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TERMINATION
AGREEMENT
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THIS TERMINATION AGREEMENT (the " Agreement ") is made as of
this 21st day of October, 2003 (the " Effective Date ") by
and between HERCULES INCORPORATED (" Hercules ") and NORTH
JERSEY ENERGY ASSOCIATES, A LIMITED PARTNERSHIP, a New Jersey
limited partnership (" NJEA ") (each a " Party ", and
collectively the " Parties ").
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WITNESSETH:
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WHEREAS, NJEA and Hercules are parties to an Industrial Steam Sales
Contract (the " Steam Contract ") dated June 5, 1989
pursuant to which NJEA sells steam generated at its natural
gas-fired electrical and steam generation facility located in
Sayreville, New Jersey (the " Facility ") to Hercules for
consumption at Hercules' chemical manufacturing facility located in
Parlin, New Jersey (the " Hercules Facility ");
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WHEREAS, Hercules resells a portion of the steam it purchases from
NJEA under the Steam Contract to its lessee, Green Tree Chemical
Technologies Inc. (" Green Tree "), which is engaged in the
production of nitrocellulose and other chemicals at its facilities
(the " Nitrocellulose Facility ");
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WHEREAS, NJEA is restructuring its power purchase agreement with
Jersey Central Power & Light Company (" JCP&L ") and
has entered into an Amended and Restated Power Purchase Agreement
with JCP&L dated as of May 16, 2003, as amended by that
First Amendment to Amended and Restated Power Purchase Agreement
dated as of October 21, 2003 (the " Amended and Restated
Power Purchase Agreement ") pursuant to which NJEA sells the
electrical output of the Facility to JCP&L, and in connection
therewith, a filing has been made with the New Jersey Board of
Public Utilities (" NJBPU ") seeking approval of the
restructuring transaction (the " Restructuring ");
and
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WHEREAS, in connection with the foregoing, the Parties have agreed
to terminate the Steam Contract prior to the expiration of the term
thereof pursuant to the terms and conditions set forth
herein.
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
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1. DEFINITIONS; TERM; APPENDICES
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In addition to terms defined in the recitals hereto, the following
terms shall have the meanings set forth below. Capitalized terms
used and not otherwise defined herein shall have the meanings set
forth in the Steam Contract.
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1.1 Defined Terms.
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"Approvals" has the meaning set forth in
Section 13(f).
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"Business Day" means Monday through Friday, excluding any
day on which banks in New York, New York (U.S.A.) are closed for
business.
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"Cessation of Operations" shall be deemed to have occurred
at either the Hercules Facility or the Nitrocellulose Facility on
the 30th consecutive calendar day on which (i) the number of
full-time employees (A) at the Hercules Facility, falls below
forty (40) or (B) at the Nitrocellulose Facility, falls below
one hundred (100) during calendar years 2004 and 2005, ninety (90)
during calendar year 2006, or eighty (80) during calendar year 2007
or any year thereafter (if applicable) or (ii) there has been
a cessation of substantially all of the manufacturing and
production operations at either such Facility.
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"Cure Period" has the meaning set forth in
Section 3.2(c).
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"Effective Date" has the meaning set forth in the Preamble
hereto.
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"Expiration Date" has the meaning set forth in
Section 2.3.
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" Facility " means either the Hercules Facility or the
Nitrocellulose Facility, as the context requires.
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" Final Order " has the meaning set forth in
Section 2.6(a).
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" Final Payment " has the meaning set forth in
Section 2.2(a)(iii).
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" First Component " means $251,570 per month.
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"Force Majeure" means circumstances beyond the control of
the party concerned and resulting in or causing a failure or
substantial interference in the operation of the Hercules Facility
or the Nitrocellulose Facility, as the case may be, which
circumstances cannot be overcome by the exercise of due diligence
by the party concerned. Subject to the foregoing, such
circumstances may include riots, wars (declared or undeclared),
insurrections, sabotage, rebellions, terrorist acts, civil
disturbances, acts of God, explosions, fires, major equipment
failures beyond the control of the party affected, and
interruptions beyond the control of the party affected of fuel
supply, power, water, utilities, wastewater disposal, feedstock, or
product distribution; provided, however, that (a) any lack of
money, (b) changes in market conditions, or (c) strikes,
lockouts or other labor difficulties involving personnel of
Hercules (or its Affiliates or successors or assigns) or the Green
Tree (or its Affiliates or successors or assigns) shall not
constitute Force Majeure.
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" Hercules Stipulation " means the motion to intervene in
the Restructuring and Stipulation of Settlement filed or to be
filed by Hercules with the NJBPU in the Matter of the Application
of Jersey Central Power & Light Company for the Approval of an
Amendment and Restatement of the Power Purchase Agreement Currently
Existing Between It and North Jersey Energy Associates, A Limited
Partnership, NJBPU Docket No. EM03060438, pursuant to which
Hercules agrees to the terms and conditions of this Termination
Agreement.
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" Hercules Waiver and Release " has the meaning set forth in
Section 4.2.
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" Incentive Payments " means the Initial Payment, the
Monthly Employment Incentive Payments and the Final
Payment.
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" Initial Payment " has the meaning set forth in
Section 2.2(a)(i).
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" Monthly Certificate " has the meaning set forth in
Section 3.3.
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" Monthly Employment Incentive Payment " has the meaning set
forth in Section 2.2(a)(ii).
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" NJEA Waiver and Release " has the meaning set forth in
Section 4.1.
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" Pro Rata Factor " has the meaning set forth in
Section 3.2(b).
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" PSEG " means Public Service Electric and Gas Company, a
New Jersey corporation, and its successors and assigns.
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"PSEG Amendment" means that Amendment to Gas Purchase and
Sales Agreement between PSE&G and NJEA dated as of
August 20, 2003, amending that Gas Purchase and Sales
Agreement dated as of May 4, 1989.
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"Required Levels" has the meaning set forth in
Section 3.2(c).
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" Restructuring Effective Date " shall mean the later of:
the "Effective Date" under and as defined in the Amended and
Restated Power Purchase Agreement and the "Effective Date" under
and as defined in the PSEG Amendment.
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" Second Component " means $188,679 per month.
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"Termination Date" has the meaning set forth in
Section 3.1.
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" Utilities Agreement " means the Utilities Agreement dated
as of June 16, 2000 by and between Green Tree and the Aqualon
Company, a division of Hercules.
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2. TERMINATION; CONDITIONS PRECEDENT.
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2.1 Termination of Steam Contract .
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Subject to the terms and conditions set forth below and provided
that the Termination Date occurs on or prior to the Expiration
Date, the Parties agree to terminate the Steam Contract as of
11:59 p.m. (Eastern time) on the Termination Date, and agree
to execute and deliver on the Termination Date to each other a
written acknowledgement of such termination. Effective as of
11:59 p.m. on the Termination Date, the Steam Contract shall
be of no further force and effect and thereafter neither of the
Parties shall have any rights or obligations thereunder, excepting
only the obligation of Hercules to pay for steam delivered through
and up to 11:59 p.m. on the Termination Date for which payment
had not been received, which obligation shall survive the
termination of the Steam Contract.
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Section 2.2 Initial Payment; Monthly Employment Incentive
Payments; Final Payment.
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(a) In consideration for Hercules' agreement to terminate the Steam
Contract, which termination shall be effective as of
11:59 p.m. on the Termination Date, and subject to the
satisfaction or waiver of the conditions set forth in
Section 2.5 or Section 2.6 hereof (as
applicable), NJEA shall pay to Hercules in immediately available
funds, by wire transfer as provided in Section 2.2(b) below,
forty-nine payments, as follows:
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(i) on the last business day of the month during which the
Termination Date occurs, the Monthly Employment Incentive Payment,
as prorated for a partial month if the Termination Date occurs on
any date other than the last day of the month. Such payment as
prorated shall equal the Monthly Employment Incentive Payment
multiplied by a fraction, the numerator of which is the number of
days in such month occurring on and after the Termination Date and
the denominator of which is the total number of days in such month
(the " Initial Payment "); and
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(ii) on the last business day of each month beginning with the
month following the Termination Month and continuing for
forty-seven months, the sum of the First Component and the Second
Component (together, the " Monthly Employment Incentive
Payments "), subject to reduction or elimination of such amount
pursuant to Section 3.2; and
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(iii) on the last business day of the forty-eighth month following
the Termination Month, an amount equal to the difference between
the Monthly Employment Incentive Payment minus the Initial Payment
(the " Final Payment ").
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(b) Wire Transfer Instructions . Wire transfer payments to
Hercules shall be made as follows:
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Mellon Bank N.A.
Pittsburgh, Pennsylvania
ABA # 043000261
Credit Hercules Incorporated
Acct # 124-3768
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or to such other banking institution designated in writing by
Hercules at least two Business Days prior to the Termination Date.
Such funds shall be timely wired so as to be received and confirmed
on or before the close of business on the Termination Date of the
receiving banking institution designated by Hercules in accordance
with the previous sentence.
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2.3 Termination of this Agreement This Agreement shall be
effective as of the Effective Date. If the Termination Date does
not occur on or prior to December 15, 2003 (or such later date
as extended by mutual written agreement of the Parties) (the "
Expiration Date "), this Agreement shall terminate at
11:59 p.m. on the Expiration Date, and in the event of a
termination of this Agreement pursuant to this Section 2.3,
the Steam Contract shall continue unamended and unaffected by
virtue of this Agreement.
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2.4 Intentionally Omitted .
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2.5 Conditions Precedent to Obligations of Hercules .
Hercules' obligation to effect the transactions set forth herein is
subject to the satisfaction at or before the Termination Date of
the following conditions (any of which Hercules may waive at its
option and in its sole discretion, and only in a writing signed by
its duly authorized officer):
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(a) Representations and Warranties . All of the
representations and warranties of NJEA in Section 14
shall be true and correct in all material respects as though made
on and as of the Termination Date, and NJEA shall have delivered a
certificate, duly executed by an authorized officer, with respect
to such representations and warranties. NJEA shall have performed,
or caused to be performed, all of the agreements and covenants to
be performed by it under this Agreement as of the Termination
Date.
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(b) No Legal Restraint . Neither Party shall be subject to
any order, decree, injunction, or other legal restraint or
prohibition of a court or agency of competent jurisdiction which
enjoins, prohibits or materially interferes with the termination of
the Steam Contract on the Termination Date.
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(c) NJEA Waiver and Release . The NJEA Waiver and Release
shall have been executed and delivered by NJEA and shall be in full
force and effect.
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(d) Termination Acknowledgement . NJEA shall have executed
and delivered its termination acknowledgement contemplated in
Section 2.1.
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2.6 Conditions Precedent to Obligations of NJEA. NJEA's
obligation to effect the transactions set forth herein is subject
to the satisfaction at or before the Termination Date of the
following conditions (any of which NJEA may waive):
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(a) Hercules Stipulation; NJBPU Final Order . The Hercules
Stipulation shall have been submitted on or before October 30,
2003, and the NJBPU shall have approved the Restructuring,
including (without limitation) the Amended and Restated Power
Purchase Agreement, pursuant to a non-appealable order in form and
substance acceptable to NJEA (the " Final Order ") on or
before December 15, 2003. NJEA may terminate this Agreement
(i) on November 1, 2003 if the Hercules Stipulation has
not been filed prior to such date or (ii) on December 6,
2003 if the Final Order has not been issued prior to such
date.
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(b) Effectiveness of Restructured Agreements . In order to
effectuate an orderly and simultaneous closing of all components of
the Restructuring, it shall be a condition precedent to the closing
under this Agreement that the "Effective Date" under each of the
Amended and Restated Power Purchase Agreement and the PSEG
Amendment shall have occurred, and each such agreement shall be in
full force and effect.
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(c) Representations and Warranties . All of the
representations and warranties of Hercules in
Section 13 shall be true and correct in all material
respects as though made on and as of the Termination Date, and
Hercules shall have delivered a certificate, duly executed by an
authorized officer, with respect to such representations and
warranties. Hercules shall have performed, or caused to be
performed, all of the agreements and covenants to be performed by
it under this Agreement as of the Termination Date.
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(d) No Legal Restraint . Neither Party shall be subject to
any order, decree, injunction, or other legal restraint or
prohibition of a court or agency of competent jurisdiction which
enjoins, prohibits or materially interferes with the termination of
the Steam Contract on the Termination Date.
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(e) Hercules Waiver and Release . Hercules shall have
executed and delivered to NJEA the Hercules Waiver and
Release.
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(f) Termination Acknowledgement . Hercules shall have
executed and delivered to NJEA the termination acknowledgement
contemplated in Section 2.1.
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3. NOTICE OF TERMINATION DATE; REDUCTION OR ELIMINATION OF MONTHLY
EMPLOYMENT INCENTIVE PAYMENTS.
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3.1 Termination Date.
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As soon as reasonably practicable, NJEA shall deliver to Hercules a
written notice containing the date on which NJEA anticipates that
the Restructuring Effective Date will occur. The Restructuring
Effective Date shall be the "Termination Date" under this
Agreement. On the Termination Date, NJEA shall become obligated to
pay the Initial Payment, Monthly Employment Incentive Payments, and
the Final Payments as and to the extent due pursuant to
Section 2.2.
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3.2 Reduction or Elimination of Incentive Payments; JCP&L
Default.
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(a) Acknowledgement of Purpose of Incentive Payments . The
Parties acknowledge that the primary purposes of NJEA's payment of
the Incentive Payments is to promote the continuation of employment
at the Hercules Facility and the Nitrocellulose Facility and to
mitigate the increased costs of steam due to the Restructuring. The
Parties further acknowledge that if either the Hercules Facility or
the Nitrocellulose Facility ceases operation, the facility that
remains in operation will incur additional costs as a result of
lost operational efficiencies. Accordingly, if a Cessation of
Operations occurs at either the Hercules Facility or the
Nitrocellulose Facility, the Monthly Employment Incentive Payment
will be reduced or eliminated as set forth in
Section 3.2(b).
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(b) Reduction or Elimination of Incentive Payments . The
Incentive Payments may be reduced or eliminated as
follows:
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(i) If a Cessation of Operations occurs at the Hercules Facility,
then the Second Component shall be reduced by 20% beginning on the
last business day of the month during which the Cessation of
Operations occurs; or
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(ii) If a Cessation of Operations occurs at the Nitrocellulose
Facility, the Second Component shall be reduced by 50% beginning on
the last business day of the month during which the Cessation of
Operations occurs; or
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(iii) If a Cessation of Operations occurs at both Facilities, then
the Monthly Employment Incentive Payment shall be eliminated
effective immediately on the date or dates on which the Cessation
of Operations occurs.
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(c) Cure Period for Cessation of Operations . Hercules shall
have a period of one hundred and eighty-three (183) days from the
date of inception of the Cessation of Operations to cure or
overcome the cause of a Cessation of Operations and reinstate
employment levels or production and manufacturing levels so that a
Cessation of Operations no longer exists (the " Required
Levels "); provided, however , such 183-day period
shall be extended day-for-day during the occurrence of an event of
Force Majeure so long as the party affected is diligently seeking
to remedy the effects of such Force Majeure, provided,
further , that in no event shall such extension exceed 180 days
(as the case may be, the " Cure
Period "). During the Cure Period, NJEA shall have no
obligation to make (i) partial Monthly Employment Incentive
Payments with respect to the Facility that has experienced a
Cessation of Operations (provided, NJEA shall continue to make
payments in respect of the Facility that has not experienced a
Cessation of Operations, which reduced payments shall be calculated
as set forth in Section 3.2(b)) or (ii) any Monthly
Employment Incentive Payments at all if both Facilities have
experienced a Cessation of Operations, as applicable. Payments that
would have otherwise been payable hereunder during such period but
for the Cessation of Operations at one or both Facilities shall be
permanently and irrevocably forfeited by Hercules. If the Required
Levels are re-attained within the Cure Period, then Hercules shall
promptly so notify NJEA in writing with appropriate detail and
supporting information (including the date on which the Required
Levels were re-attained), and the Monthly Employment Incentive
Payments (or portion thereof in the case of a reduction) shall be
reinstated from that date forward, with the first such payment
following the Cessation of Operations being prorated for any
partial month.
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(d) Failure to Cure . If the Required Levels at either or
both of the Hercules Facility and/or the Nitrocellulose Facility
are not re-attained within the Cure Period, Hercules shall promptly
so notify NJEA in writing and the Cessation of Operations shall be
considered permanent, and NJEA's obligation to make the Monthly
Employment Incentive Payments hereunder shall be irrevocably
reduced or eliminated as described in Section 3.2(b), as the
case may be.
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(e) JCP&L Failure to Provide for Payment of Second
Component . The Second Component shall (i) in the event of
a shortfall in any monthly payment from JCP&L under the Amended
and Restated Power Purchase Agreement, be reduced by the product of
the Second Component times the Pro Rata Factor, or (ii) be
eliminated upon a termination of the Amended and Restated Power
Purchase Agreement
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