EXHIBIT 10.13
7/18/91
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FOSSIL FUEL SUPPLY AGREEMENT
Dated as of July 1, 1991
Between
BLC Corporation,
as Supplier
and
The United Illuminated Company,
as User
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TABLE OF CONTENTS
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(Fossil Fuel Supply Agreement)
Section Page
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1. Definitions 1
2. Agreement to Sell and Purchase Fuel Supply 4
3. Term of this Agreement 4
4. Sale of Fuel Supply in Connecticut
and Other States; Supplier's Right to Utilize Fuel 5
5. Maximum Inventory Balance 6
6. Assignment of Fuel Contracts and Operation Thereunder 7
7. Fuel Supply Charges 8
8. Storage of Fuel Supply; Mixed Fuel; Required Records and Reports 9
9. No Warranties, Representations, or Liabilities by Supplier 11
10. Encumbrances; Insurance; Compliance with Laws 12
11. Indemnity 14
12. Loss or Destruction of Fuel Supply 16
13. Breach of Agreement by User 16
14. Breach of Agreement by Supplier 18
15. Termination 19
16. Termination Due to Law or Regulatory Acts 20
17. Sale or Assignment 21
18. Certificates; Information; Other Actions 22
19. Intention of the Parties 22
20. Obligation of User to Pay Fuel Supply Charges 22
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TABLE OF CONTENTS
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(Continued)
Section Page
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21. Closing Costs 23
22. Fuel Supply To Be and Remain Personal Property 23
23. Miscellaneous 23
- Signature Lines 24
- Exhibit A - Inventory Record
- Exhibit B - Form of Assignment and Consent of Fuel Vendor
- Exhibit C - Form of Storage Area License Agreement
- Exhibit D - Form of Corporate Certificate
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FOSSIL FUEL SUPPLY AGREEMENT
Fossil Fuel Supply Agreement (hereinafter called "Agreement"), dated as
of July 1, 1991, by and between BLC Corporation, (hereinafter called
"Supplier"), and The United Illuminating Company, (hereinafter called "User").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties covenant and agree as follows:
1. Definitions. As herein used:
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(a) "Acquisition Cost" means, with respect to the Fuel Supply, the sum
in U.S. dollars of (i) the invoice price thereof paid by Supplier, (ii) any
costs of transportation, delivery, storage, handling and insurance of the Fuel
Supply not included in the invoice price thereof and paid by Supplier including,
without limitation, demurrage, tug and pilot costs and agents fees for handling
spot purchases and transportation, (iii) any sales, excise, or other taxes (real
or personal), other than Income Taxes, paid by Supplier and, if reimbursed by
Supplier to User, by User with respect to the acquisition, storage and
consumption of the Fuel Supply, (iv) all other costs relating to the Fuel Supply
paid by Supplier pursuant to this Agreement and (v) such other costs as may be
agreed in writing by Supplier and User, less (vii) any amount actually received
by Supplier with respect to the Fuel Supply by reason of any refunds, credits,
or similar payments.
(b) "Applicable Laws" means all applicable federal, state or local
laws, rules, regulations, regulatory policies and guidelines and all licenses,
permits, judgements, decrees, writs, orders or like actions of any authority or
agency of any federal, state or local government.
(c) "Available Funds" means funds which are immediately available in
New York, New York to Supplier for its use.
(d) "Business Day" means any day excluding Saturday, Sunday, and any
day which shall be in New Haven, Connecticut or New York, New York a legal
holiday or a day on which banking institutions in New Haven, Connecticut or New
York, New York are authorized by law to be closed.
(e) "Delayed Payment Fee" shall have the meaning specified in
Subsection 7(B) hereof.
(f) "Dollar per Barrel Charge" means the value of oil, expressed in
U.S. dollars per each U.S. barrel of 42 U.S. Standard gallons of 231 cubic
inches measured at 60 degrees Fahrenheit in accordance with table 6B of ASTM
designation D-1250, payable by User for each barrel of petroleum product sold to
it by Supplier and calculated as provided in Section 7(A).
(g) "Dollar per MMBTU Charge" means the value of natural gas, expressed
in U.S. dollars per Million British Thermal Units (MMBTU's) higher heating value
determined in accordance with criteria set forth at Page 158 of the AGA
Measurement Manual (c. 1963), as measured by the gas chromatograph meters at the
gas meter station operated by Southern Connecticut Gas Company at New Haven
Harbor Station, payable by User for volumes of natural gas sold by Supplier and
calculated as provided in Section 7(A).
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(h) "Dollar per MCF Charge" means the value of natural gas, expressed
in U.S. dollars per Thousand Cubic Feet (MCF's,) of gas, a cubic foot of gas
expressed as the volume of gas which occupies one cubic foot when such gas is at
a temperature of 60 degrees Fahrenheit and at a pressure of thirty-three
hundredth (.33) pounds per square inch above an assumed atmospheric pressure of
fourteen and four tenths (14.4) pounds per square inch (fourteen and
seventy-three hundredths (14.73) pounds per square inch absolute), as measured
by the gas chromatograph meters at the gas meter station operated by Southern
Connecticut Gas Company at New Haven Harbor Station, payable by User for volumes
of natural gas sold by Supplier and calculated as provided in Section 7(A).
(i) "Dollar per Ton Charge" means the value of coal, expressed in U.S.
dollars per each ton of 2,000 pounds avoir du pois, payable by User for each ton
of coal sold to it by Supplier and calculated as provided in Section 7(A).
(j) "Fuel Consumption Charge" shall have the meaning specified in
Subsection 7(A)(b) with respect to each such specific type of fuel.
(k) "Fuel Supply" means fossil fuel of the types listed below:
(i) oil, coal, and natural gas agreed upon by the Supplier and
the User for which Supplier has made payment or as to which it has
obtained title for the purpose of making its commitments pursuant to
this Agreement as indicated by an Inventory Record signed by the
Supplier and the User.
The term "Fuel Supply" also means any part or portion of the Fuel
Supply.
(1) "Fuel Supply Charges" means the periodic payments to be made by
User to Supplier hereunder, calculated and payable as provided in Section 7
hereof, as the case may be and shall include the Fuel Consumption Charges and
the Delayed Payment Fee (if any).
(m) "Income Taxes" means any tax imposed upon or measured solely by the
income or profits of Supplier determined substantially in the same manner as net
income is determined as of the date of this Agreement under the United States
Internal Revenue Code of 1986, as amended.
(n) "Interim Service Charge" for any Fuel Supply in User's Inventory or
Supplier's Inventory for any partial month shall be an amount computed by
multiplying the following:
(1) The Acquisition Cost of the Fuel Supply acquired during any
partial month, by
(2) A fraction having a numerator equal to the number of days
remaining in such partial month (including the date of payment by
Supplier to and including the last day of the month) and a denominator
equal to 360, by
(3) The Percentage Rental Factor as defined in Subsection
l(r)(3).
(o) "Inventory Record" means a record substantially in the form of
Exhibit A hereto, by which the User requests that the Supplier acquire, and the
Supplier agrees to acquire Fuel Supply from the User, or from a vendor
designated by User and records the acquisition by Supplier hereunder of the Fuel
Supply specified in such Inventory Record.
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Such Inventory Record shall set forth all of the information called for in
Exhibit A and shall include the Dollar per Barrel paid by Supplier or the Dollar
per MMBTU paid by Supplier or the Dollar per MCF paid by Supplier or the Dollar
per Ton paid by Supplier, as applicable. The Inventory Record shall be dated the
date the Supplier first makes any payment with respect to the Acquisition Cost
of such Fuel Supply and Fuel Supply Charges for such Fuel Supply shall begin on
such date. The Inventory Record shall set forth a full description of the Fuel
Supply specified therein, the Acquisition Cost thereof, the location and such
other details with respect to such Fuel Supply as the parties may agree or as
Seller may deem necessary or advisable. Each Inventory Record shall be signed by
the Supplier and the User and shall contain the following covenants on behalf of
the User:
"The undersigned User hereby requests the Supplier to acquire, and the
undersigned Supplier hereby agrees (subject to the terms and conditions
set forth in the Fossil Fuel Supply Agreement hereinafter referred to)
to acquire, the Fuel Supply described herein to be held by Supplier for
the benefit of the undersigned User pursuant to the terms and
conditions of the Fossil Fuel Supply Agreement, dated as of July 1,
1991, between the parties hereto (the terms and conditions of which
Fossil Fuel Supply Agreement are hereby incorporated by reference). The
User hereby confirms its obligation to pay the Fuel Supply Charges with
respect to such Fuel Supply as provided in the Fossil Fuel Supply
Agreement."
(p) "Inventory Value" means (i) with respect to the Supplier's
Inventory at any time an amount equal to the then cumulative total Acquisition
Cost of such Supplier's Inventory plus Interim Service Charges accrued and
unpaid and the Monthly Service Charges accrued and unpaid with respect to such
Supplier's Inventory, plus with respect to the User's Inventory at any time, an
amount equal to the then cumulative total Acquisition Cost of such User's
Inventory plus Interim Service Charges accrued and unpaid and the Monthly
Service Charges accrued and unpaid with respect to such User's Inventory, less
(ii) the then cumulative total payments of Fuel Consumption Charges paid to
Supplier pursuant to Section 7 and pursuant to any other provision of this
Agreement requiring a payment with respect to such Inventory Value. The
Inventory Value shall be reduced, as of the close of business on the last day of
each full month during the term of this Agreement, by the amount of the Fuel
Consumption Charge to be paid to Supplier on the next payment date with respect
to such Fuel Supply but only to the extent of the amount Fuel Consumption
Charges which are actually received by Supplier in respect of such payment date
or, if User has elected to delay the payment as allowed by Section 7(B) hereof,
for the purposes of calculating the Monthly Rental Charge only, the Inventory
Value shall be reduced as of the close of business on the last day of the month
immediately preceding the due date of such delayed payment by the amount of the
Fuel Consumption Charge due to Supplier on such due date. The quantity of each
type of fuel in Supplier's Inventory and User's Inventory shall be reduced
simultaneously with the corresponding reduction in Inventory Value.
(q) "Mixed Fuel" shall have the meaning specified in Subsection 8(e)
hereof.
(r) "Monthly Service Charge" for any Fuel Supply for each full month
shall be an amount computed by multiplying the following:
(1) The Inventory Value hereunder on the first day of such month, by
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(2) A fraction having a numerator equal to the number of days in such
month and a denominator of 360, by
(3) A percentage (the "Percentage Rental Factor") equal to the sum of
1.10% per annum plus the AA Composite Index of 30-day dealer placed
commercial paper, as publicly announced by the Federal Reserve Bank of New
York for the first Business Day of the current month and documented on
Federal Reserve Statistical Release H.15 "Selected Interest Rates" in
respect of such Business Day. Upon execution of this agreement, Lessor
shall notify Lessee in writing of the then applicable Percentage Rental
Factor under this subsection (3). Thereafter, Lessor shall notify Lessee in
writing of any change in such Percentage Rental Factor.
(s) "Settlement Amount" means an amount equal to the total of (i) all
Fuel Supply Charges remaining unpaid on the Termination Date, whether or not
then due, with respect to all of the Fuel Supply in inventory during the months
prior to the month during which the termination of this Agreement occurs, plus
(ii) a Fuel Supply Charge, whether or not then due, with respect to all of the
Fuel Supply in inventory during the month during which the termination of this
Agreement occurs calculated as if the Termination Date were the last day of such
month, plus (iii) the Inventory Value on the Termination Date, plus (iv) all
other sums payable by User to Supplier under this Agreement on the Termination
Date.
(t) "Supplier's Inventory" means that portion of the Fuel Supply for
which Supplier has made payment, but which has not yet been sold to User by
Supplier pursuant to the terms hereof.
(u) "Termination Date" shall have the meaning specified in Section 3
hereof.
(v) "Termination Events" shall have the meaning specified in Section 16
hereof.
(w) "User Mixed Fuel" shall have the meaning specified in Subsection 15(d)
hereof.
(x) "User's Inventory" means that portion of the Fuel Supply subject to
this Agreement for which Supplier has made payment, for which title has been
transferred to User but as to which User has not yet paid, pursuant to the terms
hereof, all Fuel Consumption Charges to Supplier due in respect thereof
2. Agreement to Sell and Purchase Fuel Supply. Subject to all the terms
and provisions of this Agreement, the availability of fuel, and upon execution
and delivery by the User and Supplier of an Inventory Record evidencing the
mutual agreement of the parties hereto with respect to the acquisition by
Supplier of specific Fuel Supply, Supplier agrees to acquire Fuel Supply for
sale to User and to sell Fuel Supply to User (with respect to natural gas, for
consumption by User, and not for resale) from time to time as provided herein
and User agrees to purchase Fuel Supply from Supplier (with respect to natural
gas, for consumption by User, and not for resale) in the amounts and at the
purchase prices hereinafter provided. No Inventory Record shall be effective
unless and until executed by Supplier.
3. Term of this Agreement.
(a) The term of this Agreement shall commence with respect to any Fuel
Supply on the earlier of Supplier's payment for such Fuel Supply or the date
upon which title to
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any such Fuel Supply shall transfer to Supplier. Notwithstanding the foregoing,
the provisions of Section 11 of this Agreement under which User indemnities
Supplier and the obligation of User under Section 10 to assume all risks of loss
or damage to the Fuel Supply shall apply from the date User executes an
Assignment of any contract covering any Fuel Supply or such other contracts as
set forth in Section 6. The term of this Agreement shall be for a period
beginning on the date hereof and ending on June 30, 1992 unless earlier
terminated under the provisions of Section 13, 14, 15, 16 or 22 hereof (such
ending or termination date, as (and if) extended pursuant to the next succeeding
sentence of this Section 3(a), being referred to as the "Termination Date"). The
Termination Date shall be extended as follows:
Each day, the Termination Date shall then and thereupon
automatically be extended for one additional day so that the new
Termination Date shall be, unless earlier terminated pursuant to the
provisions of Section 13, 14, 15, 16 or 22 hereof, three hundred and
sixty-four (364) days after the date of such extension; provided,
however, that if on any date, Supplier or User shall provide the other
party hereto with written notice of its desire not to extend the
Termination Date, the Termination Date shall thereafter no longer be
automatically extended and the Termination Date then in effect shall
remain in effect for the remainder of the term of this Agreement.
Unless the term of this Agreement has terminated as provided in Sections 13, 14,
15, 16 or 22, on the Termination Date, User shall pay to Supplier an amount
equal to the Inventory Value plus any Fuel Supply Charges and any other amounts
which are due and unpaid hereunder.
(b) Upon payment in full of the Inventory Value plus any Fuel Supply
Charges and all other amounts which are due and payable hereunder, the term of
this Agreement as it relates to such Fuel Supply shall terminate and the entire
interest of Supplier in such Fuel Supply shall automatically transfer to and be
vested in User (without recourse and without warranty of any kind whatsoever)
without the necessity of any further action by either Supplier or User.
4. Sale of Fuel Supply in Connecticut and Other States;, Supplier's Right
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to Utilize Fuel.
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(a) In the state of Connecticut, Supplier's Inventory shall be deemed
to be sold to and purchased by (and title thereto shall transfer to) User as and
when (i) it is withdrawn from storage for consumption or is otherwise purchased
as provided in this Section or in Section 15, 16 or 22, or (ii) Supplier's title
thereto or its interest therein is conveyed to User pursuant to Section 12 of
this Agreement.
(b) In locations other than Connecticut, all Fuel Supply shall be
deemed to be sold to and purchased by (and title thereto shall transfer to) User
immediately after the purchase of such Fuel Supply by Supplier as and when (i)
it passes a point or points mutually agreed upon by the vendor and User or is
otherwise purchased as provided in this Section or in Section 15, 16 or 22, or
(ii) Supplier's title thereto or its interest therein is conveyed to User
pursuant to Section 12 of this Agreement.
(c) Provided that Fuel Supply is available in the state of Connecticut,
User may withdraw Fuel Supply for consumption as and when needed in the
operation of User's
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generating stations at the following locations, in accordance with monitoring
and control procedures established by Supplier and User:
Location of Generating Stations
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Bridgeport, Connecticut and
New Haven, Connecticut
(d) Provided that Fuel Supply is available in locations other than
Connecticut, User may, at its option, purchase for consumption Fuel Supply from
Supplier as and when needed, whether by way of a spot purchase or otherwise, all
purchases to take place in accordance with monitoring and control procedures
established by Supplier and User.
(e) User shall be entitled to purchase Fuel Supply from Supplier
hereunder (with respect to natural gas, such purchase shall be solely for the
purpose of consumption) as and when needed in the operation of User's business.
(f) Supplier reserves and shall have the right, at its own cost and
expense, to utilize or dispose of Supplier's Inventory as it may determine,
provided, however, in the event of such utilization or disposition, Supplier
shall replace such Supplier's Inventory at its own cost and expense with fuel of
the same or superior type, grade and quality (provided that User shall specify
in writing specifications for such fuel) and within such time as shall be
necessary to the maintenance of adequate reserves. Notwithstanding the foregoing
sentence, under no circumstances shall Supplier's right of utilization or
disposal as aforesaid impair User's access to fuel reserves at all times
adequate to assure reliable service to its customers and to meet any
requirements imposed by regulatory authorities. Supplier will give User at least
two (2) days prior written, telephone, telex, or telecopier notice of any such
utilization or disposal and, upon request, User will advise Supplier of reserves
required, including amounts and types of fuel.
5. Maximum Inventory Value. At no time shall the Inventory Value hereunder
exceed $30,000,000. If, at any time, the Inventory Value shall exceed
$30,000,000, Interim Service Charges and Monthly Service Charges shall no longer
be added to the Inventory Value and such charges shall be paid by User to
Supplier monthly on the first day of each immediately following month until the
Inventory Value falls below $30,000,000. If, at any time, the Inventory Value
shall exceed $30,000,000, User shall make an additional payment to Supplier on
the first day of the month immediately following the month in which such excess
occurred in an amount equal to such excess. Supplier shall have no obligation
under any circumstance to make any payment which, except for this Section, would
be required to be made hereunder which, after giving effect thereto, would
increase the Inventory Value above such maximum amount. User agrees to make
payments directly to the third party vendor or supplier of fuel and to any other
third party to whom a payment is due with respect to any item which would be
includable in Acquisition Cost, in such amounts and at such times as may be
necessary to insure that the Inventory Value does not exceed the limitation set
forth above. To the extent User makes any such payments, it shall acquire right,
title and interest in the fuel for which the payments were made in the same
proportion as such payments bear to the total cost of such fuel. In connection
with any such payments by User, Supplier and User agree to notify the party to
whom payment is due that it should invoice and/or sell directly to User.
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6. Assignment of Fuel Contracts and Operation Thereunder.
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(a) If agreed by User and Supplier, the interests of User under any
contract providing for the purchase, transportation, storage or handling of fuel
in connection with this Agreement may be assigned to Supplier, provided that all
legal and regulatory requirements with respect to such assignment have been
satisfied. Said assignment and consent of the other party (or parties) to each
such contract shall be in substantially the form attached hereto as Exhibit B,
or in such other form as User and Supplier may agree. Upon such assignment and
consent, subject to the limitation set forth in Section 5, Supplier, in
consultation with User, shall thereafter place orders for fuel with the vendor
thereunder in accordance with procedures agreed upon by Supplier and User. In
addition, subject to the limitation set forth in Section 5 and the satisfaction
of all legal and regulatory requirements, during the term of this Agreement,
Supplier may make spot purchases (meaning purchases which are not pursuant to a
preexisting contract) of Fuel Supply. Any such spot purchases shall be made
after consultation with, and direction from, User and in accordance with
procedures agreed upon by Supplier and User. Invoices for the cost of all Fuel
Supply ordered, including spot purchases, and for other costs included in the
Acquisition Cost of such Fuel Supply shall be submitted by the vendor to User,
with a copy to Supplier. Upon receipt by User of such an invoice, User shall
review the same and, not less than three (3) Business Days before the date on
which payment is due under the normal payment terms, shall forward it to
Supplier endorsed with User's confirmation that User is in accord with such
invoice along with a duly executed Inventory Record covering the related Fuel
Supply. Upon receipt of such copy of the duly executed Inventory Record and the
invoice, endorsed as provided in this Section 6(a) by a duly authorized officer
of User and in form and substance satisfactory to Supplier, Supplier shall, in
accordance with the terms of the invoice and subject to the provisions of
Section 5 hereof, make payment to the vendor and execute the Inventory Record
and return a copy thereof to User. To the extent that costs included in the
Acquisition Cost of the Fuel Supply covered by any Inventory Record have been
paid or incurred by User, Supplier shall promptly reimburse User for such costs.
User shall: (i) pay all costs and expenses associated with obtaining and
delivering Fuel Supply to User, including, without limitation, those of
transportation, operation, use, freight, packing, insurance, handling, storage,
shipment and delivery of the Fuel Supply to the extent that the same have not
been paid by Supplier; and (ii) at its own cost and expense, furnish such labor,
equipment and other facilities and supplies, if any, as may be required to store
and install the Fuel Supply to the extent that the cost and expense thereof have
not been paid by Supplier. Such storage and installation shall be in all
material respects in accordance with the specifications and requirements of each
vendor and all requirements of Applicable Law. By delivery of an executed
Inventory Record to Supplier, the User shall be deemed to covenant and warrant
to the Supplier as of the date specified on such Inventory Record, that upon
payment of the Acquisition Cost for the Fuel Supply listed in such Inventory
Record, Supplier will thereby receive good and valid title to such Fuel Supply
free and clear of any and all liens, encumbrances and rights of others and User
will defend the Fuel Supply against all claims and demands of all persons at any
time claiming any interest in the Fuel Supply adverse to the Supplier, other
than any claim or demand arising solely out of the actions of Supplier or
persons asserting claims solely through Supplier.
(b) User shall retain all rights under any contract assigned to enforce
any claims for breach of any terms of such contracts. User shall, on behalf of
Supplier, be fully responsible and liable for, and supervise or direct the
off-loading of, fuel and shall take all steps necessary to preserve and protect
the Fuel Supply located in the storage areas referred
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to in Section 8(a), to comply with all Applicable Laws with respect thereto, and
to prevent spilling, loss, or other damage to persons, property, or the
environment.
(c) At the request of User, Supplier shall reassign to User any
contract assigned hereunder with respect to all then future deliveries of fuel,
other than fuel with respect to which Supplier has made any payment prior to the
date of such reassignment.
7. Fuel Supply Charges.
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(A) Fuel Supply Charges to be Paid by User.
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(a) On or before the first day of each calendar month during the term
of this Agreement or, if such first day is not a Business Day, on or before the
next preceding Business Day, User shall pay to Supplier in arrears, in Available
Funds, a Fuel Supply Charge, as hereinafter provided, for each type of fuel in
the Fuel Supply. User shall give Supplier at least three (3) Business Days prior
notice if User elects to delay the payment of the Fuel Supply Charge in any
month pursuant to the provisions of Subsection (B). Such notice shall state the
date User intends to make such delayed payment and the estimated amount of such
Fuel Supply Charge. All payments of Fuel Supply Charges and other payments to be
made by User to Supplier pursuant to this Agreement shall be paid to Supplier in
lawful money of the United States in Available Funds by wire transfer to
Supplier's Account No. 3846-9701 at Citibank, N.A, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 or such other account that Supplier may designate in writing
notwithstanding any contrary provision herein with respect to the place of
payment. Each such wire transfer shall reference the name of the User, this
Agreement (including the date hereof), and the due date of the Fuel Supply
Charges being paid.
(b) The Fuel Supply Charge for each calendar month for each type of
fuel in the Fuel Supply shall be an amount which shall include, with respect to
each type of Fuel Supply withdrawn from inventory by User during the second
preceding calendar month, an amount equal to the Dollar per Ton Charge, the
Dollar per Barrel Charge the Dollar per MMBTU Charge or the Dollar per MCF
Charge, whichever is applicable, calculated as provided hereinafter, multiplied
by the number of tons, barrels, MMBTUs or MCFs of that type of fuel sold to User
(other than under Sections 12, 15(c) and 16) by Supplier during the second
preceding calendar month (for each such specific type of fuel hereinafter called
the "Fuel Consumption Charge"). For purposes of calculating Fuel Consumption
Charges, it shall be presumed that the Fuel Supply shall be purchased by User
from Supplier on an "Average Cost" basis.
(c) The Dollar per Ton Charge, Dollar per Barrel Charge, Dollar per
MMBTU Charge and Dollar per MCF Charge shall each be computed on an "Average
Cost" basis by dividing (i) the sum of the Inventory Value of all Fuel Supply of
a particular type in the User's Inventory at the end of the second preceding
calendar month plus the Inventory Value of all Fuel Supply of such type in the
Supplier's Inventory at the end of the second preceding calendar month by (ii)
the sum of the number of tons, barrels, MMBTUs or MCFs of that type of fuel in
the User's Inventory at the end of the second preceding calendar month plus the
number of tons, barrels, MMBTUs or MCFs of that type of fuel in the Supplier's
Inventory at the end of the second preceding calendar month. The Dollar per Ton
Charge, the Dollar per Barrel Charge, the Dollar per MMBTU Charge or the Dollar
per MCF Charge and the "Average Cost" basis of each such charge shall be
separately computed for each type of fuel sold by Supplier to User.
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(B) User has the option to delay the payment of Fuel Supply Charges due
from it to Supplier hereunder for up to the number of days in the calendar month
in which such payment is due and User shall give written notice to Supplier of
its intent to delay such payment at least five (5) days prior to the date such
payment is due. Such notice shall include the amount of the payment which User
intends to delay. User shall pay a fee (a "Delayed Payment Fee") for any such
delayed Fuel Supply Charge payment, on the actual payment date, in an amount
equal to (x) the amount of such delayed payment multiplied by (y) a fraction
having a numerator equal to the number of days in the period beginning with and
including such due date and ending upon but excluding the date of receipt by
Supplier of such payment in Available Funds and a denominator of 360 by (z) the
Percentage Rental Factor as defined in Subsection l(r)(3) hereof provided,
however, if, at any time during the term of this Agreement the Inventory Value
when added to the amount of the Fuel Supply Charge payment which the User
desires to delay pursuant to this Subsection (B) shall exceed $30,000,000, the
User shall not have the option to delay payment of any Fuel Supply Charge until
such time as the sum of the Inventory Value plus all then outstanding unpaid
Fuel Supply Charges is less than or equal to $30,000,000. When such delayed
payment is actually received by Supplier, the Inventory Value shall be reduced
(for all purposes other than calculating the Monthly Rental Charge) by the
amount of the Fuel Consumption Charge included in such payment.
(C) Subject to the provisions of Subsections 7(A)(a) and 7(B) hereof,
if User fails to pay any Fuel Supply Charge to Supplier on the due date thereof
User shall promptly pay to Supplier an additional amount equal to (i) such
unpaid amount multiplied by (ii) the Percentage Rental Factor as defined in
Subsection l(r)(3) hereof plus 3% per annum (but in no event shall such rate be
greater than the rate permitted by applicable law) as calculated on the due date
of such payment multiplied by (iii) a fraction having a numerator equal to the
number of days in the period beginning with and including such due date and
ending upon but excluding the date of receipt by Supplier of payment in
Available Funds and a denominator of 360. User shall also promptly pay to
Supplier all costs and expenses, including out-of-pocket expenses (including,
without limitation, reasonable attorneys' fees and disbursements) incurred by
Supplier in collecting such unpaid sums.
8. Storage of Fuel Supply; Mixed Fuel; Required Records and Reports.
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(a) If Supplier's Inventory is to be stored, the Supplier's Inventory
shall be stored in storage areas in Connecticut agreed to by Supplier and User
and owned or controlled by User. In each case all such Supplier's Inventory
shall be under the full care and custody of User and shall be stored in full
compliance with all Applicable Laws. Such storage areas shall be made available
for storage of fuel owned by Supplier at no charge (and at User's sole cost,
expense and liability) under one or more license agreements each in
substantially the form attached hereto and marked Exhibit C.
(b) User shall conspicuously xxxx, or cause to be marked, each storage
area to show the ownership by Supplier of the Supplier's Inventory stored
therein. Supplier or its authorized representative, at User's cost and expense
and upon reasonable notice, shall have reasonable access to any such storage
area for the purpose of inspecting and measuring the Supplier's Inventory and
for all other purposes consistent with Supplier's ownership of the Supplier's
Inventory and the agreements hereunder. User agrees to use every reasonable
precaution to prevent loss of, or damage to, the Supplier's Inventory and to
prevent injury to persons or property arising out of the use, custody and
storage of the Supplier's Inventory by User and all liabilities with respect
thereto including, but not limited to, all environmental
9
liabilities shall be the sole responsibility of the User. All individuals
handling, using, or performing any operation with respect to the Supplier's
Inventory (excluding employees of Supplier, and all companies, persons, or firms
controlled by or under common control with Supplier, acting within the scope of
their employment) shall, as between Supplier and User, be deemed for all
purposes to be employees, servants or agents of User and shall be conclusively
presumed not to be employees, servants, or agents of Supplier.
(c) Supplier's Inventory which is physically commingled with fuel owned
by User or others, shall in no event be mixed with fuel which is of a different
type or an inferior grade or quality. Unless otherwise agreed in writing in
specific cases by User and Supplier and except as otherwise provided in Section
15, when any type of fuel containing a mixture of fuel owned by Supplier and
fuel owned by User or others ("Mixed Fuel") is consumed by User, the fuel
consumed shall be deemed to consist wholly of fuel owned by User or others and
it shall be presumed that such fuel is consumed until an amount equal to that
portion of such Mixed Fuel owned by User or others is consumed;
(d) Except for (i) such costs and charges as are included in the
Acquisition Cost of the Fuel Supply and (ii) any costs associated with the use
or disposition of the Fuel Supply by Supplier in accordance with Section 4(f),
User shall be responsible for payment of all costs and charges associated with
the Fuel Supply, including but not limited to costs of transfer, transportation,
storage and delivery of the Fuel Supply.
(e) User agrees promptly to furnish Supplier all necessary and
appropriate exemption certificates certifying as to the existence of exemptions
under any applicable state and local sales tax exemptions for all fuel in the
Fuel Supply.
(f) User shall keep, and make available to Supplier upon reasonable
request, current and complete records in such form as Supplier may reasonably
request pertaining to the purchase, delivery, Acquisition Cost, and physical
inventories of each type of fuel in the Fuel Supply, including Mixed Fuel,
orders placed with vendors, and any other information reasonably requested by
Supplier with respect to the Fuel Supply.
(g) Supplier shall maintain current and complete records, as agreed to
by Supplier and User, to record and account for any fuel used or disposed of by
Supplier pursuant to Section 4(f).
(h) On or before each date that any Fuel Supply Charge is due to
Supplier pursuant to Subsection 7(A)(a), there shall be prepared by User and
submitted to Supplier a written report containing an explanation in such detail
and with such supporting information as Supplier may reasonably request with
respect to the calculation of the Fuel Supply Charge for the second preceding
calendar month for each type of fuel included in the Fuel Supply. Such report
shall include the following information:
(i) the Inventory Value at the beginning of the second preceding
calendar month,
(ii) the types, dates and amounts of Acquisition Costs incurred
during the second preceding calendar month,
(iii) the types, dates and amounts of any other costs incurred
during the second preceding calendar month with respect to the Fuel
Supply,
10
(iv) the Interim Service Charge for the second preceding calendar
month,
(v) the Monthly Service Charge for the second preceding calendar
month,
(vi) the Inventory Value at the end of the second preceding
calendar month,
(vii) the location, quantity, delivery, and consumption of each
type of fuel owned by Supplier and User during the second preceding
calendar month which are part of Mixed Fuel,
(viii) the Fuel Consumption Charge for each type of fuel
purchased by User during the second preceding calendar month, and
(ix) such other details as Supplier or User may reasonably
request.
(i) On each April 30th, July 31st, October 31st and January 31st during
the term of this Agreement, the User shall deliver to Supplier a certificate
dated such date of such delivery and signed during the term of this Agreement by
a duly authorized officer of User containing the certifications of User set
forth in the form of Corporate Certificate attached hereto as Exhibit D.
9. No Warranties, Representations, or Liabilities by Supplier.
----------------------------------------------------------
THE FUEL SUPPLY IS SOLD TO USER IN THE CONDITION THEREOF AND SUBJECT TO
THE STATE OF THE TITLE THERETO, THE RIGHTS OF OWNERSHIP THEREIN AND TO ALL
APPLICABLE LAWS, RULES, REGULATIONS, ORDERS, WRITS, INJUNCTIONS, DECREES,
CONSENTS, APPROVALS, EXEMPTIONS, AUTHORIZATIONS, LICENSES AND WITHHOLDING OF
OBJECTIONS OF ANY GOVERNMENTAL OR PUBLIC BODY OR AUTHORITY AND ALL OTHER
REQUIREMENTS HAVING THE FORCE OF LAW APPLICABLE AT ANY TIME TO ANY OF THE FUEL
SUPPLY OR ANY ACT OR TRANSACTION WITH RESPECT THERETO OR PURSUANT TO THIS
AGREEMENT, IN EACH CASE AS IN EXISTENCE WHEN THE SAME FIRST BECOMES SUBJECT TO
THIS AGREEMENT, WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND BY SUPPLIER,
OR ANY PERSON ACTING ON ITS BEHALF. USER ACKNOWLEDGES AND AGREES THAT NEITHER
SUPPLIER, ITS RESPECTIVE DIRECTORS, OFFICERS AND EMPLOYEES, ANY COMPANY, PERSON
OR FIRM CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH ANY OF THEM
(INCLUDING, WITHOUT LIMITATION, BANKERS LEASING AND FINANCIAL CORPORATION AND
ITS SUCCESSORS AND ASSIGNS), NOR ANY OTHER PERSON ACTING ON BEHALF OF SUPPLIER
HAS HAD AT ANY TIME PHYSICAL POSSESSION OF ANY PORTION OF THE FUEL SUPPLY, HAS
MADE ANY INSPECTION THEREOF, HAS GIVEN ANY ADVICE TO USER OR HAS MADE ANY
RECOMMENDATION TO USER WITH RESPECT TO THE CHOICE OF THE VENDOR OF THE FUEL
SUPPLY HEREUNDER OR WITH RESPECT TO THE PROCESSING, FABRICATION,
CONTAINERIZATION, TRANSPORTATION, UTILIZATION, STORAGE OR REPROCESSING OF THE
SAME. USER ALSO ACKNOWLEDGES AND AGREES THAT NEITHER SUPPLIER, ITS DIRECTORS,
OFFICERS AND EMPLOYEES, ANY COMPANY, PERSON OR FIRM CONTROLLING, CONTROLLED BY
OR UNDER COMMON CONTROL WITH ANY OF THEM (INCLUDING WITHOUT LIMITATION BANKERS
LEASING AND FINANCIAL CORPORATION AND ITS SUCCESSORS AND ASSIGNS), NOR ANYONE
ACTING ON BEHALF OF SUPPLIER HAS
11
MADE ANY WARRANTY OR OTHER REPRESENTATION, EXPRESS OR IMPLIED, THAT THE FUEL
SUPPLY UNDER THIS AGREEMENT (a) WILL NOT RESULT IN INJURY OR DAMAGE TO PERSONS
OR PROPERTY, (b) WILL BE USEABLE BY USER OR WILL ACCOMPLISH THE RESULTS WHICH
USER INTENDS FOR SUCH FUEL SUPPLY, OR (c) IS SAFE IN ANY MANNER OR RESPECT. USER
ALSO ACKNOWLEDGES AND AGREES THAT SUPPLIER, ITS DIRECTORS, OFFICERS AND
EMPLOYEES, ANY COMPANY, PERSON OR FIRM CONTROLLING, CONTROLLED BY OR UNDER
COMMON CONTROL WITH ANY OF THEM (INCLUDING WITHOUT LIMITATION BANKERS LEASING
AND FINANCIAL CORPORATION AND ITS SUCCESSORS AND ASSIGNS), AND ANYONE ACTING ON
BEHALF OF ANY OF THEM IS NOT A MANUFACTURER OR ENGAGED IN THE SALE OR
DISTRIBUTION OF FUEL SUPPLY AND HAS NOT MADE AND DOES NOT HEREBY MAKE ANY
REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED, WITH RESPECT TO THE
MERCHANTABILITY, CONDITION, QUALITY, USEABILITY, DURABILITY, SUITABILITY OR
FITNESS FOR OR CONSEQUENCES OF USE OR MISUSE OF THE FUEL SUPPLY IN ANY RESPECT,
OR IN CONNECTION WITH OR FOR THE PURPOSES OR USES OF USER, OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, WITH RESPECT THERETO. SUPPLIER SHALL NOT BE LIABLE TO USER OR ANY THIRD
PARTY FOR ANY FAILURE OF ANY FUEL SUPPLY OR ANY DEFECT THEREIN NOR FOR ANY
INJURY OR DAMAGE ARISING DIRECTLY OR INDIRECTLY OUT OF ANY SUCH FUEL SUPPLY OR
THE USE THEREOF, NOR FOR ANY FAILURE OR DELAY IN OBTAINING FUEL SUPPLY OR THE
DELIVERY THEREOF. AS BETWEEN USER AND SUPPLIER, USER'S APPROVAL OF ANY INVOICE
FOR PAYMENT BY SUPPLIER PURSUANT TO SECTION 6 ABOVE AND USER'S DELIVERY OF THE
RELATED EXECUTED INVENTORY RECORD TO SUPPLIER SHALL CONSTITUTE USER'S
ACKNOWLEDGEMENT THAT THE ISSUER OF SUCH INVOICE HAS COMPLIED IN ALL RESPECTS
WITH THE TERMS, CONDITIONS, AND OBLIGATIONS OF THE CONTRACT OR AGREEMENT UNDER
WHICH SUCH INVOICE IS ISSUED AND THAT THE FUEL SUPPLY OR SERVICES COVERED BY
SUCH INVOICE MEETS ALL STANDARDS OF QUALITY, CONDITION, AND PERFORMANCE
SPECIFIED IN SAID CONTRACT OR AGREEMENT.
(b) Except as to liabilities arising under Section 4(f), Supplier shall
not be liable to User for any failure or delay in obtaining or delivering any
Fuel Supply or be in any way responsible for the non-availability of, or
interruptions in, the supply of the Fuel Supply to User occurring for any reason
whatsoever, other than the gross negligence or willful misconduct of Supplier or
its employees, during the term of this Agreement or for any damages, claims, or
liabilities, direct, indirect, or consequential, which may be sustained by User
as a result of any such interruption or non-availability.
(c) Supplier represents, warrants, and covenants that it will have good
title, free from encumbrances except those provided for in Section 17, to any
fuel either substituted for fuel used or disposed of by Supplier pursuant to
Section 4(f).
10. Encumbrances; Insurance; Compliance with Laws.
---------------------------------------------
(a) User shall not permit any lien or encumbrance to attach to, or
remain on, the Supplier's Inventory, other than those placed thereon by Supplier
or by persons claiming only against Supplier and not against User. User shall
not permit any lien or encumbrance to attach to, or remain on, the User's
Inventory.
12
(b) Supplier covenants and agrees that User, so long as User is not in
breach hereof, shall be able to consume, purchase, and transfer Fuel Supply
pursuant to the terms and conditions of this Agreement without hindrance,
interference, or molestation, or the imposition of any lien or encumbrances
other than as permitted under Section 17, by Supplier or any person claiming
solely under, through, or against Supplier.
(c) User shall procure, pay for and maintain property insurance (fire
and extended coverages, including, without limitation, vandalism and malicious
mischief insurance) insuring Supplier with respect to the Fuel Supply in an
amount equal to the higher of (i) the then fair market value of Fuel Supply or
(ii) the Inventory Value of the Fuel Supply and subject to a deductible amount
not in excess of $250,000. In addition, User shall procure, pay for and maintain
liability insurance (covering bodily injury and property damage, including,
without limitation, pollution and environmental coverage) covering Supplier and
all companies, persons, or firms, controlling, controlled by, or under common
control with Supplier and their respective directors, officers, and employees
with respect to the Fuel Supply. Policies covering bodily injury shall not be
subject to a deductible amount in excess of $250,000 and policies covering
property damage liability shall not be subject to a deductible amount in excess
of $250,000 and shall provide primary limits of not less than $1,000,000 for
injury or death for each person and not less that $2,000,000 for all persons in
the same accident and not less than $2,000,000 for damage, destruction, and loss
of use of property as a result of one accident and shall provide for combined
single limit coverage of not less than $30,000,000 in excess of the primary
limits. All policies shall provide for at least thirty (30) days prior written
notice to Supplier of any cancellation or material alteration of such policies.
Upon request of Supplier, User will (i) provide Supplier with copies of all
applications and communications to or from any insurer or prospective insurer,
other than routine premium notices, (ii) provide Supplier with copies of the
policies or insurance certificates in respect of the insurance procured pursuant
to the provisions of this Section, (iii) advise Supplier of all expirations and
renewals of policies and all notices issued by the insurers thereunder and (iv)
within a three (3) month period from the execution of this Agreement and upon
the reasonable request of Supplier thereafter, furnish to Supplier a detailed
statement as to the insurance coverage provided pursuant to this Section and
give immediate notice as to any change in the nature of such coverage. Supplier
shall be under no duty to examine such policies, certificates, or other evidence
of insurance procured by User, or to advise User in the event that the insurance
coverage is not in compliance with this Agreement.
(d) Supplier shall cooperate fully with User and all insurance
companies providing coverage hereunder in the investigation and defense of any
claim. User shall comply with all insurance policy conditions and restrictions
and with all Applicable Laws concerning the transfer, storage, use and delivery
of the Fuel Supply and with respect to any spillage or discharge (accidental or
otherwise) of the Fuel Supply. User shall comply with all applicable laws,
rules, and regulations relating to the performance of this Agreement by User.
(e) User shall comply with all Applicable Laws of any jurisdiction
governing any aspect of the Fuel Supply including, but not limited to, all
local, state and federal environmental laws, rules and regulations and all
Applicable Laws governing pollution resulting in any way from the Fuel Supply
and governing the licensing, acquisition, storage, containerization,
transportation, blending, transfer, consumption, insuring, using, operating,
disposing, fabricating and reprocessing of the Fuel Supply, provided that User
may contest the applicability or validity of any such provisions, rules or
regulations in good faith by appropriate proceedings conducted in good faith and
with due diligence if and to the extent
13
any such contest could not materially and adversely affect the ability of User
to perform its obligations under this Agreement or the ability of Supplier to
conduct its business or to exercise its rights and obligations under this
Agreement or have any other material adverse effect upon Supplier. User further
agrees to indemnify and hold Supplier harmless (without derogating any of User's
obligations under Section 11 hereof) for any costs, expenses, liabilities or
penalties relating to such contests; provided, that all such costs, expenses,
liabilities and penalties (without derogating any of User's obligations under
Section 11 hereof), shall be for the account of User whether arising before,
during or after any such contest. User shall use every commercially reasonable
precaution to prevent loss or damage to the Fuel Supply and to prevent injury to
third persons or property by the Fuel Supply.
(f) User shall promptly and duly execute, deliver, file and record all
such documents, statements, filings and registrations (including Uniform
Commercial Code financing statements or similar evidence of Supplier's and any
assignee's interests), and take such further actions as Supplier shall from time
to time reasonably request in order to establish, perfect and maintain the
rights and remedies created or intended to be created in favor of Supplier
hereunder and Supplier's title to and interest in the Fuel Supply as against
User or any third party.
(g) User hereby assumes all risks of loss or damage of Fuel Supply
however caused and wherever located, and shall, except as otherwise provided in
Section 12 at its own expense, subject to reasonable wear and tear, obsolescence
and exhaustion keep the Fuel Supply in good operating condition and repair.
(h) Prior to the acquisition of any Fuel Supply hereunder by Supplier
and prior to the assignment of any contracts to Supplier pursuant to Section 6
hereof, User shall obtain all regulatory approvals and authorizations for this
Agreement which are required or which shall be reasonably requested by Supplier.
User shall promptly provide Supplier with copies of all such approvals and
authorizations along with an opinion of counsel, satisfactory to Supplier, that
all necessary governmental approvals and authorizations for this Agreement and
for performance hereunder by the parties hereto have been obtained.
Notwithstanding any provision herein to the contrary, if User shall not obtain
the satisfactory approvals described in this Subsection or shall fail to provide
documentation acceptable to Supplier as described herein, Supplier shall have no
obligation to acquire any Fuel Supply whatsoever and shall have no obligation to
accept the assignment of any contracts whatsoever pursuant to Section 6 hereof.
User shall not resell any natural gas Fuel Supply purchased under this
Agreement.
11. Indemnity.
---------
(a) User hereby indemnifies and agrees to hold harmless and defend
Supplier and all companies, persons, or firms controlling, controlled by or
under common control with Supplier and their respective directors, officers, and
employees, and any assignee of Supplier referred to in Section 17, against any
and all claims, demands, and liabilities of whatsoever nature (including strict
liability in tort) and all losses, costs, expenses (including, but not limited
to, attorneys' fees), fines, and penalties directly or indirectly relating to or
in any way arising out of the following, whether or not insured against or
required to be insured against under Section 10:
(i) The licensing, ordering, delivering, acquisition, title on
acquisition, rejection, installation, ownership, use, nonuse, misuse,
possession, control, storage,
14
containerization, inspection, transportation, blending, fabricating,
transfer, reallocation, discharge, spillage, leakage, pumping, pouring,
emitting, emptying, dumping, consumption, loss, insuring, operating,
disposition, or sale of the Fuel Supply, or energy produced by the
consumption of the Fuel Supply, or of all fuel which is proposed to be
included in the Fuel Supply except to the extent that such costs and
expenses are included in the Inventory Value within the dollar limit
specified in Section 5 and except for any general administrative
expenses of Supplier and all losses, costs, expenses, fines, or
penalties of Supplier arising out of the use or disposition by Supplier
of Fuel Supply pursuant to Section 4(f);
(ii) All costs, charges, damages or expenses and royalties and/or
claims and expenses of litigation (including, but not limited to,
reasonable attorneys' fees) arising out of or necessitated by the
assertion of any claim or demand based upon any infringement or
alleged infringement of any patent or other right, by or in respect of
any Fuel Supply; provided, however, that Supplier will make available
to User all of the Supplier's rights under any similar indemnification
from the supplier, manufacturer, fabricator or vendor of such Fuel
Supply;
(iii) The performance of this Agreement, the contracts and
assignments thereof referred to in Section 6 and the license agreement
or agreements referred to in Section 8(a), except for any general
administrative expenses of Supplier and the costs contemplated by
Section 4(f) of this Agreement for the account of Supplier;
(iv) All federal, state, county, municipal, foreign, or other
fees and taxes of whatsoever nature, including, but not limited to,
license, qualification, franchise, sales, use, business, gross
receipts, ad valorem, property (real or personal), excise, and
occupation fees and taxes, and penalties and interest thereon, whether
assessed, levied against or payable by Supplier or otherwise with
respect to the Fuel Supply or the licensing, ordering, acquisition,
purchase, operation, ownership, use, possession, control, acquisition,
storage, containerization, transportation, blending, inspection,
transfer, consumption, insuring, operating, disposition, fabrication,
or sale of the Fuel Supply or measured in any way by the value thereof
or by the business of, investment in, financing of, or ownership by
Supplier with respect thereto, excepting only (1) Income Taxes of
Supplier, (2) sales, excise, or other taxes which are included in the
Acquisition Cost of the Fuel Supply, and (3) any fees or taxes arising
out of the use or disposition of Fuel Supply by Supplier pursuant to
Section 4(f);
(v) Any violation, or alleged violation, of this Agreement by
User or of any agreements to which User is a party or by which it is
bound or any laws, rules, regulations, orders, writs, injunctions,
decrees, consents, approvals, exemptions, authorizations, licenses and
withholdings of objection, of any governmental or public body or
authority and all other requirements having the force of law, in any
such case applicable at any time to the Fuel Supply or any action or
transaction by User or Supplier with respect thereto or pursuant to
this Agreement including, but not limited to, all local, state and
federal environmental laws, rules, regulations, regulatory policies
and guidelines;
(vi) Performance of any labor or service or the furnishing of any
materials in respect of the Fuel Supply or any portion thereof except
to the extent that such costs are included in the Acquisition Cost of
such Fuel Supply within the maximum Inventory Value provided in
Section 5 hereof,
15
(vii) Liabilities based upon a theory of strict liability in
tort, negligence or willful acts (except for gross negligence or
willful misconduct of Supplier) including but not limited to any
environmental liabilities.
User shall forthwith upon demand reimburse Supplier for any sums expended with
respect to any of the foregoing or shall pay for such amounts directly upon
request by Lessor. To the extent that User in fact has held Supplier harmless
and made it whole under this indemnity provision, User shall be subrogated to
Supplier's rights in the affected transaction and shall have a right to
determine the settlement of claims therein, provided that any such settlement
will not, in the opinion of Supplier, adversely affect any property or rights of
Supplier or its ability to engage in its business activities. The foregoing
indemnity shall not be affected by any termination of this Agreement, or the
termination of this Agreement with respect to any portion of the Fuel Supply,
insofar as it affects matters which arise or accrue during the term of this
Agreement.
(b) Supplier shall indemnify and hold harmless User, and all companies,
persons or firms controlling, controlled by or under common control with User,
and their respective directors, officers, and employees to the same extent as
User in the foregoing Section 11(a) agrees to indemnify and hold harmless
Supplier, but only with respect to the use or disposition of Fuel Supply by
Supplier pursuant to Section 4(f).
12. Loss or Destruction of Fuel Supply. If any Fuel Supply is lost,
damaged, or destroyed, by any cause; or if any Fuel Supply is taken,
requisitioned, commandeered, condemned, seized, or reallocated; or if any Fuel
Supply is attached (other than on a claim against Supplier but not User) and the
attachment is not removed within ninety (90) days; or in the event of any other
such loss of the use of any Fuel Supply for a period exceeding ninety (90) days,
then, in any such event of casualty, User shall give Supplier prior written
notice of such fact and within ninety (90) days of the occurrence of any such
event, User shall pay to Supplier an amount equal to the Inventory Value of such
Fuel Supply plus any Fuel Supply Charges and all other amounts hereunder which
are due and unpaid with respect thereto. The agreement with respect to such Fuel
Supply hereunder and the obligation of User to pay Fuel Supply Charges for such
Fuel Supply shall continue until the day on which Supplier receives such
amounts. Upon receipt of such payment, the entire interest of Supplier in such
Fuel Supply shall automatically transfer to and be vested in User (without
recourse and without warranty of any kind whatsoever) without the necessity of
any further action by either Supplier or User.
The occurrence of any event covered by this Section 12 shall not
constitute a termination of this entire Agreement and User shall continue to
make all payments required under Section 7 and any other Section hereof with
respect to any Fuel Supply unaffected by any such casualty.
13. Breach of Agreement by User.
---------------------------
(a) The happening of any of the following events shall constitute a breach
of the Agreement by User:
(i) Failure by User to make any payment as provided in this Agreement
within ten (10) days after such payment is due; or
16
(ii) Failure in the performance of any other obligation or covenant of
User to Supplier hereunder or under the license agreement or agreements
referred to in Section 8(a) and the continuance of such failure for fifteen
(15) days after receipt by User from Supplier of written notice of such
failure sent by registered or certified mail or delivered by hand; or
(iii) User suspends or discontinues its business operations or becomes
insolvent (howsoever such insolvency may be evidenced) or admits insolvency
or bankruptcy or its inability to pay its debts as they mature, makes an
assignment for the benefit of creditors, or applies for, or consents to,
the appointment of a trustee or receiver for User, or for the major part of
its property; or
(iv) The institution of bankruptcy, reorganization, liquidation, or
receivership proceedings by or against User and, if instituted against
User, its consent thereto or the pendency of such proceedings for sixty
(60) days; or
(v) Any court, governmental officer, or agency shall, under color of
legal authority, take and hold possession of any substantial part of the
property or assets of User; or
(vi) Any representation or certification made by User herein or in any
written instrument furnished by User to Supplier in connection herewith
shall not be correct and complete in all material respects on the date as
of which made and on the date Supplier makes any payment with respect to
the Acquisition Cost of the Supplier's Inventory or User's Inventory, as
the case may be.
(b) Upon the occurrence of any such breach of this Agreement, Supplier may
in its discretion do one or more of the following:
(i) Terminate the term of this Agreement, pursuant to Section 15, upon
five (5) days written notice to User sent by registered or certified mail
(in which case the Termination Date shall be the fifth day after the date
of mailing of such notice by Seller);
(ii) Whether or not the term of this Agreement is terminated, and
subject to any applicable law or regulation, take immediate possession of
and remove any or all Fuel Supply or cause such Fuel Supply to be taken
from the possession of User, wherever situated, and for such purpose enter
upon any premises without liability for so doing or require User, at User's
expense, to deliver the Fuel Supply, properly containerized and insulated
for shipping to Supplier or to such other person as Supplier may designate,
in which case the risk of loss shall be upon User until such delivery is
made;
(iii) Whether or not any other action has been taken under this
Section 13 or under Applicable Laws, and subject to any Applicable Laws,
sell any Fuel Supply (with or without the concurrence or request of User)
at public or private sale, in any case, in a commercially reasonable manner
and with at least ten (10) Business Days prior written notice thereof to
User, and User shall be liable for and shall promptly pay to Supplier all
unpaid Fuel Supply Charges to the date of receipt by Supplier of the
proceeds of such sale plus any deficiency between the net proceeds of such
sale and the Inventory Value of such Fuel Supply at the time of such
payment by User;
17
(iv) Subject to Applicable Laws, sell, dispose of, hold, use, remove,
finance or keep idle any or all of the Fuel Supply, such action or inaction
to be determined by Supplier in a commercially reasonable manner, without
any duty to account to User for any proceeds thereof, except that the net
proceeds of any such selling, disposing of, holding, using, operating or
leasing shall be credited by Supplier against any Fuel Supply Charges
accruing after Supplier shall have declared this Agreement as to any or all
of the Fuel Supply to be in default pursuant to this Section;
(v) Exercise any other right or remedy which may be available under
applicable law or proceed by appropriate court action to enforce the terms
hereof or to recover damages for the breach hereof.
If after the occurrence of such breach by User, User (upon written
request of Supplier) delivers or fails to deliver Fuel Supply to Supplier or if
after the occurrence of a breach, Supplier repossesses Fuel Supply, User shall
be liable for and Supplier may recover from User all Fuel Supply Charges on the
Fuel Supply due and payable to the date of such delivery or repossession, all
other amounts due and payable under this Agreement, plus all losses, damages and
expenses (including without limitation reasonable attorneys' fees and
disbursements) sustained by Supplier by reason of such default and the exercise
of Supplier's remedies with respect thereto. No remedy referred to in this
Section is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to
Supplier at law or in equity and the exercise in whole or in part by Supplier of
any one or more of such remedies shall not preclude the simultaneous or later
exercise by Supplier of any or all such other remedies; provided, however, that,
notwithstanding the foregoing, Supplier shall not be entitled to recover more
than an aggregate amount equal to the sum of (i) all amounts due to Supplier
hereunder plus (ii) any losses, damages and expenses suffered by Supplier
arising out of any breach of this Agreement by User. No waiver by Supplier of
any breach hereunder shall in any way be, or be construed to be, a waiver of any
future or subsequent breach. User agrees also promptly to pay to Supplier any
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred by Supplier in collecting any unpaid sums under this
Agreement.
14. Breach of Agreement by Supplier.
-------------------------------
(a) The happening of any of the following events shall constitute a breach
of the Agreement by Supplier:
(i) Failure in the performance of any obligation or covenant
of Supplier to User hereunder and the continuance of such failure for
fifteen (15) days after receipt by Supplier from User of written notice
of such failure sent by registered or certified mail or delivered by
hand; or
(ii) Supplier permanently suspends or discontinues its
business operations or admits insolvency or bankruptcy or its inability
to pay its debts as they mature, makes an assignment for the benefit of
creditors, or applies for, or consents to, the appointment of a trustee
or receiver for Supplier, or for the major part of its property or
institutes a proceeding in bankruptcy against itself; or
(iii) The institution of bankruptcy, reorganization,
liquidation, or receivership proceedings against Supplier and
Supplier's consent thereto or the pendency of such proceedings for
sixty (60) days; or
18
(iv) Any court, governmental officer, or agency shall, under
color of legal authority, take and hold possession of any substantial
part of the property or assets of Supplier.
(b) Upon the occurrence of any such breach of this Agreement, User may
in its discretion terminate the term of this Agreement pursuant to Section 15
upon five (5) days written notice to Supplier sent by registered or certified
mail (in which case the Termination Date shall be the fifth day after the date
of mailing of such notice by User).
15. Termination.
-----------
(a) The term of this Agreement shall terminate on the Termination Date.
(i) Upon such termination no further orders for Fuel Supply shall be
placed with vendors by Supplier; and
(ii) Upon receipt by Supplier of all amounts due it in respect of this
Agreement,
(1) all right, title and interest to Fuel Supply for
which Supplier has not made any payment shall be immediately
conveyed and assigned by Supplier to User without recourse and
without warranty of any kind whatsoever, whereupon all
payments with respect to such Fuel Supply shall be made by
User and Supplier shall have no further obligation to make any
payment with respect to such Fuel Supply; User hereby agrees
to accept such conveyance and assignment and to make all such
payments;
(2) all Fuel Supply contracts assigned to Supplier
shall be reassigned by Supplier to User with reasonable
promptness and User hereby agrees to accept such reassignment
and, thereafter, User shall have the right to place orders for
fuel on its behalf under such contracts;
(3) subject to the provisions of the first sentence
of Section 8(c), all fuel purchased by User in accordance with
the foregoing Subsection 15(a)(ii)(2) may be stored with or
commingled with the Fuel Supply;
(4) all other contracts, if any, assigned to Supplier
shall be reassigned to User with reasonable promptness, except
that Supplier shall retain its license interest in any storage
tanks and areas until receipt by Supplier of all amounts
payable by User under this Agreement (no later than the
Termination Date of this Agreement), and User hereby agrees to
accept such reassignment; and
(5) Supplier shall in accordance with Section 4(f),
within thirty (30) days, replace any Fuel Supply which it has
used or disposed of pursuant to said Section; and
(iii) Until the date of the final payment to Supplier pursuant to the
following Subsections 15(b) or 15(c), or Section 16, User shall continue to
pay Fuel Supply Charges to Supplier.
19
(b) Subject to the provisions of Section 15(c), upon any termination,
Supplier, or, at the written request of Supplier, User on behalf of Supplier,
shall promptly sell the Supplier's Inventory and the User's Inventory, if any,
to a third party or third parties on a non-installment cash sale basis, without
recourse to or warranty of any kind whatsoever by Supplier, or, if for any
reason such sale cannot be made, shall otherwise dispose of the Supplier's
Inventory and the User's Inventory to a third party or third parties. User shall
not become the purchaser of or acquire the Supplier's Inventory or the User's
Inventory upon its sale or disposition. Upon the sale or disposition of the
Supplier's Inventory and the User's Inventory to a third party or third parties,
the entire proceeds thereof, if any, net of costs incurred in connection with
such sale or disposition, shall be paid to Supplier. No later than the
Termination Date, User shall pay to Supplier in Available Funds the amount, if
any, by which (i) the Settlement Amount is in excess of (ii) the net proceeds
(excluding, at Supplier's option, any non-cash consideration), if any, of such
sale or disposition. Unless Supplier elects to retain any such non-cash
consideration, upon such payment by User, Supplier shall pay over to User such
non-cash consideration, Supplier shall pay over to User the amount of any net
proceeds in excess of the Settlement Amount received by Supplier.
(c) Notwithstanding the foregoing, and without limiting User's rights
under Section 4, upon any termination, User shall have the option, exercisable
at any time up to and including the Termination Date, to purchase, without
recourse to Supplier and without warranty by Supplier of any kind whatsoever,
all or part of the Supplier's Inventory and the User's Inventory for a purchase
price in Available Funds equal to the Settlement Amount.
(d) In the event of a breach of this Agreement by User, User hereby
grants to Supplier the right to sell and dispose of that portion of Mixed Fuel
which is owned by User (the "User Mixed Fuel") to facilitate the disposition and
sale of the User's Inventory and the Supplier's Inventory in accordance with the
provisions of this Agreement, User hereby makes, constitutes and appoints
Supplier the true and lawful agent and attorney-in-fact of the User, with full
power of substitution, to (i) sell or dispose of all of the User Mixed Fuel and
(ii) to do any and all things necessary, or take such action in the name of and
on behalf of the User, to carry out the provisions and intent of this Section
15(d). The power of attorney granted under this Section 15(d) is coupled with an
interest and shall be irrevocable until this Agreement has been terminated and
all of User's obligations under this Agreement have been fully and finally paid
in full. In the event of any sale or disposition of User Mixed Fuel hereunder by
Supplier, Supplier shall pay to User the amount, if any, by which the sum of (x)
the net proceeds from the sale of User's Inventory and the Supplier's Inventory
pursuant to Section 15(b) plus (y) the net proceeds from the sale of User Mixed
Fuel, exceeds the Settlement Amount, to the extent, and only to the extent, that
such excess is attributable to the sale of User Mixed Fuel.
16. Termination Due to Law or Regulatory Acts. This Agreement shall
terminate prior to the expiration of its term upon the date of the happening of
any of the following "Termination Events":
(i) If directly as a result of the transactions contemplated
by this Agreement, Supplier becomes, or based upon notification from
any relevant governmental body or the receipt of a written opinion from
mutually acceptable outside counsel (at Supplier's expense) that
Supplier will become, an "electric utility company", a "gas utility
company", a "public utility" or a similar entity under the Public
Utility Holding Company Act of 1935, as amended, the Federal Power Act,
as amended, any other Federal law or regulation, or under the laws of
any state;
20
(ii) Any law or regulation or interpretation (judicial,
regulatory or otherwise) of any law or regulation shall be adopted or
enforced by any court or governmental or regulatory authority and as a
result of such adoption or enforcement, approval of the transactions
contemplated by this Agreement shall be required and shall not have
been obtained within any grace period after such adoption or
enforcement, or as a result of which adoption or enforcement this
Agreement or any transaction contemplated hereby, including any
payments to be made by User or the ownership of the Fuel Supply by
Supplier, shall be or become unlawful or the performance of this
Agreement shall be commercially frustrated or rendered impracticable in
any material way; or
(iii) There shall occur the revocation or material adverse
modification or any ruling, order or direction in respect of any
authorization, consent, exemption or approval theretofore obtained from
any regulatory body or governmental authority necessary for the
carrying out of the intent and purposes of this Agreement, or the
actions or transactions contemplated hereby (it being understood and
agreed that the expiration of any order approving this Agreement shall
not be deemed to constitute any such revocation or material adverse
modification, provided only that another such order shall have been
obtained by User with respect to this Agreement on or prior to the date
of such expiration).
If any of the Termination Events occur, Supplier may terminate this
Agreement in accordance with Section 15.
17. Sale or Assignment.
------------------
(a) Supplier shall have the right to grant participations or security
interests in or sell or assign some or all of Supplier's right, title and
interest in the Fuel Supply, or any part or portion thereof, this Agreement
(including any Inventory Record or Assignment), or any Fuel Supply Charges or
other monies due from User and any third party under this Agreement and in that
connection to grant security interests in the Fuel Supply, provided that any
such sale, assignment or security interest shall be subject to the rights and
interest of User in the Fuel Supply and under this Agreement and provided
further that: (i) User understands and agrees that any cost or expense
associated with or arising out of any transfer, sale, assignment or grant of
participations or security interests in some or all of Supplier's right, title
and interest in and to the Fuel Supply or any part or portion thereof, this
Agreement (including any Inventory Record or Assignment) or any Fuel Supply
Charges or other monies due from User and any third party under this Agreement
shall be for the sole account of Supplier and that in no event shall any such
transfer, sale, assignment or other disposition increase the liability in any
manner whatsoever of User under this Agreement and (ii) Supplier shall remain
the sole administrator of its rights and duties hereunder unless Supplier shall
become insolvent or bankrupt or cease doing business. Supplier's transferee or
assignee shall have all the rights, powers, privileges and remedies of Supplier
hereunder and User's obligations as between itself and such transferee or
assignee hereunder shall not be subject to any claims, defense or rights of set
off which User may have against Supplier. Upon written notice to User of any
such sale or assignment, User shall thereafter make payments of all Fuel Supply
Charges and other sums due hereunder to a lock box account which shall be
maintained for the benefit of Supplier or any and all transferees or acquirers
of an interest hereunder with the effect and result that at all times during the
term of this Agreement, User shall only be required to make one payment of Fuel
Supply Charges due on any payment date. Such payments shall discharge
21
the obligation of User to Supplier hereunder to the extent of such payments.
After such assignment and upon delivery of written notice to User by such
assignee, the terms and provisions of this Agreement may not be altered,
modified, or waived without the written consent of such assignee.
(b) Supplier may assign all of its rights, duties and obligations under
this Agreement to a wholly owned subsidiary or an affiliate Supplier.
18. Certificates; Information; Other Actions.
----------------------------------------
(a) User will, from time to time, deliver to Supplier, promptly upon
reasonable request (i) a statement executed by any duly authorized officer of
User, certifying the dates to which the sums payable hereunder have been paid,
that this Agreement is unmodified and in full effect (or, if there have been
modifications, that this Agreement is in full effect as modified, and
identifying such modifications) and that no breach has occurred and is
continuing (or specifying the nature and period of existence of any thereof and
what action User is taking or proposes to take with respect thereto), and (ii)
such information with respect to User's operations, business, property, assets,
financial condition, or litigation as Supplier, or any transferee or assignee of
Supplier pursuant to Section 17 shall reasonably request.
(b) Supplier will, if it has used or disposed of any Fuel Supply under
Section 4(f) hereof, from time to time, deliver to User, promptly upon
reasonable request such information with respect to Supplier's operations,
business, property, assets, financial condition, or litigation as User shall
reasonably request, including without limitation, annual audited financial
statements, and unaudited quarterly financial statements.
(c) User will promptly and duly execute, deliver, file and record such
documents, statements, registrations, and filings and take such further actions
as Supplier may from time to time reasonably request in order to establish,
perfect, and maintain Supplier's title to, and interest (including security
interests) in, the Fuel Supply, this Agreement, the license agreement or
agreements referred to in Section 8(a) and the contracts and assignments thereto
referred to in Section 6, as against User or any third party in any applicable
jurisdiction.
19. Intention of the Parties. It is the intention of the parties hereto
that Supplier has title to and is the legal owner of the Supplier's Inventory
and that User does not hereby acquire any right, title, equity, or interest in
and to the Supplier's Inventory except for the right to purchase the Supplier's
Inventory as provided herein.
20. Obligation of User to Pay Fuel Supply Charges. User's obligation to
pay all Fuel Supply Charges and other amounts payable hereunder shall be
unconditional and shall not be affected by (i) any set off, counterclaim,
recoupment, defense or other right which User may have (and may pursue
independently) against Supplier or anyone else for any reason whatsoever, and
(ii) any defect in the title, compliance with specifications, condition, design,
operation or fitness for use of, or any damage to or loss or destruction of, any
Fuel Supply, and (iii) any ruling or decision of any governmental authority or
agency. User hereby waives, to the extent permitted by applicable law, any and
all rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit or surrender this
Agreement except in accordance with the express terms hereof. Each Fuel Supply
Charge payment and other payment made by User shall be
22
final and User will not seek to recover all or any part of such payment from
Supplier for any reason whatsoever, except only to the extent adjustments in the
amount of any Fuel Supply Charge payment is necessitated or expressly
contemplated by the definitions or terms contained in this Agreement.
21. Closing Costs. At the time of execution of this Agreement, User
shall pay to Supplier closing costs in an amount equal to $25,000. All expenses
for User's legal counsel and all other User's costs and expenses necessary to
close this transaction shall be paid by User or shall be for the User's account.
22. Fuel Supply To Be and Remain Personal Property. It is the intention
and understanding of both Supplier and User that all Fuel Supply shall be and at
all times remain personal property. User will obtain and record such instruments
and take such steps as may be necessary to prevent any person from acquiring any
rights in the Fuel Supply paramount to the rights of Supplier, by reason of such
Fuel Supply being deemed to be real property. If, notwithstanding the intention
of the parties and the provisions of this Section 21, any person acquires or
claims to have acquired any rights in any Fuel Supply paramount to the rights of
Supplier, by reason of such Fuel Supply being deemed to be real property, and
such person seeks in any manner to interfere with the use of the Fuel Supply by
User as contemplated by this Agreement, then User shall promptly notify Supplier
in writing of such fact (unless the basis for such interference is waived or
eliminated to the satisfaction of Supplier within a period of ninety (90) days
from the date it is asserted) and User shall within ninety (90) days after such
notice pay to Supplier or Supplier's assignee an amount equal to the Inventory
Value of such Fuel Supply at the time of payment plus all Fuel Supply Charges on
such Fuel Supply to such date of payment and any other amounts hereunder which
are due and unpaid. The User's obligation to pay the Fuel Supply Charges shall
continue until such payments have been received and shall thereupon terminate;
and upon such payments all of Supplier's title to and rights in such Fuel Supply
shall automatically pass to User or its designee without recourse and without
warranty of any kind whatsoever and this Agreement shall thereupon terminate
with respect to such Fuel Supply.
23. Miscellaneous. This Agreement and all rights hereunder shall be
governed by the laws of the State of Connecticut, including all matters of
construction, validity and performance. Each of the parties hereto acknowledges
that the other party shall not by act, delay, omission or otherwise be deemed to
have waived any of its rights or remedies hereunder or under any other
instrument given hereunder unless such waiver is given in writing and the same
shall be binding to the extent therein provided and only upon the parties
signing the same. A waiver on any one occasion shall not be construed as a
waiver on any future occasion. No executory agreement shall be effective to
change, modify or discharge, in whole or in part, this Agreement, or any other
instrument given in connection herewith, unless such agreement is in writing and
signed by Supplier and User. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their permitted successors and assignees. All
rights, remedies and powers granted herein, or in any other instrument given in
connection herewith, shall be cumulative and may be exercised singularly or
cumulatively. This Agreement constitutes the entire understanding or agreement
between Supplier and User and there is no understanding or agreement, oral or
written, which is not set forth herein. Notices to User required pursuant to
this Agreement shall be delivered to The United Illuminating Company at 00
Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000, Attention: Treasurer, or at such
other location as User may direct in writing. Notices to Supplier required
pursuant to this Agreement shall be delivered
23
to BLC Corporation at 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000,
Attention: Legal Department, or at such other location as Supplier may direct in
writing.
IN WITNESS WHEREOF, Supplier and User have duly executed this Fossil
Fuel Supply Agreement as of the day and year first above written.
BLC Corporation, Supplier
Attest:
By By
-------------------------------------- ------------------------------
Asst. Secretary President
The United Illuminating Company, User
Attest:
By By
------------------------------- ---------------------------------
Secretary
Title
24
EXHIBIT A
Inventory Record
[To be Provided by User]
EXHIBIT B
---------
(Oil, Coal and Natural Gas)
THIS ASSIGNMENT made as of the day of ____ , 19__, by and between The
United Illuminating Company (hereinafter called "Assignor"), and BLC
Corporation (hereinafter called "Assignee").
WHEREAS, Assignor is party to the following described contract
(hereinafter called the "Contract") which provides for the purchase,
transportation, storage, or handling of fuel:
[*]
WHEREAS, Assignor and Assignee are parties to a Fossil Fuel Supply
Agreement, dated as of July 1, 1991, as the same may be amended from time to
time (hereinafter called the "Agreement").
NOW THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, Assignor and Assignee hereby agree as follows:
1. Assignor assigns, transfers, and sets over unto Assignee all of
Assignor's right, title, and interest in and to the Contract and in and to the
fuel and services to be purchased, delivered or performed under the Contract but
only in connection with fuel delivered to Assignor's receiving terminals at [*],
Connecticut [AND FUEL LOADED IN [*]] or [SHIPPED FROM [*]]. Notwithstanding the
foregoing, Assignor on its own behalf or on behalf of Assignee retains all its
rights and obligations under the Contract to give any notice and to exercise any
option or election provided therein, to enforce any claim for breach of any term
thereof and any rights and obligations to supervise or direct the off loading of
fuel, including, but not limited to, the scheduling of vessels, and to take any
steps necessary to prevent spilling, loss, or other damage to persons, property,
or the environment.
2. Assignee accepts the foregoing assignment and transfer from Assignor
and, subject to all of the terms and provisions of the Agreement, including
without limitation, provisions thereof setting forth circumstances under which
Assignee would have no obligation to make any payment under or pursuant to the
Contract, agrees (i) to make all payments which are required to be made under
the Contract for fuel to be purchased or services to be performed but only in
connection with fuel delivered to Assignor's receiving terminals at [*],
Connecticut [AND FUEL LOADED IN [*]] or [SHIPPED FROM [*]], and (ii) to sell to
Assignor fuel delivered under the Contract to Assignor's receiving terminals at
[*], Connecticut [AND FUEL LOADED IN [*]] or [AT OR NEAR ANY WELL OR XXXXX,
PRODUCTION PLATFORMS OR ANY OTHER POINTS IN [*]], provided, however, that with
respect to any payments to be made under the Contract which Assignor is required
to make pursuant to the Agreement in order to stay within the limitation on the
maximum costs to be paid by Assignee as specified in the Agreement, Assignor and
Assignee agree to notify the party to the Contract to which any such payment is
due that it should invoice and sell the fuel or service covered by such payment
directly to Assignor.
3. Assignor agrees to pay Assignee, in accordance with the terms of the
Agreement, for any fuel or services purchased by Assignor under the Agreement.
1
4. Notwithstanding the foregoing, Assignee shall not be or become
responsible to Assignor or to the other party (or parties) to the Contract for
the performance of the term, conditions and obligations under the Contract,
other than for the obligation to make the payments which are required to be made
thereunder for the purchase of fuel or services in connection with fuel
delivered to Assignor's receiving terminals at [*], Connecticut [AND FUEL LOADED
IN [*]] or [SHIPPED FROM [*]], in accordance with and subject to the limitations
set forth in the Agreement. Nothing contained herein shall be construed to give
any party to the Contract, other than the Assignor, any right, including without
limitation, third party beneficiary rights against Assignee by reason of this
Assignment. Assignor shall be and remains responsible for the performance of the
terms, conditions, and obligations under the Contract, including, without
limitation, the obligation to make payments for the purchase of fuel or services
thereunder if, for any reason, the Assignee should fail or not be obligated to
make any such payment.
5. If the Agreement is terminated pursuant to its terms at any time
when payment for any fuel or services covered by the Contract has not been made,
or if the Contract is reassigned by Assignee to Assignor pursuant to any
provision of the Agreement, then after such termination or reassignment,
Assignee shall not be obligated to make any further payment under the Contract.
Upon any notice of termination of the Agreement or notice of reassignment of the
Contract, Assignee agrees to reconvey to the Assignor the right, title and
interest of Assignee in and to the Contract and Assignor agrees to accept such
reconveyance all in accordance with the terms of the Agreement.
IN WITNESS WHEREOF, Assignor and Assignee have duly executed this
Assignment as of the day and year first above written.
The United Illuminating Company, Assignor
Attest:
By By
---------------------------- ----------------------------------
Secretary Title
BLC Corporation, Assignee
Attest:
By By
---------------------------- ----------------------------------
Secretary President
2
CONSENT AND AGREEMENT
---------------------
The undersigned hereby (i) consents to the aforesaid Assignment, (ii)
acknowledges and agrees that Assignee's obligations under the Assignment are
limited solely to the obligation to make payment for fuel to be delivered or
services to be performed under the Contract in connection with fuel delivered to
Assignor's receiving terminals at [*], Connecticut [AND FUEL LOADED IN [*]] or
[SHIPPED FROM [*]] and are limited by and subject to the terms and provisions of
the Agreement including, but not limited to, the maximum Inventory Value
limitation set forth in Section 5 of the Agreement, (iii) agrees, upon request
of Assignor and Assignee as provided in Section 2 of the aforesaid Assignment,
to invoice and sell specified fuel or perform specified services directly to or
for Assignor by submitting an invoice to the Assignor with a copy to the
Assignee, (iv) acknowledges and agrees that Assignee's obligation to make
payment hereunder is expressly conditioned upon Assignee's receipt of a
completed executed Inventory Record and an endorsed invoice both covering the
relevant fuel and in each case executed and endorsed by an appropriate duly
authorized officer of Assignor in form and substance satisfactory to Assignee,
and (v) covenants and warrants that Assignee shall receive good and valid title
to all fuel supplied under the Contract, free and clear of any and all liens,
encumbrances and rights of others.
[VENDOR]
-------------------------------------
By
-----------------------------------
Date
------------------
The United Illuminating Company hereby represents to [vendor] that at all times
while the Contract is in effect or any obligations under it are outstanding, The
United Illuminating Company shall be and remains responsible as primary obligor
for the performance of the terms, conditions and obligations under the Contract,
including without limitation the obligation to make payment for the purchase of
fuel or services thereunder.
The United Illuminating Company
By
-----------------------------
Title
--------------------------
Date
---------------
3
EXHIBIT C
---------
LICENSE AGREEMENT
-----------------
THIS AGREEMENT, entered into as of the _ day of ___ , 19 , between The
United Iluminating Company ("UI"), Bridgeport Electric Company which is a wholly
owned subsidiary of UI ("BEC") (hereinafter "Licensors") and BLC Corporation
(hereinafter "Licensee").
WITNESSETH THAT:
WHEREAS UI and Licensee are parties to a Fossil Fuel Supply Agreement,
dated as of July 1, 1991, as the same may be amended from time to time
(hereinafter called the "Fuel Agreement") under which Licensee will sell fossil
fuels owned by it (hereinafter called the "Fuel Supply") to UI; and
WHEREAS UI is the lessee of certain fuel storage facilities in New
Haven, Connecticut and UI and BEC are each the owner or lessee of certain fuel
storage facilities in Bridgeport, Connecticut which facilities Licensors are
willing to make available to Licensee for storage of Fuel Supply pending
delivery and sale of Fuel Supply to UI or other persons pursuant to the Fuel
Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
agreements contained herein, Licensors and Licensee agree as follows:
1. Licensors hereby grant to Licensee a license and permission to use
the fuel storage facilities in New Haven, Connecticut and Bridgeport,
Connecticut described in Exhibits attached hereto (hereinafter called the
"Facilities") for the purpose of storing Fuel Supply therein pending delivery
and sale thereof to UI or other persons pursuant to the Fuel Agreement, together
with a license and permission to use the most direct and convenient existing
access ways affording ingress and egress to and from the Facilities; reserving,
however, to Licensors the right, whether alone or in common with Licensee and
others, or in connection with others, to use the equipment associated with the
Facilities and owned by Licensors; and reserving, further, to Licensors the
right to use the facilities for the storage of fossil fuel owned by Licensors
and the storage of fossil fuel owned by other persons, insofar as said use does
not interfere with Licensee's use of the Facilities pursuant to the Fuel
Agreement.
2. Licensors acknowledge and agree that Licensors have retained all
rights, duties and liabilities as owner or lessee and operator of the
Facilities, including any and all liability related to the ownership, tenancy,
maintenance and operation of the Facilities and any and all Fuel Supply stored
therein. Licensors agree to operate and maintain all facilities, and to handle
and store all Fuel Supply, in full compliance with all applicable federal, state
and local laws, rules, regulations, regulatory policies and guidelines and all
licenses, permits, judgements, decrees, orders or like actions of any authority
or agency of any federal, state or local government and to use every reasonable
precaution to prevent loss of, or damage to, the Fuel Supply and to prevent
injury to persons or property arising out of the use, custody
1
and storage of the Fuel Supply by Licensors and all liabilities with respect
thereto including, but not limited to, all environmental liabilities shall be
the sole responsibility of the Licensors. All individuals handling, using or
performing any operation with respect to the Fuel Supply (excluding employees of
Licensee and all companies, persons or firms controlled by or under common
control with Licensee, acting within the scope of their employment) shall, as
between Licensors and Licensee, be deemed for all purposes to be employees,
servants or agents of Licensors and shall be conclusively presumed not to be
employees, servants or agents of Licensee.
3. Licensee agrees to make no additions, alterations, modifications or
improvements to the Facilities without the prior written consent of Licensors.
4. Licensee may assign the license and permission evidenced hereby,
provided that any such assignment shall be subject to all of the terms and
conditions hereof.
5. The term of this License Agreement shall commence on the date hereof
shown on the first page and shall continue for period of three hundred and
sixty-four (364) days. Thereafter, the term of this License Agreement shall
automatically extend for any period or periods during which the term of the Fuel
Agreement is extended. This License Agreement shall terminate on the same date
the Fuel Agreement terminates and UI has paid to Licensee all amounts required
to be paid under the Fuel Agreement.
IN WITNESS WHEREOF, Licensors and Licensee have duly executed this
Assignment as of the day and year first above written.
The United Illuminating Company, Licensor
Attest:
By By
----------------------------- -----------------------------
Secretary
Title
--------------------------
Bridgeport Electric Company, Licensor
Attest:
By By
------------------------------ -----------------------------
Secretary
Title
--------------------------
BLC Corporation, Licensee
Attest:
By By
---------------------------- ----------------------------
Secretary President
2
EXHIBIT D
---------
CERTIFICATE
-----------
This Certificate is delivered by The United Illuminating Company
("Company") to BLC Corporation ("Supplier") in connection with the Fossil Fuel
Supply Agreement, dated as of [*] ("Agreement") between Supplier and Company,
the assignment by Company of contracts relating to fuel supply to Supplier
("Assignments"), and the granting by Company and Bridgeport Electric Company, a
wholly owned subsidiary of Company ("BEC") of a license to BLC Corporation to
utilize storage facilities of Company and BEC ("License") to perform its
obligations under the Agreement. The Company hereby certifies as of the date
hereof as follows:
1. Company is a corporation duly organized and existing in good
standing under the laws of the State of Connecticut and has the corporate power
to own its properties and to carry on its business as now being conducted and as
presently contemplated to be conducted and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction where the nature of the
business transacted by it makes such qualification necessary, namely New
Hampshire.
2. The execution, delivery and performance by Company of the Agreement,
the Inventory Records in connection therewith, the Assignments, and the License
have been duly authorized by all necessary action, and do not and will not (i)
require any further consent or approval of the stockholders of Company, (ii)
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Company or any of its properties or to the charter or bylaws of
Company, or (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which Company is a party or by which it or its properties may be
bound or affected.
3. No authorization, consent, approval, license, exemption of or filing
or registration with any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, is or will be necessary
to the valid execution, delivery or performance by Company of the Agreement, the
Inventory Records in connection therewith, the Assignments and the License.
4. The Agreement, the Inventory Records in connection therewith, the
Assignments and the License each constitute legal, valid and binding obligations
of Company enforceable against Company in accordance with their terms, subject
to any applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting generally the enforcement of creditors' rights.
5. There has not been any failure by Company to file at or prior to the
time required any reports or other filings with any regulatory authority having
jurisdiction over it which could materially adversely affect its business or
financial condition.
6. Company is not a party to any indenture, loan or credit agreement or
any lease or other agreement or instrument or subject to any charter restriction
which could impair the ability of Company to carry out its obligations under the
Agreement, the Inventory Records in connection therewith, the Assignments or the
License.
7. Company has filed all tax returns (Federal, state and local)
required to be filed and paid all taxes shown thereon to be due, including any
interest and penalties, or has provided adequate reserves for payment thereof.
1
8. Company is not in default under or in violation of (i) any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to Company or
any of its properties or to the charter or bylaws of Company or (ii) the
Agreement or (iii) any indenture, loan, credit agreement, lease or any other
agreement or instrument to which Company is a party or by which it or any of its
properties may be bound or affected. There exists no condition, event or act
which, with the giving of notice or lapse of time, or both, would constitute any
such default or violation.
9. The balance sheet of Company as at [INSERT MOST RECENT YEAR], and
the related statements of income and retained earnings of Company for the fiscal
year then ended, certified by Coopers & Xxxxxxx, independent public accountants,
copies of which have been furnished to Supplier, fairly present the financial
condition of Company as at such date and the results of the operation of the
Company for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied. The unaudited balance sheet
of Company as at [INSERT MOST RECENT QUARTER], and the related statements of
income and retained earnings of Company for the [*] month period then ended,
certified by a chief financial officer of the Company, copies of which have been
furnished to Supplier, fairly present, subject to normal year-end adjustments,
the financial position of Company for the [*] months then ended, all in
accordance with generally accepted accounting principles consistently applied.
10. Except as described in the financial statements in paragraph 9
above, there has been no material adverse change in the business, operations,
affairs, assets or condition, financial or otherwise, or prospects of the
Company. The Company does not have any material contingent liability not
provided for or disclosed in the financial statements referred to in paragraph 9
hereof.
11. Except as described in the financial statements in paragraph 9
above, there are neither (i) any actions, suits or proceedings pending, or to
the knowledge of Company, threatened against or affecting Company or the
property of Company in any court or before any arbitrator of any kind or before
or by any governmental body, nor (ii) any developments or determinations in any
such actions, suits or proceedings, which actions, suits or proceedings,
developments or determinations may materially adversely affect the business,
operations, affairs, assets or condition, financial or otherwise, or prospects
of Company or which may adversely affect the ability of Company to perform its
obligations under the Agreement, the Inventory Records in connection therewith,
the Assignments or the License. The Company is not in default with respect to or
in violation of any order of any court, arbitrator or governmental body which
has a significant effect on the affairs, properties or financial condition of
Company.
12. The Company's sole purpose for purchasing natural gas under the
Agreement is for consumption by the Company, and none thereof will be resold by
the Company.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed by its duly authorized officer as of the date first herein written.
The United Illuminating Company,
By its authorized officer,
Attest:
By By
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Secretary
Title
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2
