FIRST AMENDMENT TO
INDUSTRIAL STEAM SALES CONTRACT
THIS FIRST AMENDMENT TO INDUSTRIAL STEAM SALES CONTRACT
Amendment ") is made as of the 16th day of December 2003,
between Hercules Incorporated, a Delaware corporation ("
Buyer ") and North Jersey Energy Associates, A
Limited Partnership, a New Jersey limited partnership ("
Seller "). Buyer and Seller are individually referred
to herein as a " Party " and are collectively
referred to herein as the " Parties ". Terms used and
not otherwise defined in this Amendment shall have the meanings set
forth in the Original Agreement (as defined in the first recital
W I T N E S S E T H :
WHEREAS , Buyer and Seller entered into an Industrial Steam
Sales Contract dated as of June 5, 1989 (the " Original
Agreement " and as amended by this Amendment, the "
Agreement ") pursuant to which the Seller is
obligated to sell and Buyer is obligated to purchase the Steam
generated at the Facility;
WHEREAS , Buyer sold a portion of the Buyer's Plant used for
the production of nitrocellulose (the " Nitrocellulose
Facility ," as defined in the Termination Agreement (defined
below)) to Green Tree Chemical Technologies Inc. (" Green
Tree ") and entered into a Utilities Agreement pursuant to
which Buyer resells a portion of the steam it purchases from Seller
to Green Tree;
WHEREAS , Seller 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 Seller sells the electrical output of the Facility to
JCP&L, and in connection therewith, the New Jersey Board of
Public Utilities (" NJBPU ") has approved such restructuring
transaction (the " Restructuring ");
WHEREAS , in connection with the Restructuring, the Parties
entered into a Termination Agreement dated as of October 21,
2003 (the " Original Termination Agreement ")
pursuant to which they agreed to terminate the Original Agreement
in consideration for which Seller agreed to pay to Buyer, for the
purposes of promoting the continuation of employment at the
Hercules Facility and Nitrocellulose Facility and to mitigate the
increased cost of steam due to the Restructuring, Monthly
Employment Incentive Payments (as defined in the Termination
Agreement) per month, which will be funded in part by Seller and in
part, indirectly, by JCP&L; and
WHEREAS , the Parties wish to amend the Original Agreement
to accommodate the parties' operations notwithstanding the
Restructuring and, contemporaneously herewith, have amended the
Original Termination Agreement (as so amended, the "
Termination Agreement ") to permit Seller the right
to terminate the Agreement as provided in the Termination
WHEREAS , in light of the foregoing, Buyer and Seller desire
to amend the Original Agreement as described herein.
NOW, THEREFORE , in consideration of the premises and of the
mutual 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:
1. Definitions .
The following new definition shall be added, in alphabetical order,
to Article II (Definitions):
"Amended PPA Effective Date" means the "Effective Date" under
and as defined in that Amended and Restated Power Purchase
Agreement, as amended by a First Amendment thereto dated as of
October 21, 2003 and a Second Amendment thereto to be dated on
or about December 23, 2003 (together, the "Amendments") which
together obligate JCP&L to fund a portion of the damages that
may be payable hereunder during the Interim Period, which
Amendments shall be substantially in the forms attached hereto as
Appendix 2 and Appendix 3 respectively, with any such
changes to which Seller may agree so long as such changes do not
"Base Damage Payment" has the meaning set forth in
Paragraph 2 of Article VI.
"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.
"Cure Period" has the meaning set forth in Paragraph 4(b) of
Article VI hereof.
"First Tier Reduction" has the meaning set forth in Paragraph
4(a)(i) of Article VI hereof.
"Green Tree" means Green Tree Chemical Technologies Inc., the
entity which, as of the date hereof, owns the Nitrocellulose
"Hercules Facility" means the Buyer's Plant, except for the
"Interim Period" means the date on or about December 18,
2003, as designated by Seller in its sole discretion in a written
notice to Hercules (the "Notice Date"), through the earlier to
occur of the Restructuring Effective Date (as defined in the
Termination Agreement) and the date that is forty-eight (48) months
after the Notice Date.
"Interim Period 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 Buyer
(or its Affiliates or successors or assigns) or Green Tree (or its
Affiliates or successors or assigns) shall not constitute Interim
Period Force Majeure.
"Interim Period Outage" means an outage at the Facility for
at least fifteen (15) continuous minutes, which results in a
curtailment of Equivalent Steam at least 10% below the lesser of
(i) the Designated Steam Requirement and (ii) the
quantity of Equivalent Steam purchased by Buyer in the last Clock
Hour prior to such outage.
"Monthly Certificate" has the meaning set forth in
Paragraph 4(d) of Article VI hereof.
"Monthly Damage Payment" has the meaning set forth in
Paragraph 2 of Article VI.
"Nitrocellulose Facility" has the meaning set forth in the
"Required Levels" has the meaning set forth in
Paragraph 4(b) of Article VI hereof.
"Second Tier Reduction" has the meaning set forth in
Paragraph 4(a)(ii) of Article VI hereof.
2. Amendments to Article III (Scope and Quantity of Steam )
There shall be inserted at the beginning of the first sentence of
Paragraph 2 of Article III, the words "Except during the
Interim Period," and at the end of such sentence, the following
; provided, further, that during the Interim Period, Buyer
acknowledges that one or both of the gas turbines may not be fully
operational and in light of such fact, Seller's obligation
hereunder during the Interim Period shall be to deliver Steam to
Buyer whenever the Facility is, or the Buyer reasonably projects
that the Facility will be, operating at baseload conditions for at
least 144 consecutive hours.
3. Amendments to Article VI (Defaults; Remedies) and
Article XVIII (Liability Limitations) .
(a) Paragraph 2 of Article VI is hereby amended and
restated in its entirety to read as follows:
2. Any of the following events shall constitute a default by Seller
hereunder: (i) fraudulent use by Seller of any meters provided
hereunder; (ii) except during the Interim
Period , at any time (A) twelve months after the
Commencement Date (as such term is defined in the Amended and
Restated Operation and Maintenance Agreement to be entered into by
and between Seller and Westinghouse Electric Corporation, a
Delaware corporation) if the First Delivery Date shall have
occurred on or prior to the Commencement Date or
(B) twenty-four months after the Commencement Date if the
First Delivery Date shall have occurred after the Commencement
Date, but in any event not more than twenty-four months after the
First Delivery Date in the case of either clause (A) or (B) above,
any failure of Seller to deliver, on an annual average basis, with
each such annual period commencing on the immediately preceding
anniversary of the Commencement Date eighty-five percent (85%) of
the total Steam used by Buyer at Buyer's Plant up to a maximum of
the Designated Steam Requirement; or (iii) except
during the Interim Period , in any full calendar year after
the First Delivery Date, any Total Forced Outages in excess of five
(5) per year or any Partial Forced Outages in excess of fifteen
(15) per year. As regards clause 2(i) above, in the event of such