Exhibit 10.60
Exhibit A omitted
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MANAGEMENT SERVICES AGREEMENT
by and between
SCRUBGRASS GENERATING COMPANY, L.P.
and
PG&E-BECHTEL GENERATING COMPANY
Dated as of December 15, 1990
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SCRUBGRASS COGENERATION PROJECT
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TABLE OF CONTENTS
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Section Page
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Recitals ....................................................... 1
ARTICLE I. AGREEMENT AND DEFINITIONS ......................... 2
1.1 Agreement ........................................... 2
1.2 Definitions ......................................... 2
ARTICLE II. SERVICES .......................................... 4
2.1 Appointment ......................................... 4
2.2 Services ............................................ 4
2.3 Personnel ........................................... 6
2.4 Management Plan ..................................... 6
2.5 Standards for Performance of Services ............... 7
2.6 Authority of Manager ................................ 7
2.7 Right to Request Instruction ........................ 7
2.8 Cooperation and Consultation ........................ 7
ARTICLE III. ITEMS TO BE FURNISHED BY LESSEE .................. 8
3.1 General ............................................. 8
3.2 Funding of Lessee Accounts .......................... 8
3.3 Office Facilities at the Project Site ............... 8
3.4 Lessee Representative ............................... 9
ARTICLE IV. PERSONNEL, ADVISORY COMMITTEE AND REPORTING ....... 9
4.1 Manager Representative .............................. 9
4.2 Advisory Committee .................................. 9
4.3 Accounts and Reports ................................ 10
ARTICLE V. COMPENSATION ...................................... 12
5.1 Management Costs ................................... 12
5.2 Payment ............................................ 12
5.3 Other Costs and Expenses ........................... 12
5.4 Accounting and Audit Right ......................... 13
5.5 Interest ........................................... 13
5.6 Subordination ...................................... 13
ARTICLE VI. TERM AND TERMINATION .............................. 14
6.1 Term ............................................... 14
6.2 Termination by Lessee for Cause .................... 14
6.3 Termination by Manager ............................. 14
6.4 Rights upon Termination ............................ 15
6.5 Termination Payment ................................ 15
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Section Page
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ARTICLE VII. INDEMNIFICATION ................................... 16
7.1 By Manager ......................................... 16
7.2 By Lessee .......................................... 16
7.3 Other Claims ....................................... 16
7.4 Indemnification Notices ............................ 16
ARTICLE VIII. LIABILITIES OF THE PARTIES ....................... 17
8.1 Limitations of Liability .......................... 17
8.2 No Warranties or Guarantees ....................... 18
ARTICLE IX. MISCELLANEOUS PROVISIONS .......................... 18
9.1 Documents .......................................... 18
9.2 Assignment ......................................... 18
9.3 Independent Contractor ............................. 19
9.4 Force Majeure ...................................... 19
9.5 Amendments ......................................... 19
9.6 Survival ........................................... 19
9.7 Non Waiver ......................................... 19
9.8 Notices ............................................ 19
9.9 Counterparts ....................................... 20
9.10 Governing Law ...................................... 20
9.11 Partial Invalidity ................................. 20
9.12 Captions; Table of Contents ........................ 20
9.13 Not for Benefit of Third Parties ................... 20
9.14 Disputes ........................................... 21
9.15 Representations and Warranties ..................... 21
EXHIBIT A - Definitions
EXHIBIT B - Management Plan
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MANAGEMENT SERVICES AGREEMENT
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THIS MANAGEMENT SERVICES AGREEMENT ("Agreement") is entered into as of
December 15, 1990, by and between SCRUBGRASS GENERATING COMPANY, L.P., a
Delaware Limited Partnership ("Lessor"), and PG&E-BECHTEL GENERATING COMPANY, a
California general partnership ("Manager").
R E C I T A L S
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A. Lessor is developing and causing to be constructed an approximately
80 megawatt waste-coal fired cogeneration plant and adjacent greenhouse to be
located in Scrubgrass Township, Venango County, Pennsylvania (the "Project", as
hereinafter further defined);
▇. ▇▇▇▇▇▇ has agreed to enter into a Lease Agreement (the "Lease") with
Buzzard Power Corporation, a Delaware corporation ("Lessee"), pursuant to which
Lessor will lease the Project to Lessee for an initial term of twenty-two (22)
years commencing upon the date of completion of construction of the Project (the
"Lease Commencement Date", as hereinafter further defined);
C. During the term of the Lease, Lessee requires the services of a
qualified independent contractor to provide management and administrative
services in connection with the Project and with the day-to-day business of
Lessee, and to act on behalf of Lessee as Lessee's representative under the
Lease and under certain other contracts and agreements relating to the Project;
D. At the request of Lessor and Lessee, Manager has agreed to perform
such services, beginning on the Lease Commencement Date, in accordance with the
terms and conditions set forth herein, it being understood by the parties hereto
that this Agreement will be assigned by Lessor to Lessee, and Lessor's
obligations hereunder will be assumed by Lessee, effective as of the Lease
Commencement Date, whereupon all rights and obligations of Lessor hereunder
shall become rights and obligations of Lessee.
NOW THEREFORE, in consideration of the mutual covenants set forth
herein, the parties hereby agree as follows:
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ARTICLE I
AGREEMENT AND DEFINITIONS
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1.1 Agreement. This Agreement contains the entire agreement between the
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parties with respect to the subject matter hereof and supersedes all prior
negotiations, undertakings and agreements. Neither party will be bound by or
deemed to have made in connection herewith any representations, warranties,
commitments or undertakings other than those contained herein.
1.2 Definitions. Unless otherwise required by the context in which any
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capitalized term appears, capitalized terms used in this Agreement shall have
the definitions specified in this Section 1.2 or in Appendix I to the
Participation Agreement which is attached hereto as Exhibit A. The singular
shall include the plural and the masculine shall include the feminine and
neuter, as the context requires. References to "Articles," "Sections,"
"Schedules" or "Exhibits" shall be to Articles, Sections, schedules or Exhibits
of this Agreement and references to paragraphs shall be to separate paragraphs
of the Section or subsection in which the reference occurs, unless otherwise
expressly provided. All references herein to any agreements shall be to such
agreement as amended and supplemented or modified to the date of reference. All
references to a particular entity shall include a reference to such entity's
successor and permitted assigns. The words "herein," "hereof" and "hereunder"
shall refer to this Agreement as a whole and not to any particular section or
subsection of this Agreement. "Includes" or "including" shall mean "including
without limitation."
"Advisory Committee" has the meaning set forth in Section 4.2.1.
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"Agreement" means this Management Services Agreement, as the same may
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be modified or amended from time to time in accordance with the provisions
hereof.
"Bankruptcy" means a situation in which (i) a party shall file a
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voluntary petition in bankruptcy or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer or consent seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief for itself under the present or future applicable federal,
state or other statute or law relative to bankruptcy, insolvency, or other
relief for debtors, or shall seek or consent to or acquiesce in the appointment
of any trustee, receiver, conservator or liquidator of such party or of all or
any substantial part of Its properties (the term "acquiesce" as used in this
definition, includes the failure to file a petition or motion to vacate or
discharge any order, judgment or decree within fifteen (15) days after entry of
such order, judgment or decree); a court of competent jurisdiction shall enter
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an order, judgment or decree approving a petition filed against any party
seeking a reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
act, or any other present or future applicable federal, state or other statute
or law relating to bankruptcy, insolvency, or other relief for debtors, and such
party shall acquiesce in the entry of such order, judgment or decree or such
order, judgment or decree shall remain unvacated and unstayed for an aggregate
of sixty (60) days (whether or not consecutive) from the date of entry thereof,
or any trustee, receiver, conservator or liquidator of such party or of all or
any substantial part of its property shall be appointed without the consent or
acquiescence of such party and such appointment shall remain unvacated and
unstayed for an aggregate of sixty (60) days whether or not consecutive; (ii) a
party shall admit in writing its inability to pay its debts as they mature,
(iii) a party shall give notice to any governmental body of insolvency or
pending insolvency, or suspension or pending suspension of operations; or (iv) a
party shall make an assignment for the benefit of creditors or take any other
similar action for the protection or benefit of creditors.
"Lender" means National Westminster Bank PLC and the other banks
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providing construction financing and permanent debt financing for the Project
pursuant to the Reimbursement Agreement.
"Lessee" has the meaning set forth in the Recitals.
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"Lessee Representative" has the meaning set forth in Section 3.4.
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"Lessor" has the meaning set forth in the Preamble.
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"Management Costs" means the compensation payable by Lessee to Manager
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for the Services pursuant to Section 5.1.
"Management Plan" has the meaning set forth in Section 2.4.
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"Manager" has the meaning set forth in the Preamble.
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"Manager Representative" has the meaning set forth in Section 4.1.
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4.1.
"Reference Rate" means a per annum interest rate equal to two percent
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(2%) above the prime rate as quoted from time to time by National Westminster
Bank PLC, New York Branch, but in no event in excess of the maximum rate
permitted by applicable law.
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ARTICLE II
SERVICES
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2.1 Appointment. Lessor hereby appoints and retains Manager to provide
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the Services from and after the Lease Commencement Date on the terms and
conditions set forth in this Agreement. Manager hereby accepts such appointment
and agrees to perform the Services in accordance with the terms and conditions
of this Agreement. Lessor and Manager hereby also agree that as of the Lease
Commencement Date and the assignment of this Agreement to Lessee all obligations
of Manager hereunder shall run directly to Lessee and all references herein to a
"party" or "parties" to this Agreement shall be deemed to refer to "Lessee"
and/or "Manager".
2.2 Services. Manager shall perform or cause to be performed on behalf
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of Lessee the following management, administrative and other support services in
connection with the day-to-day business of Lessee and the management of the
Project (collectively, the "Services"):
2.2.1 General Management and Administration. Manager shall be fully
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responsible for the day-to-day management, administration and operation of all
of Lessee's business relating to the Project, excluding any responsibilities
delegated to the Operator. under the O&M Agreement, to the Greenhouse Operator
under the Greenhouse Agreements, or to any other party under any of the other
Project Agreements.
2.2.2 Administration of Agreements. Except for corporate,
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organizational and other such internal matters within the control of Lessee,
Manager shall represent Lessee and shall administer and perform all of Lessee's
obligations and responsibilities under each of the Project Agreements and other
Transaction Documents entered into by Lessee or assigned to Lessee pursuant to
Section 2.03 of the Lease, including the 0&M Agreement, the Greenhouse
Agreements, the Fuel Agreements, the Transportation Agreements, and the Lease,
subject to the availability of funds therefor in the Lessee accounts established
pursuant to Section 3.2.
2.2.3 Billing and Collection of Revenues. Manager shall implement
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and maintain billing and collection procedures in respect of all accounts
payable and other amounts due Lessee under each of the Project Agreements.
2.2.4 Bank Accounts and Disbursement of Funds. Manager shall
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establish and maintain on behalf of and in the name of Lessee one or more bank
accounts as required by the Disbursement Agreement or any other Transaction
Document or otherwise as required or convenient in connection with the business
of Lessee relating to the Project. Manager shall have the exclusive authority to
inform Agent or Lessor, as the case may be, of the need to make deposits to and
withdrawals from any such accounts and otherwise to inform Agent or Lessor, as
the case may be, of
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disbursements of funds which need to be approved or authorized from any other
accounts of Lessee established or maintained in connection with any of the
Transaction Documents in order to pay all of Lessee's operating and other
expenses, including any payments required under any of the Transaction Documents
and any insurance premiums, accountants' fees and other professional services
fees, taxes, license fees, property taxes, assessments or other Lessee expenses.
Without limiting the foregoing, Manager also shall have the exclusive authority
on behalf of Lessee to furnish Agent or Lessor, as the case may be, with
information necessary for such Person to direct payment from any Lessee Account
established under the Disbursement Agreement and to act for and on behalf of
Lessee in all matters arising under the Disbursement Agreement.
2.2.5 Accounting and Documentation. Manager shall provide full
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bookkeeping and accounting services to Lessee as required from time to time in
connection with the Project and, to the extent pertaining to matters within the
knowledge and control of Manager, shall prepare and submit on behalf of Lessee
all necessary documentation, certification and notices required to be submitted
by Lessee pursuant to the Transaction Documents . 2.2.6 Insurance. Manager shall
implement Lessee's insurance program, including procuring and maintaining, at
Lessee's expense, any and all insurance required to be maintained by Lessee
pursuant to any of the Transaction Documents, and monitoring the insurance
coverage provided by Operator and Greenhouse Operator pursuant to the O&M
Agreement and Greenhouse Agreements, respectively. Manager also shall be
responsible for administering all claims and making all collections on behalf of
Lessee under insurance policies covering Lessee or the Project. Manager shall be
named as an additional insured or a named insured, as appropriate, under each of
the insurance policies which include Lessee as a named or additional insured
obtained in connection with the Project.
2.2.6 Insurance. Manager shall implement Lessee's Insurance
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program, including procuring and maintaining, at Lessee's expense, any and all
insurance required to be maintained by Lessee pursuant to any of the Transaction
Documents, and monitoring the insurance coverage provided by Operator and
Greenhouse Operator pursuant to the O&M Agreement and Greenhouse Agreements,
respectively. Manager also shall be responsible for administering all claims and
making all collections on behalf of Lessee under insurance policies covering
Lessee or the Project. Manager shall be named as an additional insured or a
named insured, as appropriate, under each of the insurance policies which
include Lessee as a named or additional insured obtained in connection with the
Project.
2.2.7 Licenses and Permits. Manager shall maintain compliance with
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all required permits, licenses and governmental approvals obtained by or for
Lessee in connection with the operation and lease of the Project, excluding any
responsibilities delegated to the Operator under the O&M Agreement, to the
Greenhouse Operator under the Greenhouse Agreements, or to any other party under
any of the other Project Agreements. Where permits must be obtained, modified or
renewed by Lessee and such responsibility has not been delegated to Operator or
Greenhouse Operator, Manager shall prepare any application, filing or notice
related thereto, shall cause such materials to be submitted to, and shall
represent Lessee in contacts with, the appropriate governmental agency, and
shall perform all ministerial or administrative acts necessary for timely
issuance and the continued effectiveness thereof. Copies of all permits,
licenses and governmental approvals obtained by or for Lessee in connection with
the Project shall be maintained by Manager at its offices.
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2.2.8 Public Relations. Manager shall be responsible for all public
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and community relations matters of Lessee relating to the Project.
2.2.9 Additional Project Agreements. Manager shall administer and
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implement Lessee's fuel procurement program for the Project, including providing
fuel planning, performing contract administration, scheduling and coordination
with respect to the Fuel Agreements, Limestone Agreement and Transportation
Agreements, arranging for additional fuel sources and ash disposal as required,
and establishing and implementing a fuel sampling and testing program. Manager
also shall arrange for and administer any Additional Contracts required on
behalf of Lessee in connection with the Project and shall assist Lessee in
complying with all requirements of the Transaction Documents with respect to
such Additional Contracts.
2.2.10 Lessee Working Capital Loan Agreement. Manager shall, on
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behalf of Lessee, make all requests for Lessee Working Capital Loans under the
Lessee Working Capital Loan Agreement, at such times and in such amounts as
Manager deems necessary or desirable based on information furnished to it from
the Operator, the Lessee and any other source, in accordance with the terms of
the Lessee Working Capital Loan Agreement. Manager shall furnish the Agent or
Lessor, as the case may be, with information necessary for such person to direct
the disbursement of the proceeds of any Lessee Working Capital Loan in
accordance with Section 2.2.4 hereof. Subject to the availability of funds
therefor in the Operating Account, Manager shall ensure that all Lessee Working
Capital Loans are repaid in accordance with Section 2.01(d) of the Lessee
Working Capital Loan Agreement.
2.3 Personnel. Manager shall provide and make available as necessary
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all professional, supervisorial, managerial, administrative and other personnel
as are necessary to perform the Services. Such personnel shall be qualified and
experienced in the duties to which they are assigned. The working hours, rates
of compensation and all other matters relating to the employment of individuals
employed by Manager or its Affiliates in the performance of the Services shall
be determined solely by Manager or its respective Affiliates. In the performance
of the Services, Manager also shall be authorized to obtain on behalf of Lessee
outside accounting, tax, legal, engineering, and other services as it reasonably
deems necessary.
2.4 Management Plan. Attached as Exhibit B to this Agreement is a
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preliminary Project management plan setting forth in greater detail Services to
be performed by Manager hereunder and Manager's proposed organization plan for
the Project. Within thirty (30) days following the Lease Commencement Date,
Manager shall prepare and submit to Lessee a more complete management plan and
organization chart covering the matters set forth in Exhibit B (the "Management
Plan"), which, upon approval by Lender, shall replace and become a new Exhibit B
hereto; provided, however, that nothing contained in Exhibit B shall in any way
limit Manager's obligations under Section 2.2.
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2.5 Standards for Performance of Services. Manager shall perform the
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Services with due diligence and dispatch in a prudent, cost effective and
efficient manner, in accordance with all applicable laws, regulations, codes,
permits, licenses, and standards, and in accordance with the Management Plan and
applicable terms and conditions of the Transaction Documents. To the extent
within the reasonable control of Manager, all Operating Expenses incurred or
authorized by Manager on behalf of Lessee hereunder shall be in accordance with
the applicable Project Operating Budget, as such Operating Budget may be amended
from time to time in accordance with the Transaction Documents. Manager shall
not carry out any transaction or enter into any contract or agreement on behalf
of Lessee hereunder with any Affiliate of Manager except on terms no less
favorable to Lessee than would be available in a bona fide arm's length
transaction with a non-affiliated person.
2.6 Authority of Manager. Manager is hereby granted, to the fullest
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extent permitted by law, as of the Lease Commencement Date and the assignment of
this Agreement to Lessee, the right, power and authority to do on behalf of
Lessee in Lessee's name all things which are necessary, proper or desirable to
carry out the duties and responsibilities of Manager under this Agreement,
including the right, power and authority to engage in any actions and to
execute, enter into, perform and carry out contracts and undertakings of any
kind whatsoever necessary or incidental to the accomplishment of the purposes
and objectives of Lessee as set forth in this Agreement or the other Transaction
Documents, so long as such activities, contracts and undertakings may be
lawfully carried out or performed by or on behalf of Lessee, and provided that
in no event shall Manager's authority hereunder be greater than or extend beyond
the authority of Lessee, as such authority may be limited by any covenant or
other restriction contained in any Transaction Document. Lessee agrees, from
time to time, to execute and deliver any additional written authorizations or
powers of attorney which may be reasonably requested by Manager to carry out the
purpose and intent of this Section.
2.7 Right to Request Instruction. At any time, Manager may, if it
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reasonably deems it to be necessary or appropriate, request written instructions
from Lessee, within a reasonable period prior to the necessity for taking
action, with respect to any matter contemplated by this Agreement and may defer
action thereon pending the receipt of such written instructions. Actions taken
by Manager, its officers, employees and representatives in accordance with the
written instructions of Lessee, or, except in cases of Manager's gross
negligence or willful misconduct, failures to act by such persons pending the
receipt of such written Instructions, shall be deemed to be proper conduct
within the scope of Manager's authority under this Agreement.
2.8 Cooperation and Consultation. Lessee agrees that it shall cooperate
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with Manager in the performance of Manager's services and, subject to the
provisions of Section 6.2, shall not take any independent or unilateral action
with respect to the Project, or any Project
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Agreement or other Transaction Document, including terminating, modifying,
amending or settling or asserting any claim with respect to any Project
Agreement or other Transaction Document, or entering into any Additional
Contract, without first consulting with Manager and obtaining Manager's prior
written concurrence. Any action taken by Lessee which does not comply with the
provisions of this Section 2.8 shall be null and void.
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ARTICLE III
ITEMS TO BE FURNISHED BY LESSEE
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3.1 General. Lessee shall furnish, or cause to be furnished, to
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Manager, at Lessee's expense, such information, documentation, services and
materials, which are not required to be provided by Manager hereunder and which
are reasonably requested by Manager to perform the Services and to otherwise
fulfill its obligations under this Agreement. All such items shall be made
available at such times and in such manner as may be required by Manager for the
expeditious and orderly performance of the Services. Without limiting the
generality of the foregoing, Lessee shall provide Manager all operating plans,
fuel plans, and other such Project materials developed by or on behalf of Lessor
during the construction of the Project and made available to Lessee pursuant to
the Lease.
3.2 Funding of Lessee Accounts. During the term of this Agreement,
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Lessee shall deposit or cause to be deposited with the Disbursement Agent in
accordance with the Disbursement Agreement all Project Revenues and other income
or earnings of Lessee from any source whatsoever, except income or earnings with
respect to amounts previously released to Lessee by the Disbursement Agent.
Notwithstanding any provision in this Agreement to the contrary, Manager shall
not be obligated to perform Services and shall be excused from its obligations
and responsibilities hereunder to the extent there are not available funds under
the Disbursement Agreement to allow Manager to perform the Services and
administer the Transaction Documents on behalf of Lessee pursuant to the
provisions of this Agreement.
3.3 Office Facilities at the Project Site. Lessee shall provide Manager
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with suitable office facilities at the Project site, including telephones,
copying and fax machines, office supplies and janitorial services. Such
facilities shall be made available to Manager beginning on the Lease
Commencement Date.
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3.4 Lessee Representative. On or before the Lease Commencement Date,
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Lessee shall appoint an individual representative (the "Lessee Representative")
authorized and empowered to act for and on behalf of Lessee on all matters
concerning or arising under this Agreement. In all such matters, Lessee shall be
bound by the written communications, directions, requests, and decisions made by
the Lessee Representative. Lessee shall notify Manager in writing of such
representative, and such appointment shall remain in full force and effect until
a written notice of substitution or replacement is delivered by Lessee to
Manager.
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ARTICLE IV
PERSONNEL, ADVISORY COMMITTEE
AND REPORTING
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4.1 Manager Representative. Within ten (10) days after the Lease
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Commencement Date, Manager shall appoint an individual representative (the
"Manager Representative") authorized and empowered to act for and on behalf of
Manager on all matters concerning this Agreement and the Services. In all such
matters, Manager shall be bound by the written communications, directions,
requests, and decisions made by the Manager Representative. Manager shall notify
Lessee in writing of such representative, and such appointment shall remain in
full force and effect until a written notice of substitution or replacement is
delivered by Manager to Lessee. At any time, the Manager Representative may act
through or be represented by one or more individuals appointed by Manager.
4.2 Advisory Committee.
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4.2.1 Membership. In order to facilitate communication and
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cooperation between the parties in the administration of the Project and the
Lease, an advisory committee (the "Advisory Committee") shall be established as
of the Lease Commencement Date to review Manager's performance hereunder and to
consider and make recommendations with respect to Manager's proposed actions
concerning the Project. The Advisory Committee shall consist of three or more
individuals, one of whom shall be appointed by Lessee and one of whom shall be
appointed by each of the general partners (other than Scrubgrass Power Corp.) of
Lessor. Each member of the Advisory Committee shall hold office until death,
resignation or removal at the pleasure of the party that appointed him. If a
vacancy occurs on the Advisory Committee, the party that appointed such vacating
member shall appoint his successor.
4.2.2 Meetings. The Advisory Committee shall meet no less
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frequently than once each calendar quarter after the Lease Commencement Date on
a date and at a time and place established by the consent of
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Manager and each member on the Advisory Committee. A special meeting of the
Advisory Committee shall be held at the written request of Manager or any
Advisory Committee member. Any meeting of the Advisory Committee may be held by
conference telephone call or through similar communications equipment by means
of which all persons participating in the meeting can hear each other.
Participation in a telephonic meeting held pursuant to this Section shall
constitute presence in person at such meeting. A representative of Manager shall
be entitled to attend and participate in all meetings of the Advisory Committee,
and Manager shall be given notice of all meetings requiring notice in accordance
with the provisions of Section 4.2.3.
4.2.3 Notices. Notices of regular meetings of the Advisory
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Committee are not required. Notices of special meetings of the Advisory
Committee shall state the date and hour of the meeting and the purpose or
purposes for which the meeting is called. Special meetings shall be held by
telephone conference call or at such place as shall be agreed to by Manager and
by the members of the Advisory Committee. The notice of a special meeting shall
be given in writing not less than ten (10) nor more than twenty (20) days before
the date of the meeting to Manager and to each Advisory Committee member.
Manager and Advisory Committee members may waive in writing the requirements for
notice before, at or after the special meeting involved.
4.2.4 Review and Advisory Function. The Advisory Committee shall
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not have power or authority to direct or control the actions or performance by
Manager of Services hereunder; but Manager shall make Project information
available to the Advisory Committee and shall consider any recommendations,
proposals or suggestions made by the Advisory Committee. Without limiting the
generality of the foregoing, Manager shall consult with the Advisory Committee
on matters concerning the Project Operating Budget and operating and fuel plans,
and shall seek review by the Advisory Committee of any Additional Contract which
is required to be submitted to Lender for Lender's consent prior to making such
submission.
4.3 Accounts and Reports. From and after the Lease Commencement Date
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throughout the term of this Agreement, Manager shall furnish or cause to be
furnished to Lessee the following reports concerning the Services and the
Project:
4.3.1 Quarterly Reports. As soon as available at the end of the
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first three (3) quarterly accounting periods, and in any event within the period
required pursuant to Section 8.1(a) of the Participation Agreement, Manager
shall submit (i) quarterly unaudited financial statements of Lessee prepared in
reasonable detail and in accordance with generally accepted accounting
principles consistently applied (except that such statements need not contain
notes thereto), which statements shall contain balance sheets as of the end of
such accounting period, and statements of profit and loss for the period from
the beginning of such year to the end of such accounting period; (ii) copies of
all reports and accompanying certificates received by Manager
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on behalf of Lessee from Operator and Greenhouse Operator during such quarterly
accounting period pursuant to the O&M Agreement and Greenhouse Agreements,
respectively; and (iii) a comparison of Lessee' 5 actual annual Project
operating costs incurred to date and the budgeted costs for such period as set
forth In the applicable Project Operating Budget. Following submission of such
quarterly reports, the Manager Representative shall be prepared to meet with the
Advisory Committee at its request to review and discuss the reports and to
review any proposed plan of action.
4.3.2 Annual Reports. As soon as available after the end of each
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calendar year, and in any event within the period required pursuant to Section
8.1(b) at the Participation Agreement, Manager shall submit: (i) complete
financial statements of Lessee for such year, together with all notes thereto,
prepared in reasonable detail in each case, and in accordance with generally
accepted accounting principles consistently applied, which financial statements
shall be audited and duly reported upon by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or a successor
independent public accounting firm retained by Manager and approved by Lessee
(which approval shall not be unreasonably withheld); (ii) an annual report
describing the Services and Lessee's operations for such year, including a
comparison of Lessee's actual annual Project operating costs and budgeted costs
for such year, as set forth in the applicable Project Operating Budget; and
(iii) copies of any reports and certificates received by Manager on behalf of
Lessee from the Operator and Greenhouse Operator pursuant to the O&M Agreement
and Greenhouse Agreements, respectively, which have not been previously supplied
to Owner pursuant to Section 4.2.1. Following submission of each such annual
report, the Manager Representative shall be prepared to meet with the Advisory
Committee at its request to review and discuss the report and to report upon any
other aspects of the operation of the Project or the conduct of Lessee's
business which the Advisory Committee may wish to discuss.
4.3.3 Other Information. Manager shall furnish or cause to be
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furnished any other information concerning the Services or Lessee's operations
which is required to be furnished by Lessee under the Transaction Documents or
Is reasonably requested by Lessee. Without limiting the foregoing, at Lessee's
request Manager shall provide Lessee information concerning Manager's proposed
annual Operating Budget for the Project, prior to submission to Lender pursuant
to the Loan Agreement, and shall meet with the Advisory Committee to review such
proposed Operating Budget and to discuss any recommended changes or
modifications. Notwithstanding any provision herein to the contrary, in the
event Manager's proposed annual budget for Management Costs (which shall form a
part of its proposed annual Operating Budget) exceeds on an aggregate basis by
more than ten percent (10%) the amount budgeted therefor in the preceding year,
Manager shall not incorporate such increase in excess of ten percent (10%) in
the final Operating Budget, without the prior consent of Lessee, which shall not
be unreasonably withheld.
-11-
---------------------------------
ARTICLE V
COMPENSATION
--------------------------------
5.1 Management Costs. As compensation in full to Manager for the
----------------
performance of all Services hereunder, Lessee shall pay to Manager the sum of
(a) the amount of all wages and salaries, including bonuses, which Manager pays
to its or any of its Affiliates' permanent or temporary employees and other
representatives which is allocable to the work of such employees or
representatives in performing Services (such total allocable amount, "Wages"),
(b) an amount to cover costs of employee benefits (including employee holidays
and paid time-off), social security, insurance, retirement and other plans,
payroll taxes, premiums for unemployment, workers' compensation and employer's
liability insurance, Manager's general and administrative expenses, costs of
maintaining established offices and other organizational expenses equal to fifty
percent (50%) of the Wages paid with respect to personnel performing Services at
the Project site and one hundred percent (100%) of all other Wages, and (c)
costs incurred for travel, subsistence, recruitment and relocation with respect
to such employees and other representatives engaged In the performance of the
Services. All of Manager's rates, policies and practices referred to in the
foregoing shall be subject periodically to reasonable adjustment to reflect
changes in Manager's costs, upon Lessee's prior approval, which shall not be
unreasonably withheld.
5.2 Payment. Within fifteen (15) days after the last day of each month
-------
following the Lease Commencement Date during the term of this Agreement, Manager
shall send Lessee an Invoice setting forth in reasonable detail the amount of
the Management Costs for such preceding month. Manager shall be authorized
hereunder to pay, or cause to be paid, from the Operating Account the amount of
each such invoice within fifteen (15) days after Lessee's receipt thereof,
provided that all such payments of Management Costs shall be subordinated in
accordance with the provisions of Section 5.6.
5.3 Other Costs and Expenses. All reasonable costs and expenses
------------------------
incurred by Manager in the performance of the Services for supplies, equipment,
materials, services and other items provided by third parties, including legal,
consulting, accounting, engineering and technical services, shall, at Manager's
election, either (I) be incurred on behalf of and in the name of Lessee and paid
directly as a Lessee Operating Expense pursuant to the provisions of the
Disbursement Agreement, or (ii) be incurred and paid by Manager and reimbursed
by Lessee to Manager within fifteen (15) days as a Lessee Operating Expense. In
either case, Manager shall be authorized hereunder to cause such amounts to be
disbursed by the Disbursement Agent within the time provided for payment in
accordance with the provisions of the Disbursement Agreement.
-12-
5.4 Accounting and Audit Right. Manager shall keep and maintain, in
--------------------------
accordance with generally accepted accounting principles consistently applied,
all necessary books, records, accounts and other documents sufficient to
accurately and completely reflect all Management Costs incurred pursuant to this
Agreement and any other costs and expenses incurred pursuant to Section 5.3.
Such records shall include receipts, memoranda, vouchers and accounts of every
kind and nature pertaining to the Services, as well as complete summaries and
reports setting forth all reimbursable manhours expended, payroll Incurred and
the monthly salary and hourly rate of each and every employee whose payroll
costs are Included in the Management Costs hereunder. Lessee, its
representatives and the firm of independent auditors retained by Manager
pursuant to Section 4.2.2 shall have access, upon not less than five (5) days
advance written notice, to all such records maintained by Manager, for the
purposes of auditing and verifying the Management Costs (exclusive of ▇▇▇▇-up)
or any other costs claimed to be due and payable hereunder. Lessee shall have
the right to reproduce any such records, and Manager shall keep and preserve all
such records for a period of at least two (2) years from and after the close of
the calendar year in which such costs were incurred.
5.5 Interest. Any amount owed to either party hereunder beyond the
--------
date such amount is due and payable shall accrue interest each day from such
date at the Reference Rate.
5.6 Subordination. Notwithstanding any provision in this Agreement to
-------------
the contrary, payment of Management Costs otherwise due and payable under this
Agreement shall be subordinate to and conditional upon the prior payment in full
by Lessee of the obligations of Lessee which are prior and senior to the
Management Costs, as set forth in Section 13.01(c) of the Reimbursement
Agreement (or as set forth in the Disbursement Agreement, if the Reimbursement
Agreement no longer is in effect). Payments of the Management Costs shall be
made on or before the date each such payment is otherwise due and payable
pursuant to this Agreement only to the extent Lessee Is permitted to pay such
amounts pursuant to Section 13.01(c) of the Reimbursement Agreement (or pursuant
to the Disbursement Agreement, if the Reimbursement Agreement no longer is in
effect). If sufficient funds are not available from the Operating Account or
such payment is not otherwise permitted to be made at such time under the
Reimbursement Agreement (or under the Disbursement Agreement, if the
Reimbursement Agreement no longer Is in effect), all or a portion of the
Management Costs otherwise payable shall be deferred until such time as there
are available funds therefor in the Operating Account or until payment Is
permitted under the Reimbursement Agreement (or under the Disbursement
Agreement, if the Reimbursement Agreement no longer is in effect). All
Management Costs due and payable hereunder or deferred pursuant to the foregoing
shall be paid to Manager prior to any payments by Lessee which are junior or
subordinated to the Management Costs, as set forth in Section 13.01(c) of the
Reimbursement Agreement (or as set forth in the Disbursement Agreement, if the
Reimbursement Agreement no longer is in effect). Management Costs deferred
pursuant to the foregoing shall accrue interest on the unpaid portion thereof at
the
-13-
Reference Rate from the date such deferral commences until such Management Costs
are paid in full; provided that such interest shall also be subordinated
pursuant to the provisions of this Section 5.6.
--------------------------------
ARTICLE VI
TERM AND TERMINATION
--------------------------------
6.1 Term. The term of this Agreement shall commence on the Lease
----
Commencement Date and shall continue until the expiration or other termination
of the Lease, subject to earlier termination pursuant to Section 6.2 or 6.3.
6.2 Termination by Lessee for Cause. Lessee, with the consent of Lessor
-------------------------------
and, during the term of the Reimbursement Agreement, with the consent of Lender
and Lessor, may terminate this Agreement for cause upon thirty (30) days prior
written notice to Manager: (I) In the event of the Bankruptcy of Manager; or
(ii) in the event of a failure by Manager to perform the Services in accordance
with the requirements of this Agreement, if Manager does not cure such failure
within forty-five (45) days of the date of a notice from Lessee demanding such
cure (or within such longer period of time as Is reasonably necessary to
accomplish such cure, if it cannot be reasonably accomplished within such
forty-five (45) day period and Manager diligently commences and continues such
cure in such period). Notwithstanding the foregoing cure period allowed to
Manager in the event of a failure by Manager to perform the Services in
accordance with the requirements of this Agreement, if Lessee reasonably
determines that such failure by Manager may lead to an event of default or
termination under any other Transaction Document to which Lessee is a party or
which has been assigned to Lessee pursuant to the Lease, Lessee, notwithstanding
any other provision of this Agreement to the contrary, upon notice to Manager,
may itself take such independent action for its own account as Lessee may deem
necessary or appropriate to cure such event of default or remove such basis for
termination, and Manager shall direct payment for the cost of such Lessee action
as a Lessee Operating Expense under the Disbursement Agreement; provided,
however, that any such independent action by Lessee which cures a failure or
default by Manager hereunder shall be deemed for purposes of this Section 6.2 to
constitute a cure by Manager of such failure or default.
6.3 Termination by Manager.
----------------------
6.3.1 For Cause. Manager may terminate this Agreement for cause
---------
upon thirty (30) days prior written notice to Lessee and to Lender:
(I) in the event of the Bankruptcy of Lessee, or (ii) in the event Lessee
materially fails to perform any obligation required to be
-14-
performed by Lessee hereunder and does not cure, or cause to be cured (including
a cure by Lender), such failure within forty-five (45) days of the date of a
notice from Manager to Lessee and Lender demanding such cure (or within such
period of time as is reasonably necessary to accomplish such cure, if it cannot
be reasonably accomplished in said forty-five (45) day period and Lessee or
Lender diligently commences and continues such cure in such period).
Notwithstanding the cure period provided by the foregoing, Manager shall not be
required to continue performing the Services for the benefit of Lessee during
such a cure period if adequate funds are not available to Manager from the
Operating Account to perform the Services hereunder.
6.3.2 For Convenience. In the event neither Manager nor any
---------------
Affiliate of Manager continues to be a general partner of Lessor under the
Lease, Manager may terminate this Agreement for its convenience, without cause,
upon six (6) months advance written notice to Lessee; provided, however, that
such six (6) month period may be extended by Lessee for a reasonable additional
period (not to exceed an additional six (6) months) in the event such earlier
termination would materially adversely affect or inconvenience Lessee and Lessee
is diligently attempting to obtain a replacement or substitute for Manager.
6.4 Rights upon Termination. Upon any expiration or termination of this
-----------------------
Agreement, Manager shall deliver to Lessee at Lessee's principal place of
business all records, documents, accounts, files and other materials of Lessee
or pertaining to Lessee's business as Lessee may reasonably request. Lessee
shall assume and become liable for any contracts or obligations that Manager may
have undertaken with third parties in connection with the Services, and Manager
shall execute all documents and take all other reasonable steps requested by
Lessee which may be required to assign to and vest in Lessee all rights,
benefits, interests and titles in connection with such contracts or obligations.
Expiration or termination of this Agreement shall not relieve any party hereto
of liability which has accrued or arisen prior to the date of such expiration or
termination.
6.5 Termination Payment. In the event of a termination of this
-------------------
Agreement pursuant to Section 6.3.1, Manager shall be entitled, in addition to
all other amounts due hereunder as of the date of termination, to a cancellation
payment equal to all costs and expenses reasonably incurred by Manager as a
direct result of such termination, including all reasonable severance and
relocation costs incurred with respect to Manager's employees and any
cancellation costs incurred with respect to third parties. Such amounts shall be
due and payable by Lessee within fifteen (15) days of Manager's submission of an
invoice therefor.
-15-
--------------------------------
ARTICLE VII
INDEMNIFICATION
--------------------------------
7.1 By Manager. Manager shall indemnify, defend and hold harmless
----------
Lessee and its Affiliates, and all of their officers, directors, employees,
agents, partners, shareholders and representatives, from and against any and all
suits, actions, liabilities, investigations, legal proceedings, claims, demands,
losses, costs and expenses of whatsoever kind or character (including attorneys'
fees and expenses) arising out of any actions by Manager, its officers,
directors or employees which are outside the scope of Manager's authority under
this Agreement, or actions or failures to act of Manager, its officers,
directors or employees, which in each case constitute gross negligence or
willful misconduct.
7.2 By Lessee. Lessee shall indemnify, defend and hold harmless Manager
---------
and its Affiliates, and all of their officers, directors, employees, agents,
partners, shareholders and representatives, from and against any and all suits,
actions, liabilities, investigations, legal proceedings, claims, demands,
losses, costs and expenses of whatsoever kind or character (including attorneys'
fees and expenses) arising out of the acts (or failures to act) of Lessee or of
Manager, its officers, directors and employees within the scope of Manager's
authority under this Agreement; and Manager, its officers, directors and
employees shall not be liable to Lessee or any other party for any obligation,
liability, or commitment incurred by or on behalf of Lessee, its officers or
employees as a result of any such acts (or failures to act); provided, however,
that Manager, its officers, directors and employees shall not be entitled to
indemnification hereunder for any action, claim, demand, cost or liability
resulting solely from their gross negligence or willful misconduct.
7.3 Other Claims. Except as otherwise provided in Sections 7.1 and 7.2,
------------
any and all claims, damages or causes of action against Lessee asserted by
anyone other than Manager arising out of the design, construction, supervision,
operation, maintenance and administration of the Project that are not covered by
insurance maintained pursuant to the Transaction Documents shall be settled, or
litigated and defended by Manager on behalf of Lessee at Lessee's expense in
accordance with Manager's reasonable judgment and discretion.
7.4 Indemnification Notices. Whenever a party entitled to
-----------------------
indemnification under Sections 7.1 or 7.2 of this Agreement ( an "Indemnitee")
shall learn of a claim which, if allowed (whether voluntarily or by a judicial
or quasi-judicial tribunal or agency), would entitle such Indemnitee to
indemnification under Section 7.1 or 7.2 of this Agreement, before paying the
same or agreeing thereto, the Indemnitee shall promptly send a notice to the
party required to pay such
-16-
indemnification (the "Indemnitor") in writing of all material facts within the
Indemnitee's knowledge with respect to such claim and the amount thereof;
provided, however, that the Indemnitee's right to indemnification shall be
diminished by the failure to give prompt notice only to the extent that the
Indemnitee's failure to give such notice was prejudicial to the right of the
Indemnitor. If, prior to the expiration of fifteen (15) days from the giving of
such notice, the Indemnitor shall request, in writing, that such claim not be
paid, the Indemnitee shall not pay the same, provided that the Indemnitor
proceed promptly to settle or litigate, in good faith, such claim. The
Indemnitee shall have the right to participate in any such negotiation,
settlement or litigation. The Indemnitee shall not be required to refrain from
paying any claim which has matured by a court judgment or decree, unless an
appeal is duly taken therefrom and execution thereof has been stayed, nor shall
it be required to refrain from paying any claim where the delay to pay such
claim would result in the foreclosure of a lien upon any of the property or
assets then held by the Indemnitee, or where any delay in payment would cause
the Indemnitee an economic loss.
--------------------------------
ARTICLE VIII
LIABILITIES OF THE PARTIES
--------------------------------
8.1 Limitations of Liability. Notwithstanding any provision in this
------------------------
Agreement to the contrary, neither party hereto, nor Its Affiliates, nor any of
their officers, directors, employees, agents, shareholders, partners or
representatives shall be liable in connection with this Agreement or the
Services for any consequential or indirect loss or damage, including loss of
revenues, cost of capital, loss of goodwill, increased operating costs or any
other special or incidental damages. Except as expressly provided in Section
7.1, Manager shall have no liability hereunder to Lessee for damages or other
amounts in connection with a breach by Manager of this Agreement or a failure by
Manager to perform the Services in accordance with the terms and conditions
hereof or as a result of the Services performed by Manager pursuant to this
Agreement; and, except as otherwise expressly provided in this Section, the
parties agree that Lessee's only remedy for breach of this Agreement by Manager
shall be to terminate this Agreement pursuant to and in accordance with Article
VI. The parties further agree that the waivers and disclaimers of liability,
indemnities, releases from liability, and limitations on liability expressed in
this Agreement shall survive termination or expiration of this Agreement, and
shall apply whether in contract, equity, tort or otherwise, even in the event of
the fault, negligence, including sole negligence, strict liability, or breach of
the party indemnified, released or whose liabilities are limited, and shall
extend to the partners, principals, shareholders, directors, officers, employees
and agents of each party and its Affiliates.
-17-
8.2 No Warranties or Guarantees. EXCEPT AS EXPRESSLY PROVIDED IN THIS
---------------------------
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTIES OR GUARANTEES TO THE OTHER, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO THE PROJECT OR ANY OTHER SUBJECT MATTER or
THIS AGREEMENT, AND BOTH PARTIES DISCLAIM AND WAIVE ANY IMPLIED WARRANTIES OR
WARRANTIES IMPOSED BY LAW.
--------------------------------
ARTICLE IX
MISCELLANEOUS PROVISIONS
--------------------------------
9.1 Documents. All Project materials and documents prepared or
---------
developed for Lessee by Manager or its Affiliates, employees, or representatives
in connection with the performance of the Services, including all records,
reports, and accounts, shall become, when prepared, the property of Lessor as
leased to Lessee pursuant to the Lease, and Manager shall not use such materials
and documents for any purpose other than the performance of the Services,
without Lessee's prior written approval. All such materials and documents,
together with any materials and documents furnished to Manager by Lessee, shall
be delivered to Lessee upon expiration or termination of this Agreement;
provided that Manager may retain copies for its own files. In the event Manager
wishes to dispose of such materials and documents prior to the expiration or
termination of this Agreement, Manager shall advise Lessee, and Lessee shall
designate to Manager a place for delivery of such materials to Lessee.
9.2 Assignment. This Agreement shall not be assignable by either party
----------
without the prior written consent of the other party hereto, which consent shall
not be unreasonably, except that: (i) this Agreement may be assigned without
such consent to Lender as security for Lender's financing of the Project; (ii)
this Agreement may be assigned by Lessor to Lessee without such consent; (iii)
this Agreement may be assigned without such consent to the successor of either
party, or to a person acquiring all or a controlling interest in the business
assets of such party or to a wholly-owned subsidiary of such party; and (iv)
this Agreement may be assigned by Manager to an Affiliate of Manager or of
Lessor without such consent; provided that any such assignment under (i) or
(iii) shall not relieve the assigning party of any of its obligations under this
Agreement. Manager agrees to execute any consent to assignment and such other
documents in connection with any assignment to the Lender as Lender may request.
Except with respect to the assignment permitted under clause (i) of this
Section, no assignment by either party of this Agreement for any purpose
whatsoever shall be valid until all obligations of the assignor hereunder shall
have been assumed by the assignee by written agreement delivered to the other
party. This Agreement shall be binding upon and inure to the benefit of the
parties
-18-
hereto and their successors and permitted assigns. Any assignment which
does not comply with the provisions of this Section 9.2 shall be null and void.
9.3 Independent Contractor. Manager shall be an independent contractor
----------------------
with respect to the performance of the Services hereunder. Neither Manager nor
its employees or other agents employed in the Services shall be deemed to be
agents of Lessee, except to the extent of the agency created hereunder pursuant
to the authority granted to Manager under Article II.
9.4 Force Majeure. A delay in or failure of performance hereunder by
-------------
either party shall be excused to the extent caused by Force Majeure, with the
exception of payment obligations. For purposes hereof, "Force Majeure" shall
mean occurrences beyond the reasonable control of the party affected, including
acts of God, changes of law, strikes, and labor disputes. The foregoing
provisions allowing a party to claim excuse due to Force Majeure shall not
relieve such party from using its best efforts to overcome or remove such Force
Majeure. A party claiming such failure or delay shall give prompt notice thereof
to the other party, together with a description of such efforts to overcome the
Force Majeure.
9.5 Amendments. No amendments or modifications of this Agreement shall
----------
be valid unless evidenced in writing and signed by duly authorized
representatives of both the parties.
9.6 Survival. Notwithstanding any provisions herein to the contrary,
--------
the provisions set forth in Articles VI, VII and VIII shall survive in full
force the expiration or termination of this Agreement.
9.7 Non Waiver. It is understood and agreed that any delay, waiver or
----------
omission by Lessee or Manager to exercise any right or power arising from any
breach or default by Lessee or Manager with respect to any of the terms,
provisions or covenants of this Agreement shall not be construed to be a waiver
by Lessee or Manager of any subsequent breach or default of the same or other
terms, provisions or covenants on the part of Lessee or Manager.
9.8 Notices. Any written notice, direction, instruction, request or
-------
other communication required or permitted under this Agreement shall be deemed
to have been duly given on the date of receipt, and shall be either served
personally or by telefacsimile to the party to whom notices is to be given, or
mailed to the party to whom notices is to be given, by first class registered or
certified mail, return receipt requested, postage prepaid, and addressed to the
addressee at the address stated opposite its name below, or at the most recent
address specified
-19-
by written notice given to the other party in the manner provided in this
Section 9.8.
Lessor: Scrubgrass Generating Company, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Lessee: Buzzard Power Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Manager: PG&E-Bechtel Generating Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9.9 Counterparts. The parties may execute this Agreement in two or more
------------
counterparts, which shall, in the aggregate, be signed by both the parties, and
each counterpart shall be deemed an original instrument as against any party who
has signed it.
9.10 Governing Law. This Agreement shall be governed by the laws of the
-------------
Commonwealth of Pennsylvania.
9.11 Partial Invalidity. If any term, provision, covenant, or condition
------------------
of this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the rest of this Agreement shall remain in full force
and effect and in no way be affected, impaired, or invalidated.
9.12 Captions: Table of Contents. Titles or captions of Sections and
---------------------------
Articles contained in this Agreement are inserted only as a matter of
convenience and for reference, and in no way define, limit, extend, describe or
otherwise affect the scope or meaning of this Agreement or the intent of any
provision hereof as though fully set forth herein.
9.13 Not for Benefit of Third Parties. Except as otherwise expressly
--------------------------------
provided herein, this Agreement and each and every provision thereof is for the
exclusive benefit of Lessor, Lessee and Manager and is not for the benefit of
any third party.
-20-
9.14 Disputes. The parties shall use their best efforts to resolve any
--------
disputes arising hereunder through consultation between the Lessee
Representative and the Manager Representative. In the event such individuals
cannot reach agreement within a reasonable period, not to exceed ten (10) days,
either party may refer the matter to the Advisory Committee for consideration at
a special meeting called in accordance with Section 4.2.3. The parties hereby
agree that they shall not take any further action, or invoke any further
remedies hereunder, in the event of a dispute without first submitting the
matter to the Advisory Committee in accordance with the foregoing and allowing
the Advisory Committee the opportunity to attempt to achieve a resolution.
9.15 Representations and Warranties. Each party represents and warrants
------------------------------
to the other party that: (i) such party has the full power and authority to
execute, deliver and perform this Agreement and to carry out the transactions
contemplated hereby; (ii) the execution and delivery of this Agreement by such
party and the carrying out by such party of the transactions contemplated hereby
have been duly authorized by all requisite corporate (or, if applicable,
partnership) action, and this Agreement has been duly executed and delivered by
such party and constitutes the legal, valid and binding obligation of such party
enforceable against such party in accordance with the terms hereof, subject, as
to the enforceability of remedies, to limitations imposed by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditor's rights generally and to general
principles of equity; (iii) no authorization, consent, approval or order of,
notice to or registration, qualification, declaration of filing with, any
governmental authority, is required for the execution, delivery and performance
by such party of this Agreement or the carrying out by such party of the
transactions contemplated hereby, other than regulatory and similar approvals
needed with respect to the operation of the Project; and (iv) none of the
execution, delivery and performance by such party of this Agreement, the
compliance with the terms and provisions hereof, and the carrying out of the
transactions contemplated hereby, conflicts or will conflict with or result in a
breach of violation of any of the terms, conditions, or provisions of any law,
governmental rule or regulation or the charter documents (or partnership
agreement, if applicable) as amended or by-laws, as amended, of such party or
any applicable order, writ, injunction judgment or decree of any court or
governmental authority against such party or by which it or any of its
properties is bound, or any loan agreement indenture, mortgage, bond, note,
resolution, contract or other agreement or instrument to which such party is a
party or by which it or any of its properties is bound, or constitutes or will
constitute a default thereunder or will result in the imposition of any lien
upon any of its properties.
-21-
IN WITNESS WHEREOF, the parties have executed this Management Services
Agreement through their duly authorized officers as of the date set forth in the
Preamble to this Agreement.
LESSOR:
SCRUBGRASS GENERATING COMPANY, L.P.,
a Delaware limited partnership
By: Falcon Power Corporation,
a general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Attorney-in-Fact
---------------------------------
By: Pine Power Corporation,
a general partner
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
MANAGER:
PG&E-BECHTEL GENERATING COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
AGREED TO AND ACCEPTED AS OF THIS 28th DAY OF DECEMBER, 1990:
LESSEE:
BUZZARD POWER CORPORATION
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
-22-
EXHIBIT B
MANAGEMENT SERVICES AGREEMENT
MANAGEMENT PLAN
---------------
FOR THE
-------
SCRUBGRASS COGENERATION PROJECT
-------------------------------
PG&E - BECHTEL GENERATING COMPANY
December 15, 1990
C:4499A
SCRUBGRASS COGENERATION PROJECT
MANAGEMENT PLAN
---------------
Overview
--------
The Scrubgrass Cogeneration Project ("Project") will be managed during
the operating period by a team of experienced professionals from PG&E-Bechtel
Generating Company (the "Manager") under the Management Services Agreement,
which will be assigned to the Project Lessee. During the construction period,
Manager also will provide Project management services, but such services will be
performed under a separate management arrangement directly with the Project
Lessor. The Project includes a bituminous waste coal-fired cogeneration plant
("Plant") with a net electrical output of approximately 80 megawatts, a 14.6
mile long 115 KV transmission line ("T-line") that connects the Plant with the
utility substation and a 12 acre glass enclosed greenhouse ("Greenhouse")
located adjacent to the Plant. The operation and maintenance ("O&M") of the
Plant will be provided by ▇▇▇▇▇▇▇ Corporation ("Plant Operator") under a Plant
O&M contract with the Project Lessor, which will be assigned to the Project
Lessee. The Greenhouse will be leased to a greenhouse operator (the "Greenhouse
Operator") yet to be selected.
The professional management team will consist of a General Manager with
appropriate legal and accounting support personnel located at the Generating
Company headquarters in Bethesda and a Site Manager, Fuel Coordinator and
Project Accountant located at the Project site. The General Manager and the
legal and accounting support will not spend full time on the Project but they
will devote whatever time is needed to fulfill their Project roles. The Site
Manager, Fuel Coordinator and Project Accountant will be dedicated full time to
the Project.
Manager's responsibilities will include:
- Management team staffing
- Power purchase agreement contract administration
- Steam sales agreement and other greenhouse contract
administration
- O&M contract administration
- Waste coal supply contract administration
- Hauling contract administration
- Limestone supply contract administration
- Permit applications and renewals
- Administration of contracts dealing with waste removal
- Public relations and community affairs
- Financial reporting
▇-▇ C:4499A
Management Structure and Responsibilities
-----------------------------------------
The General Manager will have management responsibility for the Project
and will report directly to the Project Lessee during the O&M phase. An
organizational chart depicting the management structure for the Project is given
on the following page.
The legal and accounting support personnel in Bethesda will report
directly to the General Manager and will be responsible for the legal matters
and financial reporting requirements of the Project.
On or before the Lease Commencement Date, Manager will assign a Site
Manager, a Fuel Coordinator and a Project Accountant as the permanent management
team representatives at the Project site. The Site Manager will be responsible
for overseeing all Project activities at the site and will report directly to
the General Manager. The Site Manager will be responsible for the day-to-day
management of the Plant Operator and all Project activities not included in the
scope of services of the Plant Operator and Greenhouse Operator, such as fuel
supply, limestone supply, ash disposal, waste removal, permit renewals and
community relations. In addition, the Site Manager will coordinate all Project
activities with the Plant Operator and Greenhouse Operator. The Fuel Coordinator
and Project Accountant will report directly to the Site Manager. The Fuel
Coordinator will be responsible for implementing and maintaining the fuel and
ash management plan. The Project Accountant will perform all the day-to-day
accounting and administrative functions of the Project.
The day-to-day management, operation, maintenance and repair of the
Plant will be the responsibility of the Plant Operator. The Plant Operator will
appoint a Plant O&M Manager who will be responsible for complete and proper
performance under the Plant O&M contract. The Plant O&M Manager will coordinate
the Plant O&M activities with the Site Manager but will report directly to the
General Manager.
The day-to-day management, operation, marketing and product sales of
the Greenhouse will be the responsibility of the Greenhouse Operator. The
Greenhouse Operator will appoint a Greenhouse Manager who will coordinate the
Greenhouse operations with the Site Manager.
Management Objectives
---------------------
The primary objective of managing the Plant Operator is to attempt to
ensure that the Plant is managed, operated, maintained and repaired in a safe,
reliable and efficient manner within the established budget and performance
targets. The budget and performance targets will be as established in the Plant
O&M contract. Conformance with the established targets will be the basis for any
bonuses (or penalties) paid to (or by) the Plant Operator. In addition to
reviewing and establishing
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targets for performance, the management team will be responsible for the
ultimate decisions concerning major maintenance and repair, capital
improvements, scheduling shutdowns and other activities outside the Plant
Operator's day-to-day responsibilities. Such decisions will be based on
recommendations of the Plant Operator and/or outside consultants if deemed
appropriate by the management team. The specific management responsibilities
with regard to the Greenhouse Operator are yet to be determined.
The Site Manager will work closely with the Plant O&M Manager and
Greenhouse Manager in coordinating all Project activities and in monitoring the
daily operation of the Plant and the Greenhouse. The Plant O&M Manager will be
responsible for the operation and maintenance of the Plant on a day-to-day basis
under the Plant O&M contract and all other applicable contracts, environmental
permits and other permits, codes and regulations. The Greenhouse Manager will be
responsible for the operation and maintenance of the Greenhouse. The Site
Manager will notify the Plant O&M Manager and the General Manager of any
deficiencies in the performance of the Plant Operator. The Site Manager will
advise the General Manager in matters related to Plant O&M, Greenhouse
operations and all other Project activities.
The management team will also manage all the Project activities for
which the Plant Operator and Greenhouse Operator are not directly responsible
and will coordinate these activities with the Plant Operator and Greenhouse
Operator. These activities include delivery of fuel and limestone to the Plant,
removal of ash and other solid wastes from the Plant, maintenance of the T-line,
keeping environmental and other permits and approvals current, conformance with
power purchase agreement and steam sales agreement requirements, community
relations, etc. Implementation and execution of the fuel and ash management plan
will be a responsibility of the management team and will be the focus of the
Fuel Coordinator.
Fuel and Ash Responsibilities
-----------------------------
The bituminous waste coal to be burned in the Plant boilers will come
from a variety of off-site sources. Some run-of-mine coal may also, from time to
time, be blended with waste coal at the Plant and burned in the Plant boilers.
The ash from the Plant will be taken to several off-site disposal (reclamation)
areas. Because of the complexities involved with fuel supply and ash disposal, a
fuel and ash management plan will be implemented to provide maximum protection
against interruptions in fuel deliveries or delivery of unacceptable fuel and to
make proper arrangements for disposal of ash. The division of responsibility for
fuel occurs at the fuel receiving ▇▇▇▇▇▇ (truck dump) of the Plant. The
Manager's management team, through the Site Manager, will be responsible for
monitoring delivery and unloading of acceptable fuel. Upon unloading into the
receiving hoppers, the blending, handling,
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storage, crushing and conveying of the fuel to the boilers will be the
responsibility of the Plant Operator. The Plant Operator is responsible for the
ash until it is loaded into the trucks, at which time it becomes the
responsibility of the Project.
Two types of bituminous waste fuel will be delivered to the plant:
coarse, lower moisture fuel and fine, higher moisture fuel. In order to qualify
as acceptable fuel, both types of fuel must conform with certain size, moisture
and grindability limits. In addition, the other properties of the fuels such as
sulfur content and heating value must be within a reasonable range such that, on
a blended basis, they fall within the "blended fuel range." Obtaining such a
"blended fuel range" shall be the responsibility of Manager. The size, moisture
and grindability limits as well as the "blended fuel range" specifications are
delineated in Exhibit E, Part II, Paragraph 4.3.2.1 of the Plant EPC contract.
Fuel Management Plan
--------------------
Manager shall prepare a complete fuel management plan as part of the
final Management Plan to be furnished by Manager pursuant to Section 2.4 of the
Management Services Agreement. The purpose of the fuel management plan is to
obtain specified quantities of acceptable fuel for the Plant. This will be
accomplished by extensive testing and planning prior to the fuel being loaded
at the individual supply sites. The fuel management plan will be specifically
designed to attempt to prevent unacceptable fuel from being loaded into the fuel
trucks. In general, the fuel management plan will consist of a three step
program:
1. Testing and planning
2. Reclaim and loading
3. Transport and delivery
The testing and planning step is an important part of the fuel
management program. The Fuel Coordinator will identify certain reserves of
bituminous waste coal (both coarse and fine material) that appear to be
desirable fuel feedstock based on prior analyses and economic considerations.
Additional tests will then be performed on the designated reserves as deemed
appropriate by the Fuel Coordinator (and as described under Fuel Sampling and
Testing) to confirm the sulfur, moisture, ash and Btu content and the available
tonnage. Based on an evaluation of the prior and new data on the reserves, the
Fuel Coordinator will develop a plan and schedule for reclaim and delivery of
the material. At the Fuel Coordinator's discretion, a fuel consultant may be
used to assist in interpreting data and developing the plan and schedule. In
some cases where the reserves are part of an on-going operation, the testing
data on the reserves may be provided by the coal operator. In all cases,
however, the plan and schedule for reclaim and delivery will be developed by the
Fuel Coordinator. The Fuel Coordinator will take into account seasonal weather
considerations in developing the plan and schedule. During periods of high
moisture and/or freezing weather, it may be advisable to utilize only coarse
material to avoid the handling problems caused by excessively wet fine coal. A
minimum of two
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weeks of fuel will be tested and ready for loading at each of the fuel sites.
The reclaiming and loading of the fuel into the trucks will be
performed under the overall direction of the Fuel Coordinator. Most of the
reserves to be used are part of on-going coal operations and will be reclaimed
and loaded by the coal operator. In other cases where the reserves are not part
of an on-going operation, a contractor will be used to reclaim and load the
fuel.
The transport and delivery of the fuel will be provided by a hauling
contractor under the overall direction of the Fuel Coordinator. The Fuel
Coordinator will schedule the deliveries so that the proper quantities of coarse
and fine material are received at the Plant. An on-site truck scale will be used
to determine weights of fuel delivered.
On-site fuel weighing and sampling will be designed to be an unattended
operation. The details of the fuel hauling, receiving, sampling, testing, and
reporting operation will be developed later in the start-up phase of the
Project. Basically. the operation will include an automatic logging capability
for the receipt and sampling of fuel by truckload. For example, each truck
driver might have issued to him, at the start of the day's hauling, a magnetic
card that identifies the driver, the truck number, and the source of fuel to be
hauled. When the driver approaches the truck scale, he would insert the card
into a magnetic card reader, then drive onto the scale. The weight would be
logged onto a computer together with the information read from the magnetic card
and the current date and time. After unloading, the empty truck would be
re-weighed in similar fashion to determine the weight of fuel delivered. If the
truck hauls ash back, the truck would be re-weighed after being loaded with ash.
The sampling of each truckload of fuel will be logged and reported in a
manner similar to the fuel weighing. The samples will be taken from the truck
bed with an augering device at an automatic sampling station. The truck driver's
magnetic card will again serve to identify the source of the fuel. The automatic
sampling station will be designed to divert the samples to a different bin for
each fuel source. Periodically, at least once each day, the material in each bin
will be consolidated into smaller samples for laboratory testing.
Fuel Sampling and Testing
-------------------------
The fuel for the Project includes a number of identified waste coal
sites which are in active production or have been abandoned. During the Project
construction phase, the abandoned waste coal piles will undergo a more extensive
sampling, drilling, and testing program by Lessor to augment the sampling and
testing already performed. The purpose of this program is to provide information
needed to finalize the fuel management plan. Tests to be performed will include
short proximate analyses, sieve analyses for determining size consistency, and
ultimate
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analyses of a portion of the samples. This testing will provide information
sufficient to accurately map the piles to permit efficient pile management
during the operation phase. Additional fuel sources may be identified during the
construction phase of the Project. These additional piles will also undergo
testing and may be included in the final fuel plan. Additional tests may be
performed by Lessor during the construction phase which may include flowability
tests, ▇▇▇▇▇▇▇▇▇ grindability tests and crushing tests to provide input data for
the final design and specification of fuel handling equipment.
During the operation phase, the Fuel Coordinator will continually
obtain fuel test data from all fuel sources in active production to confirm
expected quality for purposes of finalizing fuel planning. In general, short
proximate test data from each fuel source will be obtained at least every two
weeks and reported at least two weeks in advance of the uses of the fuel. Thus,
Manager will seek to maintain a two week tested reserve stockpile at each fuel
source. Loading of fuel into the trucks will be permitted only from the tested
reserve. Depending on the specific site, the actual sampling and testing will
either be performed by the fuel supplier or the loading contractor. Sampling and
testing responsibilities for each of the major fuel sources are briefly
described below.
Sky Haven - Sky Haven will have the responsibility to perform both
---------
sampling and testing of the two week tested reserve under its Waste Disposal
Agreement. Test results are required to be received by the Fuel Coordinator at
least two weeks prior to use of the fuel.
Leechburg - Sampling, testing and loading of the Leechburg fuel will be
---------
the responsibility of the loading contractor under the supervision of the Fuel
Coordinator.
▇▇▇▇▇▇▇▇ - Sampling, testing and loading of the ▇▇▇▇▇▇▇▇ fuel will be
--------
the responsibility of the loading contractor under the supervision of the Fuel
Coordinator.
Canterbury - Loading of fuel at Canterbury Pile Number 5 will be the
----------
responsibility of Canterbury. Canterbury will provide the Fuel Coordinator with
a removal plan that indicates the sequence of fuel removal from the pile.
Sampling and testing of the pile will be performed by a professional testing
laboratory under contract with the Lessee. The lab consultant will have full
access to the pile to perform the sampling and testing operations. Sampling and
testing will be performed ahead of the loading operation to confirm the expected
fuel quality. The Fuel Coordinator also has the option to load fuel from the
Canterbury refuse bin, located adjacent to the coal washing plant and prior to
Pile Number 5. The lab consultant will have access to the refuse belt and bin to
allow testing prior to loadout from the bin. The decision to load from the
refuse bin will be made based on the results of recent testing, coordination
with the washing plant operator, and observations of the field fuel consultant.
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Ash Disposal
------------
The Pennsylvania Department of Environmental Resources (DER) has
granted the Project a Beneficial Use Designation for its ash, which permits it
to be used as a substitute for high pH lime in mine reclamation.
Ash will be returned to the fuel sites on a backhaul basis by the
hauling contractor. Any ash not returned to fuel sites will be brought to
alternate ash disposal sites by the hauling contractor. Approximately 70 to 75
percent of the ash is expected to be returned to the fuel sites. The remaining
25 to 30 percent of the ash is expected to be disposed of at alternate sites.
The hauling contractor will deliver ash to the alternate sites while en-route to
the fuel site, with payment on a per-mile basis for any increase in return
mileage. Management of the ash disposal operation will be performed by the Fuel
Coordinator.
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Preliminary Estimated Budget for Project Management
(in 1990 dollars)
Management Costs (Section 5.1 of Agreement): ($000)
-------------------------------------------- ------
General Manager (Bethesda) 75
Legal and Accounting Support (Bethesda) 35
Site Manager (Site) 90
Fuel Manager (Site) 70
Project Accountant (Site) 50
Secretary/Clerk 30
-----
350
Other Lessee Costs (Section 5.3 of Agreement):
----------------------------------------------
Fuel Testing and Consultants 100
Miscellaneous Expenses 50
-----
150
Total Estimated Annual Budget 500
-----
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