OPTION AGREEMENT
BETWEEN
BAYONNE INDUSTRIES, INC.
AND
COGEN TECHNOLOGIES NJ, INC.
May 22, 1986
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS....................................................... 2
ARTICLE 2
OPTIONS TO PURCHASE AND SELL...................................... 5
2.1 Option to Purchase........................................ 6
X. Xxxxx of option to Purchase; Consideration
for Option............................................. 6
B. Purchase Price of Steam Producing Facilities........... 6
C. Exercise of Option..................................... 7
2.2 Option to Sell............................................ 7
X. Xxxxx of Option to Sell; Consideration
for Option............................................. 7
B. Sale Price of Steam Producing Facilities............... 8
C. Exercise of Option..................................... 8
2.3 Closing of Sale........................................... 8
2.4 Title to Steam Producing Facilities;
Condition Thereof......................................... 9
2.5 Assurances of Cogen....................................... 10
2.6 Determination of Fair Market Value........................ 10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BI.............................. 11
3.1 Organization and Good Standing............................ 11
3.2 Authority................................................. 11
3.3 No Violation of Other Agreements ......................... 12
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TABLE OF CONTENTS
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PAGE
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF COGEN .......................... 12
4.1 Organization and Good Standing .......................... 12
4.2 Authority ............................................... 12
4.3 No Violation of Other Agreements ........................ 13
ARTICLE 5
SUCCESSORS AND ASSIGNS ........................................... 13
ARTICLE 6
MISCELLANEOUS..................................................... 14
6.1 Notice................................................... 14
6.2 Amendments............................................... 15
6.3 Choice of Law............................................ 16
6.4 Other Agreements......................................... 16
6.5 Captions................................................. 16
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OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT dated as of May 22, 1986, by and between BAYONNE
INDUSTRIES, INC., a New Jersey corporation having its principal place of
business at the Foot of East 22nd Street, Bayonne, New Jersey 07002 ("BI") and
COGEN TECHNOLOGIES NJ, INC., a Delaware corporation having its principal place
of business at 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
("Cogen").
BACKGROUND
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Concurrently herewith, Cogen is acquiring the Steam Producing Facilities,
together with certain other assets from BI and IMTT. BI and IMTT are unwilling
to sell such assets to Cogen and Cogen is unwilling to purchase such assets from
BI and IMTT unless Cogen and BI execute and deliver this Agreement granting to
BI the option to reacquire the same from Cogen and granting to Cogen the option
to sell the same to BI, all in accordance with the provisions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:
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ARTICLE 1
---------
DEFINITIONS
-----------
The following terms when used herein shall have the following meanings,
unless a different meaning shall be expressly stated or apparent from the
context:
"Agreement" means this option agreement, including all exhibits and
amendments thereto that may be made from time to time.
"Affiliate" means a corporation or other entity that directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, another corporation or entity.
"Annual Period" means any one of a succession of 12-month periods, the
first of which shall begin on the Date of Initial Commercial Operation if such
date is the first day of a calendar month, or otherwise on the first day of the
month immediately following the month in which the Date of Initial Commercial
Operation occurs.
"Bayonne Facility" means the tank terminal facility located at Bayonne, New
Jersey, and all appurtenant property owned or leased at that location by IMTT,
BI, or any Affiliates thereof.
"BI" means Bayonne Industries, Inc., a New Jersey corporation, having its
principal place of business at the Foot of Xxxx 00xx Xxxxxx, Xxxxxxx, Xxx Xxxxxx
00000.
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"Boiler House" means the building located at the Bayonne Facility that
houses the Steam Producing Facilities, except that interior portion of the
building unrelated to the Steam Producing Facilities.
"Cogen" means Cogen Technologies NJ, Inc., a Delaware corporation, having
its principal place of business at 00000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000.
"Cogeneration Facility" means the waste heat boilers, gas and steam
turbines, generators and all appurtenant structures, equipment, including
Cogen's interconnection facilities, and real property interests owned or leased
and operated by Cogen at the Bayonne Facility, for purposes of generating
electricity, steam, or other forms of useful thermal output.
"Date of Initial Commercial Operation" means 12:01 a.m. on the day that
Cogen designates in writing as the initial date of commercial operation of the
Cogeneration Facility.
"Easement" means that certain easement of even date herewith from BI and
IMTT to Cogen pursuant to which BI and IMTT grant to Cogen ingress and egress
over the Bayonne Facility and the Boiler House, as more particularly described
therein including all exhibits and amendments thereto that may be made from time
to time, and any other easements, rights of way or licenses that may be granted
to Cogen under the Ground Lease.
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"Financier" means any person lending money for the construction and
operation of the Cogeneration Facility, any person providing funds for the
refinancing or take-out of such loans and any nominee or designee of such
person.
"Governmental Authorization" means any governmental authorization, license,
permit, or certificate that is necessary to Operate and Maintain the Steam
Producing Facilities in compliance with all applicable federal, state and local
laws.
"Ground Lease" means that certain lease agreement of even date herewith
among BI and IMTT, as lessor, and Cogen, as lessee, for certain property located
in Bayonne, New Jersey, including all exhibits and amendments thereto as may be
made from time to time.
"IMTT" means IMTT-Bayonne, a Delaware partnership.
"Note" means the promissory note of even date herewith of Cogen, payable to
BI in the principal amount of $2,600,000.00.
"Option" means either the option herein granted to B to acquire the Steam
Producing Facilities or the option herein granted to Cogen to sell the Steam
Producing Facilities, or both.
"Option Commencement Date" means the date upon which either party to the
Steam Sale Agreement has given the other party thereto notice pursuant to
Section 10.3 of that Agreement, of its intent not to renew or extend the Base
Term or any Renewal Term of the Steam Sale Agreement.
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"Party" or "Parties" means the signatories to this Agreement and their
permitted successors and assigns.
"Purchase and Sale Agreement" means that certain agreement of even date
herewith pursuant to which Cogen purchases and BI and IMTT sell the Steam
Producing Facilities, together with certain other assets, including all exhibits
and amendments thereto that may be made from time to time.
"Rent Note" means that certain promissory note of even date herewith of
Cogen, payable to BI in the principal amount of $600,000.00.
"Security Agreement" means that certain security agreement of even date
herewith between Cogen and BI, executed and delivered by Cogen as security for
the payment of the Note, including all exhibits and amendments thereto that may
be made from time to time.
"SRI Lease" means that certain steam producing facilities lease agreement
of even date herewith between Cogen, as lessor, and IMTT, as lessee, pursuant to
which the Steam Producing Facilities will be leased to IMTT, including all
exhibits and amendments thereto that may be made from time to time.
"Steam Producing Facilities" means the existing boilers and appurtenant
structures and equipment located inside the Boiler House, including all
additions, replacements, improvements, substitutions, and increments thereto,
more particularly described in Exhibit A appended hereto, but not including the
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Boiler House, located at the Bayonne Facility and operated for the purpose of
producing steam for industrial purposes at the Bayonne Facility.
"Steam Sale Agreement" means that certain agreement between Cogen and IMTT
dated June 13, 1985, for the Sale of Steam and Electricity from a Cogeneration
Plant, including all exhibits and amendments thereto that may be made from time
to time.
ARTICLE 2
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OPTIONS TO PURCHASE AND SELL
----------------------------
2.1 Option to Purchase.
X. Xxxxx of Option to Purchase; Consideration for Option. Cogen
hereby irrevocably grants to BI the option to purchase the Steam Producing
Facilities from Cogen, subject to the provisions hereof. In addition to the
consideration hereinabove recited, BI is hereby delivering to Cogen a check
payable to its order in the amount of $1,000.00, receipt of which is hereby
acknowledged as consideration for the grant of the Option.
B. Purchase Price of Steam Producing Facilities. The purchase price
for the Steam Producing Facilities shall be an amount equal to the greater of
(1) the fair market value of the Steam Producing Facilities
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(as hereinafter determined); or
(2) $200,000.00, but in no event greater than the Deferred Amount, as
such term is defined in the Note.
C. Exercise of Option.
(i) The Option shall be exercisable by BI no earlier than the Option
Commencement Date and may be exercised by BI only during the forty-five (45) day
period following the Option Commencement Date.
(ii) Notwithstanding the foregoing, BI may exercise the option at any
time (a) after the occurrence of an "Event of Default" by Cogen under the
Security Agreement and for so long as such "Event of Default" is continuing and
(b) after a termination of the Steam Sale Agreement pursuant to Section 10.2 of
that Agreement.
(iii) in order to exercise the Option, BI shall give written notice
thereof to Cogen.
2.2 Option to Sell.
X. Xxxxx of Option to Sell; Consideration for Option. BI hereby
irrevocably grants to Cogen the option to sell the Steam Producing Facilities to
BI, subject to the provisions hereof. In addition to the consideration
hereinabove recited, Cogen is hereby delivering to BI a check payable to its
order in the amount of $1,000.00, receipt of which is hereby acknowledged as
consideration for the grant of the option.
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B. Sale Price of Steam Producing Facilities. The sale price for the
Steam Producing Facilities shall be an amount equal to the greater of
(1) the fair market value of the Steam Producing Facilities (as
hereinafter determined); or
(2) $200,000.00, but in no event greater than the Deferred Amount, as
such term is defined in the Note.
C. Exercise of Option.
-------------------
(i) The option shall be exercisable by Cogen no earlier than the
Option Commencement Date and may be exercised by Cogen only during the forty-
five (45) day period following the Option Commencement Date.
(ii) Notwithstanding the foregoing, Cogen may exercise the Option at
any time after the occurrence of an "Event of Default" by IMTT under the Steam
Sale Agreement or by BI or IMTT under the Ground Lease and for so long as such
an Event of Default is continuing.
(iii) In order to exercise the Option, Cogen shall give written
notice thereof to BI.
2.3 Closing of Sale. The closing of the sale of the Steam Producing
Facilities shall take place on the effective date of the termination of the
Steam Sale Agreement at 10:00 a.m. at the Bayonne Facility; provided, however,
that if
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the Option has been exercised pursuant to Article 2.1C (ii) (a) or 2.2C(ii),
the closing of the sale of the Steam Producing Facilities shall take place on
the next business day following the service of notice of the exercise of the
option at 10:00 a.m. at the Bayonne Facility. At the closing, Cogen shall
deliver to BI a xxxx of sale, substantially in the form delivered to Cogen on
the date hereof, and BI shall pay the purchase price by making a notation on the
Note that the purchase price has been paid by applying the same first to the
Deferred Principal Amount with any balance of the purchase price to the payment
of Deferred Interest; provided, however, that if on the closing, the fair market
value of the Steam Producing Facilities shall not have been determined as
hereinafter provided, a notation shall be made on the Note that the Deferred
Principal Amount has been paid and BI hereby agrees at the time the fair market
value is determined to make an additional notation on the Note that a portion of
the Deferred Interest has been paid if the fair market value shall be greater
than $200,000.
2.4 Title to Steam Producing Facilities; Condition Thereof. The Steam
Producing Facilities shall be conveyed to BI on the closing date referred to in
Article 2.3, free and clear of all liens, security interests, claims and
encumbrances, and in the same condition, ordinary wear and tear excepted, as the
same shall exist on the Date of Initial Commercial operation.
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2.5 Assurances of Cogen. At such time as the Option is exercised, Cogen
will perform any and all steps necessary to effectuate the transfer, issue or
reissue to BI of all Govern mental Authorizations with regard to the Steam
Producing Facilities so as to allow BI to Operate and Maintain the Steam
Producing Facilities and/or to evidence its ownership interest therein and shall
not take any act or omit to take any act the effect of which would be to limit
BI's ability to effectuate such transfer, issue or reissue; provided however,
that the failure of any such Governmental Authorization to be transferred,
issued or reissued due to no fault of Cogen shall not give rise to any liability
on the part of Cogen. In the event that any such Governmental Authorization
shall fail to be transferred, issued or reissued, Cogen hereby appoints BI as
its agent and attorney in fact to take all actions necessary effectuate such
transfer, issue or reissue and prospectively ratifies and approves any actions
taken pursuant to such authority.
2.6 Determination of Fair Market Value.
A. At the time when BI or Cogen exercises the option, it shall have an
appraisal of the fair market value of the Steam Producing Facilities (the
"Appraisal"), a copy thereof shall be delivered together with the notice of the
exercise of the Option. The Party receiving the notice shall have a period of
ten (10) business days to accept or reject the
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Appraisal. Failure to reject the Appraisal within such ten (10) day period shall
constitute acceptance thereof.
B. If at the time of the giving of a notice of the exercise of the
Option, an Appraisal is not available, BI and Cogen shall use their best efforts
within ten (10) days after the giving thereof to agree upon a mutually
acceptable appraiser. If they are unable to so agree, or if the Appraisal shall
have been rejected as provided in Article 2.6A, BI and Cogen shall each select
an appraiser and the two appraisers shall select a third appraiser, each of whom
shall determine the fair market value of the Steam Producing Facilities. The
fair market value for purposes of this Agreement shall be the average of the two
appraisals closest in an amount to each other, and the amount thus determined
shall be final and binding upon BI and Cogen.
ARTICLE 3
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REPRESENTATIONS AND WARRANTIES OF BI
------------------------------------
BI hereby represents and warrants to Cogen as follows:
3.1 Organization and Good Standing. BI is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
3.2 Authority. The execution, delivery and performance of the BI Documents
have been duly and validly authorized and approved by the board of directors
and, to the extent
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necessary, the shareholders of BI. Each of the BI Documents, as defined in the
Purchase and Sale Agreement, constitutes the valid and binding agreement of BI
enforceable against it in accordance with their respective terms.
3.3 No Violation of Other Agreements. The execution, delivery and
performance of the BI Documents by BI will not conflict with or cause a breach
of or default under any other agreement to which BI is a party or by which it or
the Steam Producing Facilities may be bound.
ARTICLE 4
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REPRESENTATIONS AND WARRANTIES OF COGEN
---------------------------------------
Cogen hereby represents and warrants to BI as follows:
4.1 Organization and Good Standing. Cogen is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Authority. The execution, delivery and performance of the Cogen
Documents have been duly and validly authorized and approved by the board of
directors and, to the extent necessary, the shareholders of Cogen. Each of the
Cogen Documents, as defined in the Purchase and Sale Agreement, constitutes the
valid and binding agreement of Cogen enforceable against it in accordance with
its terms.
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4.3 No Violation of Other Agreements. The execution, delivery and
performance by Cogen of the Cogen Documents will not conflict with or cause a
breach of or default under any other agreement to which Cogen is a party or by
which its properties may be bound.
ARTICLE 5
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SUCCESSORS AND ASSIGNS
----------------------
5.1 This Agreement shall be binding upon and inure to the benefit of the
Parties and any permitted assignees as provided herein.
5.2 Except as is expressly set forth in this Agreement, neither the rights
nor the obligations under this Agreement may be assigned, pledged, hypothecated
or otherwise transferred.
5.3 Cogen is expressly permitted to assign this Agreement as provided in
this Article 5.3. Cogen may assign this Agreement to Cogen Technologies NJ
Venture, provided that such assignment shall be of no force and effect unless
and until Cogen Technologies NJ Venture shall have assumed in writing all of
Cogen's obligations under the following instruments and notes, and shall have
agreed in writing to cure any existing defaults and breaches hereunder and
thereunder:
(1) The Steam Sale Agreement
(2) The Ground Lease
(3) The Purchase and Sale Agreement
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(4) The SPF Lease
(5) The Note
(6) The Security Agreement
(7) The Rent Note
Cogen may assign this Agreement to any Financier which shall be obligated
hereunder only as provided in Articles 21.6 and 21.7 of the Ground Lease.
5.4 BI is expressly permitted to assign this Agreement to any person or
entity, provided that such assignment shall be of no force and effect unless and
until such person or entity shall have assumed in writing all of BI's
obligations under this Agreement and under the instruments referred to in
Article 5.3, with the exception of the Note and the Rent Note, and shall have
agreed in writing to cure any defaults and breaches hereunder and thereunder.
5.5 Notwithstanding any such assignment by BI or Cogen, the assignor shall
remain fully liable for its obligations hereunder.
ARTICLE 6
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MISCELLANEOUS
-------------
6.1 Notice. All notices, including communications and statements which are
required or permitted under the terms of this Agreement, shall be in writing,
except as otherwise provided. Service of a notice may be accomplished by
personal
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service, telegram or registered or certified mail. If a notice is sent by
registered or certified mail, it shall be deemed served within three (3) days,
excluding Saturdays, Sundays or legal Federal holidays, except as otherwise
demonstrated by a signed receipt. If a notice is served by telegram, it shall be
deemed served eighteen (18) hours after delivery to the telegram company.
Notices may be sent to the Parties at the following addresses:
(a) Cogen: Cogen Technologies NJ, Inc.
00000 Xxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxx X. XxXxxx,
President
With information copy to:
Cogen Technologies NJ, Inc.
Foot of Xxxx 00xx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attn: Plant Manager
(b) BI: Bayonne Industries, Inc.
Foot of Xxxx 00xx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxxx
or
International-Matex Tank
Terminals
9th Floor
000 Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx,
Partnership Manager
6.2 Amendments. No amendment or modification of the terms of this Agreement
shall be binding on either BI or Cogen unless reduced to writing and assigned by
both Parties.
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6.3 Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey.
6.4 Other Agreements. This Agreement supersedes any and all oral or written
agreements and understandings heretofore made relating to the subject matters
herein, and together with the BI Documents and the Cogen Documents constitutes
the entire agreement and understanding of the Parties relating to the subject
matters herein.
6.5 Captions. All indices, titles, subject headings, section titles and
similar items are provided for the purpose of reference and convenience and are
not intended to be inclusive, definitive or to affect the meaning, content or
scope of this Agreement.
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IN WITNESS WHEREOF, the Parties have entered into this Agreement to be
signed in quadruplicate original as of the date first written above.
[SEAL]
ATTEST: BAYONNE INDUSTRIES, INC.
/s/ XXXXXXXX X. XXXXXXXX By: /s/ XXXXXXX X. XXXXXXXX
---------------------------- ------------------------------
Xxxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx,
Assistant Secretary Executive Vice President/
Secretary
[SEAL]
ATTEST: COGEN TECHNOLOGIES NJ, INC.
/s/ XXXX X. XXXX By: /s/ XXXXXX X. XXXXXX
---------------------------- ------------------------------
Xxxx X. Xxxx, Xxxxxx X. XxXxxx,
Assistant Secretary President
