EXHIBIT 10.22
FIRM GAS PURCHASE AND SALE AGREEMENT
between
COGEN TECHNOLOGIES LINDEN VENTURE, L.P.
and
ENGAGE ENERGY US, L.P.
TABLE OF CONTENTS
Page
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TABLE OF CONTENTS........................................ i
ARTICLE 1: DEFINITIONS.................................. 1
ARTICLE 2: QUANTITIES................................... 5
ARTICLE 3: NOMINATIONS.................................. 6
ARTICLE 4: PRICE........................................ 7
ARTICLE 5: RESERVATION CHARGES AND SUBSTITUTE FUELS..... 12
ARTICLE 6: PAYMENT...................................... 14
ARTICLE 7: TAXES........................................ 17
ARTICLE 8: POINT(S) OF DELIVERY......................... 17
ARTICLE 9: PRESSURE..................................... 18
ARTICLE 10: MEASUREMENT.................................. 18
ARTICLE 11: QUALITY...................................... 18
ARTICLE 12: TRANSPORTATION AND IMBALANCE CHARGES......... 18
ARTICLE 13: TERM......................................... 19
ARTICLE 14: FORCE MAJEURE................................ 20
ARTICLE 15: NOTICE....................................... 21
ARTICLE 16: LAWS, ORDERS & REGULATIONS................... 23
ARTICLE 17: APPLICABLE LAW............................... 23
ARTICLE 18: WAIVER....................................... 23
ARTICLE 19: TITLE........................................ 24
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ARTICLE 20: ASSIGNMENT.................................. 24
ARTICLE 21: ARBITRATION................................. 26
ARTICLE 22: DEFAULT..................................... 27
ARTICLE 23: GENERAL..................................... 28
ARTICLE 24: CONFIDENTIALITY............................. 29
EXHIBIT A................................................ 31
EXHIBIT B................................................ 32
EXHIBIT C................................................ 34
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FIRM GAS PURCHASE AND SALE AGREEMENT
This AGREEMENT ("Agreement") is made and entered into this 1st day of
July, 1997, by and between COGEN TECHNOLOGIES LINDEN VENTURE, L.P. (in the State
of New Jersey D/B/A COGEN TECHNOLOGIES LINDEN VENTURE, LIMITED PARTNERSHIP), a
Delaware limited partnership, hereinafter referred to as "Buyer," and ENGAGE
ENERGY US, L.P., a Delaware limited partnership, hereinafter referred to as
"Seller; "
WHEREAS, Buyer requires a supply of gas for use in Buyer's cogeneration
facility in Linden, New Jersey; and
WHEREAS, Seller is willing to sell gas to Buyer on a firm basis to meet
its requirements.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties do hereby covenant and agree as follows:
ARTICLE 1: DEFINITIONS
In addition to the terms "Buyer" and "Seller" which shall refer to the
parties identified above, or their duly designated agents or representatives,
the following terms shall have the specified meanings:
1.1 The term "Alternate Commodity Price" shall have the meaning set
forth in Section 4.3.
1.2 The term "Btu" shall mean the amount of heat required to raise the
temperature of one (1) pound avoirdupois pure water from fifty-eight and five-
tenths degrees (58.5 degrees) to fifty-nine and five-tenths degrees (59.5
degrees) Fahrenheit, as defined in
1
the American Gas Association Gas Measurement Manual and any subsequent revisions
as determined on a dry basis.
1.3 The term "Cancellation Notice" shall mean the notice described in
Section 22.1.
1.4 The term "Commodity Price" shall have the meaning set for Section
4.2.
1.5 The term "Con Ed" shall mean The Consolidated Edison Company of New
York, Inc.
1.6 The term "Daily Contract Quantity" or "DCQ" shall mean fifteen
thousand eight hundred sixty nine (15,869) MMBtu per day, with a maximum of ten
thousand eight hundred sixty nine (10,869) MMBtu per day at Texas Gas - Ada and
five thousand (5,000) MMBtu per day at TETCO - East Louisiana Points of
Delivery, plus Transporter'(s) Market Area Fuel.
1.7 The term "day" shall mean a period of twenty-four (24) consecutive
hours, beginning and ending at the time specified in the receiving
Transporter(s)' tariff(s) at the Point of Delivery.
1.8 The term "Delivery Period" shall mean a period of five (5)
consecutive months beginning with the commencement of deliveries of gas
hereunder.
1.9 The term "Elizabethtown" shall mean Elizabethtown Gas Company.
1.10 The term "Facility" shall mean the cogeneration facility owned and
operated by Buyer that is located in Linden, New Jersey.
1.11 The term "force majeure" shall have the meaning set forth in
Section 14.2.
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1.12 The term "Gas" or "gas" shall mean any mixture of hydrocarbons or
of hydrocarbons and non-combustible gases, in a gaseous state, consisting
essentially of methane and shall include casinghead gas produced with crude oil,
natural gas from gas wells, coal-bed methane gas, synthetic gas, coal
gasification gas and residue gas resulting from processing any of the foregoing.
1.13 The term "Lender" shall mean (i) any and- all lenders -(other than
Seller) providing the construction, interim or long-term financing or re-
financing of the Facility (including financing by way of a leveraged lease) and
any trustee or agent acting on their behalf, and (ii) any and all equity
investors or limited partners providing any such financing or re-financing of
the Facility and any trustee or agent acting on their behalf. The Lender
initially shall be State Street Bank & Trust Company, as Trustee, and thereafter
such entity or entities as shall be designated in writing by Buyer to Seller.
1.14 The term "Market Area Fuel" shall mean the quantity of gas retained
by Transporter(s) as fuel for the transportation of gas from the Point(s) of
Delivery to the Point(s) of Redelivery.
1. 15 The term "Market Price" shall have the meaning set forth in
Section 4.3.
1. 16 The term Minimum Quantity" shall mean one hundred percent (100%)
of the product of the DCQ and the number of days in each month of the Delivery
Period, as reduced by circumstances of force majeure.
1.17 The term "MMBtu" shall mean one million (1,000,000) Btus.
1.18 The term "month" shall mean the period commencing on the beginning
of the first day of a calendar month and ending on the beginning of the first
day of the succeeding calendar month.
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1.19 The term "Nominated Quantity" shall have the meaning set forth in
Section 3.1.
1.20 The term "Nomination Notice" shall mean the notice described in
Section 3.1 and Exhibit A to this Agreement.
1.21 The term "NYMEX' shall mean the New York Mercantile Exchange.
1.22 The term "NYMEX Forward Price" shall have the meaning set forth in
Section 4.7 (b).
1.23 The term "NYMEX Price" shall have the meaning set forth in Section
4.7 (a).
1.24 The term "Point(s) of Delivery" shall have the meaning set forth in
Article 8.
1.25 The term "Point(s) of Redelivery" shall mean the point or points on
Transporter(s)' pipeline system where gas is redelivered to or for the account
of Buyer, PSE&G or Elizabethtown on the PSE&G system in New Jersey.
1.26 The term "Power Purchase Agreement" shall mean Contract No. 344,
dated April 14, 1989, between Buyer and Con Ed, covering the sale of electricity
from the Facility, and any amendments thereto that may be made from time to
time.
1.27 The term "PSE&G" shall mean Public Service Electric and Gas
Company.
1.28 The term "Resale Service" shall mean the resale service provided by
PSE&G and Elizabethtown under the Gas Service Agreement with Buyer dated July
13, 1990, which is used to effectuate the delivery of Seller's gas to Buyer's
cogeneration facility.
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1.29 The term "Reservation Charge" shall have the meaning set forth in
Section 5.2.
1.30 The term "Reservation Rate" shall mean one cent ($0.01) per MMBtu.
1.31 The term "Spot Market Price" shall mean the arithmetic average of
the prices reported in the weekly and bi-weekly updates of the reference pricing
reports during the month of delivery for the reference points set forth in
Exhibit "B" hereto.
1.32 The term "TETCO"shall mean Texas Eastern Transmission Corporation.
1.33 The term "Texas Gas" shall mean Texas Gas Transmission Corporation.
1.34 The term "Transporter(s)" shall mean any pipeline(s) transporting
gas sold hereunder to and from the Point(s) of Delivery and to the Point(s) of
Redelivery.
ARTICLE 2: QUANTITIES
2.1 Buyer shall purchase and receive and Seller shall sell and deliver
the Nominated Quantity at the Point(s) of Delivery, except to the extent excused
under the provisions of this Agreement.
2.2 If on any day during the Delivery Period Buyer purchases and
receives less than the DCQ, except to the extent excused under the provisions of
this Agreement or due to Seller's unexcused failure to deliver, then Buyer shall
pay Seller an amount equal to the difference between the price payable hereunder
and the then effective Spot Market Price of gas at the reference points set
forth in Exhibit B multiplied by the difference between the Minimum Quantity and
the quantity of gas purchased and received by Buyer on each such day. Except in
the case of Buyer's willful misconduct or gross negligence and except as
described in Articles 12,14 and 22, this is the sole remedy available to Seller
for any failure by Buyer to purchase and receive gas.
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ARTICLE 3: NOMINATIONS
3.1 On or before the day prior to which pipeline nominations are
required to be nominated by Buyer and Seller to the applicable pipeline
company(s) referenced herein, and subject to the provisions of Sections 3.2 and
3.3, Buyer shall notify Seller in writing by providing a Nomination Notice,
substantially in the form attached hereto as Exhibit A, specifying the daily
quantity of gas, in MMBtus, up to the DCQ, that Buyer shall purchase and receive
from Seller during the next month (hereinafter the "Nominated Quantity"). In the
alternative, Buyer may specify a standing Nominated Quantity to be effective
until changed in writing pursuant to the first sentence of this section.
3.2 The parties recognize that fluctuations in the production and
transportation of gas can occur on a daily basis. Buyer and Seller will attempt
to receive and deliver gas on a uniform hourly basis. Notwithstanding anything
to the contrary herein, any revisions to the Nominated Quantity shall be
implemented in accordance with Transporter(s)' nomination procedures, unless a
waiver of such procedures is received by either Buyer or Seller.
3.3 Buyer and Seller shall be responsible for nominations to their
respective Transporters and the nominations in each case shall reflect the
Nominated Quantity .
3.4 If no Nominated Quantity is submitted by Buyer in accordance with
Section 3.1, the DCQ shall be the Nominated Quantity.
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ARTICLE 4: PRICE
4.1 For all gas nominated by Buyer and delivered by Seller during a
month, Buyer shall pay the Commodity Price or the Alternate Commodity Price per
MMBtu, rounded to the nearest $0.001.
4.2 The term "Commodity Price" shall mean the price of gas for each
month which shall be mutually agreed upon by the parties and subsequently
confirmed in) writing prior to the date Buyer's nomination notice to Seller is
due for the month of delivery. In the event that the parties fail to reach
agreement as to the Commodity Price, the Alternate Commodity Price determined in
accordance with Section 4.3 shall apply.
4.3 For the deliveries at TETCO - East Louisiana, the term "Alternate
Commodity Price" shall mean the arithmetic average of the prices reported in the
referenced issue of the month of delivery for the price references included in
the "Market Price Index," set forth in Exhibit B. For deliveries at Texas Gas
Ada, the term "Alternate Commodity Price" shall mean the arithmetic average of
the prices reported in the referenced issue of the month of delivery for the
price references included in the "Market Price Index," set forth in Exhibit B,
less $0.02 per MMBtu. The price references in the Market Price Index are
intended to reflect the price paid for gas delivered at the Point(s) of Delivery
under spot contracts (the "Market Price"). The price references in the "Backup
Price Index" set forth in Exhibit B are intended to serve as a substitute for
the price references in the Market Price Index in the event the latter price
references are not available or are "erroneous," as that term is defined in
Section 4.5.
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4.4 Either party may request that a price reference be added to or
deleted from the Market Price Index or Backup Price Index by providing written
notice to the other party. For a price reference to be added to the Market Price
Index or Backup Price Index, the price reference must reflect the Market Price
and be from an independent publication which is not controlled by a buyer,
seller or broker of gas. For a price reference to be deleted from the Market
Price Index or Backup Price Index, such price reference must no longer reflect
the Market Price. If within thirty (30) days after the date of notice by a
party, the parties are unable to agree to add or delete a price reference, then
the party seeking such addition or deletion may submit the issue to arbitration
which shall be conducted pursuant to Article 21. A price reference shall be
added or deleted effective the first day of the month after notice by the
requesting party and the price ultimately determined by negotiation or
arbitration will be given retroactive effect to take into account the period of
negotiation or arbitration with interest assessed at the rate provided in
Section 6.3. Unless otherwise agreed by the parties, in no event may either
party request that a price reference be added to or deleted from the Market
Price Index or Backup Price Index more than once during the Delivery Period.
4.5 If during any month a price reference included in the Market Price
Index is not published, the Market Price Index will exclude such price reference
from the Market Price Index for so long as such price reference is not published
and the price reference(s) from the Backup Price Index shall be substituted for
the excluded price reference. If the excluded price reference is the only price
reference in the Market Price Index and no price references in the Backup Price
Index are published, then
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Section 4.6 below shall apply. If an erroneous price is published and the
publisher confirms such error, then the correct price, if available, shall be
used. If the publisher does not confirm such error or if the correct price is
not available, then the price reference containing such erroneous price shall
not be included in the Market Price Index or Backup Price Index for such month.
For purposes of Sections 4.3 and 4.5, the term "erroneous" price shall mean
any price reference that varies by more than. four percent (4%) from the average
of the other price references included in the Market Price Index and Backup
Price Index for such month.
4.6 If no Market Price Index and no Backup Price Index reference prices
are available or if, in the opinion of either party, there are no price
references which reasonably reflect the Market Price and the basis of such
opinion is provided in writing to the other party, then a new method to
determine the Alternate Commodity Price will be negotiated. If the parties are
unable to agree within thirty (30) days after notice by a party, then the matter
of determining whether a basis exists to invoke this provision and, if so, the
determination of a new method to determine the Alternate Commodity Price shall
be submitted to arbitration pursuant to Article 21. During a period of
negotiation or arbitration, the last applicable Commodity Price or Alternate
Commodity Price shall remain in effect and shall be adjusted at the conclusion
of such negotiation or arbitration to give retroactive effect to the result with
interest assessed at the rate provided in Section 6.3.
4.7 Alternatively, and in lieu of the price calculated pursuant to
Sections 4.2 and 4.3 hereof, the parties may mutually agree to a NYMEX Price or
a NYMEX
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Forward Price based on the NYMEX posting for the natural gas futures contract,
calculated as follows:
(a) On or before the business day prior to the NYMEX
Settlement day, Buyer may propose that the price under this Agreement
for gas nominated by Buyer for delivery in the applicable month be the
NYMEX Price, plus or minus the basis differentials that may be mutually
agreed upon at the time of Buyer's proposal. The NYMEX Price shall be
the arithmetic average of the NYMEX settlement price of the natural gas
futures contract for the last three trading days applicable to the month
of delivery. Buyer's proposal shall designate the volume of gas for
delivery in the applicable month at the proposed price, up to the volume
nominated in accordance with Section 3.1 of this Agreement. Upon receipt
of Buyer's proposal, the parties shall confer by telephone as soon as
possible and decide whether or not to use the NYMEX Price, which
decision shall ultimately be made by Buyer and Seller no later than
11:00 a.m. Central Time on the business day before the last trading day
of the applicable natural gas futures contract. In the event the parties
agree to use the NYMEX Price and agree on the basis differential, the
parties' agreement shall be set forth in a confirmation prepared by
Buyer and transmitted by telecopy to Seller. The parties' agreement
shall be deemed conclusive upon receipt of the confirmation (as evidence
by electronic confirmation of transmission) unless Seller objects
promptly in writing following receipt of the confirmation. Either party
shall have the right to withhold agreement on any price proposed under
this Section 4.7 (a) at its sole discretion, in which case the price
under this Agreement will
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be calculated under Sections 4.2 or 4.3 hereof. If the parties are
unable to agree on the basis differentials, or methodology for
determining the basis, the NYMEX Price shall be deemed to be rejected.
In the event the parties agree to use the NYMEX Price, the nominated
volumes which are covered by the NYMEX Price shall remain in effect
during the applicable month and shall not be reduced or increased
pursuant to Sections 3.2 or 3.3 of this Agreement.
(b) In addition to the NYMEX Price, Buyer shall have the right
to propose that the NYMEX Forward Price, plus or minus the basis
differentials that may be mutually agreed upon at the time of Buyer's
proposal, be the price to be paid under this Agreement during any
calendar months designated by Buyer. The NYMEX Forward Price shall be
the NYMEX posting for the natural gas futures contract applicable to the
month or months selected by Buyer and prevailing at the time Buyer's
proposal is communicated to Seller by telephone and confirmed by Seller.
Buyer's proposal shall designate the volume of gas for delivery during
the designated months at the proposed price, up to the volume that can
be nominated in accordance with Section 3.1 of this Agreement. Upon
receipt of Buyer's proposal, the parties shall confer by telephone and
decide whether or not to use the NYMEX Forward Price, which decision
shall be made no later than 11:00 a.m. Central Time on the first
business day following Seller's receipt and confirmation of Buyer's
proposal. In the event the parties agree to use the NYMEX Forward Price
and agree on the basis differential or methodology for determining the
basis, the parties' agreement shall be set forth in a confirmation
prepared by Buyer and transmitted by telecopy to Seller. The
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parties' agreement shall be deemed conclusive upon receipt of the
confirmation (as evidenced by electronic confirmation of transmission)
unless Seller objects promptly in writing following receipt of the
confirmation. Either party shall have the right to withhold agreement on
any price proposed under this Section 4.7 (b), at its sole discretion,
prior to the execution of the NYMEX transaction, in which case the price
under this Agreement will be calculated under Sections 4.2 or 4.3
hereof If the parties are unable to agree on the basis differentials or
methodology for determining the basis, the NYMEX Forward Price shall be
deemed to be rejected. Nothing in this subsection (b) shall be construed
to prevent Buyer from proposing the NYMEX Forward Price in any
designated month if either of the parties had previously rejected the
NYMEX Forward Price for that month. In the event the parties agree to
use the NYMEX Forward Price, the nominated volumes which are covered by
the NYMEX Forward Price shall remain in effect during the designated
months and shall not be decreased or, increased pursuant to Sections 3.2
or 3.3 of this Agreement. In addition, should the parties agree to use
the NYMEX Forward Price, the selection of that option shall remain in
effect during the months selected by the parties unless the parties
mutually agree to use a different pricing option.
ARTICLE 5: RESERVATION CHARGES AND SUBSTITUTE FUELS
5.1 If during any month, Seller sells and delivers less than one hundred
percent (100%), but greater than ninety percent (90%), of the Nominated Quantity
multiplied by the number of days in the month, except to the extent excused
under the provisions of this Agreement or due to Buyer's unexcused failure to
receive, then Buyer
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shall be relieved of its obligation to pay Seller the Reservation Charge
applicable to the volumes not made available and Seller shall refund to Buyer
any payments attributable to such volumes if already invoiced and paid. If
during any month Seller sells and delivers less than ninety percent (90%) of the
Nominated Quantity multiplied by the number of days in the month, except to the
extent excused under the provisions of this Agreement or due to Buyer's
unexcused failure to receive, then Buyer shall be relieved of its obligation to
pay Seller the Reservation Charge set forth in Section 5.2 for the entire month
during which such supply failure occurred. Under such circumstances in this
Section 5. 1, Seller shall also reimburse Buyer its actual higher costs incurred
for the purchase and/or production and transportation of alternate supplies of
fuel acquired to replace the underdelivered quantity, not to exceed the
undelivered quantity, including but not limited to any imbalance carrying
charges and/or cash-out costs and penalties imposed by Transporter(s), PSE&G
and/or Elizabethtown, less the costs that Buyer would have otherwise incurred
for the purchase and transportation of such gas delivered under this Agreement.
Buyer shall use commercially reasonable efforts to minimize its incremental
actual costs for acquiring alternate supplies of fuel. In the exercise of its
commercially reasonable efforts, Buyer shall exercise diligent good faith
efforts to purchase least cost substitute fuel, including purchasing gas under
existing agreements with other sellers which will enable Buyer to utilize its
transportation rights used to transport gas hereunder. Because of environmental
restrictions on Buyer's use of fuels other than gas at the Facility, Buyer shall
have the sole discretion whether to purchase gas or an alternate fuel as a
substitute for gas not delivered by Seller hereunder, even where gas is more
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expensive. Except in the case of Seller's willful misconduct or gross negligence
and except as described in Articles 12, 14 and 22, these are the sole and
exclusive remedies available to Buyer for any failure by Seller to deliver gas.
5.2 Buyer shall pay Seller a monthly Reservation Charge for TETCO - East
Louisiana deliveries only, in consideration for maintaining the capability to
deliver gas at such Point of Delivery up to the DCQ, assuming market and supply
risks, and agreeing to reimburse Buyer for any amounts pursuant to Section 5.1.
The Reservation Charge shall be the Reservation Rate multiplied by the DCQ, for
the TETCO - East Louisiana Point of Delivery, multiplied by the number of days
in such month. To illustrate how the Reservation Charge for the TETCO - East
Louisiana deliveries would be calculated, assume that the DCQ, is 5,000 MMBtus
per day, at the Reservation Rate, the Reservation Charge during November would
be $1,500 (5,000 x $0.01 x 30).
ARTICLE 6: PAYMENT
6.1 Seller shall render an invoice on or before the tenth (10th) day of
each month setting forth the actual quantity of gas nominated by Buyer and
delivered by Seller hereunder during the preceding month, the Commodity Price,
Alternate Commodity Price, NYMEX Price or NYMEX Forward Price, the Reservation
Charge, any amounts due under Sections 2.2 and 12.2 and the total amount due. In
the event that the actual quantity delivered, the Alternate Commodity Price or
the Reservation Charge is not known at the time the invoice is rendered, an
estimated quantity, Alternate Commodity Price and Reservation Charge, based on
the best available information, shall be used. Buyer shall pay Seller for the
amount due by wire transfer
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with immediately available funds to Seller's account in accordance with
instructions contained in Seller's invoice. Payment shall be due on or before
the twenty-first (21st) day of such month or ten (10) days from the date of such
invoice, whichever is later. If Con Ed falls to pay Buyer under the Power
Purchase Agreement by the twentieth (20th) day of the month, Buyer's obligation
to pay Seller shall be suspended from the twenty-first (21st) day of the month,
or ten (10) days from the date of Seller's invoice, until one (1) day following
Buyer's receipt of Con Ed's payment, but, in such a case, Buyer's obligation to
pay Seller shall not be suspended past the twenty-fifth (25th) day of the month.
When the actual quantity, Alternate Commodity Price or Reservation Charge
becomes known and if an adjustment is necessary, an invoice containing the
adjustment for the difference between the actual value and the estimated value
will be rendered. Payment will be made in subsequent months' payment cycles.
6.2 Buyer shall submit an invoice on or before the tenth (10th) day of
the month, if necessary, for any amount due pursuant to Sections 5.1 and 12.2.
Seller shall pay Buyer in accordance with instructions contained in Buyer's
invoice. Payment shall be due on or before the twenty-fifth (25th) day of such
month or ten (10) days from the date of such invoice, whichever is later.
6.3 Should either party fail to pay any amount not in dispute when due,
interest thereon shall accrue at the lesser of (I) the rate of one percent (1%)
above the prime commercial rate charged by Citibank, N.A., New York, New York,
compounded annually from the due date or (ii) the maximum lawful contract rate
permitted by applicable law, until the amount due and interest have been paid in
full. Such interest shall be in addition to any other rights and remedies the
owed party may have for the owing party's failure to pay any amount not in
dispute. Should the owing party
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dispute the amount invoiced, such party shall pay the undisputed amount and
notify the other party of any disputed amount by the due date. Both parties will
mutually resolve the disputed amount in a timely manner with interest accruing
from the original due date on any disputed amount determined to be a valid
amount due. Notwithstanding the foregoing or any other provision herein, if
Buyer fails to pay any amount within five (5) days after receiving written
notice from Seller that payment is delinquent, Seller may withhold deliveries
and, should said: nonpayment continue for a period of thirty (30) days after
such notice, subject to the provisions of Article 22, Seller may terminate this
Agreement upon written notice.
6.4 Upon reasonable notice, each party shall have the right at
reasonable times to have an independent public accounting firm examine the
books, records, and charts controlled by the other party to the extent necessary
to verify the accuracy of any statement, payment, charge, or computation made
pursuant to this Agreement. In the event an error is discovered in any
statement, payment, charge, or computation, the adjusted amount shall be due
within thirty (30) days of the determination thereof, provided that any
statement, payment, charge, or computation shall be final as to both parties
unless objected to in writing within twelve (12) months after payment has been
made.
6.5 If either party pays any amount shown due and owing upon the invoice
of the other party, and such amount is subsequently determined by agreement,
arbitration or judgment of court not to have been due and owing when paid, the
payee will refund such amount to the paying party together with interest from
the date of payment to the date of refund at the interest rate set forth in
Section 6.3 hereof.
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ARTICLE 7: TAXES
7.1 Seller shall pay, or cause to be paid, all taxes, assessments, fees
or other charges now and hereafter lawfully levied and imposed by federal,
state, or local authorities upon Seller with respect to the gas prior to the
Point(s) of Delivery. In the event Buyer is required to remit such taxes,
assessments, fees or charges, Seller shall reimburse Buyer for such amount.
Seller shall furnish Buyer with a copy of the exemption certificate in
situations in which exemption from any such imposition is claimed by Seller.
7.2 Buyer shall pay, or cause to be paid, all taxes, assessments, fees
or other charges (including, but not limited to, sales and value added taxes)
now and hereafter lawfully levied and imposed by federal, state, or local
authorities upon Buyer with respect to the gas at and subsequent to the Point(s)
of Delivery. In the event Seller is required to remit such taxes, assessments,
fees or charges, Buyer shall reimburse Seller for such amount. Buyer shall
furnish Seller with a copy of the exemption certificate in situations in which
exemption from any such imposition is claimed by Buyer.
ARTICLE 8: POINT(S) OF DELIVERY
The "Point(s) of Delivery" shall be the point(s) on Transporter(s)'
pipeline system(s) where gas is delivered by Seller to Transporter(s) for
Buyer's account, as specified in Exhibit C attached hereto and made a part
hereof. As between the parties hereto, title, risk of loss, and liabilities
associated with delivered gas shall pass to and vest in Buyer at the Point(s) of
Delivery. Changes in the Point(s) of Delivery shall require the mutual consent
of the parties.
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ARTICLE 9: PRESSURE
Seller shall deliver gas at the Point(s) of Delivery at a pressure
sufficient to effect delivery into the receiving Transporter(s)' facilities.
ARTICLE 10: MEASUREMENT
All measurements of gas delivered and sold hereunder shall be in
accordance with the provisions of the receiving Transporter(s)' tariff at the
Point(s) of Delivery .
ARTICLE 11: QUALITY
The gas delivered and sold by Seller to Buyer at the Point(s) of
Delivery shall meet the quality specifications set forth in the receiving
Transporter(s)' tariff at the Point(s) of Delivery. Buyer shall have the right
to be represented and to participate in all tests of gas delivered hereunder
performed by Seller, and to inspect any equipment used in such tests to
determine the nature of the quality of gas delivered hereunder. In the event the
gas does not meet such quality specifications, Buyer may refuse delivery of the
gas. Seller's delivery of gas refused by Buyer for failure to meet quality
specifications shall not constitute delivery for the purposes of Articles 2, 5
and 6. Buyer's sole remedy for such failure of gas to meet quality
specifications shall be to refuse receipt of the gas and receive the remedy
specified in Article 5.
ARTICLE 12: TRANSPORTATION AND IMBALANCE CHARGES
12.1 Transporter(s)' rules, guidelines, operational procedures and
policies, as may be changed from time to time, may define and set forth the
manner in which gas delivered and sold under this Agreement is transported.
Seller and Buyer agree to provide to the other, in as prompt a manner as
reasonable, an information necessary to permit scheduling pursuant to such
requirements. Seller shall give Buyer the equivalent ranking given to any other
firm purchaser of Seller's gas in any priority
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queue when nominating or allocating volumes to Transporter(s) for delivery to
Buyer under this Agreement.
12.2 Each party agrees to make all reasonable efforts to cooperate with
the other in operating under this Agreement to avoid pipeline imbalance charges,
cash-out costs and penalties. Buyer shall bear any under or over delivery
charges, cash-out costs and penalties assessed by Transporter(s), PSE&G and
Elizabethtown which are caused by variances (including variances due to events
of force majeure declared by Buyer) in Buyer's receipts from the Nominated
Quantity and Seller shall bear any under or over delivery charges, cash-out
costs and penalties assessed by Transporter(s), PSE&G and Elizabethtown which
are caused by variances (including variances due to events of force majeure
declared by Seller) in Seller's deliveries from the Nominated Quantity.
12.3 Seller shall be responsible for transportation to the Point(s) of
Delivery and payment of all transportation charges relating thereto. Buyer shall
be responsible for transportation from the Point(s) of Delivery and payment of
an transportation charges relating thereto. The parties recognize that the gas
purchased hereunder may be transported by Transporter(s) whose transportation
rates and related charges such as fuel reimbursement and take-or-pay surcharges
are subject to refund. The party which pays the Transporter(s) for
transportation of gas hereunder shall be entitled to retain any refunds
associated therewith.
ARTICLE 13: TERM
This Agreement shall be effective from the date first set forth above
and, unless sooner terminated under the provisions of this Agreement, shall
continue for five (5) months from the commencement of deliveries of gas
hereunder. The commencement
19
of deliveries of gas hereunder shall be November 1, 1997, unless otherwise
agreed by the parties. The term of this Agreement may be extended by mutual
agreement of the Parties.
ARTICLE 14: FORCE MAJEURE
14.1 If, by reason of force majeure either party is rendered unable,
wholly or in part, to carry out its obligations under this Agreement, and such
party provides written notice and full particulars of such event of force
majeure as soon as practicable after the occurrence thereof, the obligations of
such affected party shall be suspended to the extent and for the period of such
event of force majeure, except for the payment of monies in respect of
obligations that have accrued hereunder prior to such event of force majeure.
The cause of suspension other than strikes or lockouts shall be remedied so far
as possible with reasonable dispatch. Settlement of strikes and lockouts shall
be wholly within the discretion of the party having the difficulty.
14.2 The term "force majeure" shall mean any act or event which wholly
or partially prevents or delays the performance of obligations arising under
this Agreement if such act or event is not reasonably within the control of and
not caused by the fault or negligence of the party claiming force majeure and
which by the exercise of due diligence such party is unable to prevent or
overcome, including, without limitation by the following enumeration: acts of
God, the public enemy or the elements; fire, accidents, breakdowns, shutdowns
for purposes of necessary repairs, maintenance, relocation or construction of
facilities; breakage, freezing or accidents to wells, machinery or lines of
pipe; the necessity of making repairs or alterations to machinery or lines of
pipe; inability to obtain materials, supplies, permits, or labor to perform or
comply with any obligation or condition of this Agreement; any curtailment of
firm gas transportation service to, of electricity or steam purchases from, or
of Resale Service
20
by PSE&G and Elizabethtown to, the Facility; strikes and any other industrial,
civil or public disturbances; any laws, orders, rules, regulations, acts,
restraints of any government or governmental body or authority, civil or
military which have the effect of prohibiting performance of a party's
obligations. The term "force majeure" shall also expressly include the
imposition upon Buyer of any gross receipts, franchise or other gas consumption
tax which Buyer is not obligated to pay on the date of execution of this
Agreement, which tax Buyer determines has a material economic impact on its
ability to continue to purchase gas at the prices or in the quantities set forth
herein.
14.3 Except as provided in Section 14.2, neither party may rely upon
changes in market conditions, curtailment of interruptible transportation, or
denial by a regulatory authority of the pass through of the cost of gas
purchased under this Agreement as events of force majeure" In the event of force
majeure" that causes Seller to curtail its deliveries hereunder, Seller shall
treat Buyer on a pro rata basis with Seller's other firm customers and shall
give Buyer priority of service over all interruptible customers.
14.4 In the event Buyer fails to take or Seller fails to make available,
due to a declared event of force majeure" at least fifty percent (50%) of the
aggregate DCQ for a period of sixty (60) consecutive days, then the non-
declaring party may terminate this Agreement upon written notice, provided that
such notice is given prior to the date the force majeure" is remedied.
ARTICLE 15: NOTICE
Any notice, request, demand, statement, or bill provided for in this
Agreement shall be in writing and delivered by hand, mail, or telecopy. All such
written
21
communications shall be effective upon receipt by the other party at the address
of the parties hereto as follows:
Buyer:
Notices & Statements
Cogen Technologies Linden Venture, L.P.
Cogen Technologies, Inc.
Suite 5000, 50th Floor
1600 Smith Street
Houston, TX 77002
Attention: Vice President - Fuel Supply
Telephone No.: (713) 951-7768
Telecopy No.: (713) 951-7803
Seller: Notices and Nominations:
Engage Energy US, L.P.
460 McLaws Circle, Suite 200
Williamsburg, VA 23185
Attention: Mr. Martin Minnaugh
Telephone No.: (757) 253-0336
Telecopy No.: (757) 253-0753
Payments:
By wire transfer to:
Citibank, N.A., New York, New York
ABA # 0210-008-9
Account No. 4071-9415
Either of the parties may designate a further or different address by giving
written notice to the other party.
22
ARTICLE 16: LAWS, ORDERS & REGULATIONS
This Agreement, and all terms and provisions contained herein, and the
respective obligations of the parties are subject to valid laws, orders, rules,
and regulations of duly constituted authorities having jurisdiction over Buyer,
Seller, Transporter(s), PSE&G or Elizabethtown. In the event that any regulatory
or government body asserting jurisdiction over Transporter(s), PSE&G,
Elizabethtown or either party prohibits any of the transactions described in
this Agreement or any transportation or delivery agreement between
Transporter(s), PSE&G, Elizabethtown and/or Buyer covering the transportation
and delivery of the gas sold hereunder, or otherwise conditions such
transactions in a form that is unacceptable in the reasonable judgment of the
party affected thereby, then either party hereto so affected or prohibited may,
by giving one (1) month prior written notice to the other party, terminate this
Agreement and each party shall be held harmless as a result of such termination
except for obligations which were incurred prior to termination; provided,
however, such termination shall be effective immediately where required by law,
rule or regulation.
ARTICLE 17: APPLICABLE LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS.
ARTICLE 18: WAIVER
No waiver by either party of any one or more defaults in the performance
of any provision of this Agreement shall operate or be construed as a waiver of
any future default, whether of a like or a different character.
23
ARTICLE 19: TITLE
Seller warrants title to, or good right to sell, all gas delivered
hereunder by Seller, and that such gas is free from liens and adverse claims of
every kind. Seller will pay, or cause to be paid, all royalties and other sums
imposed on the production, gathering, or transportation of the gas prior to its
delivery by Seller to Buyer. Seller will indemnify and save Buyer harmless
against all loss, damage, and expense of every character on account of adverse
claims to the gas delivered by-it or of royalties, payments or other charges
thereon applicable before delivery to Buyer. If any adverse claim of any
character is asserted with respect to Seller's right to deliver gas hereunder,
or with respect to Seller's right to receive payment for such gas, or if
Seller's title is questioned or involved in any action, then Buyer shall
immediately notify Seller of such adverse claim and then may withhold that
portion of sums due hereunder reasonably related to such claim until such claim
is finally determined or title is clear, or until such time as Seller furnishes
a corporate undertaking conditioned to save Buyer harmless from such claim.
ARTICLE 20: ASSIGNMENT
Either party may, without relieving itself of its obligations under this
Agreement, assign any of its rights hereunder to an entity with which it is
affiliated, but otherwise no assignment of this Agreement or any of the rights
or obligations hereunder shall be made unless there first shall have been
obtained the consent thereto in writing of the other party, which consent shall
not be unreasonably withheld. Any successor-in-interest of Buyer or Seller shall
be entitled to the rights and shall be subject to the obligations of its
predecessor-in-interest under this Agreement. It is agreed, however, that the
restrictions on assignment contained in this
24
paragraph shall not in any way prevent either party to this Agreement from
pledging, mortgaging or assigning its rights hereunder as security for its
indebtedness. In connection with any such pledge, mortgage or assignment by
Buyer, Seller will execute an appropriate consent to any such pledge, mortgage
or assignment as reasonably requested by Buyer's lender. Any such consent will
acknowledge, in effect, that this Agreement has been duly authorized and is
valid and enforceable against Seller and that this Agreement is in full force
and effect; that Seller will not agree to any amendment to this Agreement
without the lender's approval in writing, which approval shall not be
unreasonably withheld by the lender that Seller win make an payments due to
Buyer hereunder in accordance with the instructions of the lender; that Seller
will not terminate this Agreement by reason of Buyer's default or by reason of
force majeure, without giving the lender notice of default and notice of
termination and the same opportunity to cure provided to Buyer under this
Agreement (plus any longer period as may be necessary, not to exceed one (1)
month, if the lender in good faith is endeavoring to obtain possession of the
Facility and pays Seller in accordance with the terms of this Agreement during
such period); that Seller will deliver to the lender a copy of each notice of
default and notice of termination at the same time that such notice is delivered
to Buyer; and that in the event the lender exercises its rights under its loan
documentation or partnership documentation with Buyer, Seller will accept
performance by the lender or any successor or assign thereof, provided that the
lender or any such successor or assign pays all sums then due to Seller
hereunder, meets Seller's credit requirements and is also otherwise in
compliance with this Agreement.
25
ARTICLE 21: ARBITRATION
21.1 Should an issue be submitted to binding arbitration pursuant to the
provisions of this Agreement, the parties shall each appoint one (1) arbitrator
and the two (2) arbitrators so appointed will select a third arbitrator, all of
such arbitrators to be qualified by education, knowledge, and experience to
resolve the dispute or controversy. If either party fails to appoint an
arbitrator within ten (10) days after a request for such appointment is made by
the other party in writing, or if the two (2) appointed fail, within ten (10)
days after the appointment of the second, to agree on a third arbitrator, the
arbitrator or arbitrators necessary to complete a board of three (3) arbitrators
will be appointed upon application by either party therefor by the American
Arbitration Association.
21.2 The jurisdiction of the arbitrators win be limited to the single
issue or issues referred to arbitration and the arbitration shall be conducted
pursuant to the guidelines set forth by the American Arbitration Association;
provided, however, that should there be any conflict between such guidelines and
the procedures set forth in this Agreement, the terms of this Agreement shall
control.
21.3 Within fifteen (15) days following selection of the third
arbitrator, each party shall furnish the arbitrators in writing its position and
supporting arguments regarding the issue or issues being arbitrated. The
arbitrators may, if they deem necessary, convene a hearing regarding the issue
or issues being arbitrated. All hearings shall be held at a location to be
agreed upon among the arbitrators in Houston, Harris County, Texas. Within
thirty (30) days following the later of the appointment of the third arbitrator
or of the hearing, if one is held, the arbitrators shall notify the parties in
writing as to which of the two (2) positions submitted with
26
respect to the issue or issues in question is most consistent with the intent of
this Agreement. Such decision shall be binding on the parties hereto until and
unless changed in accordance with the provisions of this Agreement.
21.4 Enforcement of the award maybe entered in any court having
jurisdiction over the parties.
21.5 Each party will pay the expense of the arbitrator selected by or
for it, and its counsel, witnesses and employees. All other costs of arbitration
will be equally divided between the parties.
ARTICLE 22: DEFAULT
22.1 In the event either party fails to perform any of the material
covenants or obligations imposed upon it under and by virtue of this Agreement,
the party not in default hereto, having first given thirty (30) days written
notice to the party in default stating specifically the nature of the default
and declaring it to be the intention of the party giving notice to cancel this
Agreement (the "Cancellation Notice"), may, at its option, cancel this Agreement
in accordance with this Article 22. If within said period of thirty (30) days
the party in default remedies or removes said default, including payment of sums
due with interest at the rate set forth in Section 6.3 hereof, or provides
adequate security to fully indemnify the party not in default for any and all
direct damages of such breach, including payment of sums due with interest at
the rate set forth in Section 6.3 hereof, then such Cancellation Notice shall be
withdrawn and this Agreement shall continue in full force and effect; provided,
however, that if the default is the failure to pay sums due hereunder, then the
party not in default shall have the right to suspend gas deliveries or takes, as
the case may be, after service of the Cancellation Notice.
27
22.2 If the party in default does not so remedy or remove the default or
does not provide adequate security to fully indemnify the party not in default
for any and all direct damages of such breach, and fails to represent that
further defaults shall not occur and that steps have been taken to avoid such a
recurrence, within said period of thirty (30) days, this Agreement, at the
option of the party not in default, shall be canceled upon written notice to the
defaulting party. Cancellation of this Agreement, pursuant to the provisions of
this Article 22, shall be without prejudice to any other rights and remedies the
party not in default has available to it. Further, such cancellation of this
Agreement or failure to cancel shall be without prejudice to the right of Seller
to collect any amounts then due Seller for gas delivered prior to the time of
cancellation.
ARTICLE 23: GENERAL
23.1 The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
23.2 Any modification, revision or amendment of this Agreement made
subsequent to its execution shall be valid and-effective only if and when made
in writing and duly executed by the parties hereto.
23.3 This Agreement and any Exhibit hereto shall constitute a single
agreement, superseding all prior agreements or undertakings between the parties
on the subject matter hereof. This Agreement contains the entire agreement of
the parties and, except as stated herein, there are no promises, agreements,
warranties, obligations, assurances or conditions precedent or otherwise
affecting it.
23.4 By executing this Agreement, each of the individuals so executing
warrants that (1) the individual has all necessary corporate power and authority
to
28
enter into and execute this Agreement and (ii) this Agreement constitutes the
valid and binding obligation of the party on whose behalf it is executed,
enforceable in accordance with its terms, subject to applicable bankruptcy and
insolvency laws.
23.5 The parties shall execute such additional documents and shall cause
such additional action to be taken as may be reasonably required, or, in the
reasonable judgment of any party, as may be reasonably necessary or desirable,
to effect or evidence the provisions of this Agreement and the transactions
contemplated hereby.
23.6 The parties acknowledge that each provision to this Agreement
constitutes their joint work product.
ARTICLE 24: CONFIDENTIALITY
24.1 The terms of this Agreement and information disclosed pursuant to
this Agreement, including but not limited to the price paid for gas, and Buyer's
financial statements shall be kept confidential by Seller and Buyer, (a) except
to the extent any information must be disclosed to (i) Transporter(s), PSE&G and
Elizabethtown for the purpose of effectuating transportation and resale of the
gas sold and purchased under this Agreement, (ii) Con' Ed for the purpose of
complying with Article 4.6 of the Power Purchase Agreement and (iii) Buyer's
lender and (b) except as required by law, regulation or request of governmental
authority.
29
IN WITNESS WHEREOF, by execution in duplicate originals, the parties
hereto have caused this Agreement to be effective as of the day and year first
above written.
"BUYER" "SELLER"
COGEN TECHNOLOGIES ENGAGE ENERGY US, L.P.
LINDEN VENTURE, L.P.
By: Cogen Technologies Linden, Ltd. By: /s/ J. R. Milam
in the State of New Jersey d/b/a ----------------------------
Cogen Technologies Linden, Limited Name: J.R. Milam
Partnership), a Texas limited Title: Senior Vice President
partnership, its general partner Date: August 18, 1997
By: Cogen Technologies, Inc., a
Texas corporation, its general partner
By: /s/ W. Colin Harper
-----------------------------------
W. Colin Harper
Vice President - Fuel Supply
Date: August 1, 1997
30
EXHIBIT A
Attached to and made a part of that Firm Gas Purchase and Sale Agreement
effective July 1, 1997, by and between COGEN TECHNOLOGIES LINDEN VENTURE, L.P.,
as Buyer, and ENGAGE ENERGY US, L.P., as Seller.
NOMINATION NOTICE
Date:
------------
Engage Energy US, L.P.
460 McLaws Circle
Williamsburg, VA 23185
Attention:
-------------
Reference: Firm Gas Purchase and Sale Agreement
Dated: July 1, 1997
Buyer: Cogen Technologies Linden Venture, L.P.
Seller: Engage Energy US, L.P.
Point of Delivery:
---------------------------------------
Contract No.:
- ----- ---------------------------------------
Gentlemen:
Pursuant to Section 3.1 of the subject Agreement, Cogen Technologies Linden
Venture, L.P., hereby nominates the following:
Month of Delivery:
----------------------
Nominated Quantity (MMBtu/D):
-----------
Very truly yours,
- -------------------------------
W. Cohn Harper
Vice President - Fuel Supply
31
EXHIBIT B
Attached to and made a part of that Firm Gas Purchase and Sale Agreement
effective July 1, 1997, by and between COGEN TECHNOLOGIES LINDEN VENTURE, L.P.,
as Buyer, and ENGAGE ENERGY US, L.P., as Seller.
MARKET PRICE INDEX (TETCO/EAST LOUISIANA)
- -----------------------------------------------------------------------------------------------------------------
Publication* Table Row Column
- -----------------------------------------------------------------------------------------------------------------
Inside FERC's Gas Prices of Spot Gas Texas Eastern East Louisiana
Market Report (first Delivered to (current month
report in applicable Pipelines (per Index)
month) MMBtu dry)
- -----------------------------------------------------------------------------------------------------------------
Natural Gas Spot Gas Prices; Texas Eastern Texas Eastern; East
Intelligence Gas Delivered to Louisiana (current
Price Index (first Pipelines (per month's) Contract
report in applicable MMBtuy dry) Index
month)
- -----------------------------------------------------------------------------------------------------------------
BACKUP PRICE INDEX (TETCO/EAST LOUISIANA)
- -----------------------------------------------------------------------------------------------------------------
Publication* Table Row Column
- -----------------------------------------------------------------------------------------------------------------
Natural Gas Week Spot Prices on Texas Eastern East Louisiana
(first report in Interstate Pipeline (current month) Bid
applicable month) Systems; Delivered to Week
Pipeline ($/MMBtu)
- ------------------------------------------------------------------------------------------------------------------
32
- ----------------------------------------------------------------------------------------------------------
MARKET PRICE INDEX (TEXAS GAS/ADA)
- ----------------------------------------------------------------------------------------------------------
Publication* Table Row Column
- ----------------------------------------------------------------------------------------------------------
Natural Gas Spot Gas Prices; Region - Contract Index
Intelligence - Delivered to North Louisiana; (for current month)
Weekly Gas Price Pipelines Texas Gas; Zone 1
Index (first report (30 Day Supply
in applicable Transactions)
month)
- ----------------------------------------------------------------------------------------------------------
Inside FERC's Gas Prices of Spot Gas Texas Gas Index (for current
Market Report Delivered to Transmission Corp. month)
(first report in Pipelines (per Zone 1
applicable month) MMBtu dry)
- -----------------------------------------------------------------------------------------------------------
BACKUP PRICE INDEX (TEXAS GAS/ADA)
- -----------------------------------------------------------------------------------------------------------
Publication* Table Row Column
- -----------------------------------------------------------------------------------------------------------
Natural Gas Week Spot Prices on Texas Gas Bid Week (for
(first report in Interstate Pipeline Transmission current month)
applicable month) Systems; Delivered Corporation
to Pipeline Zone 1: North
($/MMBtu) Louisiana
- -----------------------------------------------------------------------------------------------------------
33
EXHIBIT C
Attached to and made a part of that Firm Gas Purchase and Sale Agreement
effective July 1, 1997, by and between COGEN TECHNOLOGIES LINDEN VENTURE, L.P.,
as Buyer, and ENGAGE ENERGY US, L.P., as Seller.
POINT(S) OF DELIVERY
The Point(s) of Delivery shall be:
A. The existing point(s) of receipt on the tetco Venice or Main Pass
Systems in East Louisiana.
B. The existing point of receipt on Texas Gas at Ada, Webster Parish,
Louisiana.
34
STATE OF TEXAS )
) SS.
COUNTY OF HARRIS )
On this 1st day of August 1997, before me, Joy R. Toups, the undersigned
officer, personally appeared, W. Colin Harper, known to me to be the person
whose name is subscribed to the within instrument and acknowledged that Cogen
Technologies, Inc., as General Partner of Cogen Technologies Linden, Ltd. (D/B/A
Cogen Technologies Linden, Limited partnership), in turn acting as General
Partner of Cogen Technologies Linden Venture, L.P. (D/B/A Cogen Technologies
Linden Venture, Limited Partnership) executed the same for the purpose therein
contained.
In witness whereof I hereunto set my hand and official seal.
JOY R. TOUPS
(SEAL) MY COMMISSION EXPIRES /s/ Joy R. Toups
August 13, 2001 -------------------------------
Notary Public in and for the State of Texas
STATE OF TEXAS )
) SS.
COUNTY OF HARRIS )
On this 18th of August 1997, before me, Marchelle D. Cleveland, the
undersigned officer, personally appeared, J.R. Milam, known to me to
be the person whose name is subscribed to the within instrument and acknowledged
that ENGAGE ENERGY US, L.P. executed the same for the purposes therein
contained.
In witness whereof I hereunto set hand and official seal.
/s/ Marchelle D. Cleveland
----------------------------------------
Notary Public in and for the State of Texas
MARCHELLE D. CLEVELAND
(SEAL) Notary Public, State of Texas
My Commission Expires
MAY 05, 2001
35
GUARANTY AGREEMENT
THIS AGREEMENT, shall be effective July 1, 1997, by and between THE
COASTAL CORPORATION (hereinafter referred to as "Guarantor") and COGEN
TECHNOLOGIES LINDEN VENTURE, L.P. (hereinafter referred to as "Cogen").
WITNESSETH:
WHEREAS, Cogen and ENGAGE ENERGY US, L.P. (hereinafter referred to as
"ENGAGE"), an affiliate of Guarantor, contemporaneously herewith are entering
into a Firm Gas Purchase and Sale Agreement effective July 1, 1997, as amended
from time to time (the "Agreement"), pursuant to which Cogen will purchase from
ENGAGE natural gas for a cogeneration facility (the "Facility") located in
Linden, New Jersey, in the quantities and upon the terms and conditions that are
set forth in the Agreement; and
WHEREAS, Cogen desires assurances that Guarantor will be responsible for
obligations of ENGAGE set forth in the Agreement in the event ENGAGE does not
satisfy such obligations; and
WHEREAS, Guarantor desires that the Agreement be executed and,
therefore, desires to give such assurances.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and other valuable consideration, the adequacy and receipt of
which are hereby acknowledged, Guarantor and Cogen hereby agree as follows:
1. Guarantor hereby irrevocably and unconditionally guarantees to Cogen
the full, prompt and complete performance of the financial obligations of ENGAGE
set forth in, and subject to the terms of, the Agreement up to a maximum amount
in the
aggregate of $10 million. If ENGAGE fails to perform any of its financial
obligations then due under the Agreement, Guarantor shall cause ENGAGE or
another of its subsidiaries or affiliates to perform said obligation in
accordance with the terms of the Agreement. Without limiting the generality of
the foregoing, the Guarantor agrees that the occurrence of any one or more of
the following shall not affect the liability of the Guarantor hereunder: (a) at
any time or from time to time, without notice to the Guarantor, the time for any
performance of or compliance with any of the obligations of ENGAGE set forth in
the Agreement or such obligations shall be extended, or such performance or
compliance shall be waived, (b) any of the acts mentioned in any of the
provisions of the Agreement shall be done or omitted or (c) any right under the
Agreement shall be waived.
The Guarantor hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that Cogen or
any lender (as defined in the Agreement) exhaust any right, power or remedy or
proceed against ENGAGE under the Agreement.
2. This Guaranty Agreement shall be assignable to the lenders as defined
in the Agreement under the same terms and conditions set forth in the Agreement.
Any other assignment shall not be permitted, in whole or in part, except with
the consent of the other party, which consent shall not be unreasonably
withheld. This Guaranty Agreement shall be binding upon the parties hereto and
their permitted successors and assigns.
-2-
3. This Guaranty Agreement is for the sole and exclusive benefit of the
parties hereto and any permitted successors and assigns. Nothing expressed or
implied herein is intended to benefit any other person, firm or corporation not
a party hereto. None of such other persons shall have any legal or equitable
right, remedy or claim under this Guaranty Agreement or under any provisions
hereof. Notwithstanding anything contained in this paragraph 3, if any claim or
demand is made against Guarantor pursuant to this Guaranty Agreement, Guarantor
shall be subject to all rights, set-offs, counterclaims and defenses to which
ENGAGE may be entitled, except for defenses arising out of bankruptcy,
insolvency, liquidation or dissolution of ENGAGE.
4. This Guaranty Agreement shall remain in full force and effect from
November 1, 1997 and until March 31, 1998. Such termination shall not affect
Guarantor's liability pursuant to this Guaranty with respect to any financial
obligation of Engage under the Agreement which arise prior to such date of
termination.
5. In the event of default by ENGAGE in performance of obligations under
the Agreement, recovery may be had against the Guarantor for failure to perform,
together with reasonable attorneys' fees or expenses paid, suffered or incurred
by Cogen in enforcing this Guaranty Agreement without requiring the prosecution
of the claim against ENGAGE.
6. No delays on the part of Cogen in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by Cogen of
any right or remedy shall preclude other or further exercise thereof or the
exercise of any
-3-
right or remedy. No actions of Cogen permitted hereunder shall in any way impair
or affect this Guaranty Agreement.
7. WHEREVER POSSIBLE, EACH PROVISION OF THIS GUARANTY AGREEMENT SHALL BE
INTERPRETED IN SUCH MANNER TO BE EFFECTIVE AND VALID UNDER TEXAS LAW; BUT IF ANY
PROVISIONS OF THIS GUARANTY AGREEMENT SHALL BE PROHIBITED OR INVALID UNDER SUCH
LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING
PROVISIONS OF THIS GUARANTY AGREEMENT.
8. The Guarantor represents and warrants as follows:
(a) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation.
(b) The execution, delivery and performance by the Guarantor of
this Guaranty Agreement are within the Guarantor's corporate powers,
have been duly authorized by all necessary corporate action, and do not
contravene (I) the Guarantor's certificate of incorporation or by-laws
or (ii) any law, rule, regulation or order, or any restriction contained
in any material agreement or instrument, binding on or affecting the
Guarantor.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the
Guarantor of this Guaranty
-4-
Agreement, except such as have been duly obtained or made and are in full
force and effect.
(d) This Guaranty Agreement is a legal, valid and binding
obligation the Guarantor enforceable against the Guarantor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceeding in equity or at law).
(e) Subsidiaries of the Guarantor own, directly or indirectly,
on of the ownership interest of ENGAGE.
IN WITNESS WHEREOF, this instrument is executed as of the day and year
above written.
THE COASTAL CORPORATION COGEN TECHNOLOGIES LINDEN
(GUARANTOR) VENTURE, L.P.
By: Cogen Technologies Linden, Ltd
Its General Partner
By: /s/ J. B. Levos
------------------------
Name: J. B. Levos By: Cogen Technologies, Inc.
Title: Vice President and Controller Its General Partner
[SEAL]
By: /s/ W. Colin Harper
---------------------------------
Name: W. Colin Harper
Title: Vice President - Fuel Supply
-5-