuring equipment shall be tested
and verified by Seller on a quarterly basis in Buyer's presence. In the
event that either Party notifies the other that it desires a test of
its own or of the other Party's measuring equipment, the Parties shall
cooperate to secure a prompt verification,of the accuracy of such
equipment.
B. Costs of Testing. Seller shall bear the cost of the testing of Seller's
measuring equipment done on a quarterly basis. In the event that either
Party requests a testing of its own or of the other Party's measuring
equipment more frequently than on an annual basis, the Party requesting
the testing shall bear the cost of the testing.
C. Corrections of Steam Measuring Equipment. If, upon testing, any steam
measuring equipment is found to be in error by not more than plus or
minus one-half of one percent (1/2%) at a flowrate corresponding to
the average hourly flow rate for the period since the last preceding
test, previous recordings of such equipment shall be considered
accurate in computing deliveries of steam hereunder, but such equipment
shall be promptly adjusted to record correctly. If, upon testing, any
steam measuring equipment shall tie found to be inaccurate by an amount
exceeding plus or minus one-half of one percent (1/2%) at a flowrate
corresponding to the average hourly flowrate for the period since the
last preceding test, then such equipment shall be promptly adjusted to
record properly and any previous recordings by such equipment shall be
corrected to zero error. If no reliable information exists as to when
the equipment became inaccurate, it shall be assumed for correction
purposes hereunder that such inaccuracy began at a point in time midway
between the testing date and the last previous date on which the
equipment was tested and found to be accurate.
6.6 Maintenance. Each Party shall have the right to be present whenever the
other Party reads, cleans, changes, repairs, inspects, tests, cali-
10
brates, or adjusts the equipment used in measuring or checking the
measurement of steam delivered to Buyer. Each Party shall give timely
notice to the other Party in advance of taking any of such actions.
6.7 Records. The records from the measuring or check measuring equipment shall
remain the property of the Seller or Buyer, respectively, but, upon
request, each Party will submit to the other its records and charts,
together with calculations therefrom, for inspection and verification,
subject to return within ten (10) days after receipt thereof.
ARTICLE 7
BILLING AND RECORDS
7.1 Monthly Bill to Buyer. On or before the tenth (10th) day of each month,
Seller shall prepare and deliver to Buyer a statement setting forth the
Monthly Steam Charge, as set forth in Article 4.3, if any, for the
preceding month. The billing statement shall also set forth the amount of
steam actually taken by Buyer during such month, and Seller's unit costs of
fuel, chemicals, and water for the billed period. Each billing statement
shall clearly identify this contract and the original shall be mailed to:
Exxon Company, U.S.A.
Attn: Accounts Payable Section Supervisor
Bayonne Plant
Post Office Box 4629
Houston, Texas 77210-4629
A. Seller's Documents. Seller warrants that all documents, includinq invoices,
financial settlements, billings and reports submitted by Seller in support
of costs, shall truly reflect the facts about the activities and
transactions to which they pertain, and Seller represents that in any
further recording or reporting made by Buyer for whatever purpose, Buyer may
rely upon all such documents and the data therein as being complete and
accurate. Seller further agrees to promptly notify Buyer upon discovery of
any instance where Seller has failed to comply with the provisions of this
paragraph.
7.2 Monthly Bill to Seller. In the event that Seller purchases steam from Buyer
pursuant to Article 4.2, Buyer shall on or before the tenth (10th) day of
the month prepare and deliver to Seller a statement setting forth the
Monthly Steam Charge,, as determined in accordance with Article 4.2, for the
preceding month. The billing statement shall also
11
set forth the amount of steam actually taken by Seller during such month.
The original of each billing statement shall be mailed to:
Cogen Technologies NJ Venture
c/o Cogen Technologies NJ, Inc, Managing Venturer
14614 Falling Creek Drive
Suite 212
Houston, Texas 77068
Attn: Mr. Robert C. McNair, President
A. Buyer's Documents: Buyer warrants that all documents, including
invoices, financial settlements, fillings and reports submitted by Buyer
in support of costs, shall truly reflect the facts about the activities
and transactions to which they pertain, and Buyer represents that in
any further recording or reporting made by Seller for whatever purpose,
Seller may rely upon all such documents and the data therein as being
complete and accurate. Buyer further agrees to promptly notify Seller
upon discovery of any instance where Buyer has failed to comply with the
provisions of this paragraph.
7.3 Payment and Interest on Late Payment.
A. Payment. Buyer shall, within thirty (30) days of the receipt of Seller's
statement, pay Seller for all amounts billed pursuant to Article 7.1. If
Seller owes Buyer any amounts due under Article 4.2, Buyer shall offset
the amount owed to Seller, as set forth on the billing statement
received pursuant to Article 7.1, against the amount owed to Buyer by
Seller, as set forth on the billing statement received pursuant to
Article 7.2. If this offsetting results in a negative balance, Seller
shall, within thirty (30) days of the receipt of Buyer's statement, pay
Buyer in the amount of the negative balance. If a dispute should arise
over amounts or quantities billed, the billed amount shall be paid
within the time specified in this Article 7.3.A. Adjustments for
discrepancies in billing identified through meter verifications or
through other means as identified in Article 6.4 and Article 6.5 or by
an audit as indicated in Article 7.4, which would result in
reimbursement of billed amounts to Buyer will be reimbursed by Seller
within thirty (30) days' notice to Seller from Buyer that such amount is
due.
B. Interest. If either Party fails to pay all or a portion of the amounts
billed within the time stated in this Article 7.3, such Party shall owe
interest on the unpaid portion of the bill, which interest shall accrue
monthly at the maximum legal rate of interest, from the due date until
paid. The maximum legal rate of
12
interest as applied to this Article 7 shall be identified as two percent
(2110) over the prime rate as recorded by the Federal Reserve Bank of
New York City, New York on the day that payment becomes due; provided,
however, in no event shall this rate of interest exceed the maximum rate
of interest permissible under the laws of the State of New Jersey.
7.4 Audit. Both Seller and Buyer shall keep, in accordance with generally
accepted accounting practices, books, records and accounts, including all
invoices, receipts, charts, computer printouts, punchcards or magnetic
tapes related to the volume or price of steam sales made under this
Agreement. Authorized representatives of both Buyer and Seller will be
permitted, upon reasonable notice, to inspect such books, records, accounts
and other documents for the prior three (3) year period, and to make copies
thereof, as necessary to audit and verify the completeness and accuracy of
charges contained in invoices for steam sales, or for any other reasonable
purpose. If an audit indicates errors in invoices, appropriate adjustments
shall be made in accordance with Article 7.3A.
ARTICLE 8
TAXES
Seller shall be solely responsible for any use, property, income or other taxes
relating to the Cogeneration Facility and its components or appurtenances and
the sale of steam produced therein. Buyer shall be solely responsible for any
sales, use, property, income or other taxes relating to the Buyer's Plant, its
components or appurtenances and the sale of the products produced therein, as
well as any sales taxes imposed on the sale to Buyer of steam produced by the
Cogeneration Facility.
ARTICLE 9
LAND RIGHTS
9.1 General. During the term of this Agreement, each Party grants to the other
Party reasonable ingress and egress over property owned or leased by such
Party to the extent the other Party deems such ingress and egress necessary
in order to examine, test, calibrate or maintain the Steam Interconnection
Facilities and to read meters, except that
13
(i) such access to the Buyer's Plant shall be limited to the property
where the Steam Interconnection Facilities are installed and those
requesting access to Buyer's Plant shall follow Buyer's security
procedures,
(ii) such access shall not disrupt or otherwise interfere with the normal
operations of a Party's business, and reasonable notice shall be
provided except in the case of an emergency, and
(iii) this shall not be deemed to establish in a Party any easement or
servitude over the to ar Party's land, and shall expire with the
expiration of this Agreement.
9.2 Scope of Rights. The rights granted under this Article to the Parties shall
extend to the directors, officers, employees, agents or representatives of
the Parties, as well as independent contractors engaged by the Parties in
connection with their duties and obligations under this Agreement.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows:
A. Buyer is a Division of Exxon Corporation, a corporation duly organized
and existing in good standinq under the laws of the State of New Jersey
and is duly qualified to do business in 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. 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 of this Agreement or the ability
of Buyer to fulfill its commitments hereunder.
D. No prior consent, approval, authorization, or permit of any
Governmental Authority is necessary for the Buyer to enter and perform
this Agreement or to carry out the transactions contemplated herein.
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10.2 Representations and Warranties of Seller. Seller hereby represents and
warrants to Buyer as follows:
A. Seller is a general partnership duly organized and existinq in, good
standing under the laws of the State of New Jersey and is duly
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. 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.
D. No prior consent, approval, authorization, or permit of any
Governmental Authority is necessary for the Seller to enter and perform
this Agreement or to carry out the transactions contemplated herein.
ARTICLE 11
EMINENT DOMAIN
11.1 Termination. If Seller's Coqeneration Facility or Buyer's Plant shall be
taken, condemned, or otherwise conveyed pursuant to a condemnation
proceeding, in whole or in part, by any competent authority and such
action renders the performance by either Party under this Agreement
impossible, impracticable or unduly onerous, either Party may elect to
terminate this Agreement by giving written notice to the other Party
within three (3) months before the effective date of such taking or
condemnation. If such notice of termination is given, this Agreement shall
terminate as of the effective date of such taking or condemnation.
11.2 Rights of Parties. In the event that this Agreement is terminated by
either Party pursuant to Article 11.1, the Parties shall have no rights,
obligations or interests pursuant to this Agreement as of the date of such
termination, except that the Parties shall remain obligated to pay all
sums due to one another under this Agreement as of the date of such
termination.
15
ARTICLE 12
FORCE MAJEURE
12.1 Definition. "Force Majeure" means unforeseeable causes beyond the
reasonable control of and without the fault or negligence of the Party
claiming Force Majeure. It shall include failure or interruption of
services due to causes beyond that Party's control, including but not
limited to war, sabotage, strikes, lockouts, acts of God, or any Federal
or State Law or any order, rule, regulation or request of a Governmental
Authority (whether valid or invalid).
12.2 Burden of Proof. The burden of proof as to whether a Force Majeure has
occurred shall be upon the Party claiming the Force Majeure.
12.3 Effect of Force Majeure. If either Party is rendered wholly or partly
unable to perform its obligations under this Agreement because of Force
Majeure, that Party shall be excused from whatever performance is affected
by the Force Majeure to the extent so affected, provided that:
A. The non-performing Party, within fifteen (15) days after the
occurrence of the Force Majeure, gives the other Party written notice
describing the particulars of the occurrence;
B. The suspension of performance be of no greater scope and of no longer
duration than is required by the Force Majeure;
C. No obligations of either Party that arose before the occurrence of the
Force Majeure shall be excused as a result of such occurrence; and
D. The non-performing Party use its best efforts to remedy its inability
to perform, which best efforts, in the case of a strike by the non-
performinq Party's employees, shall be limited to the obligation to
bargain in good faith with such employees or their representative to
remove the cause of the strike. If the occurrence of the Force Majeure
is due to governmental action, the non-performing Party may, at its
sole option, decide whether to contest said action.
16
ARTICLE 13
LIABILITY
13.1 Liability of Seller. Seller shall not be liable for any cost, expense or
damage incurred by Buyer, including loss of profits, resulting from, an
interruption in Seller's delivery of steam to Buyer, except to the extent
that Seller sells steam to any other person, which steam Buyer had a right
to purchase under the terms of this Agreement.
13.2 Specific Performance. In addition to any of the rights and remedies
referred to in this Agreement, Buyer and Seller shall each have the right
to seek the specific performance by the other Party of any of its
obligations under this Agreement, including but not limited to the remedy
of any breach of this Agreement regardless of whether or not Buyer or
Seller, as the case may be, has been placed in default.
13.3 Liability of Buyer. Should Buyer fail to annually average steam purchases
as defined in Articles 3.1 and 3.2, then Buyer shall be liable to pay
Seller for such steam purchases as if Buyer had purchased and accepted
delivery of all such steam from Seller under this Agreement. Buyer shall
not be restricted from procuring steam from sources other than Seller.
ARTICLE 14
INDEMNIFICATION
14.1 Indemnification 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 reasonable 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, Seller, or others,
resulting from, or arising out of or connected with the ownership
maintenance or operation of Seller's Facility excepting only such injury
or harm as may be caused by the malfunction of Buyer's Plant or the fault,
negligence or willful acts of Buyer, its directors, officers, employees,
agents or representatives.
14.2 Indemnification 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
suits, including reasonable costs and attorneys' fees, for or on ac-
17
count of injury, bodily or otherwise, to, or death of, persons, or for
damage to, or destruction of, property belonging to Buyer, Seller, or
others, resulting from, or arising out of or in any way connected with
the ownership, maintenance or operation of Buyer's Plant, excepting only
such injury or harm as may be caused by the malfunction of Seller's
Facility or by the fault, negligence, or willful acts of Seller, its
directors, officers, employees, agents or representatives.
14.3 (Deleted)
ARTICLE 15
ARBITRATION OF DISPUTES
15.1 Notice. In the event a dispute arises between the Parties with respect to
the interpretation of, or performance under, this Agreement, either Party
may give notice in writing to the other of its desire to submit such
dispute to arbitration. Within forty-five (45) days after the receipt of
such notice by the other Party, the Parties shall appoint a single
arbitrator, from a list of eight obtained from the American Arbitration
Association. If the Parties fail to agree on an arbitrator within ten (10)
days, either Party may request the American Arbitration Association to
appoint an arbitrator. An arbitrator so appointed shall have full
authority to act pursuant to this Article. Nothing herein shall require
arbitration of the disputes described above if either Party does not agree
to such arbitration; however, both Parties shall be bound to arbitrate
as soon as hearings have commenced pursuant to Article 15.2 below.
15.2 Arbitration Procedures. Within fifteen (15) days of his or her
appointment, the arbitrator so appointed shall commence hearings on the
dispute at such reasonable time and place in New Jersey as shall be
established by the arbitrator. The then current rules of the American
Arbitration Association for the conduct of commercial arbitration
proceedings shall govern the conduct of such hearings and the resolution
of the dispute, except that if such rules shall conflict with the then
current laws of the State of New Jersey relating to arbitration, the laws
of New Jersey shall govern.
15.3 Decision. The arbitrator shall fix a reasonable time after completion of
the hearing within which the Parties shall make their final submissions of
their respective positions and shall make his decision within thirty (30)
days after such submissions, unless, for good cause to be certified by him
in writing, he shall extend such time. The decision of the arbitrator
shall be rendered in writing and in duplicate, and
18
one copy shall be delivered promptly to each Party. The award of the
arbitrator shall be final except as otherwise provided by applicable law.
Judgment upon such award may be entered on behalf of the prevailing Party
in any court having jurisdiction thereof, and application may be made by
such Party to any such court for judicial acceptance of such award and an
order of enforcement.
15.4 Expenses. The expenses of arbitration shall be borne equally by both
Parties.
ARTICLE 16
BREACH OF CONTRACT
16.1 Definition. A breach of this Agreement shall be deemed to exist upon the
occurrence of any one or more of the following events:
A. Failure by either Party to make payment of any amounts due the other
Party under this Agreement, which failure continues for a period of
thirty (30) days after notice of such nonpayment;
B. Failure by Buyer or Seller to perform fully any other provision of
this Agreement, or a breach of this Agreement by either Party, which
failure or breach continues for a period of thirty (30) days after
notice of such nonperformance or breach;
C. If by order of a court of competent jurisdiction, a receiver or
liquidator or trustee of either Party or of any of the property of
either Party shall be appointed, and such receiver or liquidator or
trustee shall not have been discharged within a period of sixty (60)
days; or if by decree of such a court, a Party shall be adjudicated
bankrupt or insolvent or any substantial part of the property of such
Party shall have been sequestered, and such decree shall have
continued undischarged and unstayed for a period of sixty (60) days
after the entry thereof; or if a petition to declare bankrupt or to
reorganize a Party pursuant to any of the provisions of the Federal
Bankruptcy Act, as it now exists or as it may hereafter be amended, or
pursuant to any other similar state statute applicable to such Party
as now or hereafter in effect, shall be filed against such Party and
shall not be dismissed within sixty (60) days after such filinq; or
D. If either Party shall file a voluntary petition in bankruptcy under
any provision of any federal or state bankruptcy law or shall consent
to the filing of any bankruptcy or reorganization
19
petition against it under any similar law; or, without limitation of
the generality of the foregoing, if a Party shall file a petition or
answer or consent seeking relief or assisting in seeking relief in a
proceeding under any of the provisions of the Federal Bankruptcy Act,
as it now exists or as it may hereafter be amended, or pursuant to any
other similar state statute applicable to such Party, as is now or
hereafter in effect, or an answer admitting the material allegations
of a petition filed against it in such a proceeding; or if a Party
shall make an assignment for the benefit of its creditor; or if a
Party shall admit in writing its inability to pay its debts generally
as they become due; or if a Party shall consent to the appointment of
a receiver or receivers, or trustee or trustees, or liquidator or
liquidators of it or of all or any part of its property.
16.2 Remedies for Breach. In the event of a breach of this Agreement, the non-
breaching Party may terminate this Agreement upon written notice to the
other Party, and may avail itself of any other remedies provided by law.
16.3 Parties' Rights and Obligations. Unless and until this Agreement has been
terminated, neither Party shall refuse to make, suspend or delay any of
the payments required under this Agreement as a result of any breach or
alleged breach by the other Party.
16.4 Waiver of Breach. Either Party may waive breach by the other Party,
provided that no waiver by or on behalf of either the Buyer or Seller of
any breach of any of the covenants, provisions, conditions, restrictions
or stipulations contained in this Agreement shall take effect or be
binding on the Buyer or Seller unless the waiver is reduced to writing
and executed by the Buyer or Seller, and any such waiver shall be deemed
to extend only to the particular breach waived and shall not limit or
otherwise affect any rights that the Buyer or Seller may have with respect
to any other or future breach.
16.5 Notice to Financiers and Opportunity to Cure.
A. Buyer shall look only to Seller or to any successor of Seller under
Article 20 to satisfy all obligations hereunder. No Financier shall
have any obligation to satisfy any obligation or indebtedness of
Seller to Buyer, except the obligations and indebtedness of Financier
to Buyer required under the terms of this Agreement.
B. Notwithstanding the provisions of Article 16.5A, a Financier shall be
liable to the Buyer for the uninsured liabilities only to the extent
such liabilities represent defaults or breaches hereunder
20
caused by Financier's actions. Financier's liability to the Buyer for
uninsured liabilities which have not been caused by Financier's
actions shall be limited to the extent of such Financier's interest in
the Cogeneration Facility. However, if financier exercises his rights
under Article 16.5C, this limitation shall no longer be applicable.
C. Seller shall promptly notify the Buyer of the names and addresses of
all Financiers. Buyer shall not terminate this Agreement until it has
given thirty (30) days' written notice of any breach thereof to each
of such Financiers, and Buyer hereby agrees to promptly notify all
Financiers of any breach. If Buyer fails to give such notice, Buyer
shall not be liable for damages to any Financier as a result of such
failure, but any termination of this Agreement shall be of no force
and effect. Thereafter, Buyer shall not terminate this Agreement as a
result of any such breach if within such thirty (30) day period any
Financier has either:
(i) cured the breach if it can be cured by payment of money; or
(ii) if the breach cannot be so cured, caused the initiation of and
is diligently pursuing proceedings to give the Financier
possession of the Cogeneration Facility, or has diligently
commenced to cure the breach, and for so long as the Financier
diligently continues such efforts.
D. If a Financier is prohibited from curing such breach by any of the
following proceedings,
1. any process or injunction issued by any court,
2. any action by any court having jurisdiction over any bankruptcy or
insolvency proceeding involving the Seller, or
3. any automatic stay issued by a court referred to in Article 16.5D2
above,
the time specified above in Section 16.5C shall be extended for the
period of such prohibition.
E. Nothing in this Agreement shall require a Financier to cure any
default hereunder in advance of entering the Cogeneration Facility
with the purpose of continuing to operate the Cogeneration Facility.
Actions by a Financier against the Cogeneration Facility under a
mortgage or other security right or encumbrance shall not in
themselves be deemed an election by Financier to assume Seller's
obligations hereunder.
21
ARTICLE 17
17.1 (Deleted)
17.2 (Deleted)
ARTICLE 16
NOTICE AND SERVICE
18.1 Notice. All notices, including communications and statements which are
required or permitted under the terms of this Agreement, shall be in
writing, except as otherwise provided.
18.2 Service.
A. Means of Service. Service of a notice may be accomplished by personal
service, telegram or registered or certified mail.
B. Date of Service.
(i) Mail. If a notice is sent by registered or certified mail, it
shall be deemed served within three (3) days, excluding
Saturdays, Sundays or legal holidays of the State of New Jersey,
except as otherwise demonstrated by a signed receipt.
(ii) Telegram. If a notice is served by telegram, it shall be deemed
served eighteen (18) hours after delivery to the telegram
company.
C. Addresses. Notices shall be sent to the Parties at the following
addresses:
(i) Seller: Cogen Technologies NJ Venture
c/o Cogen Technologies NJ Inc.
Managing Venturer
14614 Falling Creek Drive
Suite 212
Houston, Texas 77068
Attn: Mr. Robert C. McNair, President
and
22
Cogen Technologies NJ Venture
Foot of East 22nd Street
Bayonne, New Jersey 07002
Attn: Plant Manager
(ii) Buyer: Exxon Company, U.S.A.
250 East 22nd Street
Bayonne, New Jersey 07002
Attn: Plant Manager
ARTICLE 19
AMENDMENTS
No amendment or modification of the terms of this Agreement shall be binding on
either the Buyer or Seller unless reduced to writing and signed by both Parties.
ARTICLE 20
SUCCESSORS AND ASSIGNS
20.1 Release. The Agreement shall be binding upon and shall inure to the
benefit of, or may be performed by, the successors and assigns of the
Parties, except that no assignment, pledge or other transfer of this
Agreement by any Party shall operate to release the assignor, pledgor, or
transferor from any of its obligations under this Agreement except under
the following condition: consent to the release is given in writing by the
other Party, or, if the other Party has theretofore assigned, pledged, or
otherwise transferred its interest in this Agreement, then by such other
Party's assignee, pledgee or transferee.
20.2 Assignment. Either Party may assign its rights and obligations under this
Agreement with the consent of the other Party, which consent shall not be
unreasonably withheld. Any assignment without the con sent of the non-
assigninq party may, at the option of that party, be treated as a breach
of this Agreement. However, Seller is expressly permitted to assign this
Agreement to any Financier lending money for the construction and
operation of the Cogeneration Facility and Buyer expressly consents to
Seller's assignment of this Agreement to General Electric Power Funding
Corporation, which assignments shall not operate to release Seller from
any of its obligations under this Agree-
23
ment. If such assignment or deleqation is solely for the purposes of security
to obtain financing, Buyer shall be provided a copy of such assignment.
ARTICLE 21
CHOICE OF LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of New Jersey.
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 eliminated, and it is hereby declared the intention of the parties
hereto that they would have executed the remaining portion of this
Agreement without including therein any such part, parts or portions which
may for any reason be hereafter declared invalid.
22.2 Renegotiation. Notwithstanding the provisions of Articles 22.1, should any
term or provision of this Agreement be found invalid by any court or
regulatory body having jurisdiction thereover, the Parties shall
immediately renegotiate such term, or provision of the Agreement to
eliminate such invalidity.
ARTICLE 23
OTHER AGREEMENTS
This Agreement supercedes any and all oral or written agreements and
understandings heretofore made relating to the subject matters herein, and this
Agreement constitutes the entire agreement and understanding of the Parties
relating to the subject matters herein.
24
ARTICLE 24
CAPTIONS
All indices, titles, subject headings, section titles and similar items are
provided for the purpose of reference and convenience and are not intended to be
inclusive, definitive or to affect the meaning, content or scope of this
Agreement.
ARTICLE 25
COUNTERPARTS
This Agreement may be executed in any number of counterparts, and each executed
counterpart shall have the same force and effect as an original instrument.
ARTICLE 26
BUSINESS STANDARDS
Seller, in performing its obligation under this Agreement, shall establish and
maintain appropriate business standards, procedures and controls including
these necessary to avoid any real or apparent impropriety or adverse impact on
the interests of Buyer, Exxon Corporation, or its affiliates. Seller agrees to
comply with all laws and lawful regulations applicable to any activities carried
out under this Agreement and/or any amendments to it.
25
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized as of the day and year
first set forth above.
ATTEST: COGEN TECHNOLOGIES NJ VENTURE
By: /s/ Robert C. McNair
--------------------------------
Robert C. McNair
President
Cogen Technologies NJ, Inc.
Managing Venturer
ATTEST: EXXON COMPANY, U.S.A.
A Division of Exxon Corporation
By: /s/ Andy F. Icken
--------------------------------
Andy F.Icken
Manager
Marketing Specialty Products
APPENDIX A
EXXON INCREMENTAL COST PER KLB STEAM
Definitions Units
- ----------- -----
PAP = Platts Oilgram NY Spot monthly average price $/Bbl
for No.6, 0.3 wt% sulfur fuel oil - low pour
contract cargo price - use midrange value
BWP = Bayonne city water price $/kcuft
EIFC = Exxons incremental fuel cost $/klb
EIWC = Exxons incremental water cost $/klb
EICC = Exxons incremental chemical cost $/klb
ETIC = Exxons total incremental cost $/klb
* AF = Market price for alternate fuel $/MBtu
Formulas Frequency of Calculation Units
- -------- ------------------------ -----
EIFC = 0.23 * PAP Monthly by Seller $/klb
EIWC = 0.0172 * BWP Monthly by Seller $/klb
EICC = 0.15 Annually by Buyer $/klb
ETIC = EIFC + EIWC + EICC Monthly by Seller $/klb
SAMPLE CALCULATION
PAP = $15.00 per barrel
BWP = $13.50 per kcuft
EICC = $ 0.15 per klb
EIFC = 0.23 * $15.00 = $3.43
EIWC = 0.0172 * $13.00 = $0.23
EICC = $0.15 * = $0.15
-----
ETIC = $3.81 per klb
* If Buyer elects to use an alternate fuel, then EIFC will be recalculated
based on AF and a constant boiler efficiency of 89%. If plant gas is used, AF
will be Exxon's sales price to any 3rd party. If natural gas is used, AF will
be the price Exxon pays for the fuel.
APPENDIX B
COGEN BILLING PRICE CALCULATION
Definitions Units
- ----------- -----
GP = Gas price based on actual bills for month $/MBTU
BWP = Bayonne city water price $/kcuft
CFC = COGEN fuel cost $/klb
CWC = COGEN water cost $/klb
CCC = COGEN chemical cost $/klb
CMS = COGEN metered steam klb/month
Formulas Frequency of Calculation Units
- -------- ------------------------ -----
CFC = 1.4460 * GP Monthly by Seller $/klb
CWC = 0.0259 * BWP Monthly by Seller $/klb
CCC = 0.15 Annually by Seller $/klb
Billing Price = (CFC + CWC + CCC) * CMS
SAMPLE CALCULATION
- ------------------
GP = $ 2.44 per MBTU
BWF = $13.50 per kcuft
CCC = $ 0.15 per klb
CMS = 25,000 klb.
CFC = 1.4460 * $ 2.44 = $3.53
CWC = 0.0259 * $13.50 = $0.35
CCC = $ 0.15 * = $0.15
-----
Price per klb = $4.03 per klb
Steam $4.03 * 25,000 = $100,697
Charge
APPENDIX C
ANNUALIZED AVERAGE CALCULATION - 3.2C
The 35,000 pound per hour annual average and the 50,000 pound per hour supply
requirement shall be adjusted as shown below:
Definitions: Units
- ------------ -----
A = Buyer's Contract base annual average lb/hr
B = Buyer's 1986 annual average lb/hr
C = Buyer's adjusted annual average lb/hr
X = Buyer's new base annual average lb/hr
W = Seller's Contract base supply requirement lb/hr
Y = Seller's new supply requirement lb/hr
Formulas
- --------
X = C * A / B
Y = C * W / B
SAMPLE CALCULATION
A = 35,000 Constant
B = 107,700 Constant
W = 50,000 Constant
C = 80,000
X = 25,998 lb/hr new base annual average
Y = 37,140 lb/hr new supply requirement
ASSIGNMENT AGREEMENT
ASSIGNMENT (this "Assignment"), dated as of February 27, 1987, among
COGEN TECHNOLOGIES NJ VENTURE, a New Jersey joint venture (the "Borrower"), and
GENERAL ELECTRIC POWER FUNDING CORPORATION, a New York corporation (the
"Lender").
W I T N E S S E T H
WHEREAS, the Lender has entered into a Construction Loan Agreement (as
supplemented, amended, or otherwise modified from time to time, the "Loan
Agreement"), dated as of September 8, 1986, with the Borrower for the purpose of
financing the cost of constructing and equipping a 165 megawatt gas-fired
cogeneration plant to be located at Bayonne, New Jersey; and
WHEREAS, it is a condition to the making of loans under the Loan
Agreement that the Borrower shall have executed and delivered this Assignment
whereby the Borrower, in order to provide security for the full payment when due
of all amounts payable under the Loan Agreement, shall assign to the Lender. (to
the extent set forth herein) all of its rights, title and interests in, to and
under certain agreements described below relating to the design, construction
and operation of the Project (as defined in the Loan Agreement) in accordance
with the terms of this Assignment;
NOW, THEREFORE, in order to induce the Lender to make loans to the
Borrower under the Loan Agreement, the parties hereto agree as follows:
SECTION 1. Certain Defined Terms
1.1 For purposes of this Assignment capitalized terms not otherwise
defined shall have the meanings set forth in the Loan Agreement.
1.2 As used in this Assignment, the following terms shall have the
meanings set forth below:
Page 2
"Assigned Agreements" shall mean that agreement described Exhibit A
attached hereto.
"Assigned Property" shall have the meaning specified in Section
2.1(c).
"Assigned Rights" shall mean all of the rights and property assigned
to the Lender hereunder.
"Secured Obligations" shall have the meaning specified in Section 2.1.
1.3 All terms defined in this Assignment shall have the same defined
meanings when used in any notice certificate, report or other document made or
delivered pursuant to or in connection with this Assignment, unless the context
shall otherwise require. Each reference herein to the Borrower and the Lender
shall be deemed to include their respective successors and assigns.
SECTION 2. Assignment of Rights, Title and
Interest in, to and under the
Assigned Agreements
2.1 As security for the payment and performance of the Borrower's
obligations under the Loan Agreement, including the repayment of all Advances
made under the Loan Agreement, the payment of all amounts payable under the
Note, and the performance of all obligations of the Borrower (including the
payment of all amounts due) hereunder and under the other Security Documents
(collectively the "Secured Obligations") the Borrower hereby assigns, transfers,
conveys and sets over to the Lender (the "Secured Party") and grants to the
Secured Party a continuing security interest in, all the Borrower's rights,
title and interests in, to and under the Assigned Agreements and all proceeds
thereof, including without limitation:
(a) all payments due and to become due under the Assigned Agreements,
whether as contractual obligations, damages payable to the Borrower for any
breach thereunder, or otherwise;
(b) all of the Borrower's claims, rights, powers or privileges and
remedies under any Assigned Agreement; and
Page 3
(c) all of the Borrower's rights under any Assigned Agreement (i) to
make determinations, (ii) to exercise any election (including, but not
limited to, election of remedies) or option or to give or receive any
notice, consent, waiver or approval together with full power and authority
to demand, receive, enforce, collect or give receipt for any of the
foregoing or any property which is the subject of any of the Assigned
Agreements, (iii) to amend, modify or supplement any Assigned Agreement,
(iv) to enforce or execute any checks, or other instruments or orders, (v)
to file any claims and (vi) to take any action which (in the opinion of the
Secured Party) may be necessary or advisable in connection with any of the
foregoing (the Borrower's rights, title and interests in, to and under the
Assigned Agreements, together with all of the foregoing in this Section
2.1, the "Assigned Property").
Concurrently with its execution and delivery after the date hereof of any
Project Document, (i) the Borrower shall execute and deliver to the Secured
Party a supplement to this Assignment, in form and substance satisfactory to the
Secured Party, confirming the grant to the Secured Party of such Assigned
Agreement pursuant to this Assignment (and the validity of the representations
and warranties set forth with respect thereto in Section 2.3) and (ii) the
Borrower shall cause each other party to such Project Document to execute and
deliver a Consent, consenting to such grant (said Consent being set forth in
Section 20.2 of the Assigned Agreements described in Exhibit A).
2.2 The Borrower hereby expressly agrees that it will observe and
perform all of its obligations under the Assigned Agreements and will not enter
into or consent to any amendment, modification, supplement or waiver to any of
the terms, of the Assigned Agreements without the prior written consent of the
Secured Party. The Borrower agrees in any event to furnish to the Secured Party
as soon as possible (and in any event within 10 days after the execution
thereof) a signed counterpart of each amendment, modification or supplement to
any Assigned Agreement. Except as provided above in this Section 2.2, until the
occurrence and continuance of an Event of Default, or an event which, with the
lapse of time or the giving of notice or both, would constitute an Event of
Default, the Borrower may exercise all of its rights, powers, privileges and
remedies under the Assigned Agreements including the right to receive any and
all moneys due or to become due thereunder.
Page 4
2.3 The Borrower hereby represents and warrants with respect to the
Assigned Agreements that as of the date of this Assignment (and as of the date
of any supplement hereto referred to in Section 2.1):
(a) they are in full force and effect and there is no breach or
default thereunder, and
(b) they have not been transferred or assigned in whole or in part,
save for the assignment herein contained, and no Lien arising by, through,
or under the Borrower exits with respect to any of them or any obligation
payable or performable thereunder.
2.4 It is hereby expressly agreed that, anything contained herein to
the contrary notwithstanding, the Borrower shall remain liable under the
Assigned Agreements to perform all the obligations assumed by it thereunder and
the Secured Party shall not have any obligation or liability thereunder by
reason of or arising out of the assignments herein contained, nor shall the
Secured Party be required or obligated in any manner to perform or fulfill any
obligations of the Borrower under the Assigned Agreements or pursuant thereto,
or to make any payment, or, unless and until indemnified to its satisfaction, to
present or file any claim, or to take any other action to enforce any right
assigned to it hereunder or to which it may be entitled pursuant hereto at any
time or times.
2.5 The Borrower hereby undertakes that, notwithstanding the
assignments herein contained, it shall punctually perform all its obligations
under the Assigned Agreements and in particular, but without limiting the
generality of the foregoing, it shall fully and punctually pay all moneys due
and payable by it under the Assigned Agreements.
2.6 If the Borrower shall fail to do so in a full and timely fashion,
the Secured Party shall be entitled but not obliged to perform, itself or
through its nominee(s), all or any of the Borrower's obligations under the
Assigned Agreements without thereby releasing the Borrower from its obligations
thereunder.
2.7 The Borrower hereby irrevocably appoints the Secured Party as its
attorney-in-fact to do in its name all acts which it could do in relation to the
Assigned Agreements and in particular, but without limiting the generality of
the foregoing, to ask, require, demand, receive, compound and forgive any and
all moneys and claims for moneys due and
Page 5
to become due under or arising out of any of the Assigned Agreements, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or to take any action or institute any proceedings which the
Secured Party may deem to be necessary or advisable in the circumstances, which
appointment is coupled with an interest. Except insofar as necessary to effect
compliance with the provisions of Section 4.04(c) of the Loan Agreement, the
Secured Party shall not exercise any of the powers granted pursuant to the
foregoing sentence until the earliest of the breach of the Borrower's
obligations hereunder or under any other Security Document or the occurrence of
an Event of Default under the Loan Agreement.
2.8 If an Event of Default shall have occurred and be continuing, the
Secured Party may exercise with respect to the Assigned Property those rights
set forth in Section 3 hereof.
SECTION 3. Remedies and Application of Proceeds
Upon the occurrence of any Event of Default and during the existence
thereof, the Secured Party shall have all rights of a secured party under the
Uniform Commercial Code to enforce the assignments and security interests
contained herein and in addition shall have the right (a) to enforce all
remedies, rights, powers and privileges of the Borrower under any or all of the
Assigned Rights, (b) to sell any or all of the Assigned Property at public or
private sale upon at least 10 days' prior written notice and/or (c) to
substitute itself or any nominee or agent in lieu of the Borrower as a party to
any of the Assigned Agreements. In the event that the Secured Party shall bring
any suit, or shall take any other action, to enforce any of it's rights
hereunder, the Borrower shall pay on demand the Secured Party's reasonable
expenses (including attorney's fees) in so enforcing such rights, and such
expenses shall be included in any judgment obtained in connection therewith.
Unless otherwise specified herein, all amounts received hereunder as a result of
any exercise of rights or remedies created hereby shall be applied in accordance
with the Loan Agreement. All of the Secured Obligations are secured ratably and
pari passu by this Assignment.
Page 6
SECTION 4. Miscellaneous
4.1 Further Assurances. The Borrower hereby undertakes, at its own
expense, to accomplish any appropriate filings (including the filing of
financing statements) relative to the assignments herein contained and execute,
sign, deliver, do and (if required) make any appropriate filings in connection
with such further assurance, instrument, document, act or thing as in the
opinion of the Secured Party may be necessary or desirable for the purpose of
more effectually assigning the Assigned Rights and/or perfecting the assignments
herein contained and/or enabling the Secured Party to enjoy the full benefit of
the assignments and the rights and the powers herein granted to the Secured
Party.
4.2 Payments. All moneys collected or received by the Secured Party in
respect of the Assigned Rights or the Assigned Agreements, and any and all
moneys received by the Secured Party in any proceedings pursuant to this
Assignment, unless otherwise specified herein, shall be dealt with by the
Secured Party as provided in the Loan Agreement.
4.3 Binding Effect. All of the covenants, warranties, undertakings and
agreements of the Borrower hereunder shall bind the Borrower, its successors and
assigns and shall inure to the benefit of the Secured Party, its successors and
assigns, whether so expressed or not.
4.4 Notices. Any notice or other communication shall be deemed to have
been sufficiently given if given as provided in, and to the addresses provided
in, the Loan Agreement.
4.5 No Waiver; Cumulative Remedies. No failure to exercise, and no
delay in exercising, any right, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude or require any other or future exercise thereof or
the exercise of any other right, power or privilege. All rights, powers and
remedies granted to any party hereto and all other agreements, instruments and
documents executed in connection with this Assignment shall be cumulative, may
be exercised singly or concurrently and shall not be exclusive of any rights or
remedies provided by law.
4.6 Survival of Agreements. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Assignment.
Page 7
4.7 Headings. The section and subsection headings used in this
Assignment are for convenience only and shall not affect the construction of
this Assignment.
4.8 Severability. In case any one or more of the provisions contained
in this Assignment shall be invalid, illegal or unenforceable in any respect
under any law, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby.
4.9 Execution of Counterparts. This Assignment may be executed in
any number of counterparts. All such counterparts shall be deemed to be
originals and shall together constitute but one and the same instrument.
4.10 Governing Law. This Assignment shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.
4.11 Illegality. In the event that it should transpire that by reason
of any law or regulation in force or to become in force, or by reason of a
ruling of any court whatsoever, or by any other reason whatsoever, the
assignments herein contained are either wholly or partly defective, the Borrower
hereby undertakes to furnish the Secured Party with alternative assignments
and security and/or to do all such other acts as, solely in the opinion of the
Secured Party, shall be required in order to ensure and give effect to the full
intent and spirit of this Assignment.
4.12 Waivers, Amendments, Supplements and Other Modifications. The
provisions of this Assignment may be waived, amended, supplemented or otherwise
modified from time to time, in whole or in part, only by a writing signed by the
Borrower and Secured Party.
IN WITNESS WHEREOF, this Assignment has been executed and delivered as
of the date and year first above written.
ADDRESS: COGEN TECHNOLOGIES NJ VENTURE
14614 Falling Creek Drive By: COGEN TECHNOLOGIES NJ,
Suite 212 INC., Managing Venturer
Houston, Texas 77068
By /s/ Robert C. McNair
--------------------------
Title: President
Page 8
ADDRESS: GENERAL ELECTRIC POWER
FUNDING CORPORATION
Building 2, Room 708
One River Road
Schenectady, New York 12345 By: /s/ ???
--------------------------
AMENDMENT TO AGREEMENT
BETWEEN
COGEN TECHNOLOGIES NJ VENTURE
AND
EXXON COMPANY, U.S.A.
FOR
THE SALE OF STEAM
AMENDMENT TO AGREEMENT
BETWEEN
COGEN TECHNOLOGIES NJ VENTURE
AND
EXXON COMPANY, U.S.A.
FOR
THE SALE OF STEAM
AGREEMENT entered into this 21st day of August, 1988 (hereinafter, "Agreement"),
by and between COGEN TECHNOLOGIES NJ VENTURE ("Seller"), a New Jersey venture,
and EXXON COMPANY, U.S.A. ("Buyer"), a division of Exxon Corporation, a New
Jersey corporation (collectively, "Parties").
WHEREAS, Seller and Buyer entered into a contract dated February 27, 1987, for
the sale of steam from a facility for the cogeneration of steam and electricity
("Seller's Facility") in proximity to Buyer's Terminal Facility located at
Bayonne, New Jersey ("Buyer's Plant") ("February Agreement");
WHEREAS, the Parties now desire to increase the amount of steam sold by Seller
to Buyer, to adjust the steam charge calculations in certain respects, and to
revise the priority of steam purchases by Buyer from Seller; and
WHEREAS, the Parties desire to set forth in writing their respective rights and
obligations with respect to the matters set forth above;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other valuable consideration, receipt of which is hereby acknowledged, the
Parties agree as follows:
ARTICLE 1
---------
DEFINITIONS
-----------
All capitalized terms when used herein shall have the meanings set forth in the
February Agreement or this Agreement, unless a different meaning shall be
expressly stated or apparent from the context herein.
ARTICLE 2
---------
EFFECT OF AMENDMENT
-------------------
Except as specifically provided herein, the February Agreement shall govern
performance by the Parties.
ARTICLE 3
---------
BASIC RIGHTS AND OBLIGATIONS
----------------------------
3.1 General
-------
(A) Paragraph A. of Article 3.1 of the February Agreement is amended to
read as follows:
A. Buyer agrees to purchase from Seller 50,000 pounds per hour of
Deliverable Steam averaged on an annualized basis during all times
that Seller has a minimum of 65,000 pounds per hour of Deliverable
Steam available for Buyer. The calculation period for the annual
average shall be from November 1 through October 31. The 50,000
pound per hour average is based on Buyer's current operation and
steam demand and may be modified as provided for in Article 3.2.
(B) Paragraph B. of Article 3.1 of the February Agreement is amended to
read as follows:
B. Buyer agrees to advise Seller in advance of its desire to purchase
Deliverable Steam in excess of 65,000 pounds per hour, which
Seller is not obligated to supply under this Agreement.
(C) Paragraph D. of Article 3.1 of the February Agreement is amended to
read as follows:
D. Buyer agrees that Seller has obligations and rights to supply
steam to IMTT-Bayonne and to ICI Americas, Inc., and electricity
to Jersey Central Power & Light Company, which obligations and
rights come before any right Buyer may have under this Agreement
to receive Deliverable Steam from Seller except that Seller shall
not provide steam during any hour to IMTT-Bayonne in excess of
57,000 pounds per hour nor to ICI Americas, Inc., in excess of
20,000 pounds per hour, unless Seller has first made available
during such hour 65,000 pounds per hour to Buyer under this
Agreement.
3.2 Annualized Average Calculation
------------------------------
(A) Paragraph A. of Article 3.2 of the February Agreement is amended to
read as follows:
A. Any hour that Seller does not have at least 65,000 pounds per hour
of Deliverable Steam available for Buyer shall be excluded from
the annual average calculation. Any steam purchased by Buyer from
Seller during any such hour shall also be excluded from the annual
average calculation. If this occurs between September 1 and May 31
of any year, then Buyer shall be credited for 15,000 pounds for
each hour of unavailability. At Buyer's discretion, the provisions
of this paragraph may be waived with written notice to Seller
within thirty (30) days of the date of such waiver so long as such
waiver applies to each of the foregoing provisions of this
paragraph (3.2A).
(B) Paragraph C. of Article 3.2 of the February Agreement is amended to
read as follows:
C. The 50,000 pound per hour annual average is based on Buyer's
1987 actual steam demand for its operation, including outside
sales. Buyer shall have the right to reduce the 50,000 pound per
hour annual average to the extent that Buyer demonstrates that
there are changes in Buyer's operation, including outside sales,
which will result in lower annual steam requirements, provided,
however, that in such event, Seller's 65,000 pounds per hour
minimum Deliverable Steam obligation shall be reduced on a pro
rata basis. (See Appendix C.) Such right may be exercised no
earlier than sixty (60) days after Buyer presents supporting
documentation to Seller.
ARTICLE 4
---------
SALE OF STEAM
-------------
4.1 Adjustment to Monthly Steam Charge
----------------------------------
Paragraph A. of Article 4.4 of the February Agreement is amended to read as
follows:
A. If the price per thousand pounds of Deliverable Steam as
calculated in Appendix B is not at least $0.50 less than the
lowest incremental cost of steam calculated in Appendix A, then
Seller's price shall be adjusted by Seller to be $0.50 less than
the lowest incremental cost as calculated in Appendix A.
4.2 Recalculation of Price
----------------------
Article 4.5 of the February Agreement, regarding recalculation of price, is
deleted.
ARTICLE 5
---------
OTHER RIGHTS AND OBLIGATIONS OF PARTIES
---------------------------------------
5.1 Other Rights and Obligations of Seller
--------------------------------------
Paragraph A. of Article 5.1 of the February Agreement is amended to read as
follows:
A. Have the right first to use steam at the Cogeneration Facility for
purposes of sales to IMTT-Bayonne under the terms and conditions
of the Agreement between Cogen Technologies NJ, Incorporated
("Seller") and IMTT-Bayonne ("Buyer") for the Sale of Steam and
Electricity from a Cogeneration Plant, dated June 13, 1985, as
amended as of May 22, 1986, to use steam produced at the
Cogeneration Facility for purposes of sales to ICI Americas, Inc.,
to produce electric energy to sell to Jersey Central Power & Light
Company under the terms and conditions of the Agreement for
Purchase of Electric Power between Cogen
Technologies, NJ, Incorporated and Jersey Central Power & Light
Company, dated October 29, 1985, as may be amended, and to put its
obligations and rights under those agreements ahead of its
obligations to Buyer under this Agreement except that Seller shall
not provide steam during any hour to IMTT-Bayonne in excess of
57,000 pounds per hour or to ICI Americas, Inc., in excess of
20,000 pounds per hour, unless Seller has first made available
during such hour 65,000 pounds per hour to Buyer under this
Agreement.
5.2 Limitation on Seller's Liabilities
----------------------------------
Article 5.3 of the February Agreement is amended to read as follows:
5.3 Limitation on Seller's Liabilities
----------------------------------
If the Seller does not make Deliverable Steam available to Buyer under
this Agreement by reason of carrying out its obligations or exercising
its rights with regard to IMTT-Bayonne, ICI Americas, Inc., or Jersey
Central Power & Light Company, described in Article 5.1A, or by reason
of Force Majeure, such failure shall not be a cause of breach or
otherwise subject Seller to any liability, damages, or penalty under
this Agreement. If, after the end of any Force Majeure period which
continues for more than six (6) months, Buyer must obtain alternate
sources of steam due to operational necessities, and is required to
enter take-or-pay commitments to do so, Buyer shall be relieved of any
take-or-pay obligations under this Agreement for a period of up to
twelve (12) months to the extent the new take-or-pay commitment
overlaps with the take-or-pay commitment under this Agreement.
ARTICLE 6
---------
APPENDICES
----------
Appendices A and C to the February Agreement are deleted and replaced by
Appendices A and C attached hereto.
ARTICLE 7
---------
COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, and each
executed counterpart shall have the same force and effect is an original
instrument.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized as of the day and year
first set forth above.
ATTEST: COGEN TECHNOLOGIES NJ VENTURE
By: /s/ Robert C. McNair
-----------------------------
Robert C. McNair, President
Cogen Technologies NJ, Inc.
Managing Venturer
ATTEST: EXXON COMPANY, U.S.A.
(a division of Exxon Corporation)
By: /s/ Andy F. Icken 8/21/88
-----------------------------
Andy F. Icken, Manager
Marketing Specialty Products
APPENDIX A
EXXON INCREMENTAL COST PER KLB STEAM
Definitions Units
- ------------------------------------------------------------- -------
PAP = Platts Oilgram NY Spot monthly average price for No. 6, $/Bbl
0.3 wt% sulfur fuel oil - low pour cargo price - use
midrange value
AF = Cost of gas from PSE&G's Gas Assistance Program (GAP). $/MBtu
If the GAP is discontinued, the Cogeneration Inter-
ruptible Gas (CIG) rate shall be used. If neither the
GAP nor CIG rate is available, Buyer shall propose an
alternate gas pricing basis, subject to Seller's prior
consent, which consent shall not be unreasonably with
held.
BWP = Bayonne city water price $/kcuft
EIFC = Exxon's incremental fuel cost $/klb
EIWC = Exxon's incremental water cost $/klb
EICC = Exxon's incremental chemical cost $/klb
ETIC = Exxon's incremental cost of steam $/klb
Formulas Frequency of Calculation Units
- ---------------------- ------------------------ -----
EIFCOil = 0.23 * PAP Monthly by Seller $/klb
EIFCGas = 1.4592 * AF Monthly by Seller $/klb
EIWC = 0.0172 * BWP Monthly by Seller $/klb
EICC = 0.15 Annually by Buyer $/klb
Calculation of ETIC
- -------------------
Exxon's incremental cost of steam for purposes of Article 4.4A is the lowest of
ETIC\Oil\ or ETIC\Gas\, where ETIC\Oil\ = EIFC\Oil\ + EIWC + EICC and ETIC\Gas\
= EIFC\Gas\ + EIWC + EICC. The formulas for both ETIC\Oil\ and ETIC\Gas\ shall
be calculated on a monthly basis by Seller in $/klb.
APPENDIX A
Sample Calculation
- ------------------
PAP = $18.50 per barrel
BWP = $21.00 per kcuft
EICC = $ 0.15 per klb
AF = $ 2.87 per MBtu
EIFC\Oil\ = 0.23 * $18.50 = $4.26
EIWC = 0.0172 * $21.00 = $0.36
EICC = 0.15 = $0.15
-----
ETIC\Oil\ = $4.77
EIFC\Gas\ = 1.4592 * $2.87 = $4.19
EIWC = 0.0172 * $21.00 = $0.36
EICC = 0.15 = $0.15
-----
ETIC\Gas\ = = $4.70
The cost of steam from Appendix A to be used in determining whether an
adjustment to the monthly steam charge is appropriate pursuant to Article 4.4A
shall be the lower of (ETIC\Oil\ - $.50) or (ETIC\Gas\ - $.50) (ie., under
Sample Calculation, cost of steam from Appendix A = $4.70 - .50 = $4.20/klb).
APPENDIX C
ANNUALIZED AVERAGE CALCULATION - 3.2C
The 50,000 pound per hour annual average and the 65,000 pound per hour supply
requirement shall be adjusted as shown below:
Definitions Units
----------- -----
A = Buyer's Contract base annual average lb/hr
B = Buyer's 1987 annual average lb/hr
C = Buyer's adjusted annual average lb/hr
X = Buyer's new base annual average lb/hr
W = Seller's Contract base supply requirement lb/hr
Y = Seller's new supply requirement lb/hr
Formulas
- --------
X = C * A/B
Y = C * W/B
Sample Calculation
- ------------------
A = 50,000 Constant
B = 107,700 Constant
W = 65,000 Constant
C = 80,000
X = 37,140 lb/hr new base annual average
Y = 48,282 lb/hr new supply requirement