THERMAL ENERGY SERVICE AGREEMENT
THIS THERMAL ENERGY SERVICE AGREEMENT ("Agreement") is entered into as of
the 26th day of September 1996, by and between ATLANTIC JERSEY THERMAL
SYSTEMS, INC., a Delaware corporation ("Seller"), and XXXXX PLAZA ASSOCIATES, A
New Jersey general partnership ("Buyer").
WITNESSETH:
WHEREAS, Seller is engaged in the business of producing and selling heating
and cooling energy; and
WHEREAS, Buyer operates the Xxxxx Plaza Hotel and Casino and Xxxxx World's
Fair Casino at Xxxxx Plaza located at Mississippi and Xxxxxxx Xxxxxxx xxx xxx
Xxxxxxxxx, Xxxxxxxx Xxxx, Xxx Xxxxxx 00000, as the same may be expanded or
improved from time to time ("Buyer's Facilities"); and
WHEREAS, Buyer presently purchases from Seller and Seller presently sells
to Buyer all of Buyer's heating and cooling energy requirements for Buyer's
Facilities pursuant to that certain Thermal Energy Sale Agreement ("TESA") dated
as of February 1, 1995 between Seller and Buyer, as amended by that certain
letter agreement ("Letter Agreement") dated as of February 23, 1995 between
Seller and Buyer, as further amended by that certain Letter Agreement ("Second
Letter Agreement") dated as of September 15, 1995 between Seller and Buyer; and
WHEREAS, Seller presently operates and maintains "Seller's Required
Facilities", as that term is defined in the TESA, pursuant to that certain
Operating Agreement ("Operating Agreement") dated as of May 1, 1995 between
Seller and Buyer; and
WHEREAS, Seller desires to obtain the exclusive right to use the steam and
chilled water production facilities located on-site at Buyer's Facilities in
order to sell to Buyer all of Buyer's heating and cooling energy requirements
for Buyer's Facilities at an additional cost savings to Buyer; and
WHEREAS, Buyer is willing to allow Seller to operate the steam and chilled
water production facilities and emergency electric generating facilities located
on-site at Buyer's Facilities on an exclusive basis for the aforestated purposes
on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements hereinabove and hereinafter set forth and such other
good and valuable considerations, the receipt and sufficiency of which are
hereby
acknowledged, Buyer and Seller, each intending to be legally bound, do hereby
agree as follows:
1. DEFINITIONS
Except as otherwise expressly provided herein, all capitalized terms used
in this Agreement shall have the respective meanings as set forth below:
(a) "Billing Month" shall mean any calendar month, or any portion
thereof, during which Buyer receives and Seller delivers Thermal Energy to
Buyer's Facilities in accordance with the terms and conditions of this
Agreement.
(b) "Contractual Obligation" shall mean, as to either party to this
Agreement, any contract, agreement, indenture, instrument or undertaking to
which such party is a party or by which any of its properties is bound or
affected.
(c) "Emergency Electric Generating Facilities" shall mean, the diesel
generators, motors, pumps, heat exchangers, piping, valves, day tanks and
starters ("Diesel Sets") and electric switchgear and transfer switches necessary
to start and operate the Diesel Sets, and all appurtenant equipment thereto,
together with any and all parts, supplies, meters and equipment installed or
added thereto, which constitute the emergency electric generating facilities
located at Buyer's Facilities, including but not limited to those more
specifically identified on Schedule 1(c) attached hereto and made a part hereof.
(d) "Emergency Electric Services" shall mean electric services
provided or which could be provided to Buyer by Seller from the Emergency
Electric Generating Facilities in the event of an interruption in electric
service to Buyer's Facilities by Atlantic City Electric Company or successor
thereto.
(e) "Governmental Authority" shall mean the federal government and
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any other governmental entity with authority over
any aspect of this Agreement or the performance of any of the obligations
hereunder.
(f) "Metering Equipment" shall have the meaning set forth in Section
8.1 of this Agreement.
(g) "Points of Delivery" shall mean the physical point where Thermal
Energy is delivered to Buyer, as more specifically described on Schedule 1(g)
attached hereto and made a part hereof.
2
(h) "Points of Return" shall mean the physical point where Seller is
anticipated to receive the chilled water return and condensate from Buyer, as
more specifically described on Schedule 1 (h) attached hereto and made a part
hereof.
(i) "New Service Commencement Date" shall have the meaning set forth
in Section 2.2 of this Agreement.
(j) "Thermal Energy" shall mean, as the context requires, quantities
of heating and cooling energy as measured in mmBtu's and ton-hrs., respectively,
extracted from the circulating flows of the steam/condensate and chilled water
provided to Buyer at Buyer's Facilities in accordance with the delivery
specifications set forth on Schedule 1 (j) of this Agreement.
(k) "Thermal Energy Capacity Charges" shall mean the capacity charges
for Thermal Energy for each Billing Month determined in accordance with the
capacity charges set forth on Schedule 7.1 of this Agreement.
(l) "Thermal Energy Production Facilities" shall mean the chillers,
boilers, cooling towers, pumps and all appurtenant equipment thereto, together
with any and all parts, supplies and equipment installed or added thereto, and
all improvements, additions or replacements made thereto (on the primary side)
which constitute the steam and chilled water production facilities located at
Buyer's Facilities, and shall include Buyer Owned Thermal Energy Production
Facilities and Seller Owned Thermal Energy Production Facilities, all as more
specifically identified on Schedule 1(l) attached hereto and made a part hereof.
(m) "Thermal Energy Usage Charges" shall mean the usage charges for
Thermal Energy for each Billing Month determined in accordance with the usage
charges set forth on Schedule 7.1 of this Agreement.
(n) "Xxxxx Plaza (East Expansion)" shall mean the building and
associated structures of the former Holiday Inn hotel property, owned by Buyer
and located on the parcel bounded by Xxxxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxx
Avenue and The Boardwalk in Atlantic City, New Jersey.
(o) "Xxxxx Plaza (Main)" shall mean the building and associated
structures owned by Buyer and located on the parcel bounded by Mississippi
Avenue, Pacific Avenue, Columbia Avenue and The Boardwalk in Atlantic City, New
Jersey.
3
2. TERM AND TERMINATION OF TESA
2.1 Term. This Agreement shall be in full force and effect and be legally
binding upon the parties and their permitted successors and assigns as of the
date hereof and shall remain in effect for a term of twenty (20) years following
the New Service Commencement Date, unless otherwise terminated as provided
herein (the "Term").
2.2 New Service Commencement Date. Buyer and Seller shall mutually agree
upon a New Service Commencement Date upon which Seller shall first make
available and deliver to Buyer's Facilities Thermal Energy and upon which
[Atlantic Operating Systems, Inc.], Seller's affiliate, assumes operation of
Buyer's Emergency Electric Generating Facilities as provided herein, but in no
event shall the New Service Commencement Date occur any later than October 15,
1996, unless otherwise agreed to in writing by the parties.
2.3 Termination of TESA. As of the New Service Commencement Date, the TESA,
Letter Agreement, Second Letter Agreement and Operating Agreement shall
terminate and be of no further force and effect, it being the intent of the
parties that each of such agreements be superseded and replaced by this
Agreement and the operating agreement more specifically described in Section 5.2
of this Agreement.
3. LICENSE AGREEMENT
3.1 Grant of License. Buyer hereby grants to Seller (i) a non-exclusive
license throughout the Term of this Agreement to enter upon Buyer's Facilities
in order to inspect and gain access to the Thermal Energy Production Facilities
and Emergency Electric Generating Facilities; (ii) an exclusive license
commencing on the New Service Commencement Date and continuing thereafter
throughout the Term of this Agreement to use, operate and maintain the Thermal
Energy Production Facilities and Emergency Electric Generating Facilities to the
extent and for the purposes set forth herein, which license shall be irrevocable
for so long as the Agreement remains in effect and Seller is not in default of
any of its obligations hereunder; and (iii) a non-exclusive license to use,
without interruption, the electrical service, makeup water lines and fire
control system which support the Thermal Energy Production Facilities and
Emergency Electric Generating Facilities to the extent necessary in the use,
operation and maintenance of the Thermal energy Production Facilities and
Emergency Electric Generating Facilities; provided, however, that Seller shall
at no time interfere with the business operations of Buyer's Facilities
including, without limitation, the operation of the casino-hotel located at
Buyer's Facilities.
4
3.2 Consideration for Licenses. In consideration for the licenses granted
to Seller by Buyer pursuant to the provisions of Section 3.1 above, Seller
hereby agrees to pay to Buyer the sum of Five Million ($5,000,000.00) Dollars
(the "License Fee"). The License fee shall be payable on the New Service
Commencement Date, but in no event later than September 30, 1996, in immediately
available funds to an account designated by Buyer.
4. EASEMENTS
4.1 Easements and Rights-Of-Way; Access. Buyer shall grant, or cause to be
granted, to Seller all rights-of-way, access rights, easements, licenses and
other rights with respect to Buyer's Facilities as may be reasonably necessary
for Seller to perform its obligations and exercise its rights hereunder. Buyer
shall use commercially reasonable efforts to obtain, or cause to be obtained (in
form and substance reasonably satisfactory to Seller) non-disturbance agreements
or, if applicable, waivers and/or consents from each of its mortgagees or
landlords with respect to all rights of way, access rights, easements, licenses
and other property rights which Seller is obligated to provide or cause to be
provided to Seller pursuant to this Article 4.
5. THERMAL ENERGY PRODUCTION FACILITIES, EMERGENCY ELECTRIC GENERATING
FACILITIES AND RELATED REQUIREMENTS
5.1 Thermal Energy Production Facilities. Seller will engineer, permit,
construct, finance, operate and maintain the Thermal Energy Production
Facilities so as to produce and deliver Thermal Energy to Buyer at the agreed
upon Points of Delivery.
5.2 Emergency Electric Generating Facilities. Seller will engineer, permit,
construct, finance, operate and maintain the Emergency Electric Generating
Facilities so as to produce and deliver Emergency Electric Services to Buyer as
required.
5.3 Facility Operation. Seller will use, operate and maintain the Thermal
Energy Production Facilities and Emergency Electric Generating Facilities in a
manner which meets or exceeds good industry practice, and Seller shall secure
and maintain, at its sole cost and expense, all permits necessary for the use,
operation and maintenance of Buyer's Thermal Energy Production Facilities and
Emergency Electric Generating Facilities. As soon as practicable, but in no
event later than October 15, 1996, Buyer and Seller shall enter into a
definitive operating agreement on terms mutually acceptable to each of them
setting forth their respective responsibilities for the use, operation and
maintenance
5
of the Thermal Energy Production Facilities and Emergency Electric Generating
Facilities.
5.4 Facility Ownership. Title to the Buyer Owned Thermal Energy Production
Facilities and Emergency Electric Generating Facilities shall remain with Buyer
and Seller shall not remove, alter (except as otherwise required or permitted
under this Agreement) or permit any lien to exist on such Thermal Energy
Production Facilities and Emergency Electric Generating Facilities.
5.5 Buyer's Gas Requirements. Commencing on the New Service Commencement
Date and continuing throughout the Term of this Agreement, Seller shall pay for
all natural gas requirements of Buyer, provided, however, that Buyer shall
reimburse Seller for the as-delivered cost of all gas quantities delivered to
Buyer for use in its kitchen facilities, on a firm basis. Seller shall maintain
a separate meter to measure and record gas delivered to Buyer's kitchen
facilities. Upon the execution and delivery of this Agreement, Seller shall
proceed with due diligence to transfer all natural gas service at Buyer's
Facilities to Seller as of the New Service Commencement Date or as soon as
practicable thereafter. If Seller is proceeding diligently with such transfer
but is unable to effect the same as of the New Service Commencement Date, Buyer
agrees to take gas service at such meters in its name and Seller shall reimburse
Buyer at cost for all gas service taken in Buyer's name for use in Buyer's
Facilities until such time as Seller is able to effect such transfer.
5.6 Removal of Temporary Facilities. No later than December 31, 1997,
Seller shall dismantle and remove the temporary building and the Thermal Energy
generating facilities in such building located on the Xxxxx Plaza (East
Expansion) parcel and previously constructed and installed by Seller to enable
Seller on a temporary basis to provide all the Thermal Energy requirements of
the Xxxxx Plaza (East Expansion) and the Xxxxx Plaza (Main). Seller shall
reasonably restore the site of such temporary building to its prior condition.
5.7 Buyer's Electric Requirements. Commencing on the New Service
Commencement Date and continuing throughout the Term of this Agreement, Seller
shall be responsible for establishing and coordinating the electric submetering
of electric service to the Thermal Energy Production Facilities and Seller shall
grant a credit to Buyer on a monthly basis equal to the cost of such electricity
delivered to Buyer's Thermal Energy Production Facilities, provided, however,
that Buyer shall provide Seller with timely copies of its electric bills. The
parties intend that Buyer shall remain the customer of record for all electric
service to Buyer's Facilities.
6
5.8 Buyer's Water Requirements. Commencing on the New Service Commencement
Date and continuing throughout the Term of this Agreement, Seller shall be
responsible for measuring the make-up water associated with the water
requirements of the Thermal Energy Production Facilities and Seller shall grant
to Buyer a credit on a quarterly basis equal to the cost of such water usage at
the currently applicable tariff rates.
6. PURCHASE AND SALE OF THERMAL ENERGY AND EMERGENCY ELECTRIC SERVICES
6.1 Purchase and Sale of Thermal Energy. Commencing on the New Service
Commencement Date and continuing thereafter throughout the Term of this
Agreement, Seller will produce and deliver for sale to Buyer, and Buyer will
purchase and receive from Seller, all of Buyer's Thermal Energy requirements for
Buyer's Facilities. Such Thermal Energy requirements will be produced by Seller
from the Thermal Energy Production Facilities; provided, however, that Seller,
at its sole reasonable discretion, may provide such Thermal Energy requirements
from a centralized thermal energy plant to be owned and operated by Seller or an
affiliate thereof, in which event Seller will maintain the Thermal Energy
Production Facilities in a moth-ball condition which meets or exceeds good
industry practice and in which event appropriate changes will be made to the
Points of Delivery and Points of Return. Provided Buyer's Thermal Energy
requirements do not exceed the levels of contract capacity specified in Schedule
7.1 attached hereto on more than two (2) occasions within any two (2)
consecutive billing periods or in any two (2) Billing Months within consecutive
calendar years, the costs thereof shall be as set forth in Schedule 7.1. Subject
to the provisions of Section 7.2 hereof which shall control in the circumstances
described therein, if Buyer's Thermal Energy requirements exceed the levels of
contract capacity specified in Schedule 7.1 on more than two (2) occasions
within any two (2) consecutive billing periods, the contract capacity specified
in Schedule 7.1 shall be increased to the maximum quantity of capacity delivered
to Buyer and the cost thereof shall be as set forth in Schedule 7.1.
6.2 Purchase and Sale of Emergency Electric Services. Commencing on the New
Service Commencement Date and continuing thereafter throughout the Term of this
Agreement, Seller will produce and deliver for sale to Buyer, and Buyer will
purchase and receive from Seller, Emergency Electric Services produced from the
Emergency Electric Generating Facilities that may be required in the event of an
interruption in electric services to Buyer by Atlantic City Electric Company or
successor thereto.
7
6.3 Points of Delivery and Return. Buyer will obtain its Thermal Energy, in
the case of heating, by extracting heat from and, in the case of cooling, by
transferring heat to, the circulating flows of steam and chilled water that
Seller will make available to Buyer at the agreed upon Points of Delivery. Buyer
agrees to take and accept the flows of steam and chilled water at such Points of
Delivery and return the condensate and chilled water to Seller at the agreed
upon Points of Return.
6.4 Point of Transfer, Risk of Loss. The sale of Thermal Energy shall be
deemed to occur at the Points of Delivery and the risk of loss of the
circulating medium shall transfer to Buyer at such points and shall transfer
back to Seller at the Points of Return.
6.5 Delivery Specifications. The Thermal Energy delivered by Seller at the
Points of Delivery shall satisfy the conditions of temperature and pressure
specified in Schedule 1 (j) attached hereto and made a part hereof.
6.6 Treatment of Condensate and Chilled Water. Buyer shall not interfere
with, or restrict (other than to extract its Thermal Energy requirements), or
contaminate in any way the flows of steam, condensate or chilled water supplied
to or collected from Buyer hereunder. Buyer agrees to compensate Seller for the
reasonable costs of treating or replacing any condensate or chilled water that
is either contaminated or not returned, after making allowance for reasonable
losses occurring within normal operating conditions by Buyer, as reasonably
demonstrated by Seller to Buyer. Further, it is agreed that Seller may suspend
service if Buyer fails to cure any contamination of steam, condensate or chilled
water caused by Buyer, as reasonably demonstrated by Seller to Buyer, within
thirty (30) days after being advised in writing by Seller of such contaminating,
provided, however, that if the nature of such contamination is such that the
same cannot reasonably be cured within such thirty (30) day period, Buyer shall
not be deemed to be in default if it shall have commenced such cure within such
thirty (30) day period and thereafter diligently and continuously prosecutes
such cure to completion, and Seller may not suspend service to Buyer during such
period of cure.
6.7 Scheduled Outages. Whenever it shall become necessary for Seller to
schedule an outage so that Seller may make repairs, replacements or changes in
the Thermal Energy Production Facilities, both parties shall exercise reasonable
efforts to coordinate the timing of the scheduled outage, and, in any event,
Seller shall give Buyer not less than ten (10) days prior written notice of such
outage. Seller shall use reasonable means to limit the duration of the outage
and shall attempt to schedule chilled water outages during winter months and
steam outages during summer
8
months. Both parties agree to act reasonably and in good faith, recognizing that
such outages will, from time to time, be required. Notwithstanding anything
herein contained to the contrary, Seller agrees that outages shall not and may
not result in the reduction of Thermal Energy services required to continue to
maintain and meet Buyer's Thermal Energy requirements within reasonable levels
hereunder.
6.8 Buyer's Rights During Interruption in Service. If at any time during
this Agreement, Seller shall fail to deliver Buyer's Thermal Energy requirements
and such failure is, in Buyer's reasonable judgment, attributable to Seller's
failure to diligently pursue and implement appropriate corrective actions
consistent with the facts and circumstances of the interruption, Buyer may at
its option elect to cure Seller's non performance, without being in default of
Buyer's obligations under this Agreement, by producing its own Thermal Energy
(with or without use of the Thermal Energy Production Facilities) or purchasing
and accepting deliveries of Thermal Energy from any other source. In such event,
Seller shall reimburse Buyer for the excess of any costs if incurred by Buyer to
cover over and above Seller's rates and charges hereunder.
7. CHARGES AND PAYMENTS
7.1 Charges for Heating and Cooling Service. For each Billing Month in
which Buyer receives Thermal Energy from Seller, Buyer shall pay Seller (i) the
applicable Thermal Energy Capacity Charges for Thermal Energy set forth in
Schedule 7.1 attached hereto and made a part hereof; (ii) the applicable Thermal
Energy Usage Charges for Thermal Energy set forth in Schedule 7.1 attached
hereto and made a part hereof; and (iii) the Supplemental Chilled Water Capacity
Charge.
7.2 Charges for Emergency Electric Services. For each billing month, Buyer
shall pay Seller a monthly fee, said monthly fee to escalate annually, as set
forth Schedule 7.1 attached hereto and made a part hereof, for Emergency
Electric Services which could be provided to Buyer by Seller from the Emergency
Electric Generating Facilities.
7.3 Adjustment in Thermal Energy Capacity Charges. In the event the Thermal
Energy required by Buyer increases at any time within five (5) years of the New
Service Commencement Date as the result of any expansion to Buyer's Facilities,
Seller shall, at Buyer's option exercisable within six (6) months of Buyer's
commencement of any expansion, provide such additional Thermal Energy
requirements to Buyer under the same rates, terms and conditions then applicable
under this Agreement.
9
7.4 Capacity Charge Payments; No Set-Off. Unless excused by reason of Force
Majeure, payment of the Thermal Energy Capacity Charges and Thermal Energy Usage
Charges are conditioned on Seller's ability to deliver to Buyer at the Points of
Delivery the full Thermal Energy requirements of Buyer under this Agreement, and
subject to the provisions of this Agreement, shall not otherwise be subject to
any set-off, counterclaim, abatement, or diminution. If Seller is unable to
deliver to Buyer when required any quantity of Thermal Energy up to the levels
of Contract Capacity specified in Schedule 7.1 the applicable Thermal Energy
Capacity Charges shall be adjusted to on a pro rated basis to account for such
deficiency.
7.5 Supplemental Riser Capital Charge. For each Billing Month commencing
with October 1996 and continuing through and until May 2002, Buyer shall pay
Seller the charges set forth in Schedule 7.5 attached hereto, which changes are
independent of any other obligations hereunder and shall not be subject to
set-off, counter claim, abatement, or diminution.
7.6 Invoice and Payments. Within fifteen (15) days following the close of
each Billing Month, Seller shall send Buyer a detailed invoice setting forth all
charges for Thermal Energy delivered to Buyer by Seller during such calendar
month. Payment, less any credits or rebates due to Buyer pursuant to this
Agreement, will be due and payable within thirty (30) days of receipt by Buyer
of the invoice from Seller, or the first business day following such day if such
day is not a business day. Buyer shall have the right at reasonable hours to
examine the testing records and meter reading charts of Seller to the extent
reasonably necessary to verify the accuracy of any invoice. If any such
examination reveals any error or inaccuracy in Seller's invoice, than proper
adjustment and correction thereof shall be made as promptly as practicable
thereafter.
7.7 Delinquent Payments. Any invoice tendered for service rendered
hereunder shall be deemed delinquent if not paid within thirty (30) days after
becoming due and payable. The outstanding balance of any delinquent invoice
shall accrue interest from the date due until paid, at the prime rate then in
effect at Citibank, N.A., as published in the Wall Street Journal or comparable
publication, plus one percent (2%) per annum.
8. METERING
8.1 Metering Equipment. Seller will furnish, install, and maintain for the
Term of this Agreement without charge to Buyer all required meters, instruments,
recording devices, and other related
10
data logging equipment required to measure and record all charges payable by
Buyer under this Agreement (collectively, the "Metering Equipment").
8.2 Testing. All Metering Equipment will be tested and calibrated by Seller
periodically in accordance with the manufacturer's instructions and good
industry practice. Test and calibration records will be issued to the Buyer upon
request. Further, Buyer may request additional meter tests at any time;
provided, however, if a meter is subsequently found to have a variance for
accuracy of less than three (3%) percent, Buyer will bear the reasonable cost of
such testing.
8.3 Adjustment to Prior Invoices. If any test establishes that a meter is
not accurately performing (i.e., in accordance with the manufacturer's variance
specifications), Seller shall make an adjustment in Buyer's invoices, measured
from the date it is determined by Seller or Buyer, in good faith, that the
inaccuracy began.
9. SALE OF THERMAL ENERGY TO THIRD PARTIES
9.1 Resale of Thermal Energy by Buyer. Thermal Energy may be resold by
Buyer to its tenants, provided such tenants occupy Buyer's Facilities and
provided that such resale does not subject Seller to any new or additional
governmental rules, regulations or laws, including but not limited to, tax laws
or regulations by any New Jersey regulatory authority. In case of any such
resale, Buyer shall remain primarily liable to Seller for all costs and charges
of Thermal Energy delivered to Buyer pursuant to this Agreement.
10. REPRESENTATIONS AND WARRANTIES
10.1 Seller Representations. Seller hereby represents and warrants that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has all requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby;
(b) Seller has or will obtain all necessary corporate approvals for
the execution and delivery of this Agreement and the performance of its
obligations hereunder;
(c) This Agreement is a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with
11
its terms, subject to the qualification, however, that the enforcement of the
rights and remedies herein is subject to (i) bankruptcy and other similar laws
of general application affecting rights and remedies of creditors and (ii) the
application of general principals of equity (regardless of whether considered in
a proceeding in equity or at law);
(d) To the best knowledge of Seller, as of the date of execution
hereof, no Governmental Approval (other than any Governmental Approvals which
have been previously obtained or disclosed, in writing, to Buyer), is required
to authorize, or is required in connection with the execution, delivery and
performance of this Agreement or the performance of Seller's obligations
hereunder which Seller has reason to believe that it will be unable to obtain in
due course; and
(e) Neither the execution nor delivery of this Agreement by Seller nor
compliance by Seller with any of the terms and provisions hereof (i) conflicts
with, breaches or contravenes the provisions of the corporate charter or bylaws
of Seller or any Contractual Obligation of Seller or (ii) results in a condition
or event that constitutes (or that, upon notice or lapse of time or both, would
constitute) an event or default under any Contractual Obligation of the Seller.
10.2 Buyer Representations. Buyer hereby represents and warrants that:
(a) It is a general partnership duly formed, validly and existing and
in good standing under the laws of the state of its formation and has all
requisite power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement and the performance
of its obligations hereunder have been duly authorized by all necessary
partnership action;
(c) This Agreement is a legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, subject to the
qualification, however, that the enforcement of the rights and remedies herein
is subject to (i) bankruptcy and other similar laws of general application
affecting rights and remedies of creditors and (ii) application of general
principals of equity (regardless of whether considered in a proceeding in equity
or at law);
(d) To the best knowledge of Buyer, as of the date of execution
hereof, no Governmental Approval (other than any Governmental Approvals which
have been previously obtained or
12
disclosed, in writing, to Seller) is required to authorize, or is required in
connection with the execution, delivery and performance of this Agreement or the
performance of Buyer's obligations hereunder which Buyer has reason to believe
that it will be unable to obtain in due course.
(e) Neither the execution and delivery of this Agreement by Buyer nor
compliance by Buyer with any of the terms and provisions hereof (i) conflicts
with, breaches or contravenes the provisions of the Partnership Agreement of
Buyer or any Contractual Obligation of Buyer or (ii) results in a condition or
event that constitutes (or that, upon notice or lapse of time or both, would
constitute) an event of default under any Contractual Obligation of the Buyer.
11. INDEMNIFICATION/INSURANCE
11.1 Seller's Indemnity. Seller hereby agrees to defend, indemnify and hold
harmless Buyer, its employees, officers, shareholders, directors and agents from
and against any and all claims, demands, suits, actions, recoveries, judgments,
and costs and expenses in connection therewith (including, without limitation,
reasonable attorneys' fees and expenses), made, brought or obtained on account
of the loss of life, property, or injury or damage to the person or property of
any person or persons whomsoever, which loss of life or property, or injury or
damage to persons or property, shall arise out of or in connection with Seller's
or its employees' use, operation and maintenance of the Thermal Energy
Production Facilities, or any act required of or omission by Seller, or any
agent or employee of Seller under this Agreement or in connection therewith.
11.2 Buyer's Indemnity. Buyer hereby agrees to defend, indemnify and hold
harmless Seller, its employees, officers, shareholders, directors and agents
from and against any and all claims, demands, suits, actions, recoveries,
judgments, and costs and expenses in connection therewith (including, without
limitation, reasonable attorneys' fees and expenses), made, brought or obtained
on account of the loss of life, property, or injury or damage to the person or
property of any person or persons whomsoever, which loss of life or property, or
injury or damage to persons or property, shall arise out of or in connection
with Sellers or its employees' operation of Buyer's Facilities (exclusive of the
Thermal Energy Production Facilities), or any act required of or omission by
Buyer, or any agent or employee of Buyer, under this Agreement or in connection
therewith.
11.3 Seller's Insurance. Seller shall maintain throughout the Term of this
Agreement, at its sole cost and
13
expense, the policies of insurance meeting the terms and conditions set forth on
Schedule 11.3 attached hereto and made a part hereof.
11.4 Buyer's Insurance. Commencing on the date of this Agreement and at all
times thereafter throughout the Term of this Agreement, Buyer shall maintain, at
is sole cost and expense, comprehensive general public liability (including
contractual) insurance, in an amount not less than $10,000,000, with respect to
any liability, losses, damages, expenses, claims, actions, judgments and
settlement for any personal injury, death or property or economic loss occurring
in Buyer's Facilities (exclusive of the Thermal Energy Production Facilities) or
surrounding premises and arising out of or incident to the operation,
maintenance, repair, construction, replacement or modification of Buyer's
Facilities (exclusive of the Thermal Energy Production Facilities).
11.5 Evidence of Insurance. Prior to commencing any construction or
delivering any Thermal Energy under this Agreement, Seller and Buyer shall each
furnish to the other one or more certificates of insurance evidencing the
existence of the coverages set forth in Sections 11.3 and 11.4, respectively.
Each certificate shall state that the insurance carrier will give Seller and
Buyer at least thirty (30) days written notice of any cancellation or material
change in the terms and conditions of such policy during the periods of
coverage.
12. DEFAULT
12.1 Seller Default. Anyone of the following events shall constitute an
"Event of Default" hereunder with respect to Seller:
(a) In connection with itself or its assets, Seller shall (i) apply
for or consent to the appointment of or taking of possession by a receiver or
liquidator, (ii) make a general assignment for the benefit of creditors, (ii)
file a petition for relief under the Federal Bankruptcy Code or similar state
law, or (iii) take similar action to commence a proceeding for relief under any
other law relating to the bankruptcy, insolvency, reorganization, or winding up
of itself or the composition or adjustment of its debts;
(b) An action or proceeding shall be commenced, without the
application or consent of Seller, in any court of competent jurisdiction for (i)
the liquidation, reorganization, dissolution, or winding up of Seller of the
composition or adjustment of its debts, (ii) the appointment of a trustee,
receiver, liquidator or custodian of Seller or substantially of all its assets,
or (iii) any similar relief under any law relating to Seller's bankruptcy or
insolvency, provided such proceeding shall
14
continue undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continues unstayed for ninety (90) days;
(c) Any representation or warranty made by Seller and contained in
this Agreement shall prove to have been incorrect in any material respect when
made; or
(d) Seller shall fail to (i) timely make any payment required
hereunder, or (ii) comply with any non-payment obligation under this Agreement
and shall fail to cure or remedy such default within thirty (30) days following
notice and written demand by Buyer to cure the same; provided, however, that
Seller's failure to provide and deliver to Buyer the Thermal Energy required
pursuant to this Agreement for any period of three (3) consecutive days, unless
excused due to Force Majeure or actions or inactions of Buyer its agents
representatives or employees, shall constitute an immediate Event of Default.
12.2 Buyer Default. Any one of the following events shall constitute an
"Event of Default" hereunder with respect to Buyer.
(a) In connection with itself or its assets, Buyer shall (i) apply for
or consent to the appointment of or taking of possession by a receiver or
liquidator, (ii) make a general assignment for the benefit of creditors, (ii)
file a petition of relief under the Federal Bankruptcy Code or similar state
law, or (iii) take similar action to commence a proceeding for relief under any
other law relating to the bankruptcy, insolvency, reorganization, or winding up
of itself or the composition or adjustment of its debts;
(b) An action or proceeding shall be commenced, without the
application or consent of Buyer, in any court of competent jurisdiction for (i)
the liquidation, reorganization, dissolution, or winding up of the buyer or the
composition or adjustment of its debts, (ii) the appointment of a trustee,
receiver, liquidator or custodian of Buyer or substantially all of its assets,
or (iii) any similar relief under any law relating to Buyer's bankruptcy or
insolvency, provided such proceeding shall continue undismissed or order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed for ninety (90) days;
(c) Any representation or warranty made by Buyer and contained in this
Agreement shall prove to have been incorrect in any material respect when made
by Buyer; or
(d) Buyer shall fail to comply with any provision of this Agreement
and shall fail to cure or remedy such default within
15
thirty (30) days following notice and written demand by Seller to cure the same.
13. REMEDIES
13.1 Seller's Remedies. Upon an Event of Default by Buyer, Seller may
declare the Buyer to be in material breach of this Agreement and (i) suspend
service until Buyer either cures the default or, in the case of nonpayment,
provides Seller with such assurances and security as Seller may reasonably
request, (ii) terminate this Agreement by written notice to Buyer, or (iii) seek
such other relief to which Seller may be entitled at law or equity.
13.2 Buyer's Remedies. Upon an Event of Default by Seller, Buyer may (i) to
the extent commercially practicable, cure the default by Seller and obtain
reimbursement (through direct cash payment, credit, offset or otherwise as Buyer
may elect) from Seller for all costs and expenses incurred by Buyer in
connection with such cure, (ii) terminate this Agreement by written notice to
Seller, or (iii) seek whatever relief to which Buyer may be entitled at law or
equity.
14. FORCE MAJEURE
14.1 Suspension of Performance. Neither Buyer nor Seller shall be in
default in respect of any obligation under this Agreement if the party is unable
to perform its obligation by reason of an event of Force Majeure, provided (i)
that the suspension of performance shall be commensurate with the nature and
duration of the event of Force Majeure and the non-performing party is using its
best efforts to restore its ability to perform, (ii) that for so long as an
event of Force Majeure relieves Seller of its obligation to deliver Thermal
Energy to Buyer as required under this Agreement, Buyer may elect, without being
in default of its obligations hereunder, to produce its own Thermal Energy or to
purchase and accept deliveries of Thermal Energy from any other source.
14.2 Termination by Reason of Force Majeure. Notwithstanding anything in
this Agreement contained to the contrary, if a party's performance is suspended
for more than one (1) year, the other party may terminate this Agreement upon
thirty (30) days written notice to the other, provided (with respect to an event
of Force Majeure by Seller) that upon such termination Buyer is able to generate
its own Thermal Energy or to obtain Thermal Energy from a third party.
16
14.3 Force Majeure Defined. Force Majeure shall mean any event that
prevents or delays a party from performing in whole or in part any obligation
arising under this Agreement and neither was within the reasonable control of
the non-performing party nor could have been prevented by reasonable actions
taken by the non-performing party, including, without limitation, an act of God,
explosion, fire, lightening, earthquake, hurricane, storm, civil disturbance,
strike, lock-out, unavailability of fuel or power, changes in law, orders of
governmental authorities, and equipment failures that are not due to the
negligence of the non-performing party.
15. TERMINATION
This Agreement shall terminate at the end of the Term and may otherwise be
sooner terminated only: (i) by Buyer upon the occurrence of an Event of Default
by Seller, (ii) by Seller upon the occurrence of an Event of Default by Buyer,
(iii) by either party in accordance with the provisions of Section 14.2 of this
Agreement, or (iv) by Buyer in the event of any increase in the cost of Thermal
Energy hereunder by more than ten (10%) percent and actually paid or to be paid
by Buyer resulting solely from the assertion of rate jurisdiction and imposition
of any law or regulation respecting rates, whether now existing or hereafter
enacted, (including without limitation any rate regulation by the State of New
Jersey Board of Public Utilities) or directly resulting form the administration
or interpretation of any such law or regulation respecting rate regulation by
any Governmental Authority.
16. MISCELLANEOUS
16.1 Assignment. Neither Party shall assign this Agreement without first
having obtained the written consent of the other party, provided, however, that
either party may assign its rights and delegate its duties hereunder without
first obtaining the other party's consent to any subsidiary or affiliated entity
controlled by the assigning party, on the condition that the assignee agrees in
writing to assume all of the obligations of the assigning party hereunder,
further provided, however, that either party may assign, pledge or mortgage this
Agreement as security for the obligations or indebtedness of such party,
including Seller's financing of the District Thermal Energy Facilities, without
the approval of the other party.
16.2 Notice. All notices hereunder shall be sufficient if sent by
registered or certified mail postage prepaid, addressed, if to Seller: Atlantic
Jersey Thermal Systems, Inc., 5100 Xxxxxxx
00
Xxxxxxx, Xxxxx 00 & 32 Avenue, Xxxx Landing, New Jersey 08330, Attention:
President; and if to Buyer: Xxxxx Plaza Associates, Mississippi and Xxxxxxx
Xxxxxxx xxx xxx Xxxxxxxxx, Xxxxxxxx Xxxx, Xxx Xxxxxx 00000, Attention: President
and Chief Operating Officer, provided that either Seller or Buyer may by like
notice designate any further or different address or addresses or person to
which notices shall be sent.
16.3 Limitation of Liability. Except in the case of willful misconduct or
gross negligence, neither Seller nor Buyer, nor their respective officers,
officials, partners, agents, employees, subsidiaries, parents or affiliates
shall be liable to the other party, or their respective officers, officials,
directors, partners, agents, employees, subsidiaries, parents or affiliates for
claims for incidental, special, direct or consequential damages of any nature,
including lost profits and opportunity costs in connection with or resulting
from performance or non-performance of their respective obligations under or in
connection with this Agreement. Nothing in this Section 16.3, however, shall
limit either party's rights or remedies to recover any direct damages for a
breach of this Agreement.
16.4 Confidentiality. Each of the parties agrees to hold in confidence any
information supplied to it by the other and designated in writing as
confidential unless the recipient is required to disclose the information as a
matter of law, in which case, the recipient shall give the other party prior
written notice.
16.5 Counterparts. This Agreement may be executed in separate and several
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
16.6 Severability. Any provision hereof that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction and to the fullest extent
permitted by applicable law, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof and
without affecting the validity or enforceability of any provision in any other
jurisdiction.
16.7 Casino Control Commission Approval. During the Term of this Agreement,
all provisions of the New Jersey Casino Control Act shall be complied with by
Buyer and Seller, and Seller agrees to apply for a casino service industry
license, if required by the New Jersey Casino Control Commission. In addition,
Seller agrees to file a vendor registration if it has not already done so.
18
16.8 Governing Law. This Agreement shall be construed in accordance with
and shall be enforceable under the laws of the State of New Jersey.
16.9 Entire Agreement. The Agreement constitutes the entire agreement
between the Parties with respect to the matters contained herein and all prior
agreements with respect thereto are superseded hereby. No amendment or
modification hereof shall be binding unless duly executed by both Parties.
19
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered as of the date and day first above written.
ATLANTIC JERSEY THERMAL SYSTEMS, INC.
By: /s/ XXXX X. XXXXXX
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
XXXXX PLAZA ASSOCIATES
By: /s/ XXXXX X. XXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Operating Officer
20
SCHEDULE 1(g)
POINTS OF DELIVERY
"Steam" point of delivery is defined as the point of exit from the
boiler mechanical room of the steam piping system located in Buyer's Facilities.
Metering of steam usage will occur within the boiler mechanical room.
"Chilled Water Supply" point of delivery is defined as the point of
exit from the chiller mechanical room of the chilled water supply piping system
located in Buyer's Facilities. Metering of chilled water usage will occur within
the chiller mechanical room.
21
SCHEDULE 1(h)
POINTS OF RETURN
"Condensate" point of return is defined as the point of entry into the
boiler mechanical room of the condensate piping system located in Buyer's
Facilities.
"Chilled Water Return" point of return is defined as the point of
entry into the chiller mechanical room of the chilled water return piping system
located in Buyer's Facilities.
22
SCHEDULE 1(j)
CONTRACT CAPACITIES AND THERMAL ENERGY SPECIFICATIONS
[Please see attached].
23
SCHEDULE 1(l)
THERMAL ENERGY PRODUCTION FACILITIES
The "Thermal Energy Production Facilities" are defined as all
equipment identified on the following Chilled Water Piping Schematic and Steam
Piping Schematic. All equipment shown on these schematics reside in the
respective Chiller and Boiler Mechanical Rooms located within Buyer's
Facilities.
Also included is the entire condenser water system including pumps,
piping and cooling towers.
All associated electrical and controls equipment required for the
operation of the above-mentioned equipment is also included.
[To Be Completed].
24
SCHEDULE 7.1
Thermal Energy Capacity Charges, Thermal Energy Usage Charges, and
Emergency Electric Services
I. CHARGES FOR HEATING SERVICE
The charges for heating service in any billing month shall equal the sum of
the Monthly Capacity Charges and Monthly Usage Charges.
A. MONTHLY CAPACITY CHARGES
The Monthly Steam Capacity Charge shall equal the product of the Steam
Contract Capacity times the sum of the Steam Capital Capacity Rate and the Steam
O&M Capacity Rate, i.e.,
MSCC = SCC x (SCCR + SOMCR)
where,
MSCC = Monthly Steam Capacity Charge ($)
SCC = Steam Contract Capacity (MMBtu/hr.), and
SCCR = Steam Capital Capacity Rate ($ per MMBtu/hr.)
SOMCR = Steam O&M Capacity Rate ($ per MMBtu/hr.)
The initial Steam Capital Capacity Rate shall equal $668.39 per MMBtu/hr
and the initial Steam O&M Capacity Rate shall equal $273.81 per MMBtu/hr. These
rates shall be adjusted annually commencing on January 1, 1997. The new rates
shall be determined by multiplying the old rates times the fraction whose
numerator shall equal the latest available "Consumer Price Index, All Items,
Urban Consumers, Wilmington - Philadelphia" as published by the U.S. Department
of Commerce and whose denominator shall equal the same index as of twelve months
immediately preceding, provided that with respect to the Steam Capital Capacity
Rate, such fraction shall be no less than 1.03 nor more than 1.04.
----------
Refer to Schedule 1(j) for the Steam Contract Capacities.
25
B. MONTHLY USAGE CHARGE
The Monthly Steam Usage Charge shall equal the product of the Monthly Steam
Energy Deliveries times the quantity determined by adding the Monthly Steam Base
Usage Rate and the Monthly Steam Energy Usage Rate, i.e.,
MSUC = MSED x ( MSBUR + MSEUR )
where,
MSUC = Monthly Steam Usage Charge ($)
MSED = Monthly Steam Energy Deliveries (MMBtu)
MSBUR = Monthly Steam Base Usage Rate ($/MMBtu), and
MSEUR = Monthly Steam Energy Usage Rate ($/MMBtu)
The initial Monthly Base Usage Charge shall equal $0.750 per MMBtu. This
rate shall be adjusted annually commencing on January 1, 1997. The new rates
shall be determined by multiplying the old rate times the fraction whose
numerator shall equal the latest available "Consumer Price Index, All Items,
Urban Consumers, Wilmington - Philadelphia" as published by the U.S. Department
of Commerce and whose denominator shall equal the same index as of twelve months
immediately preceding.
The initial Monthly Energy Usage Charge shall equal $4.00 per MMBtu. This
charge shall be adjusted quarterly commencing on January 1, 1997. The new rate
shall be determined by multiplying the old rate times the fraction whose
numerator shall equal the latest available Energy Usage Index Steam, as defined
below, and whose denominator shall equal the same index as of the immediately
preceding quarter.
"Energy Usage Index Steam" shall mean, for any quarter, the quantity
obtained by performing the following calculation:
[80%(NG Index - Current Quarter) + 20%(No. 2 Fuel Oil Index - Current
Quarter)]
[80%(NG Index - Previous Quarter) + 20%(No. 2 Fuel Oil Index - Previous
Quarter)]
Where,
"NG Index" means, for any month, the arithmetic mean of the City Gate
Prices for NY/NJ for such month, as published in Inside FERC Gas Market Report
(or any successor publication mutually acceptable to Seller and Purchaser).
26
"No. 2 Fuel Oil Index" means, for any month, the price on the first
business day of such month of the Philadelphia Reseller Tank Car Price of No. 2
Oil, as published daily in the Journal of Commerce (or any successor publication
mutually acceptable to Seller and Purchaser).
II. CHARGES FOR COOLING SERVICE
The charges for cooling service in any billing month shall equal the sum of
the Monthly Capacity Charges and Monthly Usage Charges.
A. MONTHLY CAPACITY CHARGES
The Monthly Chilled Water Capacity Charge shall equal the product of the
Chilled Water Contract Capacity times the sum of the Chilled Water Capital
Capacity Rate and the Chilled Water O&M Capital Rate, i.e.,
MCWCC = CWCC x (CWCCR + CWOMCR)
where,
MCWCC = Monthly Chilled Water Capacity Charge ($)
CWCC = Chilled Water Contract Capacity (Tons), and
CWCCR = Chilled Water Capital Capacity Rate ($ per Ton)
CWOMCR = Chilled Water O&M Capacity Rate ($ per Ton)
The initial Chilled Water Capital Capacity Rate shall equal $9.03 per Ton
and the initial Chilled Water O&M Capacity Rate shall equal $8.97 per Ton. This
rate shall be adjusted annually commencing on January 1, 1997. The new rates
shall be determined by multiplying the old rate times the fraction whose
numerator shall equal the latest available "Consumer Price Index, All Items,
Urban Consumers, Wilmington - Philadelphia" as published by the U.S. Department
of Commerce and whose denominator shall equal the same index as of twelve months
immediately preceding, provided that fraction with respect to Chilled Water
Capital Capacity Rate, such shall be no less than 1.03 nor more than 1.04.
----------
Refer to Schedule 1(j) for the Steam Contract Capacities.
27
B. MONTHLY USAGE CHARGE
The Monthly Chilled Water Usage Charge shall equal the product of the
Monthly Chilled Water Energy Deliveries times the quantity determined by adding
the Monthly Chilled Water Base Usage Rate and the Monthly Chilled Water Energy
Usage Rate, i.e.,
MCWUC = MCWED x ( MCWBUR + MCWEUR )
where,
MCWUC = Monthly Chilled Water Usage Charge ($)
MCWED = Monthly Chilled Water Energy Deliveries (MMBtu)
MCWBUR = Monthly Chilled Water Base Usage Rate ($/MMBtu), and
MCWEUR = Monthly Chilled Water Energy Usage Rate ($/MMBtu)
The initial Monthly Chilled Water Base Usage Charge shall equal $0.0390 per
Ton-hr. This rate shall be adjusted annually commencing on January 1, 1997. The
new rates shall be determined by multiplying the old rate times the fraction
whose numerator shall equal the latest available "Consumer Price Index, All
Items, Urban Consumers, Wilmington Philadelphia" as published by the U.S.
Department of Commerce and whose denominator shall equal the same index as of
twelve months immediately preceding.
The initial Monthly Chilled Water Energy Usage Charge shall equal $0.0529
per Ton-hr. This charge shall be adjusted quarterly commencing on January 1,
1997. The new rate shall be determined by multiplying the old rate times the
Energy Usage Index Chilled Water, as defined below.
"Energy Usage Index Chilled Water" means, during any quarter, the
fraction whose numerator shall equal the currently applicable AE
Transmission Gen Service (TGS) Tariffed Rate for energy components only
as of the end of such quarter (including applicable riders or
adjustments) and whose denominator shall equal the same quantity for
the immediately preceding quarter.
III. Charges for Emergency Electric Service
28
Commencing on the New Service Commencement Date, the charges for Emergency
Electric Services in any Billing Month shall equal thirty thousand dollars
($30,000). This monthly charge shall be adjusted annually commencing on January
1, 1997. The new monthly charges shall be determined by multiplying the old
charges times the fraction whose numerator shall equal the latest available
"Consumer Price Index, All Items, Urban Consumers, Wilmington - Philadelphia" as
published by the U.S. Department of Commerce and whose denominator shall equal
the same index as of twelve months immediately preceding.
29
