EXHIBIT 10.23
FIRM GAS PURCHASE AND SALE AGREEMENT
between
COGEN TECHNOLOGIES LINDEN VENTURE, L.P.
and
COLUMBIA ENERGY SERVICES CORPORATION
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 16
ARTICLE 8: POINT(S) OF DELIVERY 17
ARTICLE 9: PRESSURE 17
ARTICLE 10: MEASUREMENT 18
ARTICLE 11: QUALITY 18
ARTICLE 12: TRANSPORTATION AND IMBALANCE CHANGES 18
ARTICLE 13: TERM 19
ARTICLE 14: FORCE MAJEURE 20
ARTICLE 15: NOTICE 22
ARTICLE 16: LAWS, ORDERS & REGULATIONS 23
ARTICLE 17: APPLICABLE LAW 24
ARTICLE 18: WAIVER 24
ARTICLE 19: TITLE 24
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ARTICLE 20: ASSIGNMENT 25
ARTICLE 21: ARBITRATION 26
ARTICLE 22: DEFAULT 27
ARTICLE 23: GENERAL 29
ARTICLE 24: CONFIDENTIALITY 30
EXHIBIT A 32
EXHIBIT B 33
EXHIBIT C 35
ii
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 COLUMBIA
ENERGY SERVICES CORPORATION, a Kentucky corporation, 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.
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 forth in
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
two hundred seventy (15,270) MMBtu per day, with a maximum of ten thousand
(10,000) MMBtu per day at Trunkline South Louisiana Point of Delivery and five
thousand two hundred seventy (5,270) MMBtu at Station No. 30 (Zone 1) Point 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 volume 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 "Reservation Charge" shall have the meaning set forth in
Section 5.2.
1.29 The term "Reservation Rate" shall mean one and two-tenths cents
($0.012) per MMBtu for Station 30 deliveries and one and one-half cents ($0.015)
for Trunkline deliveries.
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1.30 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.
1.31 The term "TGPL" shall mean Transcontinental Gas Pipe Line Corporation.
1.32 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.
1.33 The term "Trunkline" shall mean Trunkline Gas Company.
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 during any month of the Delivery Period Buyer purchases and receives
less than the Minimum Quantity for each Point of Delivery 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. 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 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.
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.
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
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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 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
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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
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
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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
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
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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
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
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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 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
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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 costs incurred for the purchase and/or
production and transportation of alternate supplies of fuel equal to the
undelivered volume, 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 gas 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 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 in consideration
for maintaining the capability to deliver gas up to the DCQ, assuming market and
supply
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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,
multiplied by the number of days in such month. To illustrate how the
Reservation Charge would be calculated assume that the DCQ for TGPL Station 30
is 5,270 MMBtus per Day, at the Reservation Rate hereunder, the Reservation
Charge during the month of November would be: $1,897 (5,270 x $0.012 x 30).
Additionally, assume that the DCQ for Trunkline is 10,000 MMBtus per Day at the
Reservation Rate hereunder, the Reservation Charge would be: $4,500 (10,000 x
$0.015 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 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 fails 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
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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-first (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 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.
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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.
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
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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.
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.
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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, all information necessary to permit scheduling pursuant to such
requirements. Seller shall give Buyer the highest ranking given to any other
purchaser of Seller's gas in any priority queue when nominating or allocating
volumes to Transporter(s) for delivery to Buyer under this Agreement.
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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
all 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 of deliveries of gas hereunder shall be November 1, 1997, unless
otherwise agreed by
19
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
20
of firm gas transportation service to, of electricity or steam purchases from,
or of resale service 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.
21
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
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.
c/o 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:
Columbia Energy Services Corporation
1330 Post Oak Blvd., 20th Floor
Houston, TX 77056
Notices & Statements
---------------------------------------
Attention: Mr. Walter Kromholz
Telephone No.: (713) 297-5811
Telecopy No.: (713) 621-5392
Accounting Matters:
---------------------------------------
Attention: Mary Allen
Telephone No.: (713)693-2816
22
Nomination Notices:
-------------------
Attention: Mr. Steve E. Locke
Telephone No.: (713) 297-5806
Telecopy No.: (713) 621-5392
Either of the parties may designate a further or different address by giving
written notice to the other party.
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's 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.
23
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.
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.
24
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 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
will make all 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
25
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 and is also otherwise in compliance with this Agreement.
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 (110)
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 will 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
26
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 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 may be 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
27
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.
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.
28
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 (i) the individual has all necessary corporate power and authority
to 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 required, or, in the reasonable
judgment of any party, as may be 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.
29
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, 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.
30
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"
COGEN TECHNOLOGIES LINDEN VENTURE, L.P.
By: Cogen Technologies Linden, Ltd. (in the State of New Jersey d/b/a Cogen
Technologies Linden, Limited Partnership), a Texas limited partnership, its
general partner
By: Cogen Technologies, Inc., a
Texas corporation, its general partner
By: W. Colin Harper
------------------------------
W. Colin Harper
Vice President - Fuel Supply
Date: August 1, 1997
"SELLER"
COLUMBIA ENERGY SERVICES CORPORATION
By: D. K. HARGREAVES
------------------------------
Name: D. K. Hargreaves
Title: Vice President
Date: August 17, 1997
31
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 COLUMBIA ENERGY SERVICES CORPORATION, as Seller.
NOMINATION NOTICE
-----------------
Date:
Columbia Energy Services Corporation
P.O. Box 2967
Pennzoil Place
Houston, TX 77252-2967
Attention:
Reference: Firm Gas Purchase and Sale Agreement
Dated: July 1, 1997
Buyer: Cogen Technologies Linden Venture, L.P.
Seller: Columbia Energy Services Corporation
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. Colin Harper
Vice President - Fuel Supply
32
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 COLUMBIA ENERGY SERVICES CORPORATION, as Seller.
MARKET PRICE INDEX (TGPL STA #30)
---------------------------------
Publication* Table Row Column
- ------------ ----- --- ------
Natural Gas Week Spot Prices on Transcontinental Gas Bid Week (current
(first report in Interstate Pipeline Pipe Line Corp. month)
applicable month) Systems; Delivered to Station #30 (Wharton
Pipeline ($/MMBtu) County, TX/Zone 1)
Inside FERC's Gas Prices of Spot Gas Transcontinental Gas Index
Market Report (first Delivered to Pipelines Pipe Line Corp.
report in applicable (per MMBtu dry) Zone 1 (Wharton Co.
month) TX - Zone 1)
BACKUP PRICE INDEX (TGPL STA #30)
Publication* Table Row Column
- ------------ ----- --- ------
Natural Gas Spot Gas Prices; Pooling Points; Transco Contract Index
Intelligence - Weekly Delivered to Pipelines Station 30 (current month)
Gas Price Index (first (per MMBtu dry)
report in applicable
month)
33
MARKET PRICE INDEX (TRUNKLINE/SOUTH LOUISIANA)
Publication* Table Row Column
- ------------ ----- --- ------
Natural Gas Week Spot Prices on Trunkline Gas Company Bid Week
(first report in Interstate Pipeline East Louisiana (current
applicable month) Systems; Delivered to month)
Pipeline ($/MMBtu)
Inside FERC's Gas Prices of Spot Gas Trunkline Gas Company Index
Market Report (first Delivered to Pipelines Louisiana (current month)
report in applicable month) (per MMBtu dry)
BACKUP PRICE INDEX (TRUNKLINE/SOUTH LOUISIANA)
Publication* Table Row Column
- ------------ ----- --- ------
Natural Gas Spot Gas Prices; Region - East Contract Index
Intelligence Gas; Delivered to Pipelines Louisiana; Trunkline (current month)
Weekly Price Index (30 Day Supply
(first report in applicable Transactions)
month)
34
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 COLUMBIA ENERGY SERVICES CORPORATION, as Seller.
POINT(S) OF DELIVERY
--------------------
The Point(s) of Delivery shall be:
A. TGPL Compressor Station #30 in Wharton County, Texas
B. The Trunkline point of delivery in South Louisiana
35
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.
/s/ JOY R. TOUPS
-----------------------------------
(SEAL) Notary Public in and for the
State of Texas
STATE OF TEXAS )
)SS.
COUNTY OF HARRIS )
On this 12th day of August, 1997, before me, Trisha S. Pollard, the
undersigned officer, personally appeared, Daniel K. Hargreaves, known to me to
be the person whose name is subscribed to the within and acknowledged that
Columbia Energy Services Corporation executed the same for the purposes therein
contained.
In witness whereof I hereunto set my hand and official seal.
TRISHA S. POLLARD
-----------------------------------
Notary Public in and for the
State of Texas
(SEAL)
36
GUARANTY AGREEMENT
------------------
THIS AGREEMENT, shall be effective July 1, 1997, by and between COLUMBIA
GAS SYSTEMS CORPORATION (hereinafter referred to as "Guarantor") and COGEN
TECHNOLOGIES LINDEN VENTURE, L.P. d/b/a/ COGEN TECHNOLOGIES LINDEN VENTURE,
LIMITED PARTNERSHIP (hereinafter referred to as "Cogen").
WITNESSETH:
WHEREAS, Cogen and Columbia Energy Services Corporation (hereinafter
referred to as "CESC"), a wholly-owned subsidiary 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 CESC 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 CESC set forth in the Agreement in the event CESC 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 promises 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 guaranties to Cogen
the full, prompt and complete performance of the obligations of CESC set
forth in, and
subject to the terms of, the Agreement. If CESC fails to perform any of its
obligations then due under the Agreement, Guarantor shell cause CESC 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 effect 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 obligation's of CESC 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 wolves 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 at remedy or
proceed against CESC 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.
3. This Guaranty Agreement is for the sole and exclusive benefit of the
parties hereto and any permitted successors and assigns. Nothing expressed or
2
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.
4. Notwithstanding anything contained herein, 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 CESC may be
entitled, except for defenses arising out of bankruptcy, insolvency, liquidation
or dissolution of CESQ.
5. This Guaranty Agreement shall remain in full force and effect until the
termination of all obligations under the Agreement.
6. Notwithstanding anything in this Guaranty Agreement to the contrary,
Guarantor's liability under this Guaranty Agreement and Cogen's right of
recovery under the some shall be limited to an aggregate amount of $7.7 million.
7. 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 right or remedy, No actions of Cogen permitted hereunder shall
in any way impair or affect this Guaranty Agreement.
8. 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
3
INVALIDITY WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING
PROVISIONS OF THIS GUARANTY AGREEMENT.
9. The Guarantor represents and warrants as follows;
(a) Tile 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, b1nding an 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
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 of
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 of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceeding in equity or at law),
4
(e) As of the effective date hereof, the Guarantor owns, directly or
indirectly, all the issued and outstanding capital stock of CESC.
IN WITNESS WHEREOF, this instrument is executed as of the day and year first
above written.
COLUMBIA GAS SYSTEMS
CORPORATION
(GUARANTOR)
By: /s/ ???????????
------------------------------
Its: August 20, 1997
Chief Financial Officer
The Columbia Gas System, Inc.
COGEN TECHNOLOGIES LINDEN
VENTURE, L.P.
By: Cogen Technologies Linden, Ltd.
(in the State of New Jersey
Cogen Technologies Linden, Limited
Partnership), a Texas limited
partnership, its general partner
By: Cogen Technologies, Inc., a
Texas corporation, its general partner
By: /s/ W. COLIN HARPER
---------------------------------
Vice President - Fuel Supply
Date: August 19, 1997
5