EXHIBIT 10.6
BACKUP FUEL STORAGE AND SUPPLY AGREEMENT
BETWEEN
COGEN TECHNOLOGIES LINDEN VENTURE, L.P.
(d/b/a COGEN TECHNOLOGIES LINDEN VENTURE, LIMITED PARTNERSHIP)
AND
EXXON CORPORATION
OCTOBER 4, 1991
TABLE OF CONTENTS
-----------------
Article Heading Page
------- ------- ----
1 Definitions 3
2 Commitments 10
3 Butane Transfer Facilities 13
4 Butane Storage Service 15
5 Wintertime Fuel Supply 19
6 Summertime Fuel Supply 22
7 Testing Service 24
8 Accounting And Payment 25
9 Possession, Title And Warranty 28
10 Term 31
11 Measurement And Delivery Conditions 33
12 Actions Required To Satisfy Certain Conditions 37
13 Force Majeure 38
14 Limitation On Liability and Distribution of Risks 40
15 Insurance 42
16 Governmental Authorizations 44
17 Termination; Defaults; Right To Cure 45
18 Notice And Service 55
19 Entirety Of Contract; Other Agreements 57
20 Captions 57
21 Amendments 57
22 Consents 58
23 Nonwaiver 58
24 Severability 58
25 Renegotiation 59
26 Assignments 59
27 Counterparts 73
28 Choice Of Law 73
29 Authority 73
EXHIBIT "A" - Butane Delivery Facilities
EXHIBIT "B" - Exxon Butane Specifications
EXHIBIT "C" - BAYWAY REFINERY LPG Ship Requirements
EXHIBIT "D" - Assumption Agreement
EXHIBIT "E" - Consent to Assignment
EXHIBIT "F" - Recognition Agreement
BACKUP FUEL STORAGE AND SUPPLY AGREEMENT
THIS BACKUP FUEL STORAGE AND SUPPLY AGREEMENT is made and entered into
effective October 4, 1991, by and between EXXON CORPORATION, a New Jersey
corporation ("Exxon"), and COGEN TECHNOLOGIES LINDEN VENTURE, L.P., doing
business in New Jersey as Cogen Technologies Linden Venture, Limited Partnership
("Cogen"), a Delaware limited partnership.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Exxon, operating through its division Exxon Company, U.S.A.,
owns, operates and maintains its Bayway Refinery and, operating through Exxon
Chemical Company (a division of Exxon), owns, operates and maintains its Bayway
Chemical Plant (collectively the "Exxon Complex"), both of which are located in
Linden, New Jersey; and
WHEREAS, Exxon owns, operates and maintains under the Exxon Complex
below-ground butane storage caverns (the "Butane Storage Caverns") for the
storage of butane or other fuels, together with certain loading and unloading
facilities at the Exxon Complex; and
WHEREAS, Exxon intends to install, operate and maintain at the Exxon
Complex above-ground butane transfer facilities for the delivery of butane, as
described in Exhibit A attached hereto; and
WHEREAS, Exxon owns and has or will have available to it supplies of
butane for sale at the Exxon Complex; and
WHEREAS, Cogen Technologies, Inc., a Texas corporation and the general
partner of Cogen Technologies Linden, Ltd., the general partner of Cogen, has
entered into a Power Purchase Agreement dated April 14, 1989 ("Power Purchase
Agreement") with Consolidated Edison Company of New York, Inc. ("Con Ed"),
whereunder Cogen Technologies, Inc. proposes to sell to Con Ed electricity from
a cogeneration facility ("Cogeneration Facility") to be located in Linden, New
Jersey and which Power Purchase Agreement has been approved by the Public
Service Commission of the State of New York, became effective in September,
1989, and has been assigned to Cogen; and
WHEREAS, Cogen has entered into a "Ground Lease Agreement" whereunder
Cogen will lease from Exxon part of the land on which Exxon's Bayway Refinery is
located, upon which property Cogen intends to construct, own, operate and
maintain the Cogeneration Facility; and
WHEREAS, Cogen has also entered into a "Steam Sale Agreement"
whereunder Cogen will sell steam to Exxon from the Cogeneration Facility for use
at the Exxon Complex; and
WHEREAS, Cogen has entered into a "Gas Service Agreement" with Public
Service Electric and Gas Company ("PSE&G") and Elizabethtown Gas Company
("Elizabethtown") whereunder Cogen will purchase natural gas as the primary fuel
for the Cogeneration Facility; and
WHEREAS, Cogen desires to contract with Exxon for the purchase of
butane and/or other backup fuel supplies and for
-2-
the use of Exxon's butane storage and loading facilities, for the backup fuel
requirements of the Cogeneration Facility.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions and obligations hereof, and other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties (as
hereinafter defined), intending to be legally bound, covenant and agree as
follows:
ARTICLE 1
DEFINITIONS
The following terms and expressions used herein shall have the
following meanings for the purposes of this Agreement:
1.1 "Affiliate" means a corporation or other entity that directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with another corporation or other entity.
1.2 "Air Permit" means the permit issued to Cogen by the New Jersey
Department of Environmental Protection for the Cogeneration Facility.
1.3 "Annual Period" means any one of a succession of consecutive
twelve-month periods, the first of which shall begin on the Date of Initial
Commercial operation of the Cogeneration Facility.
-3-
1.4 "Backup Fuel Agreement" means this agreement, including all
exhibits and amendments hereto that may be made from time to time.
1.5 "Barrel" means 42 gallons of liquid.
1.6 "Base Term" of the Backup Fuel Agreement means the period beginning
with the Date of Initial Commercial operation, and continuing for a period of
twenty-five Annual Periods, unless sooner terminated.
1.7 "BPU" means the Board of Public Utilities of the State of New
Jersey.
1.8 "Butane" means a hydrocarbon product as described in Exhibit B
attached hereto.
1.9 "Butane Delivery Facilities" means the additional facilities to be
constructed by Exxon for the delivery of Butane from the Butane Storage
Facilities to the Cogeneration Facility, said facilities being more particularly
described in Exhibit A attached hereto and made a part hereof for all purposes.
1.10 "Butane Storage Facilities" means Exxon's Butane Storage Caverns
and associated existing facilities, which are to be used by Exxon in the
storage, receipt and delivery of Butane for Cogen hereunder.
1.11 "Butane Transfer Facilities" means the additional facilities to be
constructed by Exxon for the delivery of Butane into the Butane Storage
Facilities, consisting of a
-4-
Butane unloading arm and associated equipment and piping located at the Exxon
Complex dock.
1.12 "Cogen Butane" means that volume of Butane delivered by Cogen to
Exxon for storage in Exxon's Butane Storage Facilities other than Exxon Butane.
1.13 "Cogen's Receiving Point" means the point as identified in Exhibit
A attached hereto at which Exxon delivers and Cogen receives Butane for the
purposes of this Agreement.
1.14 "Cogeneration Facility " means the cogeneration facility to be
constructed by Cogen on the land leased by Cogen from Exxon at the Exxon
Complex.
1.15 "Commercial Operation" means the production of electricity by
Cogen at the Cogeneration Facility upon the completion of such testing of the
Cogeneration Facility as Cogen determines is required by prudent electrical
practices, and the supply of steam at the points where Cogen's steam supply
system connects to Exxon's steam pipelines at Exxon's existing steam headers.
1.16 "Con Ed" means The Consolidated Edison Company of New York, Inc.
1.17 "CPI" means the Consumer Price Index for all Urban Consumers for
New York-Northern New Jersey, published by the Bureau of Labor Statistics of the
U.S. Department of Labor (all items figure - 1982-1984=100).
1.18 "Date of Initial Commercial operation" means the first day of the
month which immediately follows the date Cogen
-5-
designates in writing to Con Ed as the initial date of Commercial Operation of
its Cogeneration Facility.
1.19 "Pay" means a period of twenty-four (24) consecutive hours
commencing at midnight local time at Linden, New Jersey, on each calendar day
and finishing at midnight on the following calendar day.
1.20 "Elizabethtown" means Elizabethtown Gas Company.
1.21 "Evergreen Period" means that part of the term of this Backup Fuel
Agreement immediately following the Renewal Terms.
1.22 "Exxon Butane" means that volume of Butane in Exxon's Butane
Storage Facilities that is owned by Exxon or third-parties, other than Cogen, or
that is purchased by Cogen from Exxon, and shall include Butane purchased by
Exxon under Section 4.3 hereof.
1.23 "Exxon's Complex" means Exxon Company, U.S.A.'s Bayway Refinery
and Exxon Chemical America's Bayway Chemical Plant, both located at Linden, New
Jersey.
1.24 "Financier" initially means General Electric Power Funding
Corporation (as construction lender or as agent for itself and other
construction lenders), and may also mean any other entity subsequently extending
credit to Cogen for the construction, operation, maintenance, repair,
replacement, or removal of the Cogeneration Facility and other improvements, or
any entity subsequently providing funds for the refinancing or taking-out of
such loans, and the nominees or designees of any
-6-
such entities; provided that, at no time will Exxon be obligated to recognize
more than one such entity as the Financier to whom duties are owed, or rights
are granted, under this Backup Fuel Agreement. The parties anticipate that after
General Electric Power Funding Corporation is the Financier, a specific
designated Affiliate of General Electric Power Funding Corporation will become
the Financier and that such designated Affiliate will also become a limited
partner in Cogen. Exxon will recognize as the Financier for purposes of this
Backup Fuel Agreement (i) General Electric Power Funding Corporation, until such
time as General Electric Power Funding Corporation notifies Exxon in writing
that such designated Affiliated should be considered to be the Financier, and
(ii) thereafter, the designated Affiliate, until such time as such designated
Affiliate notifies Exxon in writing that Cogen has the right to designate
another entity as the Financier, and (iii) thereafter, such other entity as
Cogen may designate in writing from time to time. Exxon will not be required to
recognize as the Financier any partner of Cogen other than such designated
Affiliate of General Electric Power Funding Corporation.
1.25 "Force Majeure" means a cause beyond the reasonable control of the
affected Party, as more fully defined in Article 13.
1.26 "Gas Service Agreement" means the July 13, 1990, agreement between
Cogen and PSE&G and Elizabethtown, whereunder
-0-
Xxxxx will purchase natural gas as the primary fuel for the Cogeneration
Facility, including all exhibits and amendments thereto that may be made from
time to time.
1.27 "Governmental Authorizations" mean any and all licenses, permits,
certificates and other authorizations required by applicable federal, state, or
local law.
1.28 "Ground Lease Agreement" means the August 1, 1990, agreement
between Cogen and Exxon granting Cogen a leasehold estate in approximately 12.77
acres at the Exxon Complex, including all exhibits and amendments thereto that
may be made from time to time.
1.29 "Leased Premises" means the two parcels of land, totalling
approximately 12.77 acres, on the site of Exxon's Bayway Refinery that have been
leased to Cogen under the Ground Lease Agreement.
1.30 "Natural Gas Suppliers" means PSE&G and Elizabethtown.
1.31 "Party" or "Parties" means Cogen and/or Exxon, as the case may be,
and its or their permitted successors and assigns.
1.32 "Power Purchase Agreement" means that certain Power Purchase
Agreement Dated April 14, 1989, executed by and between Cogen Technologies, Inc.
and Con Ed (which Power Purchase Agreement has been assigned to Cogen) under
which electric energy generated at the Cogeneration Facility will be
-8-
sold by Cogen for purchase by Con Ed, including all exhibits and amendments
thereto that may be made from time to time.
1.33 "PPI" means the Producer Price Index for All Commodities,
published by the Bureau of Labor Statistics of the U.S. Department of Labor
(1982 = 100).
1.34 "PSE&G" means Public Service Electric and Gas Company.
1.35 "Renewal Term" means either of two five-year periods immediately
following the Base Term of the Backup Fuel Agreement.
1.36 "Shrinkage" means a 1.5 percent volumetric reduction of Butane
attributable to the injection operations of Exxon's Butane Storage Facilities.
1.37 "Steam Sale Agreement" means the August 1, 1990, agreement between
Cogen and Exxon for the sale of steam from the Cogeneration Facility, including
all exhibits and amendments thereto that may be made from time to time.
1.38 "Summer Season" means each period from April 1. through November 14
during the term of this Backup Fuel Agreement.
1.39 "Winter Season" means each period from November 15 until April 1
during the term of this Backup Fuel Agreement.
-9-
ARTICLE 2
COMMITMENTS
2.1 Exxon's Commitments. Pursuant to the terms and conditions of this
Backup Fuel Agreement, in order to satisfy the backup fuel storage and supply
requirements of the Cogeneration Facility, Exxon commits:
A. to purchase, install, operate and maintain Butane Delivery
Facilities arid Butane Transfer Facilities for delivering Butane to
the Cogeneration Facility; to have such Butane Delivery Facilities
operational for testing service purposes by May 1, 1992; to have
the Butane Delivery Facilities completed by September 1, 1992; and
to have such Butane Transfer Facilities operational on or before
November 30, 1992;
B. to provide Cogen with approximately 100,000 barrels of storage
capacity in Exxon's Butane Storage Facilities during each Winter
Season;
C. to supply Cogen with a 100,000 Barrel supply of Butane, after
Shrinkage, of a quality in conformity with Exhibit B hereto, for
the initial fill of Exxon's Butane Storage Facilities on November
15 for use during each ensuing Winter Season;
-10-
D. to give Cogen written notice by September 1 of each Annual Period
of Exxon's election to deliver Butane during each Winter Season
under Supply Option A or Supply Option B of Article 5 of this
Backup Fuel Agreement;
E. to give Cogen written notice thirty (30) Days prior to each Summer
Season of the anticipated volumes of summertime backup fuel to be
delivered during the ensuing Summer Season under Article 6 of this
Backup Fuel Agreement;
F. after the initial 100,000 Barrel fill of Exxon Butane on November
15 of each Winter Season, to receive, handle, store and deliver
subsequent shipments of Cogen Butane, if Supply Option A of
Article 5 is selected, or to provide subsequent deliveries of
Exxon Butane, if Supply Option B of Article 5 is selected; and
G. to act with due diligence and use reasonable efforts to obtain and
maintain in effect all Governmental Authorizations required to
provide the services hereunder and to cooperate with Cogen in
seeking such Governmental Authorizations.
2.2 Cogen's Commitments. Pursuant to the terms and conditions of this
Backup Fuel Agreement, in order to satisfy
-11-
the backup fuel storage and supply requirements of the Cogeneration Facility,
Cogen commits:
A. to reimburse Exxon for reasonable Exxon direct construction costs
and reasonable third-party costs of purchasing and installing the
Butane Delivery Facilities and Butane Transfer Facilities, as
defined in Section 3.3 hereof;
B. to pay Exxon storage reservation fees, as defined in Section 4.8
hereof, for the Butane storage capacity committed to Cogen
hereunder;
C. to purchase and utilize at the Cogeneration Facility at least
100,000 Barrels of Exxon Butane during each Winter Season;
D. to purchase and utilize at the Cogeneration Facility a total of
736,000 Barrels of Exxon Butane during each Summer Season,
delivered in volumes as required to operate one or two of the
Cogeneration Facilities' gas turbines each Day of operation,
subject to (i) annual and instantaneous emission and/or fuel
consumption limits of the Air Permit, such annual limitation to
commence on November 15 of each Annual Period, (ii) Cogen's minimum
purchase obligations under the Gas Service Agreement, (iii) Con
Ed's requirements under the Power Purchase Agreement, and (iv)
Cogen's ability to utilize Butane to
-12-
operate at least one of the Congeneration Facility's gas turbines
for a period of at least five (5) consecutive Days;
E. to give Exxon written notice by November 2 of each Annual Period of
scheduled shipments of Cogen Butane, if Supply Option A of Article
5 is selected, or of scheduled receipts of Exxon Butane, if Supply
option B of Article 5 is selected;
F. to purchase and have delivered to the Butane Storage Facilities the
shipments of Cogen Butane, if Supply Option A of Article 5 is
selected; and
G. to act with due diligence and use reasonable efforts to obtain and
maintain in effect all Governmental Authorizations required
hereunder and to cooperate with Exxon in seeking such Governmental
Authorizations.
ARTICLE 3
BUTANE DELIVERY AND TRANSFER FACILITIES
3.1 Facilities. Exxon will install the additional Butane Delivery
Facilities and Butane Transfer Facilities and have the Butane Delivery
Facilities ready for operation for testing service purposes by May 1, 1992; have
the Butane Delivery Facilities completed by September 1, 1992; and have
-13-
the Butane Transfer Facilities ready for operation on or before November 30,
1992.
3.2 Information. Within sixty (60) Days of the execution of this Backup
Fuel Agreement, Exxon shall provide Cogen with (i) a detailed description of
the Butane Delivery Facilities and the Butane Transfer Facilities to be
constructed hereunder; (ii) the unloading and delivery capacity of the same;
(iii) the amount of capacity in the Butane Transfer Facilities that is expected
to be used for shipments of Cogen Butane and Exxon Butane; (iv) a detailed
estimate of the cost of such facilities; and (v) the construction, installation,
completion and operational schedule of the same.
3.3 Cost Responsibility. Cogen shall be responsible for reimbursing
Exxon for reasonable Exxon direct construction costs and reasonable third-party
costs of constructing and installing the Butane Delivery Facilities. Since the
parties contemplate that the Butane Transfer Facilities will be used exclusively
for shipments of Cogen Butane hereunder, Cogen shall also be responsible for
reimbursing Exxon for all reasonable Exxon direct construction costs and
reasonable third-party costs of constructing and installing the same. If, during
the first five (5) years of their operations, the Butane Transfer Facilities are
used for the unloading and/or delivery of Butane for use other than at the
Cogeneration Facility, however, Exxon shall reimburse Cogen for the pro rata
share of the costs reimbursed by Cogen of constructing and installing
-14-
the Butane Transfer facilities to reflect the actual and anticipated use of the
same by entities other than Cogen. To determine such cost reimbursements, Exxon
shall maintain records of the volumes of Cogen Butane and Exxon Butane delivered
through the-Butane Transfer Facilities and provide copies of the same to Cogen
upon request. Exxon shall xxxx Xxxxx for the reasonable Exxon direct
construction costs and reasonable third-party costs of the Butane Delivery
Facilities and the Butane Transfer Facilities as they are constructed and
installed, which bills shall be paid by Cogen within thirty (30) Days after
Cogen's receipt of such xxxx(s).
ARTICLE 4
BUTANE STORAGE SERVICE
4.1 Service. During the term of this Backup Fuel Agreement, Exxon
agrees to receive from or on behalf of Cogen the Cogen Butane at Exxon's Butane
Storage Facilities, to store the same and to thereafter deliver the Cogen
Butane, less Shrinkage, and any Exxon Butane sold to Cogen hereunder, to Cogen
at Cogen's Receiving Point or at such other location as Exxon and Cogen shall
mutually agree. All Cogen Butane shipments will be commingled with the Exxon
Butane in Exxon's Butane Storage Facilities and, therefore, the actual
composition of the Butane delivered to Cogen's Receiving Point may differ from
Cogen's deliveries to Exxon's Butane Storage Facilities; provided, however, the
composition of the Butane
-15-
delivered to Cogen's Receiving Point shall conform with the specifications set
forth in Exhibit B hereto.
4.2 Quantity. Exxon shall provide Cogen with 100,000 Barrels of storage
capacity in the Butane Storage Facilities during each Winter Season. Cogen may
commence injections of Cogen Butane into Exxon's Butane Storage Facilities on
and after November 15 of each Winter Season, unless an earlier injection date is
approved by Exxon, and must withdraw all Cogen Butane and Exxon Butane sold to
Cogen hereunder injected into Exxon's Butane Storage Facilities no later than
April 1 of each Annual Period.
4.3 Purchase Option. In lieu of requiring Cogen to withdraw by April 1
of each Annual Period the Cogen Butane injected into Exxon's Butane Storage
Facilities and Exxon Butane sold to Cogen hereunder, Exxon may elect to purchase
and Cogen may elect to sell the remaining volumes of such Butane at a mutually
agreeable price. If Exxon does not elect to purchase such Cogen Butane, Exxon
shall cooperate with Cogen in any efforts to sell the same to a third party, so
long as Cogen bears Exxon's cost of shipping such Butane to a third party.
Furthermore, Cogen and Exxon shall determine after each shipment of Cogen Butane
whether there are any volumes of Butane in the shipment vessel in excess of the
volumes Exxon is obligated to store hereunder. If any such volumes exist, Exxon
may agree to purchase and Cogen may agree to sell the same at a mutually
acceptable price.
-16-
4.4 Injection Limitations. Upon receipt or delivery of Cogen Butane at
Exxon's Butane Storage Facilities, Exxon shall thereupon inject, or cause to be
injected into storage for Cogen's account, the volume of Cogen Butane so
delivered subject to the limitations set forth below. The quantity of individual
Butane shipments delivered by or on behalf of Cogen for storage in Exxon's
Butane Storage Facilities at any time shall be limited to approximately 100,000
barrels. After the initial fill of Butane under Section 5.2 or 5.3 by Exxon,
Cogen will be limited to delivering no more than one (1) nominal 100,000 Barrel
shipment of Butane every two (2) weeks, and no more than four (4) total Butane
shipments during each Winter Season, if Supply Option A in Section 5.2 is
selected.
4.5 Withdrawal Limitations. When Cogen desires the delivery of Cogen
Butane or Exxon Butane sold to Cogen hereunder, Cogen shall give at least two
(2) hours advance notice to Exxon's designee, to be named by Exxon, specifying
the volume of such Butane it desires delivered. Exxon shall thereupon deliver to
Cogen any and all volumes of Cogen Butane and Exxon Butane sold to Cogen
hereunder, up to the maximum withdrawal rate of 20,000 Barrels per Day, as
requested by Cogen.
4.6 Scheduling. The volumes of Cogen Butane injected into storage for
Cogen's account and the volumes of Cogen Butane and Exxon Butane sold to Cogen
hereunder withdrawn from storage and delivered to Cogen in any Day shall be
determined
-17-
by the volumes of such Butane scheduled for injection or withdrawal in such Day
by dispatchers of Cogen and/or the Natural Gas Suppliers and Exxon. All Butane
deliveries by Cogen shall be coordinated through Exxon's Bayway Light Ends
Coordinator. Exxon shall keep accurate records of volumes injected and
withdrawn for Cogen's account, which records shall be made available to Cogen at
its request.
4.7 Shipment Variations. Cogen's Butane storage and shipment volumes may
exceed the 100,000 Barrel limitation by up to ten percent (10%) if storage
capacity is available in Exxon's Butane Storage Facilities. In such event the
annual storage reservation fee set forth in Section 4.8 shall be increased by an
equal percentage, unless Exxon has elected to purchase such excess volume
pursuant to Section 4.3 of this Backup Fuel Agreement.
4.8 Charges. On November 1 following the Date of Initial Commercial
operation, and thereafter on November 1 of each Annual Period during the term of
this Backup Fuel Agreement, Cogen shall pay Exxon an annual storage reservation
fee of $50,000, which fee will be adjusted annually based upon the CPI, using
the 1990 average as a base year. In addition, Cogen will pay Exxon a handling
fee of fifty cents ($0.50) per Barrel of Cogen Butane, which handling fee will
be adjusted annually based upon the PPI, using the 1990 average as a base year.
Cogen will also reimburse Exxon for all reasonable third-party costs incurred by
Exxon in connection with such
-18-
deliveries of Cogen Butane, including demurrage and other costs as defined in
Exhibit C.
4.9 Butane Exchange. At least seven (7) Days prior to the scheduled
delivery date of a Cogen Butane shipment, Exxon will have the option to trade an
equal quantity of Butane owned by Exxon (of comparable quality) to Cogen for the
waterborne cargo. In such a case, any additional shipping, handling, disposal or
other costs of the waterborne cargo would be assumed by Exxon.
ARTICLE 5
WINTERTIME FUEL SUPPLY
5.1 Service Options. On or before September 1 of each Annual Period,
Exxon shall give Cogen written notice of the alternative backup fuel services
that Exxon will provide during the following Winter Season as described in
Sections 5.2 and 5.3 hereof. As part of both Supply Option A and Supply Option
B, Exxon will provide in Exxon's Butane Storage Facilities for Cogen's account
an initial fill of 100,000 Barrels of Exxon Butane, after Shrinkage, on November
15 of each Winter Season. Cogen shall have the right to withdraw from Exxon's
Butane Storage Facilities up to 20,000 Barrels per Day at a pressure of 450
psig, not to exceed 600 psig.
5.2 Supply Option A. After the initial fill of 100,000 Barrels of Exxon
Butane by Exxon pursuant to Section 5.1 above, all other Butane deliveries
during the
-19-
ensuing Winter Season shall be provided by Cogen and shall be subject to the
provisions of Article 4 of this Backup Fuel Agreement.
5.3 Supply Option B. In addition to the initial fill of Exxon Butane
delivered by Exxon under Section 5.1 above, Exxon will provide Cogen with up to
two (2) Exxon Butane storage refills of 100,000 Barrels each, after Shrinkage,
but not to exceed the maximum necessary to refill Cogen's 100,000 Barrel Butane
Storage Facilities' capacity on each occasion; provided, however, Exxon agrees
to provide a total volume of Butane during each Winter Season sufficient to
satisfy Cogen's Butane supply obligations under the Gas Service Agreement. The
two (2) refills of Exxon Butane will be scheduled by Cogen prior to November 2
of each Annual Period, with each refill occurring no sooner than three (3) weeks
following the last fill or refill. If such refill dates are not specified by
Cogen by November 2, the refills will occur on December 15 and January 15 of
each Winter Season. The Parties may agree upon a third and fourth refill of
Exxon Butane for Cogen's storage capacity, with the prices and delivery schedule
for such refills to be negotiated within ten (10) Days of Exxon's receipt of
written notice of the request for such refills by Cogen, as provided in the Gas
Service Agreement. Cogen shall have the right to assume any Exxon Butane refill
purchase obligation, and to divert any shipment to a different facility,
-20-
so long as such assumption and diversion is free of cost to Exxon.
5.4 Price. Except as provided in Section 5.5, the price for all Exxon
Butane under this Article 5 will be equivalent to the spot price of normal
Butane at Mont Belview, Texas, as expressed in Xxxxx'x Oilgram Price Report, on
Exxon's scheduled delivery date to Cogen, plus a premium of $2.94 per Barrel.
The premium will be adjusted annually based on the PPI, using the 1990 average
as a base year. Either Party shall have the right to reopen pricing negotiations
if the price set forth herein can be shown to differ by more than five percent
(5%) from the prevailing price of Butane delivered in 100,000 Barrel shipments,
including handling, to a facility such as Exxon's Complex in the northeast
United States.
5.5 Emergency Butane Use. If, due to emergency or abnormal operating
conditions during the Winter Season, Exxon must reduce its Butane inventory in
the Butane Storage Facilities, upon a written request from Exxon, Cogen agrees
to purchase and utilize Butane at the Cogeneration Facility each Day that such
emergency or abnormal operating conditions continue, subject to the following
conditions: (a) the volume utilized by Cogen shall be that required to operate
either one or two of the Cogeneration Facility's gas turbines each Day of
operation; (b) Exxon will provide Cogen at least seven (7) Days of prior written
notice of its emergency need to deliver Butane; and (c) Cogen's obligation to
take Butane deliveries is
-21-
subject to (i) annual and instantaneous emission and/or consumption limits of
the Air Permit, such annual limitation to commence on November 15 of each Annual
Period, (ii) Cogen's minimum purchase obligations under the Gas Service
Agreement, (iii) Con Ed's requirements under the Power Purchase Agreement, and
(iv) Cogen's ability to utilize Butane to operate at least one of the
Cogeneration Facility's Gas turbines for a period of a t least five (5)
consecutive Days. Any Butane taken by Cogen under such conditions during the
Winter Season, at Cogen's option, shall be credited against the volumes of
Butane which Cogen is obligated to take during the following Summer Season and
will be priced pursuant to Section 6.2 hereof.
ARTICLE 6
SUMMERTIME FUEL SUPPLY
6.1 Quantity. At Exxon's election, after Cogen certifies in writing that
testing of the Butane burning systems at the Cogeneration Facility is complete
and acceptable to Cogen, Exxon shall deliver and Cogen shall purchase and
utilize at the Cogeneration Facility a total of 736,000 Barrels of Exxon Butane
during each Summer Season, subject to the following conditions: (a) when offered
by Exxon and accepted by Cogen, Cogen shall utilize whatever volumes are
required to operate one or two of the Cogeneration Facilities' gas turbines each
Day of operation; (b) Exxon will provide Cogen at least seven (7) Days prior
written notice of its desire to deliver
-22-
such Butane; (c) Cogen shall have no obligation to take Butane on any particular
Day, so long as Cogen purchases the referenced total volume of Exxon Butane
during each Summer season; and (d) Cogen's obligation to take Butane deliveries
is subject to (i) annual and instantaneous emission and/or consumption limits of
the Air Permit, such annual limitation to commence on November 15 of each Annual
Period, (ii) Cogen's minimum purchase obligations under the Gas Service
Agreement, (iii) Con Ed's requirements under the Power Purchase Agreement, and
(iv) Cogen's ability to utilize Butane to operate at least one of the
Cogeneration Facility's Gas turbines for a period of at least five (5)
consecutive Days.
6.2 Price. Cogen shall pay Exxon, for the Exxon Butane that Cogen is
required to take under Section 6.1, a price equal to the price per Dekatherm
payable by Cogen to the Natural Gas Suppliers for Sales Service Gas under the
Gas Service Agreement.
6.3 Propane Substitution. At Exxon's request, Cogen shall be required
to purchase and utilize propane, instead of the Butane that it would otherwise
be required to take under Section 6.1, at an equivalent price per Dekatherm, if
(a) Cogen determines that it can use propane as an alternative backup fuel
without significant adverse effects on Cogen or the Cogeneration Facility; (b)
Cogen and Exxon mutually agree on the allocation between them of the cost of any
additional equipment necessary to use propane as a backup fuel at the
-23-
cogeneration Facility; (c) Exxon provides sufficient notice of the substitution
to permit Cogen to make the necessary equipment modifications and control system
adjustments; and (d) the use of propane is authorized under the Air Permit. In
the event propane is utilized as a substitute for Butane hereunder, any
provisions of this Agreement applicable to Butane, other than price, will apply
to the use of propane.
6.4 Scheduling. Thirty (30) Days prior to the start of a Summer Season,
Exxon shall provide Cogen with a written estimate of the volumes of Butane to be
delivered under Section 6.1 hereof during the ensuing Summer Season. Such
estimate may be modified by mutual agreement of the Parties.
ARTICLE 7
TESTING SERVICE
7.1 Prior to the Date of Initial Commercial Operation, or until Cogen
certifies in writing that testing of the Butane burning systems of the
Cogeneration Facility is complete and acceptable to Cogen, whichever occurs
later, Exxon will supply, at Cogen's election, up to 40,000 Barrels of Exxon
Butane for the operational testing of the Cogeneration Facility. The price for
such Butane will be the same as that set forth in Sections 5.4 and 6.2, as
appropriate, of this Backup Fuel Agreement. If Exxon is required to transport
Butane for testing by rail, however, then the Butane will be priced at the cost
to Exxon including the cost of shipping.
-24-
The maximum delivery rate for such Butane will be 20,000 Barrels per Day at 450
psig. Cogen will advise Exxon of the schedule of requirements for testing
service and, if Cogen requires testing service prior to May 1, 1992, Exxon shall
use best efforts to provide such service but will not be required to provide
testing service prior to May 1, 1992.
ARTICLE 8
PAYMENT AND ACCOUNTING
8.1 Payment. On or before the tenth (10th) Day of each month, Exxon
will calculate all sums payable to it by Cogen for storage services and backup
fuel deliveries at Cogen's Receiving Point or in the Butane Storage Facilities,
as appropriate, during the preceding month and will deliver its invoice to Cogen
showing thereon full billing details. The invoice will be due and payable to
Exxon by Cogen by the twenty-fifth Day of the month. If Exxon fails to render an
invoice by the due date for such invoice, the relevant due date of the payment
by Cogen shall be extended by a corresponding number of Days. If an index, rate,
publication or other source of information required for the adjustment of any
price, charge or credit under this Backup Fuel Agreement is unavailable on the
effective date for such adjustment, Exxon's invoice will be calculated using the
best available estimate of such adjustment. When the information necessary for
calculation of the actual adjustment becomes available, such invoice will be
-25-
recalculated and any net charge or credit resulting from the recalculation will
be reflected on the next month's invoice.
8.2 Mode of Payment. Each payment under this Backup Fuel Agreement will
be made by interbank wire transfer to the bank address designated in writing by
Exxon or to such other address as Exxon may from time to time designate by
written notice.
8.3 Auditing. Each Party will have the right at reasonable hours to
examine the books, records, and charts of the other party to the extent
reasonably necessary to verify the accuracy of any invoice, payment,
measurement, calculation, or determination made pursuant to the provisions of
this Backup Fuel Agreement; provided, that if any such examination requires
access to confidential information, the release of which would be harmful to
Exxon's or Cogen's competitive position, Exxon or Cogen, as the case may be,
will select an examiner who is not in a position to benefit from such
confidential information and such examiner will execute an agreement to maintain
the confidentiality of the information to be examined. If any such examination
REVEALS, or if either Party discovers, any error or inaccuracy in its own or the
other Party's invoice, calculation, measurement or determination, then proper
adjustment and correction thereof will be made as promptly as practicable
thereafter, except that no adjustment or correction will be made if more than
one year has elapsed since the error or inaccuracy occurred.
-26-
8.4 Failure to Pay. If Cogen fails to pay any amount payable to Exxon
hereunder when due, interest thereon will accrue and be payable from the date on
which payment was due until the date payment is made. The rate of such interest
will be the Prime Rate published weekdays in the Wall Street Journal, plus two
percent (2%), provided that the interest rate provided herein may never exceed
the highest rate of interest permitted by applicable law. If any such failure to
pay continues for ten (10) Days after receipt by Cogen and Financier of Exxon's
written protest, Exxon may suspend its performance under this Backup Fuel
Agreement and, in addition, if such failure to pay continues for thirty (30)
Days, Exxon may terminate this Backup Fuel Agreement upon written notice to
Cogen and the Financier; provided, however, that if Cogen in good faith disputes
the amount of any such xxxx or any part thereof, and pays to Exxon such amount
as it concedes to be correct, and at any time thereafter within ten (10) Days of
a demand by Exxon, furnishes good and sufficient surety bond of the Financier or
other security acceptable to Exxon, guaranteeing payment to Exxon of the amount
in dispute, then Exxon will not be able to suspend performance under this Backup
Fuel Agreement or seek to terminate this Backup Fuel Agreement. The exercise of
any such right will be in addition to any and all remedies otherwise available
to such Party.
8.5 Overpayment. If Cogen pays any amount shown due and owing upon the
invoice of Exxon, and such amount is
-27-
subsequently determined by agreement, arbitration or judgment of court not to
have been due and owing when paid, Exxon will refund such amount to Cogen
together with interest from the date of payment to the date of refund at the
Prime Rate published weekdays in the Wall Street Journal, plus two percent (2%),
provided that the interest rate provided herein may never exceed the highest
rate of interest permitted by applicable law.
8.6. Records. Both Cogen and Exxon shall keep all invoices, receipts,
charts, computer printouts, punchcards, magnetic tapes, and other records
related to the volume and price of storage services and Butane sales made under
this Backup Fuel Agreement. Such records shall be made available for inspection
and copying by either Party or their representatives upon reasonable notice.
Each Party shall keep all such materials for a minimum of three (3) years from
the date of their preparation.
ARTICLE 9
POSSESSION, TITLE AND WARRANTY
9.1 Possession. Exxon's control and possession of Cogen Butane for the
account of Cogen shall commence upon passage of the Cogen Butane, Barrel by
Barrel, from railroad tankcar or vessel tankage used for the purpose of
delivering Cogen Butane to Exxon at the Butane Transfer Facilities and shall
terminate upon passage of the Cogen Butane which Cogen
-28-
elects to receive, Barrel by Barrel, at Cogen's Receiving Point. Cogen through
its marine or rail transporter of Butane shall be in control and possession of
the Cogen Butane delivered hereunder, and responsible for any damage or injury
caused thereby, until the same shall have been delivered into the shore
receiving flange at the end of the Butane loading arm of the Butane Transfer
Facilities (or the railroad tankcar receiving point) and after both Cogen Butane
and Exxon Butane shall have been delivered to Cogen from the Butane Delivery
Facilities at Cogen's Receiving Point. Exxon shall be in control and possession
of the Exxon Butane until delivery to Cogen at Cogen's Receiving Point. Exxon
shall be responsible for any damage or injury caused by the Cogen Butane and
Exxon Butane during its possession.
9.2 Title. Title to the Cogen Butane delivered by Cogen to Exxon at the
Butane Transfer Facilities shall at all times remain in Cogen. Title to the
Exxon Butane (other than the initial annual fill of Exxon's Butane Storage
Facilities for use during the ensuing Winter Season in accordance with Section
2.1C hereof, and any subsequent fills should Exxon elect Supply Option B
pursuant to Section 5.3) shall pass when delivered at Cogen's Receiving Point.
Title to the Exxon Butane supplied pursuant to Section 2.1C and any subsequent
fills pursuant to Section 5.3 hereof shall pass when Exxon shall have notified
Cogen in writing that the Exxon Butane has
-29-
been placed in the Butane Storage Facilities and Cogen shall have made payment
therefor.
9.3 Warranty. Cogen, as to all Cogen Butane delivered by it or on its
behalf to Exxon, and Exxon, as to all Exxon Butane delivered by it to Cogen,
warrant for themselves, their successors and assigns, that each will at the time
of delivery to the other party, have good and merchantable title to all such
Butane or the good right to deliver such Butane free and clear of all liens,
encumbrances and claims whatsoever, with the exception of the security interest
in Cogen's Butane held by the Financier or any successors-in-interest of the
Financier. Each party will indemnify the other, defend and save it harmless from
all suits, actions, debts, accounts, damages, costs, losses and expenses arising
at any time from or out of adverse claims to such Butane by any third party or
parties, including claims by any third party or parties for any royalties,
taxes, license fees or charges applicable to such Butane or to the delivery
thereof.
9.4 Requirements For Butane Shipments. All deliveries of Cogen Butane
to the Butane Transfer Facilities shall be subject to the Exxon and U.S. Coast
Guard LPG Ship Requirements set forth in Exhibit C, attached hereto and made a
part hereof for all purposes.
-30-
ARTICLE 10
TERM
10.1 Effective Date. This Backup Fuel Agreement will be effective upon
its execution, but certain rights and obligations of each Party hereto will not
become effective, if at all, until the conditions relating to such Party's
performance defined in Article 12 are satisfied. When the conditions relating to
Cogen's obligations to purchase and store Butane are satisfied, Cogen will
provide a written notice to Exxon specifying the Date of Initial Commercial
operation. Subject to the provisions of Section 10.5, in no event will the term
of the Backup Fuel Agreement continue beyond the Evergreen Period.
10.2 Base Term. The Base Term of this Backup Fuel Agreement will
commence on the Date of Initial Commercial Operation and will continue for
twenty-five (25) Annual Periods, unless sooner terminated in accordance with the
terms hereof.
10.3 Renewal Terms. Following the completion of the twenty-five (25)
year Base Term, this Backup Fuel Agreement will be automatically renewed for two
successive Renewal Terms of five Annual Periods each, the first of which will
commence with the expiration of the Base Term, unless Cogen elects to terminate
this Backup Fuel Agreement at the expiration of the Base Term or at the
expiration of the first five-year Renewal Term. Termination by Cogen in
accordance with the provisions
-31-
of this Article 10 will be valid only if Cogen provides Exxon written notice of
its intent to terminate at least four (4) Annual Periods prior to the expiration
of the Base Term or first five-year Renewal Term, as the case may be.
10.4 Evergreen Period. After the expiration of the second five-year
Renewal Term, this Backup Fuel Agreement will automatically extend into an
Evergreen Period which will continue until December 31, 2048, unless either
Party elects to terminate the Evergreen Period earlier. Either Party may
terminate the Evergreen Period at any time by giving at least five (5) Annual
Periods prior written notice to the other Party. In that event, termination of
the Evergreen Period will be effective five (5) years after the notice is given,
or at such other time as the Parties may agree. If neither Party terminates the
Evergreen Period earlier, the Evergreen Period will automatically terminate on
December 31, 2048. The automatic termination date of December 31, 2048, may not
be extended for any reason, including Force Majeure, except as provided in
Section 10.5.
10.5 Butane Disposal Period. Cogen shall cause the Cogen Butane and
Exxon Butane purchased by Cogen hereunder to be removed from the Butane Storage
Facilities prior to the expiration of this Backup Fuel Agreement. In the event
Cogen fails to so remove the Cogen Butane and Exxon Butane purchased by Cogen
hereunder prior thereto, Exxon shall have the right, at Exxon's option, to
either (i) dispose of such Cogen Butane
-32-
and Exxon Butane purchased by Cogen hereunder in a commercially reasonable
manner and remit the proceeds of such sale, less any reasonable expenses
incurred by Exxon in connection with such sale, to Cogen or (ii) purchase such
Cogen Butane and Exxon Butane purchased by Cogen hereunder for its own account
at the then prevailing market price for Butane in the Linden, New Jersey area.
If, however, Cogen is prevented from removing the Cogen Butane and Exxon Butane
purchased by Cogen hereunder as a result of any cause within the reasonable
control of Exxon, Exxon shall be obligated to purchase the Cogen Butane and
Exxon Butane purchased by Cogen hereunder from Cogen at the then prevailing
market price for Butane in the Linden, New Jersey area.
ARTICLE 11
MEASUREMENT AND DELIVERY CONDITIONS
11.1 Measurement Facilities. Exxon's Butane Delivery Facilities shall
include a measuring station as depicted in Exhibit A hereto, which shall be
maintained and operated by Exxon. The measuring station shall be so equipped
with such meters, recording gauges, or other types of meter or meters of
standard make and design commonly acceptable in the industry, as are necessary
to accomplish the accurate measurement of Butane delivered by Exxon at Cogen's
Receiving Point hereunder. The determination of quantities delivered by Exxon
-33-
to Cogen shall be based on such meter or gauge readings or the determination of
such quantities by standard practices.
11.2 Facilities Testing. Exxon, at Exxon's sole expense, shall test all
measuring equipment used in measuring deliveries hereunder at least quarterly.
Cogen shall have the right, at its sole expense, to request a test of any and
all such measuring equipment at any time between such quarterly tests. Each
Party shall give reasonable notice, but in no event less than five (5) business
Days notice in writing, to the other Party of tests of the accuracy of such
measuring equipment so that each Party may conveniently (at its own expense)
have its representative present at such tests. If such notice has been given,
the Party giving the notice may proceed whether or not the other Party is
present, and such test results shall be used until the next quarterly test or
requested test. If upon any test, the metering equipment is found to be
inaccurate by two percent (2%) or more, any measurement based upon such
registration shall be corrected at the rate of such inaccuracy for any period of
inaccuracy which is definitely known or agreed upon, or if not known or agreed
upon, then for a period extending back to one-half of the time elapsed since the
day of the last meter test. Following any such test, any measuring equipment
found to be inaccurate to any degree shall be adjusted immediately to measure
accurately.
-34-
11.3 Shipment Accounts. All shipments of Cogen Butane for Cogen's account
shall be reported in Barrels corrected for temperature and specific gravity.
Upon receipt of Cogen Butane by Exxon at the Butane Transfer Facilities for
injection into the Butane Storage Facilities for Cogen's account, Exxon shall
prepare a Notification of Receipt showing the data necessary for the
identification of the incoming shipment. The Notification of Receipt will
include Cogen's name, date of receipt, mode of shipment and quantity of Cogen
Butane received for injection, as determined by an independent inspector using
ship's figures or Exxon's metering calculations. When quantities of Cogen Butane
and Exxon Butane sold to Cogen hereunder are withdrawn from the Butane Storage
Facilities and delivered to Cogen at Cogen's Receiving Point, Exxon shall
prepare a Notification of Delivery showing the data necessary for the
identification of the delivery. The Notification of Delivery will include
Cogen's name, date of delivery and quantity of Cogen Butane and Exxon Butane
delivered using Exxon's metering calculations. A copy of all Notifications of
Receipt and Notifications of Delivery shall be delivered to Cogen by Exxon
within ten (10) days after each receipt or delivery. Such notices shall be
deemed to be correct for all purposes unless objection thereto is given to
either Party by the other Party hereto within six (6) months after delivery of
such notice to Cogen. The Notices of Receipt and Notices of Delivery shall be
used to determine the amount of Cogen Butane
-35-
contained in Exxon's Butane Storage Facilities at any given time.
11.4 Pressure. Butane or other backup fuel delivered to Cogen at Cogen's
Receiving Point shall be at a pressure sufficient to enter Cogen's facilities,
which shall be 450 psig, plus or minus 20 psig, but not higher than 600 psig.
11.5 Heating Content. The heating content of the Butane or other backup
fuel delivered by Cogen to Exxon and by Exxon to Cogen hereunder shall be
determined by Exxon in accordance with standard testing methods for each
shipment of Cogen Butane and on a daily basis for Exxon Butane delivered for
summer use. There shall be one test or sample by Exxon for each curtailment
period which requires the utilization of Butane in the winter. The results of
any tests to determine heating content shall be corrected to reflect actual
conditions of delivery. Any difference by an amount equal to or greater than
plus or minus 1/10% between the heating content of the Cogen Butane delivered by
Cogen to Exxon and, after commingling with Exxon Butane, the Cogen Butane
delivered by Exxon to Cogen at Cogen's Receiving Point shall be taken into
account by adjusting the quantity of the Butane delivered hereunder. if the
heating content of the Exxon Butane delivered during the Winter Season to Cogen
at Cogen's Receiving Point falls below the heating content specified in Exhibit
B hereto, the quantity of such Exxon Butane shall be adjusted to reflect such
lower heating content.
-36-
11.6 Quality. Exxon's Butane Storage Facilities shall be operated in
such a manner that the Cogen Butane delivered to Cogen out of Exxon's Butane
Storage Facilities shall not be materially changed in quality from that of the
cogen Butane delivered by Cogen to such facilities, except for any change caused
by commingling the Cogen Butane with Exxon Butane. Exxon's deliveries of Butane
hereunder shall comply with the specifications set forth in Exhibit B. All Cogen
Butane delivered to Exxon shall comply with the specifications set forth in
Exhibit B. Exxon and Cogen shall provide a certificate of analysis to the other
for their respective deliveries of Butane hereunder. Exxon reserves the right,
at Exxon's sole expense, to perform an analysis of the Cogen Butane at Exxon's
Butane Storage Facilities prior to unloading and Exxon may refuse receipt of any
Cogen Butane that is found to be contaminated or not in conformity with such
qualities.
ARTICLE 12
ACTIONS REQUIRED TO SATISFY CERTAIN CONDITIONS
12.1 Governmental Authorizations. Cogen's obligations set forth herein
may be subject to the receipt of Governmental Authorizations. Cogen and Exxon
agree to act with due diligence and cooperate with each other in seeking any
such approvals or authorizations. Exxon agrees that the terms and conditions of
such orders, permits and authorizations must be acceptable to Cogen in its sole
discretion. Upon Cogen's
-37-
receipt of any regulatory authorization or governmental permit that has a
potential adverse impact on Exxon, Cogen shall transmit to Exxon a copy of such
authorization or permit within ten (10) Days of receipt thereof.
12.2 Construction of Facilities. Cogen's obligations to purchase and
store Butane hereunder are subject to the construction and placing in service of
the Cogeneration Facility and other related facilities. To the extent Exxon is
responsible for such construction, Exxon agrees, subject to satisfaction of any
other applicable conditions herein relating to the performance of its
obligations hereunder, to act with due diligence in constructing and placing in
service such facilities.
12.3 Mutual Cooperation. Both Parties agree to cooperate with each other
and to keep each other informed regarding their progress in carrying out their
respective obligations under this Backup Fuel Agreement.
ARTICLE 13
FORCE MAJEURE
13.1 Definition. Except for the obligations of a Party to make payments
when due under this Backup Fuel Agreement, the Parties will be excused from
delays in performance or failures to perform their respective obligations
hereunder and will not be liable in damages or otherwise, if and only to the
extent that such delays or failures are caused
-38-
by Force Majeure. The term "Force Majeure" means any cause beyond the reasonable
control of the affected Party, including, without limitation, storm, flood,
lightning, drought, earthquake, fire, explosion, civil disturbance, labor
dispute, act of God or the public enemy, or action of a court or governmental
authority. Financial distress of either Party, late delivery of materials or
equipment (unless itself caused by Force Majeure), or inadequate performance by
contractors (unless itself caused by Force Majeure) will not be considered Force
Majeure.
13.2 Burden of Proof. The burden of proof as to whether an event or
condition of Force Majeure has occurred will be upon the Party claiming that it
should be excused from performing its obligations hereunder due to the
occurrence of such an event or condition.
13.3 Condition. If either Party relies on Force Majeure -as a basis for
being excused from performance of its obligations under this Backup Fuel
Agreement, then the Party. relying on Force Majeure will:
A. Give prompt oral notice to the other Party, confirmed promptly in
writing, of the occurrence of the event or condition, with an
estimate of its expected duration and probable impact on the
performance of its obligations hereunder;
B. Exercise all reasonable efforts to continue to perform its
obligations hereunder;
-39-
C. Expeditiously take action to correct or cure the event or
condition excusing performance to the extent reasonably
practicable;
D. Exercise all reasonable efforts to mitigate or limit damages to
the other Party; and
E. Give prompt oral notice to the other Party, confirmed promptly in
writing, of the cessation of the event or condition giving rise to
its excusal from performance.
13.4 Labor Disputes. This Article 13 will not require the settlement of
any strike, walkout, lockout, or other labor dispute on terms which, in the
judgment of the Party involved, are contrary to its interests. The settlement of
such labor disputes will be at the sole discretion of the Party involved.
ARTICLE 14
LIMITATION ON LIABILITY AND DISTRIBUTION OF RISKS
14.1 Limitation of Liability. Neither Exxon nor Cogen, nor their
respective officers, directors, partners, agents, employees, Affiliates, nor
their successors or assigns will be liable under this Backup Fuel Agreement to
the other Party or its officers, directors, partners, agents, employees,
Affiliates, or their successors or assigns, for any punitive, indirect, or
consequential losses, damages, or expenses, including loss of profits.
-40-
14.2 Distribution of Risks Between Exxon and Cogen. Cogen will be
responsible for, and will indemnify, hold harmless and defend Exxon, its
officers, directors, partners, agents, employees, affiliates and their
representatives from and against any and all claims, losses, damages, penalties,
causes of action, suits and liability of every kind, including all expenses of
litigation, court costs and attorneys' fees from injury to or death to persons
(including Cogen's employees) or for damages or injury to property arising out
of the sale, transportation, delivery, transfer, storage or use of Butane while
the Butane is in Cogen's control and possession as set forth in Article 9 hereof
(unless such loss or damage results from the sole negligence or solely from the
willful misconduct of Exxon, its officers, directors, partners, agents,
employees, Affiliates or other representatives), and Exxon will be responsible
for, and will indemnify, hold harmless and defend Cogen, its officers,
directors, partners, agents, employees, affiliates and their representatives
from and against any and all claims, losses, damages, penalties, causes of
action, suits and liability of every kind, including all expenses of litigation,
court costs and attorneys' fees from injury to or death to persons (including
Exxon's employees) or for damages or injury to property arising out of the sale,
transportation, delivery, transfer, storage or use of Butane while the Butane is
in Exxon's control and possession as set forth in Article 9 hereof (unless such
loss or damage results
-41-
from the sole negligence or solely from the willful misconduct of Cogen, its
officers, directors, partners, agents, employees, Affiliates or other
representatives). Notwithstanding anything in this Section 14.2 appearing to the
contrary, neither party hereto shall be relieved from liability (regardless of
whether possession and control of the Butane may at the time of loss or damage
be in the other party) for any losses or damages arising from the failure of
such party to deliver Butane meeting the specifications set forth in Exhibit B.
14.3 No Effect on Other Agreements. Other than damage or injury caused
by Cogen Butane and Exxon Butane during possession by Cogen or Exxon, nothing in
this Article 14 is intended to affect the liability and distribution of risk
provisions as set forth in the Ground Lease Agreement.
ARTICLE 15
INSURANCE
15.1 General Requirements. Cogen will carry at the effective date of
this Backup Fuel Agreement and will use its best efforts to maintain in force to
the end of this Backup Fuel Agreement, the following insurances with companies
satisfactory to Exxon:
(i) Workers' Compensation and Employer Liability For all its
employees who may at any time be on Exxon's Complex, workers'
compensation
-42-
and employer's liability with limits of at least $100,000 per
accident;
(ii) Comprehensive General Liability. Cogen's normal and customary
comprehensive general liability insurance (including, without
limitation, contractual) with limits of at least $10 million
per occurrence for bodily injury and $10 million per occurrence
for property damages; and
(iii) Automobile Liability. Automobile liability insurance covering
owned, non-owned, and rented vehicles which may at any time
operate on Exxon's Complex, with limits of at least $10 million
for injury, death, or property damage resulting from each
occurrence.
Nothing contained in this Section 15.1 shall limit or waive Cogen's legal or
contractual responsibilities to Exxon or others.
15.2 Notices and Examination. If requested by Exxon, Cogen will have its
insurance carriers furnish to Exxon insurance certificates specifying the types
and amounts of coverage in effect, the expiration dates of each policy, and a
statement that no insurance will be cancelled or materially changed during the
term of this Backup Fuel Agreement without thirty (30) Days prior written notice
to Exxon. If requested
-43-
by Exxon, Cogen will permit Exxon to examine the insurance policies, or at
Exxon's option, Cogen will furnish Exxon with certified copies of the insurance
policies.
15.3 Self-Insurance. Upon showing reasonable evidence of financial
ability to assume loss to Exxon, Cogen' may self-insure any or all of the
coverages shown above.
ARTICLE 16
GOVERNMENTAL AUTHORIZATIONS
16.1 Maintenance of Governmental Authorizations. The Parties will obtain
and maintain in effect all necessary Governmental Authorizations for their
activities under this Backup Fuel Agreement and will carry on their operations
in material compliance with all such Governmental Authorizations. Each Party
will cooperate with the other Party in obtaining, maintaining and complying with
any Governmental Authorizations necessary under this Backup Fuel Agreement.
Cogen will use reasonable efforts, but will have no obligations, to keep Exxon
advised of significant developments with respect to its major Governmental
Authorizations relating to the Cogeneration Facility.
16.2 Status of Cogeneration Facility. Cogen will promptly give Exxon
written notice if the Cogeneration Facility loses its qualifying cogeneration
facility status.
-44-
ARTICLE 17
TERMINATION; DEFAULTS; RIGHT TO CURE
17.1 Termination of Other Agreements. Subject to the provisions of
Section 10.5, this Backup Fuel Agreement will automatically terminate if and
when the Improvements Removal Period, as defined in the Ground Lease Agreement,
commences or if and when the Ground Lease Agreement terminates. This Backup Fuel
Agreement will not terminate when the Steam Sale Agreement terminates, unless
the Steam Sale Agreement is terminated for cause under Section 11.5 thereof or
the termination of the Steam Sale Agreement triggers a termination of the Ground
Lease Agreement.
17.2 Change of Operations. If Exxon ceases all or substantially all
refining operations at Exxon's Complex, Exxon will have the option to terminate
this Backup Fuel Agreement six (6) months following Cogen's and the Financier's
receipt of Exxon's written termination notice, but only if Cogen, Exxon and the
Financier agree to mutually acceptable alternate arrangements for the delivery
of Butane to Cogen during the Winter Season. Cogen and Exxon agree that a
commitment by Exxon to have a third-party, acceptable to Exxon, Cogen and the
Financier, provide the winter backup fuel requirements hereunder until the
beginning of the Evergreen Period constitutes a mutually acceptable alternate
arrangement.
17.3 Other Exxon Rights to Terminate. Subject to Section 17.6, Exxon will
also have the right, at its option, to
-45-
terminate this Backup Fuel Agreement upon the occurrence of any of the following
events:
X. Xxxxx defaults by failing to make timely payment pursuant to Article
8 hereof, which failure continues for thirty (30) Days after Exxon
gives Cogen and the Financier identified in Section 17.6 written
notice of such failure to pay; or
X. Xxxxx defaults by failing substantially to perform any material
obligation under this Backup Fuel Agreement other than the payment
of storage and supply charges, which failure continues for a period
of sixty (60) Days after Exxon gives Cogen and the Financier written
notice of such nonperformance; provided, however, if such default
may not reasonably be cured within such sixty (60) Day period, this
Backup Fuel Agreement will not terminate pursuant to this Section
17.3B, if Cogen diligently commences to cure such default within
such sixty (60) Day period and for so long as Cogen diligently
continues such efforts, unless the default continues uncured for six
(6) months after Exxon gives Cogen and the Financier such written
notice; or
-46-
C. Exxon terminates the Steam Sale Agreement because of default by
Cogen; or
X. Xxxxx fails to complete the construction of the Cogeneration
Facility by January 1, 1998, in which event Exxon may terminate this
Backup Fuel Agreement by giving Cogen prompt written notice; or
E. Exxon terminates the Ground Lease Agreement pursuant to Article 16.1
thereof or the Steam Sale Agreement pursuant to Article 2.3 of such
agreement (dealing with failure by Cogen to commence Commercial
Operations by July 1, 1993, or make alternate arrangements), or
Cogen ceases to be obligated to comply with the Ground Lease
Agreement or Steam Sale Agreement for any reason other than a
termination of such Agreement (i) by Cogen due to a default by Exxon
thereunder, (ii) by Exxon (only) at the expiration of "Base Term"
(as defined in such Agreement) or of the first five year renewal
thereof, (iii) by Cogen because Exxon's External Steam Requirements
(as defined in such Agreement) from Cogen under the Steam Sale
Agreement have fallen below the level specified in Section 11.2E
thereof and the other conditions in such Section have been
satisfied; or (iv) by agreement of Cogen and Exxon; or
-47-
F. This Backup Fuel Agreement enters its Evergreen Period and Exxon
gives Cogen at least five years written notice of termination
pursuant to Article 10.
17.4 Cogen's Right to Terminate. Cogen will have the right, at its
option to terminate this Backup Fuel Agreement upon the occurrence of any of the
following events:
A. Exxon defaults by failing substantially to perform any material
obligation under the Ground Lease Agreement, which failure
continues for a period of sixty (60) Days after Cogen gives
Exxon and its lenders and mortgagees identified in Section 16.4
thereof written notice of such nonperformance, subject to the cure
rights thereunder; or
X. Xxxxx terminates the Steam Sale Agreement because of default by
Exxon; or
X. Xxxxx terminates the Steam Sale Agreement under Article 11.2E of
such agreement (dealing with decreased need for Steam by Exxon); or
D. The Power Purchase Agreement is terminated for any reason and is
not replaced by a similar agreement to sell power; or
X. Xxxxx is unable to receive or maintain the Governmental
Authorizations necessary lawfully to construct, operate, and
maintain the Cogeneration
-48-
Facility due to Force Majeure (and not due to repeated violations
by Cogen of such authorizations for reasons other than Force
Majeure); or
F. The Demised Premises, the Interconnection Areas, the Utility
Areas, or the Access Rights of Way, all as defined in the Ground
Lease Agreement, cannot be used for Cogen's purposes as specified
in Article 6 thereof and the Parties cannot relocate the
Interconnection Areas, Utility Areas or Access Rights of Way
pursuant to Section 2.6 thereof to their mutual satisfaction, or if
Cogen is unable (other than temporarily unable due to an emergency)
to obtain water, gas, or standby power for the Cogeneration
Facility; or
G. There is a partial taking allowing termination in accordance with
Section 13.3 of the Ground Lease Agreement; or
H. This Backup Fuel Agreement continues to the end of the Base Term,
or either Renewal Term, or into the Evergreen Period and Cogen
gives any of the notices of termination specified in Article 10.
I. Exxon defaults by failing substantially to perform any material
obligation under this Backup Fuel Agreement, which failure
continues for a period of sixty (60) Days after Cogen gives Exxon
-49-
written notice of such nonperformance; provided, however, if such
default may not reasonably be cured within such sixty (60) Day
period, this Backup Fuel Agreement will not terminate pursuant to
this Section 17.4I, if Exxon diligently commences to cure such
default within such sixty (60) Day period and for so long as Exxon
diligently continues such efforts, unless the default continues
uncured for six (6) months after Cogen gives Exxon such written
notice.
Any notice from Cogen to Exxon of termination of this Backup Fuel Agreement will
be effective only if such notice either (i) is joined in by the Financier in
writing, if there is a Financier then in existence, or (ii) certifies on its
face that there is no Financier.
17.5 Automatic Termination. This Backup Fuel Agreement will
automatically terminate as of the effective date set forth in Section 17.7 below
if
A. The Backup Fuel Agreement continues in effect until the end of the
Evergreen Period; or
B. The Ground Lease Agreement terminates because of a full taking by
competent authority of the Leased Premises, as described in
Article 13 thereof; or
C. This Backup Fuel Agreement is rejected pursuant to Section 365 of
the Bankruptcy Code of 1978, as
-50-
amended, or any successor provision thereto, in a case wherein
Cogen is the debtor.
17.6 The Financier, Lenders and Mortgagees. Exxon will not have the
right to terminate this Backup Fuel Agreement for default pursuant to Sections
17.3A, 17.3B, or 17.3C above, until Exxon (i) has provided the Financier
substantially the same notices which Exxon is obligated to provide to Cogen
pursuant to Sections 17.3A or 17.3B, or 17.7A; and (ii) has provided the
Financier the same right to cure such default as Cogen; and (iii) in the case of
defaults which are susceptible of being cured only if the Financier has access
to the Cogeneration Facility and the Leased Premises (and only in the case of
such defaults), has provided the Financier six (6) additional months subsequent
to the end of the period for the cure of any such default in Section 17.3B,
without extension for any period contemplated in Article 13, to cure such
default, provided that the Financier has pursued and continues to pursue with
diligence, continuity and good faith all actions to enable the Financier to
obtain access in order to cure, and to cure, such default. Exxon and Cogen
hereby grant to the Financier a non-exclusive license, irrevocable for the term
of this Backup Fuel Agreement, to have access to and to use the Cogeneration
Facility and the Leased Premises for the purpose of curing any default by Cogen
under clause (ii) above, or under Article 16 of the Ground Lease Agreement or
Article 11.4A (ii) of the Steam Sale Agreement, in any case in which
-51-
such default is not subject to cure in a reasonably practicable manner without
access to the Cogeneration Facility and the Leased Premises. Cogen will have no
right to terminate this Backup Fuel Agreement pursuant to Section 17.4A or 17.4I
above, until Cogen (i) has provided any lender to whom Exxon has assigned this
Backup Fuel Agreement to secure a loan and has provided any mortgagee holding a
mortgage on all or any part of Exxon's Complex substantially the same notices
which Cogen is obligated to provide to Exxon pursuant to Section 17.4A or 17.4I,
and (ii) has provided such lender or mortgagee the same right to cure as Exxon,
provided that Exxon has previously given Cogen actual notice of the appropriate
contact person and address for any such lender or mortgagee.
17.7 Effective Date of Termination.
A. If an event described in Sections 17.3A or 17.3B occurs, or if the
termination described in Section 17.3C occurs, Exxon may promptly
give Cogen a written notice of termination which will be effective
upon receipt, subject to any cure period described therein.
B. If Cogen fails to complete the construction of the Cogeneration
Facility by the time provided in Section 17.3D, Exxon may give
Cogen the written notice of termination provided for in Section
17.3D, which will be effective upon
-52-
receipt, subject to any cure period described therein.
C. If Exxon terminates the Ground Lease Agreement pursuant to Article
16.1 thereof or the Steam Sale Agreement pursuant to Article 2.3
thereof after the date of this-Backup Fuel Agreement, or if Cogen
ceases to be obligated to comply with the Ground Lease Agreement or
Steam Sale Agreement for any reason other than as specified in
Section 17.3E, in each case, Exxon may give Cogen prompt written
notice that Exxon is electing to terminate this Backup Fuel
Agreement as well, which will be effective upon receipt, subject to
any cure period described therein.
D. If Exxon gives Cogen notice of termination of this Backup Fuel
Agreement during the Evergreen Period pursuant to Article 10, this
Backup Fuel Agreement will terminate as provided in Article 10.
E. If a default described in Section 17.4A occurs, Cogen may promptly
give Exxon a second written notice of termination, which will be
effective upon receipt, subject to any cure period described
therein.
F. If any event described in Section 17.4B or 17.4C occurs, Cogen may
give Exxon prompt written
-53-
notice of termination, which will be effective upon receipt,
subject to any cure period described therein.
G. If any event described in Sections 17.4D, 17.4E, 17.4F or 17.4G
occurs, Cogen may give Exxon prompt written notice, which will be
effective upon receipt, subject to any cure period described
therein.
H. If Cogen gives Exxon notice of termination of this Backup Fuel
Agreement during the Base Term, either Renewal Term, or during the
Evergreen Period pursuant to Article 10, this Backup Fuel Agreement
will terminate at the end of the subject period.
I. If the Evergreen Period continues in effect until December 31,
2048, this Backup Fuel Agreement will terminate on such date,
subject to the extension permitted for the disposition of Cogen
Butane and Exxon Butane sold to Cogen hereunder, if any.
J. If there is a full taking as described in Section 13.2 of the
Ground Lease Agreement, this Backup Fuel Agreement will terminate
on the date the governmental authority requires the Cogeneration
Facility to be shut down.
-54-
K. If this Backup Fuel Agreement is rejected pursuant to Section 365
of the Bankruptcy Code of 1978, as amended, or any successor
provision thereto, in a case wherein Cogen is the debtor, this
Backup Fuel Agreement will terminate on the effective date of such
rejection.
L. If an event described in Section 17.41 occurs, Cogen may promptly
give Exxon a written notice of termination which will be effective
upon receipt, subject to any cure period described therein.
17.8 Cooperation. If this Backup Fuel Agreement is terminated for any
reason, the Parties will work together to achieve a smooth transition.
ARTICLE 18
NOTICE AND SERVICE
18.1 Notice. All notices, requests, demands and other communications
required or permitted under the terms of this Backup Fuel Agreement will be
sufficient in form if in writing and will be deemed to be duly given if
delivered by personal service, telegram, or mailed certified or registered first
class mail, postage prepaid, properly addressed to the Party entitled to receive
such notice pursuant to Section 18.3.
18.2 Date of Service.
A. Mail. If a notice is sent by registered or certified mail, it will
be deemed given within
-55-
three (3) Days, excluding Saturdays, Sundays, or legal holidays of
the State of New Jersey, after deposit of the same in the United
States mail, postage prepaid, except as otherwise demonstrated by
a signed receipt.
B. Telegram. If a notice is given by telegram, it will be deemed
given eighteen (18) hours after delivery to the telegram company.
C. Personal Service. If a notice is given by personal service, it
will be deemed given upon the date of actual delivery to the
address of the Party to be notified.
18.3 Addresses. Notices may be sent to the Parties at the following
addresses:
X. Xxxxx: Xxxxx Technologies Linden Venture, L.P.
c/o Cogen Technologies, Inc.
0000 Xxxxx Xxxxxx
Xxxxx 0000 - 50th Floor
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxx X. XxXxxx
President
B. Exxon: Exxon Corporation
c/o Exxon Company, U.S.A.
0000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Refinery Manager
or to such other and different persons or addresses as may be designated by the
Parties.
-56-
ARTICLE 19
ENTIRETY OF CONTRACT; OTHER AGREEMENTS
19.1 Entire Agreement. This Backup Fuel Agreement supersedes all prior
oral and written agreements and understandings of the Parties relating to the
subject matters hereof. This Backup Fuel Agreement constitutes the entire
agreement and understanding of the Parties relating to the subject matters
hereof.
19.2 Other Agreements. This Backup Fuel Agreement does not supersede or
in any way diminish or enhance the rights and obligations of the Parties under
the Ground Lease Agreement and Steam Sale Agreement.
ARTICLE 20
CAPTIONS
20.1 All indices, titles, subject headings, section titles, and similar
items are provided for the purpose of reference and convenience and are not
intended to be inclusive, definitive, or to control the meaning, content, or
scope of this Backup Fuel Agreement.
ARTICLE 21
AMENDMENTS
21.1 No amendment or modification of the terms of this Backup Fuel
Agreement will be binding on either Exxon or Cogen unless reduced to writing and
signed by both Parties.
-57-
ARTICLE 22
CONSENTS
22.1 Whenever either Party requests any consent, permission, or approval
which may be required or desired by that Party pursuant to the provisions
hereof, the other Party will not unreasonably withhold or postpone the grant of
such consent, permission, or approval.
ARTICLE 23
NONWAIVER
23.1 The various rights, remedies, options, and elections of Exxon and
Cogen as expressed herein are cumulative, and the failure of Exxon or Cogen to
enforce strict performance by the other Party of the provisions of this Backup
Fuel Agreement or to exercise any right, election, or option or to resort or
have recourse to any remedy herein conferred will not be construed or deemed to
be a waiver or a relinquishment of the future enforcement by Exxon or Cogen of
any such provisions, rights, options, elections, or remedies, but the same will
continue in full force and effect.
ARTICLE 24
SEVERABILITY
24.1 The invalidity or unenforceability of any provision of this Backup
Fuel Agreement shall not affect the validity and enforceability of any other
provision, and each
-58-
provision of this Backup Fuel Agreement shall be enforced to the maximum extent
permitted by applicable law.
ARTICLE 25
RENEGOTIATION
25.1 Should any term or provision of this Backup Fuel Agreement be found
invalid by any court or regulatory body having jurisdiction thereover, the
Parties will immediately renegotiate in good faith such term or provision of
this Backup Fuel Agreement to eliminate such invalidity, consistent with the
intent of this Backup Fuel Agreement.
ARTICLE 26
ASSIGNMENT
26.1 By Exxon.
A. If Exxon sells the Exxon Complex, this Backup Fuel Agreement shall
be assigned to the purchaser of such complex. Exxon may also freely
assign, this Backup Fuel Agreement, which will be binding on and
inure to the benefit of the successors and assigns of Exxon. Upon
any such assignment, Cogen will attorn to and recognize such
successor and assignee of Exxon under this Backup Fuel Agreement.
B. If Exxon sells or otherwise transfers to any unaffiliated entity any
part of Exxon's Complex
-59-
which contains the Butane Transfer Facilities, the Butane Delivery
Facilities or the Butane Storage Facilities, such entity shall be
obligated to enter into a separate backup fuel storage and supply
agreement with Cogen covering the storage and delivery of Butane.
The provisions of any separate agreement shall be substantially
similar to those of this Backup Fuel Agreement, with such entity
assuming the rights and obligations of Exxon for the remaining
term of this Backup Fuel Agreement with respect to the part of
Exxon's Complex so transferred, except that (i) Article 10 shall
reflect, as appropriate, that some of the Base Term of this Backup
Fuel Agreement shall have passed, (ii) Exhibits A, B and C shall
be amended, as appropriate, and (iii) the references to the Ground
Lease Agreement and the Steam Supply Agreement may or may not
continue to apply, depending on whether such entity succeeds to
Exxon's interest in the Ground Lease Agreement or the Steam Supply
Agreement.
26.2 By Cogen. Cogen will not assign, transfer, mortgage, pledge, or
hypothecate this Backup Fuel Agreement at any time, except that:
-60-
X. Xxxxx may at any time assign, pledge, or hypothecate this
Agreement, provided that, in accordance with the terms of the
Ground Lease Agreement, the Ground Lease Agreement is
simultaneously assigned, pledged, or hypothecated to the same
entity by Cogen; and
B. Following two years after the Date of Initial Commercial Operation,
Cogen may assign or transfer this Backup Fuel Agreement to an
unrelated entity, provided that such unrelated entity will also
assume Cogen's rights and obligations under the Ground Lease
Agreement and Steam Sale Agreement, and (i) first deliver to Exxon
its written assumption agreement substantially in the form of
Exhibit D-1 to be bound by all of the provisions of this Backup
Fuel Agreement, the Ground Lease Agreement and Steam Sale
Agreement; (ii) have the personnel, experience, equipment and other
resources reasonably required to perform its obligation under this
Backup Fuel Agreement, the Ground Lease Agreement and Steam Sale
Agreement; (iii) be financially capable based upon reasonable
standards of performing its obligations under this Backup Fuel
Agreement, the Ground Lease Agreement and Steam Sale Agreement;
-61-
and (iv) be in other respects reasonably acceptable to Exxon.
Subject to Section 26.4, this Backup Fuel Agreement will be
binding on and inure to the benefit of the successors and assigns
of Cogen.
26.3 Continuing Obligations. No assignment of this Backup Fuel Agreement
by Exxon or Cogen pursuant to Section 26.1 or 26.2 will operate to relieve Exxon
or Cogen of its obligations to the other under this Backup Fuel Agreement which
have accrued prior to the effective date of the assignment. An obligation will
be deemed to have accrued before the effective date of an assignment only if all
substantive elements of the obligation have accrued by that date. An assignment
of this Backup Fuel Agreement will relieve the assignor of any obligations to
the other Party under this Backup Fuel Agreement which have not accrued before
the effective date of the assignment; provided, however, that the assignor shall
continue to be obligated under this Backup Fuel Agreement if any such assignment
shall be ineffective.
26.4 Rights of the Financier and Other Mortgagees and Lenders.
A. With regard to the initial Financier (General Electric Power
Funding Corporation), Exxon upon request of such Financier will
first execute and deliver a consent to assignment substantially in
the form shown in Exhibit E. With respect to the
-62-
designated Affiliate of General Electric Power Funding
Corporation, upon (a) any refinancing of the initial loan for the
construction of the Cogeneration Facility, (b) acknowledgement by
General Electric Power Funding Corporation in writing that it is
no longer the Financier to be recognized by Exxon for purposes of
this Backup Fuel Agreement and (c) the request of such designated
Affiliate, Exxon and Cogen will execute and deliver a recognition
agreement substantially in the form shown in Exhibit F.
Thereafter, if Cogen assigns, mortgages, pledges, or hypothecates
this Backup Fuel Agreement to secure a loan from another Financier
to be recognized as the Financier by Exxon for purposes of this
Backup Fuel Agreement, pursuant to Section 26.2 above, in
connection therewith Exxon will execute a similar consent to any
such assignment as may be reasonably requested by the other
Financier and Exxon will give the information specified in Section
26.5 below.
B. On instructions from the Financier, unless otherwise-directed by a
court of competent jurisdiction, Exxon will make all payments due
Cogen under this Backup Fuel Agreement in accordance with the
written instructions of the
-63-
Financier in conformity with its documentation with Cogen, and in
such event Exxon will not be liable to Cogen for such payments.
C. If Cogen becomes in default under any loan documentation with the
Financier or any successor or assign of Financier holding a
mortgage, pledge or hypothecation of Cogen's interest in this
Backup Fuel Agreement, the Financier or such successor or assign
may assume or cause a third party to assume Cogen's rights and
obligations under this Backup Fuel Agreement at any time, provided
that the Financier or such successor, assign, or third party must
first give Exxon reasonable written notice of such assumption,
which notice shall contain a request (which specifically
references this Section 26.4C) for a list of all defaults of Cogen
under this Backup Fuel Agreement, the Ground Lease Agreement and
the Steam Sale Agreement, at least thirty (30) Days in advance and
must first (i) enter into an agreement with Exxon agreeing to
assume Cogen's rights and obligations thereafter accruing under
this Backup Fuel Agreement, the Ground Lease Agreement and the
Steam Sale Agreement and to cure all existing defaults of Cogen
under this Backup Fuel Agreement, the Ground Lease Agreement
-64-
and the Steam Sale Agreement that can be cured (including without
limitation paying all amounts owed by Cogen to Exxon, subject to
applicable caps on such amounts), pursuant to and as provided in
an assumption agreement substantially in the form of Exhibit D-2;
provided that the Financier or any nominee or designee of the
Financier holding the interest in this Backup Fuel Agreement for
the benefit of the Financier may enter into such an assumption
agreement substantially in the form of Exhibit D-3; (ii) have the
personnel, experience, equipment, and other resources reasonably
required to perform its obligations under this Backup Fuel
Agreement, the Ground Lease Agreement and Steam Sale Agreement;
(iii) be financially capable based upon reasonable standards of
performing its obligations under this Backup Fuel Agreement, the
Ground Lease Agreement and the Steam Sale Agreement, and (iv) be
in the other respects reasonably acceptable to Exxon. In such
event, Exxon will accept performance by such Financier, successor,
assign, or third party and the time limitation in Section 26.2
respecting assignment by Cogen will not apply to such Financier,
successor, assign, or third party. Similarly, if
-65-
the general partner of Cogen becomes in default under its
partnership agreement with the designated Affiliate of General
Electric Power Funding Corporation, the designated Affiliate may
designate a new general partner of Cogen, provided that such new
general partner has the personnel, experience, equipment and other
resources reasonably required to perform its obligations under
this Backup Fuel Agreement, the Ground Lease Agreement and the
Steam Sale Agreement and is in other respects reasonably
acceptable to Exxon. Exxon agrees that General Electric Company
and General Electric Power Funding Corporation meet the
requirements of this Section 26.4C (ii), (iii), and (iv) (and the
comparable requirements of Section 26.4F (ii) (b), (c), and (d).
D. Following the assumption of Cogen's rights and obligations under
this Backup Fuel Agreement by the Financier or its successor,
assign, or a third party pursuant to Section 19.4C, such
Financier, successor, assign, or third party may assign its rights
and obligations under this Backup Fuel Agreement to any entity,
provided that such Financier, successor, assign, or third party
must first give Exxon reasonable written
-66-
notice of such assignment at least thirty (30) Days in advance and
must first meet the requirements of Section 26.4C (i), (ii),
(iii), and (iv). Any such entity may with reasonable written
notice to Exxon at least thirty (30) Days in advance assign its
rights and obligations under this Backup Fuel Agreement to other
entities meeting the requirements of Section 26-4C (i), (ii),
(iii), and (iv). In such event, Exxon will accept performance by
such entity.
E. Notwithstanding any other provision of this Backup Fuel Agreement,
after the Financier or any successor, assign, third party or other
entity referred to in Section 26.4C or 26.4D above assumes
Cogen's rights and obligations under this Backup Fuel Agreement,
Exxon will retain all of its rights under this Backup Fuel
Agreement, including without limitation the right to terminate
this Backup Fuel Agreement for any of the reasons specified in
Article 17. Further, Cogen and the Financier (and its successors
and assigns) will give Exxon concurrent notice of any default by
Cogen and the exercise by Financier (and its successors and
assigns) of any remedy under any of the documentation between
Cogen and
-67-
Financier (and its successors and assigns) pertaining to the
Cogeneration Facility. If the Financier or any assignee of the
Financier becomes entitled to remove part or all of the
Cogeneration Facility from the Leased Premises, Exxon will not
interfere with the exercise of such right of approval.
F. In the event of the rejection of this Backup Fuel Agreement, the
Ground Lease Agreement and the Steam Sale Agreement prior to their
stated expiration dates pursuant to Section 365 of the Bankruptcy
Code of 1978, as amended, or any successor provision thereto, in a
case wherein Cogen is the debtor, Exxon will enter into a new
backup fuel agreement, a new ground lease of the Leased Premises
and a new steam sale agreement with the Financier or the same
nominee or designee of the Financier for the remainder of the term
of this Backup Fuel Agreement, the Ground Lease Agreement and
Steam Sale Agreement, respectively (assuming no rejection had
occurred), effective, in each case, as at the date of such
rejection and upon substantially the same covenants, agreements,
terms, provisions and limitations herein contained and therein
-68-
contained (in each case, excluding a provision equivalent to this
Section 26.4F), provided:
(i) the Financier delivers a written request to Exxon for such new backup
fuel agreement, new ground lease and new steam sale agreement within
thirty (30) days from the date of such rejection, which written request
is accompanied by payment to Exxon of all amounts due to Exxon under
this Backup Fuel Agreement, the Ground Lease Agreement and the Steam
Sale Agreement and unpaid as at the date of such request and which
request identifies the party to act as purchaser under such new backup
fuel agreement, as lessee under such new ground lease and supplier under
the new steam sale agreement;
(ii) the Financier or such nominee or designee, who is to act as purchaser
under such new backup fuel agreement, as lessee under such new ground
lease and supplier under the new steam sale agreement must (a) cure all
existing defaults of Cogen under this Backup Fuel Agreement, the Ground
Lease Agreement and the Steam Sale Agreement that can be cured and that
would exist but for such
-69-
rejection (including without limitation paying all amounts owed by Cogen
to Exxon, subject to the limitations of recovery set forth in Article 10
of the Ground Lease Agreement), (b) have the personnel, experience,
equipment, and other resources reasonably required to perform its
obligations under the new backup fuel agreement, new ground lease
agreement and the new steam sale agreement, (c) be financially capable
based upon reasonable standards of performing its obligations under the
new backup fuel agreement, new ground lease agreement and the new steam
sale agreement, and (d) be in the other respects reasonably acceptable
to Exxon;
(iii) such new backup fuel agreement, new ground lease agreement and new steam
sale agreement will expressly provide that Exxon will not be required to
deliver actual possession of the Leased Premises on the date of
execution and delivery thereof free of lessees, tenants or other
occupants;
(iv) such new backup fuel agreement, new ground lease agreement and new steam
sale agreement will expressly provide that with respect to
-70-
all representations, warranties and covenants of Exxon under the new
backup fuel agreement, new ground lease agreement and new steam sale
agreement that refer to the "date hereof" or "effective date of this
Agreement" or words or phrases or provision of similar import, the same
refer to the date of this Backup Fuel Agreement, the Ground Lease
Agreement and of the Steam Sale Agreement, respectively, and not the date
of execution and delivery of such new backup fuel agreement, new ground
lease agreement and new steam sale agreement and it is agreed that Exxon
will not be obligated to remove any liens placed on the Leased Premises or
any other part of the Exxon Complex subsequent to the date hereof;
(v) the last sentence of Section 8.2 of such new ground lease agreement will
expressly exclude Cogen, the Ground Lease Agreement and persons claiming
by, through or under Cogen or its successors and assigns under the Ground
Lease Agreement (and actions or omissions of such persons) and claims and
actions of the same from the operation thereof; and
-71-
(vi) the Financier or such nominee or designee enters into a new
backup fuel agreement, ground lease agreement and a new steam
sale agreement, unless the Backup Fuel Agreement, Ground
Lease Agreement and Steam Sale Agreement have been previously
terminated in accordance with their terms other than in the
event the Backup Fuel Agreement, Ground Lease Agreement and
Steam Sale Agreement are rejected pursuant to Section 365 of
the Bankruptcy Code of 1978, as amended, or any successor
provision thereto, in a case wherein Cogen is the debtor.
G. So long as there exists a Financier, Exxon and Cogen will not,
without the prior written consent of the Financier (which consent
will not be unreasonable delayed or withheld) enter into a written
amendment of this Backup Fuel Agreement.
26.5 Status Certificates. Either Party from time to time at the request
of the other Party will sign promptly a written certificate confirming that this
Backup Fuel Agreement has been duly authorized, is valid, and does not conflict
with the articles of incorporation, by-laws, or partnership agreement of the
Party in question, and stating whether the Backup Fuel Agreement is in full
force and effect; whether it has been modified or amended, and if so, the
substance of such
-72-
modification or amendment; whether there have been any uncured defaults; whether
there are any offsets, counterclaims, or defenses to be asserted by that Party
against the other under this Backup Fuel Agreement; and such other information
as may be reasonably requested.
ARTICLE 27
COUNTERPARTS
27.1 This Backup Fuel Agreement may be executed in any number of
counterparts, and each executed counterpart will have the same force and effect
as an original instrument.
ARTICLE 28
CHOICE OF LAW
28.1 This Backup Fuel Agreement will be governed by and construed in
accordance with the laws of the State of New Jersey.
ARTICLE 29
AUTHORITY
29.1 Representations and Warranties of Exxon. Exxon hereby represents
and warrants to Cogen as follows:
A. Exxon is a corporation duly organized and existing in good
standing under the laws of the State of New Jersey.
-73-
B. Exxon possesses all requisite power and authority to enter into and
perform this Backup Fuel Agreement and to carry out the
transactions contemplated herein.
C. No suit, action or arbitration, of legal, administrative or other
proceeding is pending against Exxon that would affect the validity
or enforceability of this Backup Fuel Agreement or the ability of
Exxon to materially fulfill its commitments hereunder.
29.2 Representations and Warranties of Cogen. Cogen hereby represents
and warrants to Exxon as follows:
X. Xxxxx is a limited partnership duly organized and existing under
the laws of the State of Delaware and is duly qualified to do
business in the State of New Jersey.
X. Xxxxx possesses all requisite power and authority to enter into and
perform this Backup Fuel Agreement and to carry out the
transactions contemplated herein.
C. No suit, action or arbitration, or legal, administrative or other
proceeding is pending against Cogen that would affect the validity
or enforceability of this Backup Fuel Agreement or the ability of
Cogen to materially fulfill its commitments hereunder.
-74-
IN WITNESS WHEREOF, the Parties have caused this Backup Fuel Agreement
to be signed by their respective officers duly authorized as of the day and year
first set forth above.
ATTESTED BY: EXXON CORPORATION
/s/ X.X. Xxxxx By: /s/ X. X. Xxxxxxxx, Xx.
------------------------ ------------------------------
Assistant Secretary of X. X. Xxxxxxxx, Xx.
Exxon Corporation Vice President of
Exxon Corporation, U.S.A., a
Division of Exxon Corporation
COGEN TECHNOLOGIES LINDEN VENTURE,
L.P. (D/B/A COGEN TECHNOLOGIES
LINDEN VENTURE, LIMITED PARTNERSHIP)
By: COGEN TECHNOLOGIES LINDEN,
LTD., (D/B/A COGEN TECHNOLOGIES
LINDEN, LIMITED PARTNERSHIP),
General Partner
By: COGEN TECHNOLOGIES, INC.
ATTEST: General Partner
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxx X. Xxxxxx
------------------------- -----------------------------------
Assistant Secretary Xxxxxxxx X. Xxxxxx
Vice President
-75-
ACKNOWLEDGEMENT
STATE OF TEXAS S
S SS.
COUNTY OF XXXXXX S
BE IT REMEMBERED, That on this 4th of October, 1991, before me, the
subscriber, a notary public, personally appeared X.X. XXXXXXXX, XX., who being
by me duly sworn on his oath, deposed and made proof to my satisfaction, that he
is an Assistant Secretary of Exxon Corporation, the Corporation named in the
within instrument; that X. X. XXXXXXXX, XX., is Vice President of Exxon
Company, U.S.A., a Division of Exxon Corporation; that the execution, as well as
the making of this instrument, has been duly authorized pursuant to a resolution
of the Board of Directors of Exxon Corporation; that the deponent well knows the
corporate seal of Exxon Corporation; and that the seal affixed to said
instrument is the proper corporate seal and was thereto affixed and said
instrument signed and delivered by X. X. XXXXXXXX, XX., as and for the voluntary
act and deed of Exxon Corporation, in presence of deponent, who thereupon
subscribed his name thereto as attesting witness.
Given under my signature and seal of office this 4th day of October,
1991.
/s/ Xxxxxx Xxxxxxxxx
---------------------------
NOTARY PUBLIC in and for
XXXXXX COUNTY, TEXAS
My commission expires:
10/15/94
------------------------
-76-
ACKNOWLEDGEMENT
STATE OF TEXAS
SS.
COUNTY OF XXXXXX
BE IT REMEMBERED, That on this 27th day of September, 1991, before me, the
subscriber, a notary public, personally appeared Xxxxxxxx X. Xxxxxx who is the
Vice President of Cogen Technologies, Inc., General Partner of Cogen
Technologies Linden, Ltd., (D/B/A Cogen Technologies Linden, Limited
Partnership), which is the General Partner of Cogen Technologies Linden Venture,
L.P., a Delaware limited partnership (D/B/A Cogen Technologies Linden Venture,
Limited Partnership), who I am satisfied is the person who signed this
instrument, and he acknowledged that he signed, sealed with the corporate seal,
and delivered the same as such officer aforesaid, and that this instrument is
the voluntary act and deed of such corporation, on behalf of Cogen Technologies
Linden Venture, L.P.
Given under my signature and seal of office this 27th day of September,
1991.
/s/ XXXXXX X. XXXXXXXX
---------------------------
NOTARY PUBLIC IN AND FOR
XXXXXX COUNTY, TEXAS
My Commission expires:
July 27, 1993
-------------------------
-77-
