STEAM PURCHASE CONTRACT
This STEAM PURCHASE CONTRACT, dated as of November 30, 1984, by and
between XXXXXXXX XXXXX, INC., a corporation organized and existing under the
laws of the State of Delaware ("Buyer"), and COGENTRIX LEASING CORPORATION, a
corporation organized and existing under the laws of the State of North Carolina
("Cogentrix").
RECITALS:
---------
A. Buyer is a manufacturer of textile goods and owns and operates
textile plants throughout North Carolina, including a textile plant located at
North Carolina. Highway 11, Kenansville, North Carolina, known as the "Guilford
East" plant ("Buyer's Plant").
B. Cogentrix is engaged in the business of building and operating
cogeneration facilities which produce steam arid thermal energy for sale to
industrial companies and electricity for sale to regional electric utilities.
C. Cogentrix wishes to provide Buyer with all steam and thermal energy
required for use in the operation of Buyer's Plant and has entered into certain
agreements for the construction, financing and management of a cogeneration
plant (the "Cogeneration Facility") to be located adjacent to Buyer's Plant and
has entered into a lease (the "Lease") with Buyer of certain real property
adjacent to Buyer's Plant on which such Cogeneration Facility will be
constructed.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, Buyer and Cogentrix hereby agree as follows:
1. Construction of Cogeneration Facility. Cogentrix agrees to construct
the Cogeneration Facility, to consist of two coal-fired boilers rated at
approximately 157,500 pounds per hour and a condensing steam turbine generator
rated at approximately 35,000 kilowatts, substantially in accordance with the
plans and specifications issued for bids on March 12, 1984. The Cogeneration
Facility will be located as shown on the plat attached hereto as Exhibit A. All
costs associated with engineering, licensing, construction, and operation of the
Cogeneration Facility will be the responsibility of Cogentrix. Cogentrix
reserves the right to make changes in such plans and specifications, provided,
however, Buyer shall have the right to approve any material changes to the plans
and specifications affecting the exterior design of the Cogeneration Facility to
insure that such design is aesthetically compatible with Buyer's Plant and the
surrounding areas, any material changes to the pollution control equipment in
the Cogeneration Facility, and. any changes that would materially adversely
affect Cogentrix's ability to supply the steam and thermal fluid heating
requirements of Buyer's Plant. The Buyer will cooperate with Cogentrix and take
any actions reasonably requested by Cogentrix, at Cogentrix's expense, to enable
Cogentrix to obtain all necessary licenses and permits to construct and operate
the Cogeneration Facility and to permit the sale of steam and thermal energy
under this Agreement.
2. Sale of Steam. Cogentrix agrees to sell (a) process steam, which may
be high-pressure or low-pressure, to Buyer for use in Buyer's plant up to a
maximum of 400,000,000 pounds of steam per annum and (b) the amount of steam
required for use in the hot oil system in the Buyer's Plant up to a maximum
40,000,000 BTU's per hour. Cogentrix will deliver and Buyer will receive the
process low-pressure steam at a volume up to 100,000 lbs. per hour, with a
maximum peak delivery of up to 125,000 lbs. per hour for periods up to one hour.
The steam for the hot oil system shall be of sufficient temperature to maintain
a thermal oil temperature of 550(degree)F in the hot oil header in Buyer's
Plant. All, steam shall be delivered with 1 ppm maximum total solids. If an
amine system is used for corrosion control in the Cogentrix piping system, the
conductivity of the steam delivered to the Buyer must not exceed 10 micromhos.
If a nonamine system is used, the conductivity of delivered steam must not
exceed 5 micramhos. Cogentrix agrees to sell to Buyer at its option high
pressure steam at a volume of up to 30,000 pounds per hour at the boiler outlet
station at conditions not to exceed 1500 pounds per square inch gauge
("p.s.i.g.") and 950(degree)F, as may be required by Buyer. Cogentrix will
install and owe such meters as shall be necessary to measure and record the
steam and BTU's delivered and received in accordance with the terms and
conditions of this Agreement. Meters utilized for this purpose shall meet the
specifications, and shall be subject to calibration and testing as set forth in
Exhibit B hereto. Buyer agrees that beginning with the Initial Delivery Date as
defined below, it will purchase and use or cause to be used (other than for
generation of electricity) from Cogentrix during each Term Year (as defined in
subparagraph 5(c) hereof) process steam representing a minimum of 5% of the
"total energy output" of the Cogeneration Facility as defined by 18 C.F.R. ss.
292.202.
Buyer agrees that its obligation to purchase a minimum of 5% of the
"total energy output" of the Cogeneration Facility under this Paragraph 2 is
unconditional, and shall not be relieved by force majeure (as defined herein),
transfer or closing of Buyer's Plant or otherwise, but the amounts payable
hereunder shall be determined in accordance with Paragraph 5(e).
To ensure an available supply of steam to Buyer, Cogentrix agrees that
in the event its operations are affected by a coal or transportation strike for
a period of fourteen (14) or more consecutive days, Cogentrix shall curtail its
operations and reduce production of steam and the generation of electricity for
parties other than Buyer to the extent possible and for such periods of time in
order to maintain a supply of coal that will enable Cogentrix to supply steam to
Buyer, for not less than four (4) months.
3. Initial Deliverv Date. Cogentrix agrees to make steam available to
Buyer in accordance with Paragraph 2 above, and Buyer agrees to accept delivery
of steam under this Agreement, within five (5) business days after Cogentrix has
notified Buyer that the Cogeneration Facility is commercially operational (such
date of commencement of delivery the "Initial Delivery Date"). Buyer shall have
no obligations hereunder unless the Initial Delivery Date occurs on or before
two (2) years six (6) months from the date of execution of this Agreement,
provided that the Initial Delivery Date shall be extended by the occurrence and
the continuation of an event of force majeure as defined in the succeeding
sentence. As used in this Agreement, "force majeure" shall be an event by which
either party shall be prevented from delivering or receiving steam by reason of
or through strike, stoppage of labor, riot, fire, flood, ice, invasion, civil
war, commotion, insurrection, military or usurped power, accident, order of any
court or authority granted in any bona fide adverse legal proceedings or action,
order of any civil authority, explosion, act of God or public enemies, or any
other cause reasonably beyond the control of the parties (including Cogentrix's
failure to obtain all necessary licenses and permits to construct and operate
the Cogeneration Facility after diligent effort by Cogentrix), and not
attributable to negligence. Notwithstanding the foregoing, in no event shall the
Initial Delivery Date be extended beyond four (4) years from the date of this
agreement, except by mutual agreement of the parties in writing. Upon the
failure by Cogentrix to commence such delivery or failure of Buyer to receive
such steam on or before the Initial Delivery Date (as extended pursuant to this
Section 3),the non-breaching party, at its option and by written notice to the
other party, may declare this Agreement, the Lease and any other contractual
agreements or dealings between Cogentrix and the Buyer to be immediately
terminated and cancelled.
4. Term; Breaches and Remedies. This Agreement shall run concurrently
with the Lease executed by the parties this same date and shall terminate on the
same date as that Lease, giving effect to any renewals thereof. Cogentrix, in
addition to all other legal remedies available to it, may terminate this
Agreement or suspend sales of steam and thermal energy hereunder (1) for Buyer's
failure to pay any applicable xxxx within 20 days after written notice has been
given that such xxxx is due and payable, (2) for fraudulent or unauthorized use
of Cogentrix's meters or (3) for a breach by the Buyer of paragraph 10
hereunder. In addition, Cogentrix may suspend sales until any condition on
Buyer's side of the point of interconnection with Buyer's Plant actually known
by Cogentrix to be, or which . Cogentrix reasonably anticipates may be,
dangerous to life or property has been remedied.
Failure of Cogentrix to terminate this Agreement or to suspend the sale
of steam or thermal energy at any time after the occurrence of grounds therefor,
or to resort to any other legal remedy or to exercise any one or more of such
alternative remedies, shall not waive or in any manner affect Cogentrix's right
later to resort to any one or more of such rights or remedies on account of any
such ground then existing or which may subsequently occur. Any suspension of the
sale of steam or the thermal energy by Cogentrix or termination of this
Agreement upon any authorized grounds shall in no way operate to relieve Buyer
of Buyer's liability to compensate Cogentrix for services and facilities
previously supplied.
5. Purchase Price. The price Buyer shall pay Cogentrix for the purchase
of steam and thermal energy shall be determined as follows:
(a) During the first five Term Years of this Agreement,
(i) the price for high pressure and Low Pressure
process steam shall be $5.10 per thousand pounds;
(ii) the price for the steam used in Buyer's hot oil
system per one million BTU's (including only the BTU's
actually used in Buyer's process equipment and the BTU's lost
in the piping to and from the process equipment) shall be
$4.16 per 1,000,000 BTU's.
(b) Commencing on the first day of the sixth Term Year, and on
the first day of each Term Year thereafter, new purchase rates for
steam and BTU's shall be computed based on the percentage increase, if
any, in the Delivered Cost of Coal (as hereinafter defined) from August
1, 1985. The new purchase rats for steam and BTU's shall be computed by
multiplying the appropriate purchase rate set forth in Paragraph 5(a)
above, whichever is applicable (the "Base Rate") times a fraction, the
numerator of which shall be the Delivered Cost of Coal in effect on the
first day of the Term Year for which such calculation is being made and
the denominator of which shall be the Delivered Cost of Coal on August
1, 1985. As used herein, the "Delivered Cost of Coal" shall refer to
the total price per ton paid by Cogentrix to purchase coal including
the transportation cost per ton for delivery to the Cogeneration
Facility. In no event shall such purchase prices be less than either of
the Base Rates.
(c) As used herein, the term "Term Year" shall mean the period
beginning with the initial Delivery Date or any anniversary date of the
initial Delivery Date and ending twelve months thereafter.
(d) During each Term Year, Buyer shall be entitled to a credit
to be applied against the amounts payable hereunder to Cogentrix at a
rate of S1.50 per thousand pounds of steam (excluding steam used in
Buyer's hot oil system) for the initia1 100,000,000 pounds of steam
purchased per annum, such that the maximum aggregate amount of such
credit for each Term Year shall be $150,000.00.
(e) The parties hereto agree that, if Buyer should close,
sell, lease or otherwise transfer Buyer's Plant during any Term Year,
Buyer shall not be relieved of its obligations hereunder except that
Buyer shall thereafter be liable for payment of steam delivered under
Paragraph 2 hereof at the rate of $20,000.00 per Term Year for that
period commencing with the date of closing and ending on a date
coinciding with the date that would have, absent the closing, sale,
lease or other transfer, marked the end of the Lease term as in effect
at the time of such closing, sale, lease, or other transfer.
Notwithstanding the foregoing, Buyer shall not be liable for any
amounts under this Agreement in the event of force majeure resulting in
the total destruction of Buyer's Plant.
6. Exclusive Contract. Buyer agrees that it will not (a) purchase any
of the steam or thermal fluid requirements for the Buyer's Plant from any other
person, nor (b) will it produce such steam or thermal fluid itself; provided,
that, if Buyer shall have purchased the minimum amount required to be purchased
from., Cogentrix during a Term Year under Paragraph 2 hereof, Buyer may
thereafter produce its steam and thermal fluid requirements in excess of such
amount for the remainder of such Term Year if Buyer shall have given Cogentrix
first option to supply such requirements and Cogentrix shall have been unwilling
or unable to provide such requirements at a price comparable to Buyer's costs
for producing such requirements. Notwithstanding anything to the contrary
contained herein, Buyer agrees that it will not resell any steam or thermal
energy purchased under this Agreement to any other person or entity.
7. Interconnection with Buyer's Plant. Cogentrix shall be responsible
for all required auxiliary equipment and systems required to supply steam and
thermal energy to the point of interconnection with Buyer's Plant. Cogentrix
will supply and maintain all piping systems between the Cogeneration Plant and
the interconnection point with Buyer's Plant specified on Exhibit B hereto.
Buyer will be responsible for the construction, operation and maintenance of the
piping and other equipment and apparatus to be located in Buyer's Plant and
required to receive the delivery of steam and thermal energy from the
Cogeneration Facility to Buyer's Plant. Buyer's interconnection facilities shall
be designed to accepted engineering standards. Buyer shall submit a facility
description, including equipment specifications, to Cogentrix for review and
approval prior to the connection of said facilities and equipment to the
Cogeneration Facility. Cogentrix's review shall not be construed as confirming
or endorsing Buyer's design nor as a warranty as to the safety, durability or
reliability of Buyer's facility or equipment. Cogentrix shall not, by reason of
its review or failure to review Buyer's facilities, be responsible for strength,
details of design, adequacy or capacity of Buyer's facility.or equipment, nor
shall Cogentrix's acceptance be deemed to be an endorsenent of any facility or
equipment.
8. Service Interruptions. Cogentrix does not guaranty a continuous
supply of steam to Buyer but agrees to use reasonable diligence at all times to
provide satisfactory service and to remove the cause or causes in the event of
failure, interruption, reduction or suspension of service, but Cogentrix shall
not be liable for any loss or damage resulting from such failure, interruption,
reduction or suspension of service which is due to any accident or other cause
beyond its control. Cogentrix reserves the right to suspend sales without
liability on its part at such times and for such periods and in such manner as
it may reasonably deem advisable for the purpose of making necessary adjustments
to, changes in, or repairs to the Cogeneration Facility provided that cogentrix
will endeavor to minimize such suspension for repairs, or in cases where in
Cogentrix's opinion the continuance-of the delivery of steam or thermal energy
from the Cogeneration Facility would endanger persons or property.
9.Xxxxxxxx. Cogentrix will xxxx Buyer on a monthly basis for the steam
and BTU's purchased by Buyer. Payment for such invoices shall be made by Buyer
within fifteen (15) days after receipt of such xxxx. Payments made thereafter
shall be subject to a late payment charge on the unpaid amount of such invoice
of 1 % per month.
10. Assignment of Agreement. This Agreement shall be transferred and
assigned by Buyer to any person or entity purchasing or leasing Buyer's Plant
and, as a condition to any such purchase or lease of Buyer's Plant, Buyer will
cause such purchaser or lessee to agree to be bound in accordance with the terms
hereof; in such event and unless otherwise agreed, Buyer shall remain
responsible to Cogentrix with respect to any successor's compliance with the
minimum purchase requirements set forth in Paragraph 2 hereof subject to the
limitations of Paragraph 5(e).
Cogentrix shall have the right to assign its rights and duties under
this Agreement either as collateral, security or to another entity created in
connection with the financing arrangements entered into by Cogentrix, by
notifying Buyer of such assignment. In the event of any such assignment,
Cogentrix shall remain liable for performance hereunder. Buyer agrees to execute
a "Consent and Agreement" concurrently with the execution of this Agreement in
form mutually satisfactory to the parties.
Subject to the foregoing, this Agreement shall be binding upon and
shall inure to the benefit of the parties, their successors and assigns.
11. Access to Premises. The duly authorized agents of Cogentrix shall,
upon notice to Buyer's security personnel have the right of ingress and egress
to Buyer's Plant at all reason able hours for the purpose of reading meters,
inspecting Cogeritrix's apparatus and equipment, changing, exchanging or,
repairing Cogentrix's property in the Buyer's Plant, or removing such apparatus
and equipment at the time of, or any time after, suspension of purchases under,
or termination of, this Agreement. Buyer shall protect Cogentrix's apparatus and
equipment in Buyer's Plant and shall permit no one but Cogentrix's agents to
handle such apparatus and equipment. In the event of any loss of or damage to
such apparatus or equipment of Cogentrix caused by or arising out of
carelessness, neglect or misuse by Buyer or its employees, contractors or
agents, any loss or damage resulting to Cogentrix shall be paid by Buyer. In the
event of any loss or damage to equipment owned by the Buyer caused by or arising
out of carelessness, neglect or misuse by Cogentrix or its employees,
contractors or agents, any loss or damage resulting to the Buyer shall be paid
by Cogentrix.
12. Shutdowns. In the event that any pollution control equipment in the
Cogeneration Facility malfunctions, Cogentrix will shut down the operation of
the boiler related to such pollution control equipment if such malfunction
results in higher than government permitted levels of air-pollutants in the area
of Buyer's Plant. Cogentrix will undertake the repairs of such malfunctioning
equipment as expeditiously as possible and will not begin operations of such
boiler until there has been full compliance with all governmental clean air
regulations.
13. Indemnification. Buyer hereby agrees to indemnify and hold
Cogentrix harmless from any and all liability, claims, judgments, losses, costs
and expenses for injury, loss or damage to person or property, including
personal injury or property damage to Cogentrix or Cocentrix's employees or
agents, on account of defective construction or equipment (other than
construction or equipment provided by Cogentrix), or improper or careless use of
steam or thermal energy, on Buyer's side of the point of interconnection between
the Cogeneration Facility and Buyer's Plant. Cogentrix hereby agrees to
indemnify and hold the Buyer harmless from any and all liability, claims,
judgments, losses, costs and expenses for injury, loss or damage to person or
property, including personal injury or property damage to the Buyer or the
Buyer's employees or agents, on account of defective construction or equipment
(other than construction or equipment provided by Buyer), or improper or
careless use of steam or thermal energy, on Cogentrix's side of the point of
interconnection between the Cogeneration Facility and Buyer's Plant or on
account of any breach by Cogentrix of Paragraph 14 below.
14. Covenants. Cogentrix covenants and agrees that it shall:
(a) obtain and keep in full force and effect all necessary
licenses and permits required for the conduct of its business and
comply with all applicable laws, rules and regulations;
(b) Maintain environmental pollution at a level which, when
combined with emissions and discharges from Buyer's Plant existing as
of the Initial Delivery Date, will not exceed the maximum air, water
and other pollution levels then permitted by applicable law; and
(c) Maintain full responsibility for all applicable laws,
rules and regulations relating to the storage of coal in the vicinity
of the Cogeneration Facility including, without limitation,
responsibility for any run-off of coal or coal by-products.
15. Taxes. In the event that any severance of similar tax or any
federal, state or local tax or fee of any kind measured by the amount of steam
or thermal energy sold to Buyer or by the gross receipts or revenues from such
sales of Cogentrix (other than taxes levied on or measured by the net income of
Cogentrix) shall be levied upon the sale and delivery of steam or thermal energy
to Buyer pursuant to this Agreement, the amount of such tax or fee shall be
added to the next billing statement rendered to Buyer and Buyer shall pay such
amount in full.
16. Governmental Restrictions. This Agreement is subject to the
jurisdiction of those governmental agencies having control over either party to
this Agreement or over this Agreement. This Agreement shall at all times be
subject to changes by such governmental agencies, and the parties shall be
subject to conditions and obligations, as such governmental agencies may, from
time to time, direct in the exercise of their jurisdiction, provided no change
may be made in rates or in other essential terms and conditions of this
Agreement except by agreement of the parties hereto. Both parties agree to exert
their best efforts to comply with all of the applicable rules and regulations of
all governmental agencies having control over either party or this Agreement.
17. Counterparts; Amendments. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when executed and
delivered shall be an original but all such counterparts shall constitute but
one and the same instrument. This Agreement may not be terminated, amended,
supplemented, waived or modified except by an instrument in writing signed by
each of the parties hereto.
18. Severabilitv. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any applicable law
shall render any provision of this Agreement invalid or unenforceable, the
provisions of such applicable law are hereby waived by Buyer to the fullest
extent permitted by applicable law, to the end that this Agreement shall be a
legal, valid and binding Agreement enforceable in accordance with its terms.
19. Governina Law. This Agreement is executed and delivered in the
State of North Carolina and shall in all respects be governed and construed in
accordance with the laws of the State of*North Carolina, including all matters
of construction, validity and performance.
20. Further Assurances. Each party hereby agrees to execute and deliver
all such instruments and documents and to take all such actions as the other
party may from time to tine reasonably request in order to effectuate fully the
purposes of this Agreement.
21. Notices. All notices and other communications hereunder shall be in
writing and shall become effective, is sent by first class certified or
registered mail with postage prepaid and return receipt requested, three days
after deposit in the mails, or, if otherwise sent or delivered, when received,
and shall be directed (a) if to Buyer, at Xxxxxxxx Xxxxx, Inc., Xxxx Xxxxxx Xxx
X-0, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, (b) a to Cogentrix, x/x Xxxxxxxxx xx
Xxxxx Xxxxxxxx, Inc., Xxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000 or icy to such other address as any such person may designate by notice
given to the other parties hereto.
IN WITNESS WHEREOF, this Agreement is executed by the duly authorized
officers of the parties, pursuant to the authority invested in them by the
lawful action of their Boards of Directors, on the date and year first above
written.
XXXXXXXX XXXXX, INC.
By: /s/
--------------------------
Title:
-----------------------
Attest:
By: /s/
--------------------------
Title:
-----------------------
[CORPORATE SEAL]
COGENTRIX LEASING CORPORATICN
By: /s/ Xxxxxx X. Xxxxx, Xx.
--------------------------
Xxxxxx X. Xxxxx, Xx.,
President
ATTEST:
By: /s/
--------------------------
Title:
-----------------------
(CORPORATE SEAL)
EXHIBIT B
---------
Cogentrix agrees to provide and maintain a suitable steam flow,
pressure recording and totalizing meter at the point of interconnection referred
to in Paragraph 7 so as to record the steam delivered to Buyer's Plant. Buyer
shall have the right to approve the meter installed at the point of
interconnection Buyer shall have the right, subject to its discretion, to
provide and maintain its own steam flow, pressure recording and totalizing meter
as close as practicable to the point of interconnection so as to provide its own
independent record of steam used by the Buyer. The interconnection point will be
within five (S) feet of the exterior wall of the Buyer's present boiler room in
the vicinity of the present steam header.
Either party shall be entitled to inspect.and approve any metering
device installed by the other party for measuring the flow and pressure of steam
as described above.
Either party shall be entitled to have a representative present to
observe the meter or meters each month at the time consumption is recorded for
billing and may, in addition, inspect the meter charts at other times with prior
notice to the owner of the meter.
If either party disputes a meter's accuracy or condition, it shell so
advise the owner of the meter in writing. The owner of the meter shall, within
thirty (30) days after receiving such notice, advise the disputing party in
writing as to its position concerning the meter's accuracy and reasons for
taking such position. If the parties are unable to resolve their disagreement
through reasonable negotiations, then either party may engage an unaffiliated
and qualified third party to test the meter. Should the meter be found in good
order, the disputing party shall bear the cost of inspection; otherwise the cost
shall be borne by the owner. Any repair or replacement shall be made at the
owner's expense as soon as practicable, based on the third party's report.
In the event a meter error is discovered, the following conditions
shall apply:
1. If the error in measurement does not exceed 2$, no adjustment in
previous billing shall be made.
2. If the meter error exceeds 2%, an adjustment in previous xxxxxxxx
will be made equivalent to one-half (1/2) of the percentage difference in meter
correction for the second half of the period-since the previous meter check, but
in no case for a period greater than three months prior to the date the error
was discovered.
