OPERATION AND MAINTENANCE AGREEMENT
BETWEEN
ORMESA, LLC
AND
ORMAT NEVADA INC.
ORMESA PROJECTS
USA
Operation and Maintenance Agreement - Ormesa Plants
TABLE OF CONTENTS
SECTION 1 - DEFINITIONS AND RULES OF INTERPRETATION............................2
SECTION 2 - WORK SCOPE.........................................................7
SECTION 3 - RESPONSIBILITIES AND RIGHTS OF OWNER..............................12
SECTION 4 - PAYMENTS..........................................................16
SECTION 5 - BILLING...........................................................19
SECTION 6 - FORCE MAJEURE.....................................................20
SECTION 7 - ENVIRONMENTAL RESPONSIBILITIES....................................22
SECTION 8 - TERM AND TERMINATION..............................................24
SECTION 9 - INDEMNIFICATION...................................................26
SECTION 10 - LIMITATION OF LIABILITY..........................................29
SECTION 11 - INSURANCE........................................................30
SECTION 12 - ASSIGNMENT.......................................................32
SECTION 13 - REPRESENTATIONS, WARRANTIES AND FURTHER COVENANTS................32
SECTION 14 - SUBCONTRACTORS...................................................35
SECTION 15 - MISCELLANEOUS....................................................35
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Operation and Maintenance Agreement - Ormesa Plants
APPENDICES
ANNEX A - List of Geothermal Leases, Rights of Way and Site Licenses
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Operation and Maintenance Agreement - Ormesa Plants
OPERATION AND MAINTENANCE AGREEMENT
This OPERATION AND MAINTENANCE AGREEMENT is made and entered into as of
this 15th day of April, 2002, by and between:
ORMESA LLC, a limited liability company incorporated in the State of
Delaware, USA, with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, ▇▇▇
("Owner")
- and -
ORMAT NEVADA INC., a corporation incorporated in the State of Delaware,
USA, with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, ▇▇▇
("Operator").
Each such entity may be individually referred to herein as a "Party" and
both such entities may be collectively referred to herein as the "Parties".
WHEREAS, Owner owns and operates six geothermal power plants, namely Ormesa
I, Ormesa IE and Ormesa IH, of a total aggregate 38MW nominal net capacity;
Ormesa II, of a total nominal net capacity of 18.5MW; and GEM 2 and GEM 3, of a
combined nominal net capacity of 34MW;
WHEREAS, Owner sells electricity produced by the aforementioned power
plants to Southern California Edison Company pursuant to certain long term power
purchase agreements (specifically, the Power Purchase Agreement between Owner
(as assignee of Ormesa Geothermal, which in turn was the assignee of Ormat
Systems, Inc., which in turn was the assignee of Republic Geothermal, Inc.) and
Southern California Edison Company as of July 18, 1984, as subsequently amended
on December 23, 1988 and again on June 19, 2001, and the Power Purchase
Agreement between Owner (as assignee of Ormesa Geothermal II, which in turn was
the assignee of Ormat Systems, Inc.) and Southern California Edison Company as
of June
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Operation and Maintenance Agreement - Ormesa Plants
13, 1984, as subsequently amended on June 19, 2001 (together, the "Power
Purchase Agreements")); and
WHEREAS, the operation and maintenance of the aforementioned power plants
and associated ▇▇▇▇▇ will be undertaken by the Operator upon such terms and
conditions as agreed between the Operator and Owner;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties, intending to be legally bound, hereby
agree as follows:
SECTION 1 - DEFINITIONS AND RULES OF INTERPRETATION
1.1 As used in this Agreement the following capitalized terms shall have
the meanings set forth below. All references herein to agreements and other
contractual instruments shall be deemed to include all exhibits and appendices
attached thereto and all amendments and other modifications to such agreements
and instruments.
Affiliate: With respect to any Party hereto, any entity that directly
or indirectly: (a) owns or controls such Party, (b) is owned or controlled by
such Party, or, (c) is under common ownership or control with such party. For
purposes of this definition, "control" shall mean the power to direct the
management or policies of such entity, whether through the ownership of voting
securities, by contract or otherwise. For the purpose of this Agreement, Owner
and Operator shall not be deemed to be Affiliates of each other.
Applicable Law: All U.S. federal and California state laws, rules,
regulations, orders and interpretations thereof of any national, municipal,
regional, environmental or other governmental body, instrumentality, agency,
authority, court or other body, in each case to the
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Operation and Maintenance Agreement - Ormesa Plants
extent the same has jurisdiction over Operator in connection with its
performance under this Agreement, or over the Plants or the ▇▇▇▇▇.
Authorizations: Any approval, consent, license, permit, authorization
or other permissions granted by an authorized governmental authority, in each
case to the extent the same has jurisdiction over the Plants or the ▇▇▇▇▇,
including their operation, the transmission or sale of electricity, or the
performance of Owner and Operator under this Agreement.
Bankruptcy: The occurrence of any of the following events: (a) the
passing of a resolution by the shareholders of the Owner or of the Operator for
the winding up of the Owner or the Operator, as appropriate; (b) the admission
in writing by the Owner or the Operator, as appropriate, of its general
inability to pay its debts as they become due; (c) the appointment of a
provisional manager, trustee or liquidator in a winding up proceeding after
notice to the Owner or the Operator, as appropriate, which has not been removed
or dismissed within 60 (sixty) days of the date of such appointment; or (d) the
making by a court of competent jurisdiction of an order winding up the Owner or
the Operator, as appropriate, which has not been stayed or vacated within 60
(sixty) days of the date of such order.
Confidential Information: Shall have the meaning set forth in Section
15.12.
Effective Date: April 15, 2002.
Emergency Management Powers: Shall have the meaning set forth in
Section 2.4.
Extraordinary Operation Expenses: The extraordinary expenses of
operation and maintenance of the Plants and ▇▇▇▇▇ for which Operator shall be
reimbursed by Owner, as provided in Section 4.1.2, including the ▇▇▇▇-up as
provided in Section 4.1.2.
Force Majeure: Shall have the meaning set forth in Section 6.1.
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Operation and Maintenance Agreement - Ormesa Plants
Geothermal Fluid: The geothermal steam (including other gases) and hot
brine to be supplied to Operator by Owner.
Leases: The geothermal resources leases, site licenses and rights of
way granted by the Bureau of Land Management of the United States Department of
Interior and held by Owner or Owner's subsidiaries, as further identified in
Annex A attached hereto.
IID: Imperial Irrigation District.
Indemnitee: Shall have the meaning set forth in Section 9.3.
Indemnitor: Shall have the meaning set forth in Section 9.3.
Injectate: The condensed steam, geothermal brine, cooling tower blow
down water or mixture of the above, to be received from Operator by Owner for
reinjection.
Lender(s): Any entity or entities providing construction or permanent
debt financing for the Plants, any trustee or agent acting on behalf of any such
entity or entities, and any successor or permitted assign of any such entity.
Major Corrective Maintenance Work: Corrective maintenance work which
needs to be performed pursuant to a failure of a major piece of equipment, that
was not a result of normal wear and tear, or Operator gross negligence or
willful misconduct, provided, however, that the use or replacement of
consumables in ordinary amounts is not a Major Corrective Maintenance Work.
Operation Fee: The fixed fee which Owner shall pay to Operator
throughout the Term for operation of the Plants and ▇▇▇▇▇, as provided in
Section 4.1.1.
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Operation and Maintenance Agreement - Ormesa Plants
Operator's Invoice: A written document provided by Operator to Owner
on a monthly basis requesting payment of the Plants Operation Fee, Extraordinary
Operation Expenses and other costs and expenses payable to Operator hereunder.
Plants: The following geothermal power plants located at East Mesa in
Imperial County, State of California, USA: (i) Ormesa I, Ormesa IE and Ormesa
IH, producing electricity utilizing 50 modular Ormat Energy Converters ("OECs"),
employing Ormat's binary technology of a total aggregate 38MW nominal net
capacity, (ii) Ormesa II, producing electricity through 20 OECs, employing
Ormat's binary technology, of a total nominal net capacity of 18.5MW, and (iii)
GEM 2 and GEM 3, of a combined nominal net capacity of 34MW, both plants (a)
being of double flash design, (b) including steam turbines and condensers,
geothermal fluid separators, geothermal fluid collecting tanks, cooling towers,
a brine pond, pumps, pipes and associated control equipment and (c) designed to
operate independently and currently configured to each operate at a nominal net
output level of 20.5MW, including the associated geothermal and sweet water
piping and carrying systems and reinjection pumping stations of all the Plants.
Plant Connection Agreements: Shall mean the Plant Connection
Agreements for each of the Plants, under which IID interconnects the Plants to
IID's electrical system, accepts the net electrical output at the point of
delivery and delivers an equal amount of electric energy to Southern California
Edison Company system at IID/Southern California Edison Company point(s) of
interconnection.
Plants Manager: Operator's representative for the Plants, who shall be
Operator's single point of contact with Owner in respect of this Agreement and
shall have the requisite level of skill to supervise the performance of
Operator's services hereunder and is authorized to direct the performance of the
Work by Operator.
Power Purchase Agreements: Shall have the meaning described in the
Preamble
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Operation and Maintenance Agreement - Ormesa Plants
of this Agreement.
Quarterly Operations Report: The quarterly report from Operator to
Owner describing Operator's activities at the Plants and ▇▇▇▇▇, as described in
Section 2.1.13.
Term: The period defined in Section 8.1.
United States Dollars, US Dollars or USD: The lawful currency of the
United States of America.
▇▇▇▇▇: All geothermal and sweet water ▇▇▇▇▇ (whether used for
production, injection or monitoring) located on land held subject to the Leases.
Work: Shall mean those specific items which Operator agrees to perform
during the Term, as set forth in Section 2.1.
Year: The period from January 1 to December 31 inclusive, provided,
however, that the first Year of the Term shall commence upon the Effective Date,
and the last Year of the Term shall end upon the date which is the last day of
the Term of this Agreement.
1.2 Terms defined in a given number, tense or form shall have the
corresponding meaning when used in this Agreement with initial capitals in
another number, tense or form. Except as otherwise expressly noted, reference to
specific Sections, subsections, appendices and exhibits are references to such
provisions of or attachments to this Agreement. References containing terms such
as "hereof", "herein", "hereto", "hereinafter", and other terms of like import
are not limited in applicability to the specific provision within which such
references are set forth but instead refer to this Agreement taken as a whole.
1.3 This Agreement together with the Annexes attached hereto shall be
construed as a
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Operation and Maintenance Agreement - Ormesa Plants
whole, and such Annexes shall be part of this Agreement. In the event of any
conflict or inconsistency between the text of Sections 1 through 15 of this
Agreement and any of the Annexes, the text of Sections 1 through 15 hereof shall
govern.
SECTION 2 - WORK SCOPE
2.1 Work
During the Term, Operator shall perform the following obligations
and provide the following work and services:
2.1.1 Designate or cause to be designated a qualified Plants
Manager, who shall be responsible to supervise and direct the performance of the
Operator hereunder.
2.1.2 Obtain and maintain the insurance policies set forth in
Section 11.1 hereto.
2.1.3 At Owner's cost and expense, obtain and maintain all
required Authorizations to be maintained by Owner and Operator.
2.1.4 Directly or indirectly employ and train personnel who will
be qualified and experienced to operate and maintain the Plants and ▇▇▇▇▇ and to
coordinate operation of the Plants as required under the Power Purchase
Agreements and the Plant Connection Agreements. Operator shall have the right to
dismiss any of such personnel, and shall hire suitable replacement personnel.
Operator shall replace any of its personnel to whom
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Operation and Maintenance Agreement - Ormesa Plants
Owner reasonably objects on grounds of his/her creating a risk of
non-performance by Operator of its obligations under this Agreement or otherwise
creating a disruption.
2.1.5 Maintain at the Plants accurate and up-to-date operating
logs and records regarding the operation and maintenance of the Plants, which
shall detail, among other things, power output, other operating data, repairs
performed and status of equipment as well as any information that may be
reasonably required by Owner.
2.1.6 Implement and regularly update an equipment repair and
preventive maintenance program that meets the specifications of the equipment
manufacturers and operation and maintenance manuals.
2.1.7 Act in accordance with Owner's or Owner's designated
experts' specific instructions (including but not limited to drilling programs
specifying Well location, casing to be used, depth to be drilled, drilling rig
standards, amount of materials required and standards for completion) with
respect to the geothermal and steam field and the drilling of new ▇▇▇▇▇, and
clean out, redrilling and reworking of existing ▇▇▇▇▇, and provide all technical
support and other services reasonable and necessary for operation and
maintenance of the Plants and ▇▇▇▇▇.
2.1.8 Provide reasonable safety and security measures for the
Plants and ▇▇▇▇▇ and the Plants' and ▇▇▇▇▇' sites, including any necessary or
desirable special safety gear for personnel.
2.1.9 Recommend modifications, capital repairs, replacements and
improvements for the Plants.
2.1.10 Coordinate and implement all manufacturers' requirements
for plant equipment operation and diligently pursue warranty claims.
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Operation and Maintenance Agreement - Ormesa Plants
2.1.11 Endeavor to maintain good community relations.
2.1.12 Produce Plant data in the proper formats that are
necessary for reporting to any authorized US governmental authority for purposes
of obtaining and maintaining Authorizations, including regarding reporting
requirements under applicable environmental compliance Authorizations.
2.1.13 Provide written Quarterly Operations Reports to Owner,
which include: (i) technical performance of the Plants and ▇▇▇▇▇, including
production, (ii) an accident incident report, (iii) safety and environmental
compliance status, (iv) equipment operational status, (v) a summary of all major
maintenance performed in the preceding quarter and that planned for the coming
quarter, including a summary of Major Corrective Maintenance Work performed in
the preceding quarter, and (vi) any other known conditions which may adversely
affect the technical or financial performance of the Plants and ▇▇▇▇▇.
2.1.14 Prepare and submit to Owner at least 60 (sixty) days prior
to the commencement of each Year of the Term, a proposed operating plan and
budget for the next Year.
The proposed operating plan and budget shall describe
anticipated Extraordinary Operation Expenses, including a monthly breakdown of
the same. The proposed operating plan and budget shall be subject to Owner's
review, comments and approval within 30 (thirty) days after receiving the
proposed plan and budget. Without limiting the foregoing, Owner shall have the
right to require changes to such proposed plan and budget only to the extent it
is not in accordance with prudent operating practice and manufacturers' and
systems' designers' specifications. Owner's approval or failure to approve the
proposed budget shall not derogate from Operator's obligations under this
Agreement.
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Operation and Maintenance Agreement - Ormesa Plants
If, upon the commencement of any Year any dispute of the
proposed plan and budget remains unresolved, a stand-by plan and budget in an
amount equivalent to the previous Year's plan and budget plus 3% (three percent)
shall be applied to the upcoming Year, pending resolution of the proposed
dispute. Upon resolution of the dispute, retroactive adjustments will be made to
reflect the implementation of the final plan and budget as of the beginning of
the relevant Year.
2.1.15 Keep and maintain complete and accurate records of any
costs and expenses incurred (including in connection with the drilling of ▇▇▇▇▇)
which are to be reimbursed by Owner in accordance with sound and generally
accepted accounting principles consistently applied. Owner, at its cost and
expense, shall have access to all such records for examination, copying and
audit as reasonably requested from time to time.
2.1.16 Accept the Geothermal Fluid and sweet water supplied by
Owner in accordance with Section 3.1.7, and provide Injectate of the Plants to
Owner at the uppermost wellhead master flange of each injection Well.
2.1.17 Except as otherwise provided herein, fulfill all
administrative functions and requirements in connection with running the Plants
and ▇▇▇▇▇ including, without limitation, those required under relevant law, the
Power Purchase Agreements and the Plant Connection Agreements.
2.2 Standard of Care
Operator shall perform the Work in a prudent and efficient manner and
in accordance with (i) prudent operating practice, including Owner instructions
of complying standard, (ii) manufacturers' and systems designers' specifications
and operation and maintenance manuals, (iii) Applicable Law in effect at the
time of Operator's performance, (iv) the relevant Authorizations, and (v) the
requirements of the Power Purchase Agreements, the
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Operation and Maintenance Agreement - Ormesa Plants
Plant Connection Agreements and this Agreement. In addition, Operator shall
perform the Work so as to (a) ensure that the Plants and ▇▇▇▇▇ shall be kept in
good condition, ordinary wear and tear excepted, and (b) operate the Plants and
▇▇▇▇▇ in such a manner that they shall comply with all safety and other
requirements of insurance policies in effect with respect to the Plants and
▇▇▇▇▇. Operator shall use reasonable and practical efforts (x) to maximize
Plants' energy and capacity output, (y) to minimize Plants' downtime, and (z) to
keep in full force and effect any warranties with respect to the Plants.
2.3 Results of Operator Non Compliance
If Owner directs Operator to correct Work due to non-compliance with
any of the standards set forth in Section 2.2 above, and Operator fails to
comply in a timely manner despite Owner notice and a reasonable cure period,
Owner shall be entitled to correct the noncompliance defect and offset the
reasonable, incurred direct cost from fees payable to Operator under this
Agreement.
2.4 Major Corrective Maintenance Work
As soon as the need for Major Corrective Maintenance Work arises,
Operator shall submit to Owner a request to approve a Major Corrective
Maintenance Work. The request will provide Owner with details of the failure,
method of repair, cost estimate and time estimate of the repair work. Upon
approval of Owner, Operator will carry out the actions necessary to correct the
failure. Operator, at its own expense, shall make or cause to be made all
repairs caused by its gross negligence or willful misconduct or failure to
comply with its obligations under this Agreement.
If Owner does not reply or raise reasonable objections to Operator's
request for a Major Corrective Maintenance Work within 10 (ten) days from the
time of the transmittal of such request, Operator shall perform such Major
Corrective Maintenance Work as Operator
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Operation and Maintenance Agreement - Ormesa Plants
reasonably determines is necessary in accordance with prudent operating
practice, at Owner's expense as provided in Section 4.1.2.
Notwithstanding the foregoing, the performance by Operator of Major
Corrective Maintenance Work, the cost of which is less than $10,000 (Ten
Thousand United States Dollars) per event, shall not require prior approval of
Owner.
2.5 Emergency Management Powers
Operator shall exercise emergency management powers in respect of any
aspect of the operation and maintenance of the Plants and ▇▇▇▇▇ to take such
action as a prudent Operator or Owner of the Plants and ▇▇▇▇▇ would normally
take in the circumstances (the "Emergency Management Powers"); and such action
shall not require prior approval of Owner, provided that (i) Operator reasonably
believes that immediate action is necessary to safeguard life or property or to
prevent or minimize an interruption in the production of electric energy by the
Plants or the performance of the ▇▇▇▇▇, and (ii) Operator is unable due to
events beyond its control or, acting reasonably, determines that it is
impractical to obtain Owner's prior written approval for the performance of a
Major Corrective Maintenance Work, as the case may be. Upon the exercise of the
Emergency Management Powers, Operator shall forthwith notify Owner in writing of
the nature of the Emergency Management Powers exercised by it, and the reasons
for exercising the Emergency Management Powers.
SECTION 3 - RESPONSIBILITIES AND RIGHTS OF OWNER
3.1 Owner's Responsibilities
At all times throughout the Term, Owner shall be responsible for the
following activities, each to be at Owner's expense unless otherwise expressly
provided herein.
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Operation and Maintenance Agreement - Ormesa Plants
3.1.1 Make payments to Operator in accordance with Sections 4 and 5 of
this Agreement, and pay (or, as the case may be, reimburse Operator for) on a
timely basis, in addition to other costs and expenses payable or refundable by
Owner hereunder, (i) all utility costs payable to IID, including, without
limitation, costs and fees associated with the supply of canal water and sweet
water, demand charge services, wheeling, and scheduling of electricity, and (ii)
all costs and expenses in connection with obtaining, renewing and keeping in
force (a) the Authorizations and (b) the insurance coverage contemplated in
Section 11.1.1.3.
3.1.2 Arrange for the sale of power generated by the Plants and for
the billing and collection of revenues therefrom.
3.1.3 Provide Operator free access to, and usage of, the Plants and
▇▇▇▇▇ on a continuing and uninterrupted basis and furnish such offices, storage
and maintenance facilities as are in Owner's possession at the Effective Date
and as may be subsequently acquired by Owner for this purpose during the Term.
Where necessary, office space at the Plants shall be provided for Owner
representative's use.
3.1.4 Provide all drawings, specifications, diagrams and other
information Owner received from its consultants, suppliers or subcontractors or
which are otherwise in its possession regarding the design and construction of
the Plants and ▇▇▇▇▇ required for the operation and maintenance of the Plants
and ▇▇▇▇▇.
3.1.5 Provide such assistance as Operator may reasonably require in
connection with obtaining, renewing and keeping in force the Authorizations.
3.1.6 Maintain or cause its subsidiaries to maintain in effect (and
pay on a timely basis all rents, royalties, costs, expenses and monies owing to
the Bureau of Land Management and/or the Minerals Management Service of the
United States Department of the
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Interior, under or in connection with) all real property ownership, site
licenses, easements, rights of way, rights to the geothermal reservoir, ▇▇▇▇▇
and fluid usage and exploitation rights and associated project assets,
including, without limitation, the Leases, all as necessary for continuous
operation of the Plants and ▇▇▇▇▇, and provide or cause its subsidiaries to
provide full, continuous and uninterrupted access and usage rights to Operator
of the same.
3.1.7 Provide Operator all available Geothermal Fluid at the discharge
flange of the production pump of each geothermal production Well and, where
sufficient canal water is unavailable, provide Operator all available sweet
water at the discharge flange of the production pump of each sweet water
production Well, and accept all Injectate of the Plants at the uppermost
wellhead master flange of each injection Well and reinject such Injectate in
accordance with Applicable Law.
3.1.8 The Parties recognize that electricity for operation of the
Plants' auxiliaries is supplied by the Plants. If Owner decides to supply such
electricity from an alternative source, such as the IID, Owner shall bear all
costs and expenses associated with such purchase and supply.
3.1.9 Supply, or arrange for the supply of, canal water, demand charge
services, wheeling and services for the scheduling of electricity throughout the
Term, as required by Operator for the performance of its obligations hereunder.
3.1.10 Review in accordance with the periods specified herein, and if
not specified, in a timely fashion, and not unreasonably withhold its approval
of all items submitted by Operator to Owner for approval.
3.1.11 Owner shall be responsible to ensure that all transmission
facilities for the Plants are maintained for the interconnection of the Plants
at the points of interconnection described in the Plant Connection Agreements
throughout the Term so that they will be sufficient
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Operation and Maintenance Agreement - Ormesa Plants
for the testing and operation of the Plants, as required under the Power
Purchase Agreements.
3.1.12 Provide Operator with the tools, equipment, vehicles, initial
stock of spare parts, consumables and other items available on the date hereof.
3.1.13 Designate an Owner representative who shall act as a single
point of contact with Operator in all matters in respect of this Agreement on
behalf of Owner. Owner shall, or shall cause its designated expert to, issue
specific instructions (which at Operator's request, shall be in writing) with
respect to the geothermal and steam field associated with the Plants, including
with regard to the drilling of new ▇▇▇▇▇, and clean out, redrilling and
reworking of existing ▇▇▇▇▇.
3.1.14 Diligently enforce and refrain from waiver of any of its rights
under the Power Purchase Agreements and the Plant Connection Agreements, and
diligently pursue any claims to which it is entitled under the Power Purchase
Agreements and the Plant Connection Agreements.
3.1.15 Owner shall perform and shall ensure that its contractors and
subcontractors perform all of their works at the Plants and ▇▇▇▇▇ sites, in such
a manner as to minimize any interference with the Operator's activities
hereunder.
3.1.16 Pay on a timely basis all costs, fees, expenses and monies
owing to IID, the Bureau of Land Management of the United States Department of
the Interior, the Minerals Management Service of the United States Department of
the Interior and/or any other authorized governmental authority, under or in
connection with any bonds, sureties and/or guarantees of Owner.
3.2 Results of Owner Non Compliance under Section 3.1
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If Owner does not completely perform any or all of its obligations
described in Section 3.1 above, in addition to any other payments owed under
this Agreement, Operator shall be entitled to the payment by Owner to it of all
Operator's reasonable additional costs and expenses as well as any extension of
time reasonably required by Operator under this Agreement as a result of such
failure to fully perform by Owner (or its representatives, other subcontractors
or suppliers).
3.3 Approval of Operator's Plants Manager and Replacement of Owner's
Representative
Owner shall have the right to approve the Plants Manager designated or
replaced by Operator. Such approval will not be unjustifiably withheld. Owner
shall have the right to require Operator to replace the Plants Manager, upon
reasonable notice. All costs associated with the replacement of the Plants
Manager shall be at Owner's account, unless replaced for justifiable cause.
SECTION 4 - PAYMENTS
4.1 Payment Obligations
In addition to other payment obligations provided in this Agreement,
Owner shall be responsible for all of the following main payment obligations:
Operation Fee and Extraordinary Operation Expenses.
4.1.1 Operation Fee
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Operation and Maintenance Agreement - Ormesa Plants
Commencing on the day of execution of this Agreement and
throughout the Term, Owner shall pay to Operator a fixed monthly fee of $830,000
(Eight Hundred Thirty Thousand Five Hundred USD), subject to adjustment based on
the Consumer Price Index, Urban Consumers - West (CPI-U, West) on January 1 of
each Year, which shall cover all costs associated with the ordinary maintenance
of the Plants (the "Plants Operation Fee"). The Plants Operation Fee shall
include, but not be limited to, the cost of labor, parts, consumables and fees
and costs of subcontractors, provided, however, that the payment of the above
fee shall not cover and shall be in addition to additional payments to Operator
and costs at Owner's additional expense with regard to: (a) Extraordinary
Operation Expenses, (b) costs and expenses caused to Operator as a result of
Owner non-compliance with any of its obligations described in Sections 3 or 7,
(c) all costs and expenses of Owner in connection with the performance of any of
its obligations under this Agreement, (d) all Operator costs and losses for
which Owner is responsible under Section 3.2, and (e) any other costs,
reimbursement obligations, expenses, losses, or damages and any taxes, duties,
levies or fees which are expressly described in this Agreement as an Owner
obligation (including, without limitation, those described in Section 3.1.1),
all of which shall be at Owner's additional expense. At Operator's written
request, the Parties shall renegotiate in good faith the Operation Fee for every
5 (five) year period, so as to reflect as nearly as possible the economic
factors that were the basis for the calculation of the initial Operation Fee and
other factors and circumstances justifying the adjustment of the same. If Owner
does not accept Operator's proposal for adjustment of the Operation Fee within
15 (fifteen) days of the date of such request, Operator shall be entitled to
terminate this Agreement upon written notice to Owner, and the results of such
termination shall be as described in Section 8.4.
4.1.2 Extraordinary Operation Expenses
Owner shall reimburse Operator the actual cost and expenses plus
a 10% (ten percent) ▇▇▇▇-up for the following items:
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Operation and Maintenance Agreement - Ormesa Plants
A. All Major Corrective Maintenance Work to the Plant(s)
(labor, parts and materials).
B. Any modification, addition or deletion to the Plant(s)
equipment (other than routine replacement of parts and consumables) performed
with prior approval by the Owner, and which was not a result of Operator gross
negligence, willful misconduct, or Operator failure to comply with its
obligations under this Agreement.
C. Any cost incurred as a result of any change in Applicable
Law enacted or promulgated after the Effective Date, other than with respect to
taxes described in Section 4.1.3(i)(A); any change in the Authorizations after
the Effective Date; change to the Power Purchase Agreements or the Plant
Connection Agreements after the Effective Date; or in its exercise of Emergency
Management Powers which was not a result of Operator gross negligence, willful
misconduct, or Operator failure to comply with its obligations under this
Agreement.
D. Any cost caused to Operator with respect to environmental
responsibilities of Owner under Section 7.1 hereto.
E. Works in connection with the ▇▇▇▇▇, including, without
limitation, labor, materials, supplies, consumables, technical, professional and
other services associated with production pumps and motors and chemicals used
for ▇▇▇▇▇ and pump scale inhibitors, and clean out, redrilling, reworking and
drilling of new ▇▇▇▇▇ to be performed under Owner's or Owner designated expert's
specific instructions (including drilling programs specifying well location,
casing to be used, depth to be drilled, drilling rig standards, amount of
materials required and standards for completion), to be issued in writing at
Operator's request. Notwithstanding anything to the contrary herein, Operator
shall have no liability for the effect of such works on the production
capability of the Plants, the geothermal reservoir, the ▇▇▇▇▇ or the composition
of the Geothermal Fluid, and Owner shall be exclusively responsible and liable
for
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Operation and Maintenance Agreement - Ormesa Plants
the results of Owner's or Owner designated expert's specific instructions in
connection with clean out, redrilling, reworking and drilling of new ▇▇▇▇▇.
4.1.3 Taxes
(i) Operator shall be liable for, and shall not receive any
payment from Owner in excess of Owner's other payment obligations hereunder in
connection with (A) any taxes imposed on Operator or its subcontractors with
respect to or based upon the net income, revenues or profits of Operator or its
subcontractors (other than sales or use tax, if applicable, for which tax Owner
is responsible under this Agreement), (B) any taxes or contributions in the
nature of ▇▇▇▇▇▇▇'▇ compensation or social security benefits based upon or
relating to the employment of workers by Operator or any subcontractor, and (C)
any US sales, use, excise, value added, goods and services tax, and US import
duties, customs duties and port lease expenses, if any, with respect to
services, equipment, goods and materials which Operator acquires or imports in
connection with those items included in and covered by the Plants Operation Fee.
(ii) Owner shall be liable for, and in addition to its other
payment obligations under this Agreement, shall pay (or in the case of (C)
below, reimburse Operator, where applicable) (A) any US real estate taxes or
other US ad valorem, ownership or property related taxes on the Plants and ▇▇▇▇▇
sites, (B) any taxes imposed on Owner or its contractors or subcontractors
(other than Operator and Operator's subcontractors) with respect to or based
upon the net income, revenues or profits of Owner or such other contractor or
subcontractors, (C) any US sales, use, excise, value added, and goods and
services tax, if any, in connection with or in respect of any amount payable to
Operator under this Agreement, and (D) any US withholding tax, sales, use,
excise, value added, goods and services tax, and US import duties, customs
duties and port lease expenses, if any, assessed in connection with any item
acquired or imported with respect to the Plants, unless such tax, duty, expense
or contribution is expressly described as an Operator obligation under clause
(i)(C) above.
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Operation and Maintenance Agreement - Ormesa Plants
(iii) Owner shall promptly reimburse Operator upon demand for all
amounts actually paid by Operator for which Owner is liable pursuant to clause
(ii) above. Without limiting Owner's reimbursement obligation in the foregoing
sentence, Operator shall administer and pay all taxes, duties and contributions
described in clause (ii) imposed by any taxing authority, and shall furnish to
the appropriate taxing authorities all required information and reports in
connection with such taxes, duties and contributions and promptly furnish copies
of all such information and reports to Owner. Owner shall use all reasonable
efforts to cause its general manager and administrative management team to
cooperate fully with Operator in connection with the matters described in this
clause (iii).
SECTION 5 - BILLING
5.1 Within 15 (fifteen) days of the end of each month, Operator shall
submit an Operator's Invoice to Owner. Each Operator's Invoice shall contain a
statement of all amounts due to Operator for the Operation Fee, for all
Extraordinary Operation Expenses incurred during the previous month, and for any
other fees, costs or expenses owed by Owner to Operator under this Agreement.
Payment of the Operator's Invoice shall be due 15 (fifteen) days after the
receipt by Owner of said invoice.
5.2 In the event that Owner disputes the amount of an Operator's Invoice,
Owner shall render payment for the undisputed portion of such Operator's Invoice
when such payment would otherwise be due under this Section 5. In the event that
Owner fails to pay the Invoice in full within the period described in Section
5.1 above, and any portion of disputed amounts are determined to be due and
owing to Operator, without derogating from Operator's other rights under this
Agreement or under law, Owner shall pay to Operator, in addition to such unpaid
or disputed amounts, interest for amounts determined to be owed at a rate per
annum equal to the Prime Rate plus 2 1/2% (two and one half percent) from the
date such amounts were due until paid
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Operation and Maintenance Agreement - Ormesa Plants
in full. With respect to disputed invoiced amounts or payments, the Party
disputing either the Operator's Invoice or the payment of any such amount shall
notify in writing the other Party within 7 (seven) days of receipt of the
disputed Operator's Invoice or payment stating the reason for such dispute and
such dispute shall be settled by the respective representatives of the Parties
within 60 (sixty) days from the date of the notice or as provided in Section
15.1.
5.3 Each monthly invoice shall, in its accounting of the previous month's
Extraordinary Operation Expenses incurred, set forth the description, price and
quantity of goods, property or services delivered or rendered. Operator's
Invoices shall be delivered to Owner at the address specified in Section 15.7.
All payments due to Operator in response to written invoices presented
by the Operator shall be paid in United States Dollars. Payment shall be made by
wire transfer in immediately available funds on or before the date due to the
bank account whose details shall be determined by Operator and notified to
Owner.
SECTION 6 - FORCE MAJEURE
6.1 No failure or omission to carry out or observe any of the terms,
provisions, or conditions of this Agreement (other than the obligation to pay
money) shall give rise to any claim by any Party against any other Party hereto,
or be deemed to be a breach or default of this Agreement if the same shall be
caused by or arise out of any event or circumstances beyond the reasonable
control (directly or indirectly) of the Party whose performance Force Majeure
has affected including, but not limited to, any war, declared or not, invasion,
armed conflict or act of foreign enemy, blockade, embargo, revolution,
insurrection, riot, civil commotion, act of terrorism, or sabotage provided that
any such event occurs within or directly involves the US or any other country
from which machinery, equipment and material for the Plants and/or ▇▇▇▇▇ are
procured or transported through, an act of God, including but not limited to
lightning, fire,
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Operation and Maintenance Agreement - Ormesa Plants
earthquakes, volcanic activity, floods, storms, cyclones, typhoons, or
tornadoes, epidemics or plagues, explosions or chemical contamination (other
than resulting from an act of war), labour disputes including strikes, or
go-slows or lockouts that extend beyond the Plants and/or ▇▇▇▇▇ or are
widespread or nationwide, change in Applicable Law, or any other event, matter
or thing, wherever occurring, to the extent that such event or circumstances or
its effects cannot be prevented, avoided or removed by such Party while
exercising that degree of skill, diligence, prudence and foresight which could
reasonably be expected from the Party affected thereby in the same of similar
circumstances, each of the foregoing events, matters or things being called
"Force Majeure" in this Agreement.
6.2 If either Party has been rendered wholly or partly unable to perform
its obligations, (other than the obligation to make payments) because of an
event of Force Majeure, the affected Party shall be excused from performance of
its obligations to the extent that such performance is prevented by the Force
Majeure, andshall consult with the other Party with respect to its plans to
mitigate or limit the effect of such event, and shall take such actions as are
reasonable under the circumstances.
6.3 If an event of Force Majeure continues for a period of more than 180
(one hundred eighty) days, Owner may terminate this Agreement by providing 30
(thirty) days written notice of such termination to Operator; provided that such
30 (thirty) day notice period shall run concurrently with such 180 (one hundred
eighty) day period. The results of such termination shall be as described in
Section 8.4.
SECTION 7 - ENVIRONMENTAL RESPONSIBILITIES
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Operation and Maintenance Agreement - Ormesa Plants
7.1 Environmental Responsibilities of Owner
In addition to its other payment obligations under this Agreement,
Owner shall be responsible for all costs (including, without limitation,
penalties) associated with any clean-up, removal, response or remediation of any
and all contamination required under Applicable Law, except to the extent such
contamination arises out of or results from the gross negligence or willful
misconduct of Operator or any of its subcontractors, vendors, representatives,
agents or employees in the performance of Operator's obligations hereunder.
Owner shall, in accordance with the procedures in Section 9.3,
indemnify and hold harmless Operator, its officers, employees, agents,
contractors, vendors representatives and Affiliates, from and against any and
all Damages (as that term is defined in Section 9.1) arising out of or resulting
from (a) any matter for which Owner is responsible pursuant to this Section 7,
or (b) any contamination occurring on or off the Plants or ▇▇▇▇▇ sites
attributable to any materials that arise out of, result from or relate to (i)
the use or occupancy of, or entry or re-entry on, the Plants or ▇▇▇▇▇ or the
Plants or ▇▇▇▇▇ sites (whether before, during or after the Term of this
Agreement) by Owner, and its respective officers, employees, agents,
contractors, vendors, or representatives (other than Operator and its
contractors, vendors, representatives and employees), (ii) any other acts or
omissions of Owner, and its respective officers, employees, agents, contractors,
vendors, or representatives (other than Operator and its contractors, vendors,
representatives and employees), at the Plants or ▇▇▇▇▇ or the Plants or ▇▇▇▇▇
sites, other than gross negligence or willful misconduct of Operator or of any
of its subcontractors, vendors, representatives, agents or employees.
7.2 Environmental Responsibilities of Operator
Operator shall be responsible for the clean-up of, and all costs
associated with the removal, response or remediation of, any and all
contamination to the extent that such
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Operation and Maintenance Agreement - Ormesa Plants
contamination arises out of or results from the gross negligence or willful
misconduct of Operator or any of its subcontractors, vendors, representatives,
agents or employees in the performance of Operator's obligations hereunder.
Operator shall, in accordance with the procedures in Section 9.3,
indemnify and hold harmless Owner, its officers, employees, agents, contractors,
vendors, representatives, and Lenders, from and against any and all Damages (as
that term is defined in Section 9.1) arising out of, resulting from any matter
for which Operator is responsible pursuant to this Section 7.2.
7.3 Notice of Remediation: Termination
7.3.1 If Operator discovers contamination or any other condition of
the Plants or ▇▇▇▇▇ that (a) violates or could result in a violation of any
material relevant environmental provision of Applicable Law, or (b) is the
responsibility of Owner under Section 7.1, Operator shall promptly notify Owner
thereof.
(i) Upon receipt of a notice pursuant to Section 7.3.1, Owner
shall commence and diligently prosecute remediation of the Plants and ▇▇▇▇▇ and
the Plants and ▇▇▇▇▇ sites to the extent necessary to enable operations to
resume or continue and to correct all violations of Applicable Law.
(ii) To avoid any doubt, any remediation hereunder shall be at
Owner's sole cost and expense, unless Operator's or any of its subcontractors,
vendors, representatives, agents or employees' gross negligence or willful
misconduct was the cause of the condition requiring remediation.
7.3.2 If Operator discovers contamination or any other violation of
any relevant environmental provision of Applicable Law at or associated with the
Plants or ▇▇▇▇▇ that could in any way impede, burden or adversely affect
Operator's operation or maintenance of the Plants
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or ▇▇▇▇▇ or that increases the cost of such operation or maintenance, such
increase shall be included as an Extraordinary Operation Expense, except to the
extent such condition was caused by the gross negligence or willful misconduct
of Operator or any of its subcontractors, vendors, representatives, agents or
employees.
SECTION 8 - TERM AND TERMINATION
8.1 Term
This Agreement will be binding upon the Parties on the Effective Date,
and shall remain binding until the expiration or termination of both Power
Purchase Agreements, unless terminated earlier in accordance with Section 6.3 or
this Section 8.
8.2 Termination by Owner
8.2.1 Owner may terminate this Agreement prior to the expiration of
its Term in any of the following circumstances with prior written notice,
provided, however, that the notice and cure period shall be (a) 30 (thirty) days
in the case of a failure by Operator to perform any material obligation
hereunder, unless Operator has cured such failure during the notice period or
has initiated and is diligently pursuing the cure of such breach and thereafter
continues to diligently pursue such cure and such cure is effected within 180
(one hundred eighty) days from the receipt of such notice by Operator, and (b)
no prior notice shall be required in the case of termination due to the
Bankruptcy, insolvency or dissolution of Operator.
8.2.2 If specifically requested by Owner, Operator shall use all
reasonable efforts to continue performing its obligations under the Agreement
upon termination by Owner through the applicable notice and cure period
described in Section 8.2.1 above. Owner will continue to reimburse and
compensate Operator for the Operation Fee and Extraordinary
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Operation and Maintenance Agreement - Ormesa Plants
Operation Expenses in accordance with this Agreement to the extent Operator
continues to perform. In addition, at Owner's specific request, Operator shall
assign any and all subcontracts it has entered into relating to the Work and
whose provisions permit such assignment to Owner upon termination by Owner in
accordance with Section 8.2.1.
8.2.3 If the Operator ceases all or a substantial part of the
operations and maintenance activities at the Plants for more than 10 (ten)
consecutive days for any reason, and Owner or another operator is capable of
properly conducting operation and maintenance activities in accordance with the
requirements set forth in Section 2.2 of this Agreement, Owner may, at its own
risk, perform or cause the performance of such operation and maintenance of the
Plants until such time as Operator is able to reliably resume the operation and
maintenance of the Plants. All costs incurred by Owner in temporarily conducting
the operation and maintenance as aforesaid may be offset against any amounts due
to Operator, provided, however that where Operator cessation of activities is
due to Force Majeure or Owner non-performance of any of its obligations
hereunder, Owner shall bear such costs.
8.3 Termination by Operator
Operator may terminate this Agreement prior to the expiration of its
Term in any of the following circumstances:
8.3.1 Upon the Bankruptcy, insolvency or dissolution of Owner;
8.3.2 Upon written notice to Owner if there is a failure by Owner to
pay when due any amounts owed to Operator.
8.3.3 Upon 30 (thirty) days written notice to Owner if there is a
failure or a delay by Owner to completely perform any or all of its obligations
under Section 3.1 and such failure(s) or delay(s) render it impossible or highly
impractical for Owner to perform its
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Operation and Maintenance Agreement - Ormesa Plants
obligations hereunder for 180 (one hundred eighty) days in the aggregate, unless
Owner has cured such breach during the notice period.
8.3.4 Upon written notice to Owner, as provided in Section 4.1.1
hereof.
8.4 Results of Termination
In the case of termination pursuant to Sections 6.3 or 8.3, Owner
shall pay Operator (i) the Operation Fee due and all Extraordinary Operation
Expenses accrued by Operator as well as all other sums due as of the date of the
termination, and (ii) any reasonable costs attributable to termination of the
Agreement, including without limitation, costs of demobilization and
cancellation charges owed to third parties.
In the case of termination pursuant to Section 8.2, Owner will pay
Operator the amounts described in clause (i) above, and Owner shall not be
obligated to pay the amounts described in clause (ii) above or any other
termination fee or other compensation. Except to the extent that obligations by
their terms expressly survive termination, or arose prior to the date of
termination, or as a result of termination, or as provided in the preceding
sentence, neither party shall have any additional liability to the other as a
result of or following termination.
SECTION 9 - INDEMNIFICATION
9.1 Indemnity by Operator
Operator shall fully indemnify, save harmless and defend Owner,
Lenders, each of their subsidiaries and Affiliates, and the directors, officers,
shareholders, agents, employees, successors and assigns of each of them (the
"Owner Indemnified Parties"), from and against any and all liability arising
from third party claims, suits, losses, costs, damages, injuries, liabilities,
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Operation and Maintenance Agreement - Ormesa Plants
demands, penalties, interest and causes of action, including without limitation
reasonable attorney's fees, (collectively, the "Damages"), arising out of,
resulting from, or related to this Agreement, including without limitation any
damage to or destruction of property, or death of or bodily injury to, any
person (whether they are employees of the Owner Indemnified Parties, Operator or
any subcontractor, or are persons unaffiliated with the Plants and/or ▇▇▇▇▇) to
the extent caused by Operator's gross negligence or willful misconduct, if the
claim or cause of action has arisen prior to the termination, expiration or
completion of this Agreement or within 3 (three) years thereafter. It is
expressly agreed that where the Owner Indemnified Parties are contributorily
negligent, such contributory negligence will not preclude recovery under the
preceding sentence, but Operator's indemnity will not include Damages to the
extent caused by such contributory negligence. Operator's aforesaid indemnity is
for the exclusive benefit of the Owner Indemnified Parties and in no event shall
inure to the benefit of any other party.
9.2 Indemnity by Owner
Owner shall fully indemnify, save harmless and defend Operator, its
subcontractors, each of their subsidiaries and Affiliates, and the directors,
officers, shareholders, agents, employees, successors and assigns of each of
them (the "Operator Indemnified Parties"), from and against any and all Damages,
arising out of, resulting from, or related to this Agreement, including without
limitation any damage to or destruction of property of, or death of or bodily
injury to, any person (whether they are employees of the Operator Indemnified
Parties, Operator or any subcontractor, or are persons unaffiliated with the
Plants and/or ▇▇▇▇▇) to the extent the Damages are not included in the Operator
indemnification obligation under Section 9.1 above, if the claim or cause of
action has arisen prior to the termination, expiration or completion of this
Agreement or within 3 (three) years thereafter. It is expressly agreed that
where the Operator Indemnified Parties are contributorily grossly negligent,
such contributory gross negligence will not preclude recovery under the
preceding sentence, but Owner's indemnity will not include Damages to the extent
caused by such contributory gross negligence. Owner's aforesaid indemnity is for
the exclusive benefit of the Operator Indemnified Parties and in no
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Operation and Maintenance Agreement - Ormesa Plants
event shall inure to the benefit of any other party.
9.3 Notice
The party seeking indemnity is hereinafter referred to as the
"Indemnitee" and the party against whom indemnity is sought is hereinafter
referred to as the "Indemnitor". An Indemnitee shall, within 10 (ten) business
days of the receipt of notice of the commencement of any legal action or of any
claims against such Indemnitee in respect of which indemnification will be
sought, notify Indemnitor in writing thereof. Failure of the Indemnitee to give
such notice will reduce the liability of Indemnitor by the amount of damages
attributable to the failure of the Indemnitee to give such notice to Indemnitor
but the failure to so notify shall not relieve Indemnitor from any liability
which it may have to such Indemnitee under the indemnity agreements contained in
this Section 9 or otherwise. In case any such claim or legal action shall be
made or brought against an Indemnitee and such Indemnitee shall notify
Indemnitor thereof, Indemnitor may, or if so requested by such Indemnitee shall,
assume the defense thereof, with a reservation of rights, with counsel
reasonably satisfactory to such Indemnitee, and after notice from Indemnitor to
such Indemnitee of an election to assume the defense thereof and approval by the
Indemnitee of such counsel, will not be liable to such Indemnitee under this
Section 9 for any legal fees and expenses subsequently incurred by such
Indemnitee in connection with the defense thereof. No Indemnitee shall settle
any indemnified claim over which Indemnitor has not been afforded the
opportunity to assume the defense without Indemnitor's approval, which approval
shall not be unreasonably withheld. Indemnitor shall control the settlement of
all claims over which it has assumed the defense; provided, however, that
Indemnitor shall not conclude any settlement which requires any action or
forbearance from action by Indemnitee or any of its Affiliates without the prior
approval of Indemnitee. The Indemnitee shall provide reasonable assistance to
Indemnitor at Indemnitor's expense in connection with such legal action or
claim. If Indemnitor shall not have employed counsel to conduct the defense of
any such claim or action within a reasonable time after notice of assertion of
such claim or of commencement of such action, legal and other expenses,
including the expenses of separate counsel, incurred by such
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Operation and Maintenance Agreement - Ormesa Plants
Indemnitee shall be borne by Indemnitor. In all cases the Indemnitee shall have
the right to participate in and be represented by counsel of its own choice and
at its own expense in any such legal action or with respect to any claim and the
Indemnitee shall have the right to be represented by separate counsel at the
expense of the Indemnitor if the named parties to such action include both such
Indemnitee and the Indemnitor and the claims or defenses which Indemnitee
chooses to assert are conflicting or inconsistent with the claims or defenses
that Indemnitor chooses to assert.
9.4 Employees
Neither Party nor its directors, officers, employees, agents,
Affiliates or representatives, nor any independent subcontractors engaged by it
in connection with the performance of this Agreement, shall be deemed an
employee of the other Party. Neither Party shall bring any claim against the
other Party or its directors, officers, Affiliates, agent, representatives,
employees or independent subcontractors with respect to any liability for
compensation under an applicable statue or any applicable governmental rule for
Worker's Compensation, if applicable, and/or employer's liability claims of
employees.
9.5 Net Amount
In the event that an Indemnifying Party is obligated to indemnify and
hold any Indemnified Party harmless under this Section, the amount owing to the
Indemnified Party shall be the amount of such indemnified Party's actual
out-of-pocket loss, net of any insurance or other recovery.
SECTION 10 - LIMITATION OF LIABILITY
10.1 In no event shall either Party be liable for indirect, special,
consequential,
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Operation and Maintenance Agreement - Ormesa Plants
exemplary or incidental damages, nor for loss of anticipated profits or revenues
or for loss or use of any equipment, installation system, operation or service
into which goods or parts may be put, or with respect to which any Work may be
performed by Operator, cost of capital, cost of substitute equipment,
facilities, services or replacement power, downtime cost or claims of Owner's
customers regardless of form of action, whether as a result of breach of
contract, warranty, guarantee, indemnity, or tort, including negligence and
strict liability. This limitation on liability shall apply to any liability for
default under or in connection with the goods, parts or services delivered
hereunder, whether based on warranty, failure of, or delay in delivery or
otherwise.
10.2 In no event shall Operator's aggregate liability under, in connection
with or arising from, this Agreement, whether regarding any indemnification,
environmental responsibility or otherwise, exceed the sum of $5,000,000 (Five
Million United States Dollars).
SECTION 11 - INSURANCE
11.1 Operator's Coverages
11.1.1 Operator shall provide or obtain and maintain in force through
the term of this Agreement, the following insurance coverages:
11.1.1.1 Workmen's Compensation
At Operator's cost and expense, workmen's compensation
insurance, disability benefit and other similar employee benefit acts in amounts
required by Applicable Law, at Operator's cost and expense.
11.1.1.2 Automobile Liability
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Operation and Maintenance Agreement - Ormesa Plants
At Operator's cost and expense, automobile liability
insurance covering bodily injury and property damage, for hired, owned and
non-owned vehicles.
11.1.1.3 Comprehensive General Liability
At Owner's cost and expense, comprehensive general liability
insurance covering personal injury (including bodily injury and death) and
property damage to third parties and covering liability for damage to property
of third parties in the care, custody and control of Owner, Operator and/or
their respective employees in connection with operations at the Plants and ▇▇▇▇▇
with a combined single limit of not less than $1,000,000 (One Million USD) per
occurrence and $5,000,000 (Five Million USD) annual aggregate for bodily injury
and property damage.
11.1.2 Owner shall be listed as an additional insured on all policies
listed in Section 11.1.1 above, and such policy provisions shall provide that
Owner be given 60 (sixty) days (10 (ten) days in the case of non-payment of
premiums) written notice from the insurance company of policy cancellation(s),
modifications or terminations.
11.1.3 The obligation to carry the insurance required by this Section
11.1 shall not limit or modify in any way other obligations assumed by Operator
under this Agreement. Owner shall not be under any duty to examine policies,
certificates or other evidence of Operator's insurance, or to advise Operator in
the event that Operator's insurance is not in compliance with this Agreement.
11.2 Independent Contractor's Coverage
Each of the Parties shall require all of its independent consultants,
contractors and subcontractors to obtain, maintain and keep in force during the
time in which they are engaged in
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Operation and Maintenance Agreement - Ormesa Plants
performing services in connection with the Plants and ▇▇▇▇▇ reasonably adequate
insurance coverage in accordance with prudent industry practice and reasonably
acceptable to the other Party and furnish such other Party with acceptable
evidence of such insurance upon its request. Neither Party shall have
responsibility for payment of premiums and claims with respect to the insurance
of the other Party's independent consultants, contractors and subcontractors.
11.4 Certificates: Proof of Insurance
On or before the required date for the insurance to be provided
hereunder, each Party shall furnish certificates of insurance to the other Party
evidencing the insurance required of such Party pursuant to this Agreement.
SECTION 12 - ASSIGNMENT
12.1 Assignment by Operator
This Agreement may not be assigned by Operator without the prior
written consent of Owner, and such consent shall not be unreasonably withheld or
delayed. In the case of assignment to an Affiliate of Operator, such consent
shall not be required.
12.2 Assignment by Owner
This Agreement may not be assigned by Owner without the prior written
consent of Operator, which consent shall not be unreasonably withheld or
delayed; provided, however, that Owner may collaterally assign its rights under
this Agreement to the Lender(s) without Operator's prior consent. Operator
agrees to execute a consent to such assignment and such other documents as may
reasonably be requested by Owner and the Lender(s) in connection with such
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Operation and Maintenance Agreement - Ormesa Plants
assignment. Operator further agrees that such consent to assignment will contain
a requirement to provide notice to the Lenders and to permit reasonable cure
periods on the part of the Lenders for Owner default under this Agreement.
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Operation and Maintenance Agreement - Ormesa Plants
SECTION 13 - REPRESENTATIONS, WARRANTIES AND FURTHER COVENANTS
13.1 Representations by Operator
Operator represents and warrants to Owner as follows:
13.1.1 Organization
Operator is a corporation duly established, validly existing and
in good standing under the laws of the State of Delaware, USA, and the
execution, delivery and performance of this Agreement has been duly authorized
by all necessary action and will not violate any provisions of any Applicable
Law, its organizational documents, or any indenture, agreement or instrument to
which it is party or by which it or any of its property may be bound or
affected. This Agreement has been duly executed and delivered by Operator and
constitutes a legal, valid and binding obligation of Operator, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights generally, from time to time in effect, and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
13.1.2 No Violation of Law
Operator is not in violation of any Applicable Law including,
without limitation, the U.S. Foreign Corrupt Practices Act, or of a judgment
entered by any governmental authority, which violations, individually or in the
aggregate, would affect Operator's performance of its obligations under this
Agreement.
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Operation and Maintenance Agreement - Ormesa Plants
13.1.3 Litigation
Operator is not a party to any legal, administrative, arbitral,
investigatorial or other proceeding or controversy pending, or, to the best of
Operator's knowledge, threatened, that would adversely affect Operator's ability
to perform under this Agreement.
13.1.4 Qualifications
Operator has: (i) examined the Power Purchase Agreements, the
Plant Connection Agreements and this Agreement thoroughly and become familiar
with their terms; (ii) proper qualifications to perform the Work hereunder; and
(iii) carefully reviewed all documents, plans, drawings and other information,
including Applicable Law, that it deems necessary regarding the Plants and ▇▇▇▇▇
and its performance of the Work hereunder that are available as of the date
hereof.
13.1.5 Acceptance of Plants
Operator acknowledges that it has become familiar with the
proposed components and characteristics of the Plants and ▇▇▇▇▇ to the extent
deemed necessary by it, and that, in its opinion the components and
characteristics of the Plants and ▇▇▇▇▇ are sufficient for the performance of
its obligations hereunder.
13.2 Representations by Owner
Owner represents and warrants to Operator as follows:
13.2.1 Organization
Owner is a limited liability company duly organized, validly
existing and
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Operation and Maintenance Agreement - Ormesa Plants
in good standing under the laws of the State of Delaware, USA, and the
execution, delivery and performance of this Agreement has been duly authorized
by all necessary action and will not violate any provisions of any Applicable
Law, its organizational documents, or any indenture, agreement or instrument to
which it is party or by which it or any of its property may be bound or
affected. This Agreement has been duly executed and delivered by Owner, and
constitutes a legal, valid and binding obligation of Owner, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights generally, from time to time in effect, and by general
principles of equity (regardless of whether such enforceability is considered a
proceeding in equity or at law).
13.2.2 No Violation of Law
Owner is not in violation of any Applicable Law, including,
without limitation, the U.S. Foreign Corrupt Practices Act or of a judgment
entered by any governmental authority, which violations, individually or in the
aggregate, would affect Owner's performance of its obligations under this
Agreement.
13.2.3 Litigation
Owner is not a party to any legal, administrative, arbitral,
investigatorial or other proceeding or controversy pending, or, to the best of
Owner's knowledge, threatened, that would adversely affect Owner's ability to
perform under this Agreement.
SECTION 14 - SUBCONTRACTORS
Operator may enter into subcontracts for the performance of the Work and
shall be solely responsible for the management and satisfactory performance of
all of its subcontractors. The issuance of any subcontract shall not relieve
Operator from any of its obligations under this
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Operation and Maintenance Agreement - Ormesa Plants
Agreement.
Owner will have the right to require Operator to remove or replace any
subcontractor whose performance is disrupting or is likely to disrupt proper
operation of the Plants or ▇▇▇▇▇.
SECTION 15- MISCELLANEOUS
15.1 Dispute Resolution
The competent courts of the State of California, USA, shall have
exclusive jurisdiction with respect to any and all disputes arising out of or in
connection with this Agreement.
15.2 Independent Contractor
Except as otherwise provided herein Operator shall at all times be
deemed an independent contractor.
15.3 Severability
The invalidity, in whole or in part, of any of the foregoing Sections
or paragraphs of this Agreement will not affect the validity of the remainder of
such Sections or paragraphs.
15.4 Entire Agreement
This Agreement, including Exhibits and all amendments thereto contain
the complete agreement between Owner and Operator with respect to the matters
contained herein and supersedes all prior and contemporaneous agreements and
understandings, whether written
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Operation and Maintenance Agreement - Ormesa Plants
or oral, with respect to the matters contained herein.
15.5 Amendment
No modification, amendment, or other change will be binding on any
Party unless consented to in writing by both Parties.
15.6 Governing Law
This Agreement shall be governed by the laws of the State of
California, USA, without regard to the conflict of laws principles thereof that
may direct the application of the law of another jurisdiction.
15.7 Notices
All notices required or provided for in this Agreement shall be in
writing and shall be delivered by hand; or sent by a recognized overnight mail
or courier service with delivery receipt requested; or sent by facsimile
transfer and acknowledged by recipient; as follows:
If to Owner: ORMESA, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
If to Operator: Ormat Nevada, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Operation and Maintenance Agreement - Ormesa Plants
Attention: President
Notices shall be effective when received by the Party to whom
addressed.
15.8 Additional Documents and Actions
Each Party agrees to execute and deliver to the other such additional
documents, and take such additional actions, as may be reasonably required by
the other to effect the purposes and intent of this Agreement.
15.9 Waiver
Failure by either Party to exercise any of its rights under this
Agreement shall not constitute a waiver of such rights. Neither Party shall be
deemed to have waived any right resulting from any failure to perform by the
other unless it has made such waiver specifically in writing.
15.10 Captions
The captions contained in this Agreement are for convenience of
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision contained herein.
15.11 Counterparts
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original and all of which shall be deemed one and the
same Agreement.
15.12 Confidentiality of Information
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Operation and Maintenance Agreement - Ormesa Plants
15.12.1 Each Party agrees, for itself and its Affiliates and their
directors, officers, employees and representatives, to keep confidential and not
make any unauthorized use of any confidential or proprietary information of the
other Party disclosed to such Party in and during the performance of this
Agreement, including documents, specifications, formulae, evaluations, methods,
processes, technical descriptions, reports and other data, records and
information (hereinafter the "Confidential Information").
15.12.2 Confidential Information shall be identified in writing by the
disclosing Party, or if it is orally disclosed, the confidentiality thereof
shall be confirmed in writing by the disclosing Party promptly after such oral
disclosure. In any event, no disclosure shall be deemed to be Confidential
Information if such information:
(a) Was known by the recipient prior to the disclosure thereof by
the disclosing Party;
(b) Is, or shall become, other than by an act of the recipient,
generally available to the public;
(c) Is lawfully made available to the recipient by a third party
in good faith;
(d) Is required by law or governmental authority to be disclosed
to any person who is authorized by law to receive the same; provided, that to
the extent permitted by law and practical under the circumstances, the
disclosing party gives notice to the other party of the impending disclosure and
the opportunity to contest such disclosure in an appropriate proceeding.
15.12.3 Each Party agrees that it will make available the other
Party's
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Operation and Maintenance Agreement - Ormesa Plants
Confidential Information only on a "need to know" basis and that all persons to
whom such Confidential Information is made available will be made aware of the
strictly confidential nature of such Confidential Information.
15.12.4 Notwithstanding the foregoing, Confidential Information may be
disclosed to any Lender and any Lender's advisors or potential lender in
connection with financing, refinancing, proposed financing or proposed
refinancing for the Plants as long as such lender or potential lender or advisor
complies with the provisions of this Section 15.12.
15.13 No Third Party Beneficiaries
This Agreement is intended solely for the benefit of the Parties
hereto. Nothing in this Agreement shall be construed to create any duty to,
standard of care with reference to, any liability to, or any right of suit or
action in, any person or other legal entity not a party to this Agreement.
15.14 Non-Recourse
Neither Party shall have recourse hereunder, and no claim shall be
made, against any partner, shareholder, director, officer or other Affiliate of
the other Party, in such capacity, under this Agreement, and each Party's sole
recourse in the event of a breach hereunder by the other Party shall be against
the breaching Party's assets, irrespective of any failure to comply with
applicable law or any provision of this Agreement. Neither Party shall have any
right of subrogation to any claim of the other Party for any equity
contributions to such party from any shareholder or partner of such Party. This
acknowledgment and agreement are made expressly for the benefit of the partners,
shareholders, directors, officers and other Affiliates of the Parties. Nothing
containing in this Section 15.14 shall be construed to limit or affect any
obligations undertaken by any Affiliate of either Party or any of either Party's
or its Affiliates' partners, shareholders, directors or officers pursuant to a
separate agreement or instrument.
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Operation and Maintenance Agreement - Ormesa Plants
15.15 Rights to Set-Off
Each Party shall be entitled to set-off against any amounts owing by
it to the other Party under this Agreement any undisputed amounts owing by the
other Party to it under this Agreement.
15.16 Survival of Certain Provisions
The provisions of Sections 7, 8.4, 9, 13, 15.1, 15.6, 15.12, 15.14 and
15.15 shall survive the termination of this Agreement.
IN WITNESS WHEREOF the Parties have entered into this Operation and
Maintenance Agreement as of the date first written above.
ORMESA, LLC ORMAT NEVADA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ Ran Raviv
---------------------------------- -----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: Ran Raviv
Title: Assistant Secretary Title: Vice President
Ormat Funding Corp.
Sole Member
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Operation and Maintenance Agreement - Ormesa Plants
ANNEX A
LIST OF GEOTHERMAL LEASES, RIGHTS OF WAY AND SITE LICENSES
Bureau of Land Management geothermal leases identified by their Serial Numbers
as follows:
Lease CACA-25081
Lease CACA-6219
Lease CACA-6218
Sublease CACA-6218
Lease CACA-6217
Lease CACA-966
Lease CACA-964
Lease CACA-1903
Lease CACA-17568
Bureau of Land Management Rights of Way identified by their Serial Numbers as
follows:
Right of Way (access road - used to gain access to and from the Plants)
CACA-17188
Right of Way (access road - used to gain access to and from the Plants)
CACA-20267
Right of Way (access road - used to gain access to and from the Plants)
CACA-22562
Right of Way (access road - used to gain access to and from the Plants)
CACA-25544
Right of Way (access road - used to gain access to and from the Plants)
CACA-26355
Right of Way (transmission line - used for delivery of power) CACA-22567
Right of Way (transmission line - used for delivery of power) CACA-25633
Right of Way (transmission line - used for delivery of power) CACA-26356
Right of Way (piping (used to carry fluids to and from the Plants) and pumping
stations (used to assist the injection process)) CACA-25634
Right of Way (piping (used to carry fluids to and from the Plants) and pumping
stations (used to
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Operation and Maintenance Agreement - Ormesa Plants
assist the injection process)) ▇▇▇▇-▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇ Management Site Licenses for building and operating the Plants:
Ormesa I Plant Site License
Ormesa II Plant Site License
Ormesa IE Plant Site License
Ormesa IH Plant Site License
Gem 2 Plant Site License
Gem 3 Plant Site License
45