OPERATION AND MAINTENANCE AGREEMENT
By and Between
COGEN TECHNOLOGIES NJ VENTURE,
AS "OWNER"
AND
GENERAL ELECTRIC COMPANY,
AS "OPERATOR"
June 6, 1997
TABLE OF CONTENTS
Section Page
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I. DEFINITIONS.............................................. 2
Actual kWh............................................... 2
Affiliate................................................ 2
Agreement................................................ 2
Annual Fee Adjustment Amount or "AFAA"................... 2
Annual Operating Plan.................................... 2
Applicable Adjustment Amount............................. 2
Approved Annual Operating Plan........................... 2
Approved O&M Plan........................................ 2
Approved Operating Budget................................ 2
Base Index............................................... 2
Bayonne Approved Operating Budget....................... 2
Camden Approved Operating Budget......................... 2
Camden Facility.......................................... 2
Camden O&M Agreement..................................... 3
Capital Improvements..................................... 3
Confidential Information................................. 3
Constant Personnel....................................... 3
Consumables.............................................. 3
CPI Adjusted Payments.................................... 3
Defaulting Party......................................... 3
Default Rate............................................. 3
Denominator.............................................. 3
Direct Costs............................................. 3
Effective Hourly Rate.................................... 3
Equipment................................................ 3
Event of Default......................................... 3
Execution Date........................................... 4
Existing O&M Agreement................................... 4
Existing O&M Agreement Termination Date.................. 4
Exxon.................................................... 4
Facility................................................. 4
Facility Data............................................ 4
Facility Manager......................................... 4
FERC..................................................... 4
FM kWh................................................... 4
Force Majeure............................................ 4
Forced Outage............................................ 4
Fourth Year Termination Fee.............................. 4
Fuel..................................................... 4
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Section Page
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Gas Service Agreement..................................... 5
GE........................................................ 5
GE Equipment.............................................. 5
GE O&M Personnel.......................................... 5
GE O&M Personnel Overhead................................. 5
IMTT-Bayonne.............................................. 5
IMTT-Bayonne Plant........................................ 5
IMTT-BX................................................... 5
JCP&L..................................................... 5
Key Personnel............................................. 5
Key Regional Office Personnel............................. 5
kWh....................................................... 5
Lender.................................................... 6
Linden Approved Operating Budget.......................... 6
Linden Facility........................................... 6
Linden O&M Agreement...................................... 6
Major Inspection.......................................... 6
Major Overhauls........................................... 6
Non-Defaulting Party...................................... 6
Numerator................................................. 6
O&M Fee................................................... 6
O&M Plan.................................................. 6
Operating Budget.......................................... 6
Operating Procedures...................................... 6
Operator.................................................. 6
Operator Confidential Information......................... 6
Operator Indemnitees...................................... 6
Operator Personnel........................................ 6
Operator Personnel Overhead............................... 7
OSHA...................................................... 7
Overhead Percentage Rate.................................. 7
Owner..................................................... 7
Owner Confidential Information............................ 7
Owner Indemnitees......................................... 7
Parts..................................................... 7
Parts Discount............................................ 7
Permitted Transferee...................................... 7
Plant Capacity............................................ 7
Plant Manager............................................. 7
POPI...................................................... 7
Power Purchase Agreement.................................. 7
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Section Page
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Power Purchasers.......................................... 7
Project Year.............................................. 8
Prudent Utility Practices................................. 8
PSE&G..................................................... 8
Published Price........................................... 8
PURPA.................................................... 8
Qualifying Cogeneration Facility.......................... 8
Rated Capacity............................................ 8
Regional Office........................................... 8
Reimbursable Costs........................................ 9
Related Agreements........................................ 9
Repairs................................................... 9
Scheduled Outage.......................................... 9
Services.................................................. 9
Services Discount......................................... 9
Seventh Year Termination Fee.............................. 9
Site...................................................... 9
Site Lease................................................ 9
Special Improvements...................................... 9
SSOI...................................................... 9
Standby Boilers........................................... 9
Steam Purchase Contracts.................................. 10
Steam Purchasers.......................................... 10
Target Rated Capacity..................................... 10
Termination Agreement..................................... 10
Test Plan................................................. 10
Transition Stage.......................................... 10
Transition Stage Operating Budget......................... 10
Transition Stage Operating Plan........................... 10
Transition Stage Plan..................................... 10
Unscheduled Maintenance................................... 10
W-2 Wages................................................. 10
Water Supply Agreement.................................... 10
Work...................................................... 10
II. RESPONSIBILITIES OF OPERATOR.............................. 11
2.1 Services Generally................................... 11
2.2 Compliance with Related Agreements................... 16
2.3 QF Status............................................ 16
2.4 Annual Operating Plan................................ 16
2.5 Monthly Summary...................................... 18
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Section Page
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2.6 Emergencies.......................................... 18
2.7 Inspections.......................................... 18
2.8 Operating Procedures and Training.................... 19
2.9 Transition Stage..................................... 20
2.10 Limited Authority.................................... 21
III. RESPONSIBILITIES OF OWNER................................. 21
3.1 Services, Operation, Obligations..................... 21
3.2 Payments............................................. 22
3.3 Right to Perform Upon Operators Default.............. 22
IV. OPERATING COSTS AND EXPENSES.............................. 23
4.1 Procedure for Incurring Costs........................ 23
4.2 Procedure for Payment of Direct Costs................ 23
4.3 Limitation on Ability to Incur Direct Costs.......... 23
4.4 Payment for Special Improvements..................... 24
4.5 Payment for Unscheduled Maintenance.................. 24
4.6 Payment for Major Overhauls.......................... 24
4.7 Payment for Capital Improvements..................... 24
4.8 GE Equipment......................................... 24
4.9 Wage Increases in Excess of CPI...................... 25
V. PAYMENTS TO OPERATOR...................................... 26
5.1 O&M Fee.............................................. 26
5.2 Reimbursable Costs .................................. 26
5.3 CPI Adjustment ...................................... 29
5.4 Procedure for Payment of Reimbursable Costs.......... 29
5.5 Late Payments........................................ 30
VI. FACILITY PERFORMANCE, LIQUIDATED DAMAGES AND BONUS........ 30
6.1 Annual Fee Adjustment Amount......................... 30
6.2 Quarterly Meetings................................... 35
6.3 Partial Project Year................................. 35
6.4 Payment of Annual Fee Adjustment Amount.............. 35
6.5 Application of CPI Adjustment........................ 35
6.6 Change in Conditions or Circumstances................ 35
6.7 First and Second Project Years....................... 35
6.8 Employee Bonuses..................................... 35
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Section Page
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VII. WARRANTY; CORRECTION OF DEFECTS........................... 36
7.1 Warranty.............................................. 36
7.2 Consequence of Breach................................. 36
7.3 Vendor Warranties..................................... 36
VIII. TERM...................................................... 36
IX. TERMINATION............................................... 38
9.1 Event of Default...................................... 38
9.2 Termination upon Breach............................... 38
9.3 Termination for Insolvency............................ 38
9.4 Owner's Additional Remedies........................... 39
9.5 Transfer of Operators Upon Termination................ 39
9.6 Condition of Facility Upon Termination................ 40
9.7 Survival of Obligations............................... 40
X. INSURANCE................................................. 40
10.1 Operator Insurance Coverage.......................... 40
10.2 Owner Insurance Coverage............................. 41
10.3 Form and Content of Insurance........................ 42
10.4 Additional Requirements.............................. 43
XI. NOTIFICATIONS............................................. 45
XII. ASSIGNMENT; LENDER'S RIGHTS............................... 46
12.1 Assignment........................................... 46
12.2 Lender's Rights...................................... 46
12.3 Estoppel Certificates................................ 47
12.4 Legal Opinion........................................ 48
XIII. INDEMNIFICATION........................................... 48
13.1 Operator Indemnity................................... 48
13.2 Owner Indemnity...................................... 49
13.3 No Limitation........................................ 49
XIV. REPRESENTATIONS AND WARRANTIES............................ 49
14.1 Representations and Warranties of Owner.............. 49
14.2 Representations and Warranties of Operator........... 50
XV. BOOKS, RECORDS AND REPORTS................................ 51
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Section Page
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15.1 Books and Records.................................... 51
15.2 Reports ............................................ 51
XVI. FORCE MAJEURE............................................. 51
16.1 Force Majeure........................................ 51
16.2 Effect of Force Majeure.............................. 52
16.3 Extended Force Majeure............................... 52
16.4 Payments to Operator During an Event of Force Majeure 53
XVII. LIMITATION OF LIABILITY................................... 53
17.1 Operator............................................. 53
17.2 Owner................................................ 53
XVIII. RESOLUTION OF DISPUTES.................................... 54
18.1 Resolution by Parties................................ 54
18.2 Mediation by Expert.................................. 54
18.3 Arbitration.......................................... 56
18.4 Selection of Arbitrators............................. 57
18.5 Notice............................................... 57
18.6 Award................................................ 57
18.7 Survival............................................. 57
XIX. CONFIDENTIALITY AND INTELLECTUAL PROPERTY................. 57
19.1 Confidential Information............................. 57
19.2 Return of Confidential Information................... 58
19.3 Continuation of Confidentiality Obligations.......... 59
19.4 Ownership of Confidentiality Information............. 59
19.5 Intellectual Property................................ 59
XX. MISCELLANEOUS............................................. 60
20.1 Governing Law....................................... 60
20.2 Severability........................................ 60
20.3 Entire Agreement.................................... 60
20.4 Amendments.......................................... 60
20.5 Waiver.............................................. 60
20.6 Original and Counterparts........................... 60
20.7 Independent Contractor.............................. 60
20.8 Limited Recourse.................................... 60
20.9 Captions............................................ 61
20.10 Exhibits............................................ 61
20.11 Effectiveness of Agreement.......................... 61
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Section Page
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Exhibit A Monthly O&M Report Format
Exhibit B Consent to Assignment
Exhibit C Schedule of Parts and Services for GE Equipment
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OPERATION AND MAINTENANCE AGREEMENT
This Agreement is entered into this 6th day of June, 1997 (the
"Execution Date"), by and between Cogen Technologies NJ Venture, a joint venture
organized under the laws of the State of New Jersey ("Owner"), and General
Electric Company, a corporation organized and existing under the laws of the
State of New York ("Operator").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Owner owns the Facility (as defined herein); and
WHEREAS, Owner and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Operations, Inc. ("SSOI")
entered into that certain Operation and Maintenance Agreement dated March 28,
1994 (the "Existing O&M Agreement"), pursuant to which SSOI operates and
maintains the Facility for Owner in accordance with the terms thereof; and
WHEREAS, Owner and SSOI entered into that certain Agreement to
Terminate Operation and Maintenance Agreement dated June 4, 1997, (the
"Termination Agreement"), pursuant to which Owner has the right to terminate the
Existing O&M Agreement by delivery of written notice to SSOI in accordance with
the terms thereof; and
WHEREAS, Owner intends to terminate the Existing O&M Agreement
pursuant to the terms of the Termination Agreement; and
WHEREAS, Owner desires to engage the services of an entity qualified
and competent to operate and maintain the Facility after the Existing O&M
Agreement Termination Date; and
WHEREAS, Operator has represented that it is qualified and capable to
operate and maintain gas-fired, combined cycle cogeneration facilities such as
the Facility; and
WHEREAS, Owner desires to appoint Operator and Operator desires to
operate and maintain the Facility after the Existing O&M Agreement Termination
Date; and
WHEREAS, Owner and Operator desire to enter into this Agreement in
order to set forth their agreements relative to the operation and maintenance of
the Facility starting on the Existing O&M Agreement Termination Date;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
I.
DEFINITIONS
The following definitions shall apply to this Agreement:
Actual kWh shall have the meaning set forth in Section 6. 1 (a)
hereof.
Affiliate shall mean any person or corporation or other entity that,
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, another person or corporation or
entity. The term "control" with respect to any entity means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise.
Agreement shall mean this Operation and Maintenance Agreement,
including all Exhibits attached hereto, as the same may be amended from time to
time in accordance herewith.
Annual Fee Adjustment Amount or "AFAA" shall have the meaning set
forth in Section 6.1 hereof.
Annual Operating Plan shall have the meaning set forth in Section
2.4(a) hereof.
Applicable Adjustment Amount shall have the meaning set forth in
Section 5.3 hereof.
Approved Annual Operating Plan shall have the meaning set forth in
Section 2.4(a) hereof.
Approved O&M Plan shall have the meaning set forth in Section 2.4(a)
hereof.
Approved Operating Budget shall have the meaning set forth in Section
2.4(a) hereof.
Base Index shall have the meaning set forth in Section 5.3 hereof.
Bayonne Approved Operating Budget shall mean an Approved Operating
Budget for the Facility as set forth in Section 2.4 hereof.
Camden Approved Operating Budget shall mean an Approved Operating
Budget for the Camden Facility as set forth in Section 2.4 of the Camden O&M
Agreement.
Camden Facility shall mean the cogeneration plant owned by Camden
▇▇▇▇▇ ▇.▇. located in Camden, New Jersey.
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Camden O&M Agreement shall mean that certain Operation and Maintenance
Agreement dated of even date herewith, by and between Camden ▇▇▇▇▇ ▇.▇., as
"Owner," and Operator, as "Operator," relating to the Camden Facility.
Capital Improvements shall have the meaning set forth in Section
2.1(2) hereof.
Confidential Information shall have the meaning set forth in Section
19.1 hereof.
Constant Personnel shall mean, at the time of determination, such
Operator Personnel and GE O&M Personnel as were employed on the first day of the
then current Project Year and are also scheduled to be employed in the same
positions on the first day of the next Project Year pursuant to the Approved
Annual Operating Plan for such next Project Year.
Consumables shall mean, collectively, all items consumed or needing
regular periodic replacement during operation and maintenance of the Facility,
including, but not limited to, spare parts, water treatment chemicals,
lubricants, office supplies, air filters, gaskets, hand tools, and all other
consumable materials and parts required for the normal operation of the
Facility, but not including Fuel and water.
CPI Adjusted Payments shall have the meaning set forth in Section 5.3
hereof.
Defaulting Party shall have the meaning set forth in Section 9.2
hereof.
Default Rate shall mean the lesser of (i) the rate of interest
announced by The Chase Manhattan Bank, N.A., from time to time, at its principal
office located at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or any
successor financial institution), as its prime commercial lending rate, plus 1%
or (ii) the maximum lawful nonusurious rate of interest that may be charged
under applicable law.
Denominator shall have the meaning set forth in Section 6.1(a) hereof.
Direct Costs shall mean those costs incurred by Operator for goods and
services in connection with the operation and maintenance of the Facility which
are paid directly by Owner to the vendor of such goods and services.
Effective Hourly Rate shall mean, as of the date of determination, the
sum of (i) the aggregate then current effective hourly rate for all salaried
Constant Personnel and (ii) the aggregate then current straight time hourly
rates for all hourly paid Constant Personnel.
Equipment shall mean any and all materials, supplies, equipment and
facilities, of whatever nature, intended to become or which are a part of the
Facility.
Event of Default shall have the meaning set forth in Section 9.1
hereof.
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Execution Date shall have the meaning set forth in the preamble of
this Agreement.
Existing O&M Agreement shall have the meaning set forth in the
preamble of this Agreement.
Existing O&M Agreement Termination Date shall mean the date, if ever,
on which Owner terminates the Existing O&M Agreement pursuant to the Termination
Agreement.
Exxon shall mean Exxon Company, U.S.A., a division of Exxon
Corporation, a New Jersey corporation.
Facility shall mean, collectively, (i) Owner's combined-cycle
cogeneration facility with three GE frame six gas turbines and one GE steam
turbine located on the Site, (ii) the associated facilities, structures,
buildings and offices, all interconnections with Steam Purchasers' facilities as
described and set forth in the Steam Purchase Agreements, all interconnections
with PSE&G's facilities as described and set forth in the Power Purchase
Agreements, all mechanical and electrical systems and controls, drainage
systems, air pollution control and water treatment facilities, access roads,
security fencing and all other Equipment located at the Site and (iii) the
Standby Boilers.
Facility Data shall mean all facility and equipment design data
pertaining to the Facility, including, without limitation, plant data manuals,
equipment user/maintenance manuals, facility drawings and system descriptions,
inspection reports and operating plans.
Facility Manager shall mean Operator's employee, who shall be present
on the Site during regular business hours on all business days to oversee the
operation, maintenance, inspection and repair of the Facility and all parts
thereof, and who shall be authorized to make decisions on behalf of Operator.
The Facility Manager shall serve as Operator's single point of contact for all
matters regarding the operation, maintenance, inspection and repair of the
Facility.
FERC shall mean the Federal Energy Regulatory Commission.
FM kWh shall have the meaning set forth in Section 6.l (a) hereof.
Force Majeure shall have the meaning set forth in Section 16.1 hereof.
Forced Outage shall mean an outage of the Facility which is not a
Scheduled Outage.
Fourth Year Termination Fee shall have the meaning set forth in
Article VIII hereof.
Fuel shall mean natural gas, kerosene or any other fuel suitable for
operating the Facility.
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Gas Service Agreement shall mean that certain letter agreement dated
October 10, 1986, by and between Owner and PSE&G, as amended from time to time.
GE shall mean General Electric Company, a New York corporation.
GE Equipment shall mean the gas and steam turbine generation equipment
and associated electrical and control systems components, now existing or
hereafter installed or located at the Facility, and which were supplied by GE
prior to or during the term of this Agreement, including, without limitation,
steam turbines; gas turbines (including components supplied in connection with
uprate packages); generators; load gears; speedtronic controls; steam turbine
controls; admission/extraction valves; stop valves; control consoles;
datatronics; accessory system compartment containing heavy duty, multi-shaft,
accessory gear, electric motor starting system, combined lube and hydraulic oil
system and all terminal boxes, conduit and wiring; generator auxiliary
compartment which contains all static excitation equipment, metering and
relaying current and potential transformers, lightning arrestors and generator
neutral grounding system; and any future improvements and/or enhancements to any
of the foregoing.
GE O&M Personnel shall mean all employees of Operator involved in the
performance of the Work, including, without limitation, all employees located at
the Regional Office, but expressly excluding the Operator Personnel.
GE O&M Personnel Overhead have the meaning set forth in Section 5.2
hereof.
IMTT-Bayonne shall mean IMTT Bayonne, a Delaware partnership.
IMTT-Bayonne Plant shall mean IMTT-Bayonne's plant located at ▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
IMTT-BX shall mean IMTT-BX, a Delaware partnership with offices
located at the IMTT-Bayonne Plant at ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
JCP&L shall mean Jersey Central Power & Light Company, a New Jersey
corporation.
Key Personnel shall mean the Key Regional Office Personnel, the
Facility Manager and all other personnel reporting directly to the Facility
Manager.
Key Regional Office Personnel shall mean the following personnel who
will be located in the Regional Office: the general manager, the financial
analyst, the plant engineer, the environmental, health and safety engineer, the
sourcing specialist and such other personnel as Owner may designate.
kWh shall mean kilowatt-hour.
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Lender shall mean the entity or entities providing Owner with the
construction, term, permanent or other debt or equity financing for the Facility
and/or the operation thereof and/or any entity or entities providing a letter of
credit for other security in connection with financing of the Facility and/or
the operation thereof.
Linden Approved Operating Budget shall mean an Approved Operating
Budget for the Linden Facility as set forth in Section 2.4 of the Linden O&M
Agreement.
Linden Facility shall mean the cogeneration plant owned by Cogen
Technologies Linden Venture, L.P. located in Linden, New Jersey.
Linden O&M Agreement shall mean that certain Operation and Maintenance
Agreement dated of even date herewith, by and between Cogen Technologies Linden
Venture, L.P., as "Owner," and Operator, as "Operator," relating to the Linden
Facility.
Major Inspection shall have the meaning set forth in Section 6.1(a)
hereof.
Major Overhauls shall have the meaning set forth in Section 2.1(2)
hereof.
Non-Defaulting Party shall have the meaning set forth in Section 9.2
hereof.
Numerator shall have the meaning set forth in Section 6.1(a) hereof.
O&M Fee shall have the meaning set forth in Section 5.1 hereof.
O&M Plan shall have the meaning set forth in Section 2.4(a) hereof.
Operating Budget shall have the meaning set forth in Section 2.4(a)
hereof.
Operating Procedures shall have the meaning set forth in Section
2.8(a) hereof.
Operator shall have the meaning set forth in the preamble of this
Agreement.
Operator Confidential Information shall have the meaning set forth in
Section 19.1 hereof.
Operator Indemnitees shall have the meaning set forth in Section 13.2
hereof.
Operator Personnel shall mean all employees of POPI involved in the
performance of the Work or, in the event that during the term of this Agreement
POPI ceases to provide personnel for performance of the Work, then such
personnel who perform the functions that were previously performed by the
employees of POPI.
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Operator Personnel Overhead shall have the meaning set forth in
Section 5.2 hereof.
OSHA shall mean the Occupational Safety and Health Administration.
Overhead Percentage Rate shall have the meaning set forth in Section
5.2 hereof.
Owner shall have the meaning set forth in the preamble of this
Agreement.
Owner Confidential Information shall have the meaning set forth in
Section 19.1 hereof.
Owner Indemnities shall have the meaning set forth in Section 13.1
hereof.
Parts shall mean replacement parts and/or assemblies (either in land
or improved) to replace existing parts and/or assemblies which are removed from
service, and any future improvements and/or enhancements to any such parts
and/or assemblies.
Parts Discount shall have the meaning set forth in Section 4.8 hereof.
Permitted Transferee shall mean (i) any Affiliate of Lender or (ii)
any other person or entity who succeeds to the rights and interests of Lender
under any mortgage.
Plant Capacity shall have the meaning set forth in Section 6.1(a)
hereof.
Plant Manager shall mean the person designated by Owner, pursuant to
Section 3.1(4) hereof, to serve as Owner's administrative representative at the
Site.
POPI shall mean Plant Operating Personnel, Inc., a Delaware
corporation.
Power Generation Factor shall have the meaning set forth in Section
6.1 (a) hereof.
Power Purchase Agreement shall mean (i) that certain Agreement for
Purchase of Electric Power dated October 29, 1985, by and between Cogen
Technologies NJ, Inc., as "Seller," and JCP&L, as "Buyer," as amended from time
to time, (ii) that certain Agreement dated June 13, 1985, by and between Cogen
Technologies NJ, Inc., as "Seller," and IMTT-Bayonne, as "Buyer," as amended
from time to time, (iii) that certain Power Purchase and Operations Coordination
Agreement dated June 5, 1989, by and between Owner and PSE&G, as amended from
time to time and (iv) any subsequent or other agreements entered into by Owner
providing for the sale of electricity generated at the Facility.
Power Purchasers shall mean JCP&L, IMTT-Bayonne, PSE&G, and any other
future purchasers of electricity generated at the Facility.
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Project Year shall mean any calendar year during the term of this
Agreement, provided that (1) the first Project Year shall be deemed to begin on
the Existing O&M Agreement Termination Date and extend through the next
occurring December 31 and (ii) the twelfth Project Year shall be deemed to end
November 1, 2008.
Prudent Utility Practices shall mean those practices, methods, acts,
techniques, standards and equipment, as changed from time to time, that are then
generally accepted by the electric utility industry and commonly used in prudent
electric utility engineering and operations to operate and maintain equipment
lawfully, safely, dependably and economically, and as would have been (i)
expected to accomplish the desired result in a manner consistent with applicable
laws, applicable governmental permits, reliability, safety, environmental
protection, economy and expediency and (ii) implemented using that degree of
skill, diligence and foresight which would reasonably and ordinarily be expected
from a skilled and experienced operator complying with all applicable laws and
engaged in the same type of undertaking, including, without limitation, those
established by the North American Electric Reliability Council, as applicable to
units of the size and service of the Facility.
PSE&G shall mean Public Service Electric & Gas Company, a corporation
organized under the laws of the State of New Jersey.
Published Price shall mean (i) with respect to Parts, the published
prices provided by Operator's or any of its Affiliates' parts centers and/or
available through Operator's or any of its Affiliates' computerized pricing
systems, or if at any time during the term of this Agreement Operator and its
Affiliates do not have such published prices for any Parts, then the normal and
customary charges that are paid by Operator's and its Affiliates' other
customers for such Parts in the United States and (H) with respect to Services
and/or Repairs, the published prices or rates that Operator or any of its
Affiliates' charge for such Services and/or Repairs, or if at any time during
the term of this Agreement Operator and its Affiliates do not have published
prices or rates for any Services and/or Repairs, then the normal and customary
charges that are paid by Operator's and its Affiliates' other customers for such
Services and/or Repairs in the United States.
PURPA shall mean the Public Service Regulatory Policies Act of 1978
(U.S.C.A., Title 16, Section 824a-3, subsection (j), as amended, a law of the
United States of America.
Qualifying Cogeneration Facility shall have the meaning set forth in
PURPA.
Rated Capacity shall have the meaning set forth in Section 6.l(b)
hereof.
Rated Capacity Test shall have the meaning set forth in Section 6.1(b)
hereof.
Regional Office shall mean the office established by Operator at
location designated by Owner for the sole purpose (and no others) of
administering and performing its
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obligations under (i) this Agreement, (ii) the Camden O&M Agreement and (iii)
the Linden O&M Agreement.
Reimbursable Costs shall have the meaning set forth in Section 5.2
hereof.
Related Agreements shall mean and include the Power Purchase
Agreements, all easements used in connection with the Facility, the Steam
Purchase Contracts, the Gas Service Agreement, the Water Supply Agreement, the
Site Lease and the order of FERC granting the Facility status as a Qualifying
Cogeneration Facility.
Repairs shall mean services for assembly, disassembly and/or repair
provided by GE Apparatus Service Department, or if at any time during the term
of this Agreement GE Apparatus Service Department does not provide such
services, then such successor entity or other division of GE providing such
services.
Scheduled Outage shall mean a planned outage of the Facility or any
portion thereof necessary for regular inspection and maintenance.
Services shall mean services for assembly, disassembly, diagnosis
and/or repair provided by GE Power Generation Services, or if at any time during
the term of this Agreement GE Power Generation Services does not provide such
services, then such successor entity or other division of GE providing such
services.
Services Discount shall have the meaning set forth in Section 4.8
hereof.
Seventh Year Termination Fee shall have the meaning set forth in
Article VIII hereof.
Site shall mean the certain tract of land located at ▇▇ ▇▇▇▇ ▇▇▇▇ in
Bayonne, New Jersey, upon which the Facility is constructed, such tract being
within the boundaries of the IMTT Bayonne Plant, as more fully described in the
Site Lease, together with easements appurtenant thereto or used in connection
therewith.
Site Lease shall mean that certain Lease Agreement dated October 18,
1986, by and between Bayonne Industries, Inc. and IMTT-Bayonne, as "Lessor," and
Owner, as "Lessee," as amended from time to time.
Special Improvements shall have the meaning set forth in Section 4.4
hereof.
SSOI shall have the meaning set forth in the preamble of this
Agreement.
Standby Boilers shall mean Owner's standby boilers located in IMTT-
Bayonne's boiler house at the IMTT-Bayonne Plant.
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Steam Purchase Contracts shall mean (i) that certain Agreement dated
June 13, 1985, by and between Cogen Technologies NJ, Inc., as "Seller," and
IMTT-Bayonne, as "Buyer," as amended from time to time, (ii) that certain
Agreement dated February 27, 1987, by and between Owner, as "Seller," and Exxon,
as "Buyer," as amended from time to time, such Agreement having been
subsequently assigned by Exxon to IMTT-BX, and (iii) any subsequent or other
agreements entered into by Owner providing for the sale of steam produced at the
Facility.
Steam Purchasers shall mean IMTT-Bayonne, IMTT-BX and any other future
purchasers of steam produced at the Facility.
Target Rated Capacity shall have the meaning set forth in Section
6.1(b) hereof.
Termination Agreement shall have the meaning set forth in the preamble
of this Agreement.
Test Plan shall have the meaning set forth in Section 6.l(b) hereof.
Transition Stage shall have the meaning set forth in Section 2.9(a)
hereof.
Transition Stage Operating Budget shall have the meaning set forth in
Section 2.9(d) hereof.
Transition Stage Operating Plan shall have the meaning set forth in
Section 2.9(d) hereof.
Transition Stage Plan shall have the meaning set forth in Section
2.9(d) hereof.
Unscheduled Maintenance shall mean all maintenance, repair and
replacement requirements of the Facility during each Project Year which are not
contemplated in the Approved Annual Operating Plan, or any approved revision
thereof, for each such Project Year.
W-2 Wages shall mean the amount listed in box 1 on Internal Revenue
Service Form W-2, or if such form ceases to be used, then the sum of such
amounts as would have been included in the calculation of the number to be
inserted in such box 1 if such form were still in use.
Water Supply Agreement shall mean and refer to that certain letter
agreement dated June 1, 1988, by and between Owner and the City of Bayonne, New
Jersey, which guarantees the water supply to the Facility for a period of thirty
(30) years.
Work shall mean all obligations, services, duties and responsibilities
assigned to or agreed to be undertaken by Operator and its subcontractors
pursuant to this Agreement.
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II.
RESPONSIBILITIES OF OPERATOR
2.1 Services Generally. Operator hereby agrees to provide all
operations and maintenance services necessary or advisable in order to safely,
dependably and efficiently operate and maintain the Facility (as contemplated by
the Related Agreements). Without limiting the generality of the foregoing,
Operator shall perform the following services on behalf of Owner in connection
with the operation and maintenance of the Facility:
(1) Provide all services necessary or advisable to use, operate and
maintain the Facility's three (3) gas turbine units and associated waste heat
steam generators arranged in combined cycle with one (1) steam turbine in good
operating condition with the objective of maximizing output of steam and
electricity while minimizing Fuel consumption consistent with (i) Prudent
Utility Practices, (ii) the thermal and mechanical limits and other requirements
specified in the nameplates thereon or in vendor and manufacturer warranty
requirements or recommendations relating thereto so as to maximize the residual
value of the Facility, (iii) the applicable terms of the Related Agreements and
all easements related to the operation of the Facility and the sale of steam and
electricity, (iv) all applicable federal, state and local laws, regulations,
orders, licenses, approvals, certificates and permits, including all Qualifying
Cogeneration Facility requirements, (v) procedures established pursuant to the
Facility Data and the Operating Procedures as revised from time to time, (vi)
the requirements of insurance policies required hereunder and Owner's insurance
carrier so as to maintain insurance coverage in full force and effect with
respect to the Facility or any part thereof, (vii) the applicable Annual
Operating Plan, and (viii) the reasonable instructions of Owner;
(2) Maintain the Facility, including, without limitation, its associated
facilities, structures, buildings and offices, all interconnections with Steam
Purchasers' facilities up to the Steam Purchasers' meters, all interconnections
with PSE&G up to the potheads located on the Site, all mechanical and electrical
systems and controls, drainage systems, air pollution control and water
treatment facilities, access roads, security fencing and all other Equipment,
and (i) develop, implement and maintain a maintenance management program which
(a) meets all applicable vendor and manufacturer warranty and preventive and
predictive maintenance requirements and specifications, (b) meets Prudent
Utility Practices, and (c) includes provisions for continuously improving such
program, (ii) develop, implement and maintain emergency preparedness procedures
that allow an immediate and appropriate response to events such as fires,
explosions, bomb threats, release of toxic chemicals, employee illnesses and
other accidents, (iii) perform or cause to be performed routine and scheduled
inspections, and monitoring of the Facility and daily work (such as cleaning the
Equipment and maintaining levels of liquids), (iv) perform or cause to be
performed all necessary Unscheduled Maintenance, subject to Owner's approval
when required pursuant to Section 4.5 hereof, and (v) perform or cause to be
performed such overhaul or repair of major components of the Equipment (the
"Major Overhauls") and perform such replacement of major components of the
Equipment
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(the "Capital Improvements") as may be recommended or required by the
manufacturer of any such Equipment or requested by Owner or as may become, in
Operator's reasonable discretion, upon consultation with and approval from
Owner, otherwise necessary or appropriate;
(3) Establish and maintain an effective work force required for the
operation and maintenance of the Facility in accordance with the terms of this
Agreement and the Related Agreements through proper hiring, training,
supervising and qualifying procedures, and administer all matters pertaining to
labor relations, salaries, wages, working conditions, hours of work, termination
of employment, employee benefits, safety and all related matters in connection
with these duties in accordance with applicable laws;
(4) Maintain or cause to be available a sufficient number of personnel
adequately trained in effective operation and maintenance such that the Facility
can be operated in accordance with the terms of this Agreement and the Related
Agreements in the event of a strike by or other labor problem with Operator's
normal work force;
(5) Maintain an inventory of spare parts, Consumables and items of
equipment as Owner requires or, subject to Owner's prior approval, as Operator
determines are necessary or advisable to perform the operation and maintenance
services required hereunder, provided that (i) Operator shall surrender such
inventory to Owner upon termination of this Agreement and (ii) the cost of
maintaining such inventory shall be a Reimbursable Cost to Operator;
(6) Coordinate with Owner all deliveries and services under and monitor the
contracts with respect to Consumables, water, and Fuel; review performance under
such contracts and determine compliance therewith; and to the extent not
hereinafter undertaken by Owner, perform Owner's obligations under such
contracts;
(7) Maintain a spare parts and tools inventory control and reporting
system, which system shall include, without limitation, (i) procedures for
receiving, storing, trending the history of and cataloging spare parts and
tools, (ii) the ability to access the inventory of spare parts and tools for the
Camden Facility and (iii) the ability to access the inventory of spare parts and
tools for the linden Facility; and store spare parts and tools on the Site and
at a central location in conjunction with the storage of spare parts and tools
for the Camden Facility and the Linden Facility in a manner reasonably
calculated to assure their continued good condition, including storage in
accordance with vendors' and manufacturers' warranty requirements and
recommendations in order to insure them against risks reasonably expected to
occur during periods of such storage. The decision as to which spare parts will
be stored on Site and which spare parts will be stored at a central location
shall be mutually agreed upon by Owner and Operator;
(8) Schedule, hire, and supervise subcontractors and vendors as may be
necessary for the performance of the services required hereunder and regularly
provide
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Owner with an updated list of all such subcontractors and vendors; provided that
(i) Operator shall obtain owner's prior written approval of any subcontractor or
vendor intended to be used for Major Overhauls, Capital Improvements or
operation of the Facility, (ii) Operator shall remain fully liable for the
management and satisfactory performance of its subcontractors and vendors, (iii)
Operator shall use reasonable efforts to ensure that all contracts and sub-
contracts can be freely assigned to Owner or a successor operator on termination
of this Agreement and (iv) Owner may, upon delivery of written notice to
Operator, require that a subcontractor or vendor be replaced in the event that
Owner considers that such subcontractor's or vendor's performance has been
unsatisfactory;
(9) Assist Owner in maintaining good community relations;
(10) Maintain good labor relations and, to the extent the work force at the
Facility is or becomes affiliated with labor unions, use best efforts to obtain
a no strike clause in any collective bargaining agreement and consult with and
obtain approval from Owner before taking any action inconsistent with any such
collective bargaining agreement;
(11) On behalf of Owner, generate, maintain and store all operating and
maintenance logs (which shall include an up-to-date record of (i) real and
reactive power production for each clock hour, (ii) Fuel consumption, (iii)
steam output, (iv) emission outputs, (v) water consumption, (vi) changes in
operating status, Scheduled Outages and Forced Outages, (vii) all OSHA
reportable and lost time accidents, and (viii) any unusual conditions found
during inspections) relating to the use, operation and maintenance of the
Facility. All such information shall be considered proprietary and confidential
information and shall not be disclosed to any third party for any reason without
the prior written consent of Owner;
(12) Maintain current revisions of all Facility drawings and
specifications, technical documents, instruction books, equipment diagrams and
other information illustrating a material, product or system relating to the
Facility;
(13) Keep accurate cost ledgers regarding the Work pursuant to the terms of
Section 15.1 hereof and in accordance with generally accepted accounting
principles, consistently applied, in such forms as shall be reasonably required
by Owner;
(14) Maintain records and provide to Owner all data and/or reports required
of Owner and/or Operator to federal, state and local agencies (excluding any
reports to be filed for federal, state and local income tax purposes);
(15) Assist Owner in the renewal and maintenance of all licenses, approvals
and permits required in connection with the operation and maintenance of the
Facility, as modified from time to time;
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(16) Collect, handle, transport and dispose of all waste and refuse from
the Site in accordance with all applicable laws, provided that Owner signs all
manifests prior to waste leaving the Site;
(17) Provide reasonable access to the Facility and all records relating to
the operation and maintenance of the Facility to all agents, representatives and
inspectors of Owner, Lender and governmental authorities;
(18) Monitor the sufficiency of the Fuel, water and backup electrical power
supplied to the Facility in terms of quality and quantity and advise Owner of
any deficiency thereof and any noncompliance of Fuel with the appropriate
specifications; work directly with suppliers of the Fuel, water and backup
electrical power to ensure adequate deliveries, and likely future requirements
for the Facility; and verify invoices with respect thereto for payment by Owner;
(19) Supply all tools, materials and services necessary or advisable for
the operation and maintenance of the Facility, including, but not limited to,
(i) all such materials, tools, equipment and services required for the day to
day operation and maintenance of the Facility and (ii) all Consumables,
including, without limitation, lubricating oils, chemicals, filters and greases
recommended by equipment manufacturers and suppliers or as required to operate,
maintain and protect the Facility;
(20) Take reasonable precautions for the safety of personnel performing
operations and maintenance services and comply with (i) all safety rules and
guidelines outlined in the Facility Data and (ii) all applicable federal, state
and local safety laws, regulations, orders, licenses, approvals, certificates,
permits, and other safety requirements (including, without limitation,
applicable requirements under OSHA) necessary or advisable to prevent accidents
or injury to persons or damage to property on, about or adjacent to the Site,
including erecting and properly maintaining guards and barriers as needed for
the protection of workers and the public and posting danger signs warning
against any hazards on the Site; and strive to eliminate or ▇▇▇▇▇ safety hazards
created by or otherwise resulting from the performance of its operations and
maintenance services hereunder;
(21) Conduct, and allow Owner to participate in, the process of
interviewing, selecting and hiring individuals to fill the Key Personnel
positions and complete such process no later than the Existing O&M Agreement
Termination Date, all such individuals being subject to Owner's approval, and in
the event any such Key Personnel positions become vacated during the term of
this Agreement, Operator shall conduct, and allow Owner to participate in, the
process of interviewing, selecting and hiring replacements to fill such
vacancies, all such replacements being subject to Owner's approval. Without the
prior written approval of Owner, Operator shall not remove any individual from a
Key Personnel position prior to such individual being in such position for a
minimum of two (2) years; provided, however, if Owner notifies Operator that the
performance of an
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individual is unsatisfactory, then Operator shall promptly replace such
individual in accordance with the terms hereof;
(22) Participate in and provide services during the Transition Stage, as
set forth in Section 2.9 hereof;
(23) Exercise Owner's rights under subcontractor and vendor warranties,
monitor and report to Owner concerning the remaining term of all warranties and,
prior to the expiration of any such warranty, perform such inspections as are
reasonable to ensure that any final warranty work is not required; provided,
however, Operator shall not file suit to enforce any such warranty without the
prior written consent of Owner;
(24) Keep and maintain the Facility free and clear of all liens and
encumbrances resulting from performance of the Work by Operator or its
subcontractors;
(25) Keep Owner informed of the operating status of the Facility through
daily, weekly and monthly reports, as may be agreed on from time to time,
through ongoing written and verbal communication;
(26) Determine and recommend to Owner for approval any necessary or
advisable Capital Improvements, modifications or alterations to the Facility;
(27) Determine the need for any change, deletion or addition to the
obligations, services or duties performed by Operator pursuant to this Section
2. 1 and the change in cost attributable thereto, if any, where such change,
deletion or addition is caused by a reason outside of the control of Operator,
including, without limitation, a Capital Improvement or change in Operating
Procedures. Except as provided in Section 2.6 hereof, any change, deletion or
addition to the obligation, services or duties specifically enumerated in this
Section 2.1 shall be submitted to Owner for approval, prior to implementation,
as a modification to the Approved Annual Operating Plan for the given Project
Year;
(28) Work diligently to operate and maintain the Facility in a first-class
manner and provide all other work as is reasonably necessary or advisable to
perform Operator's operations and services pursuant to this Agreement;
(29) Maintain all insurance coverage as required to be provided by Operator
under Article X hereof;
(30) Comply with the terms and conditions of each Approved Annual Operating
Plan, this Agreement and the Related Agreements;
(31) Operate and maintain the Standby Boilers;
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(32) Maintain a document control system for documents critical to Facility
operation and maintenance;
(33) Without any duty of inquiry, notify Owner if Operator becomes aware of
(i) a default by any of the parties to the Related Agreements, (ii) any breach
of any consents, licenses or permits which are required in connection with
operation of the Facility, (iii) any occurrence which constitutes a violation of
law or (iv) the occurrence of any event of force majeure under the Related
Agreements;
(34) Be responsible for payment in respect of fines and penalties imposed
on it or on Owner for breaches of applicable laws, permits or licenses where
such fines or penalties result from a failure by Operator to comply with Prudent
Utility Practices;
(35) Assist and cooperate with Owner in obtaining Owner status as a
"qualified business" under and complying with the New Jersey Urban Enterprise
Zones Act;
(36) As soon as reasonably practicable notify Owner, Power Purchasers and
Steam Purchasers of any outage, whether or not such outage is scheduled; and
(37) Setup, staff, operate and maintain the Regional Office.
2.2 Compliance with Related Agreements. Operator (i) has reviewed the
Related Agreements, (ii) shall abide by all of the terms thereof applicable to
the operation and of the Facility pursuant to the terms of this Agreement and
(iii) shall not operate and maintain the Facility in a manner which would cause
Owner to be in breach of any of the terms of the Related Agreements. Owner shall
provide Operator with written notice of any changes to such terms that may
affect Operator's provision of operation and maintenance services hereunder, and
such notice, unless otherwise agreed in writing by the parties, shall modify
Operator's obligation hereunder. This Section 2.2 shall not be deemed to make
Operator a party to any or all of the Related Agreements.
2.3 QF status. Operator shall operate and maintain the Facility so as
to maintain its status as a Qualifying Cogeneration Facility.
2.4 Annual Operating Plan. (a) Subject to the terms of the next
succeeding sentence hereof, not later than one hundred twenty (120) days prior
to the first day of each Project Year, Operator shall prepare and submit to
Owner for approval a proposed operating and maintenance plan providing
information for each month during the upcoming Project Year (the "O&M Plan").
The O&M Plan for the first, Project Year shall be submitted to Owner for
approval on the date on which this Agreement is executed unless previously
submitted. The O&M Plan shall describe, in detail acceptable to Owner and on a
monthly basis, anticipated maintenance and overhaul schedules, staffing plans,
equipment acquisitions and spare parts and Consumables inventories (including a
breakdown of capital items and expense items), schedules of subcontract
services, plant performance data regarding required environmental performance,
projected Fuel
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usage and such other matters as Owner may reasonably require. Any actions
proposed under the O&M Plan shall be consistent with the Facility Data, the
Operating Procedures, Prudent Utility Practices, the Related Agreements and this
Agreement. Contemporaneously with the delivery of the O&M Plan, Operator shall
submit to Owner a proposed budget for operating and maintaining the Facility
during the upcoming Project Year (the "Operating Budget"), which shall include
the estimated cost, based on time and materials and all fees contemplated in
this Agreement, for all anticipated operating and maintenance services to be
provided by Operator during each month of the upcoming Project Year in the
account structure and format provided by Owner (the O&M Plan and the Operating
Budget are hereinafter sometimes together called the "Annual Operating Plan").
When approved pursuant to subparagraph (b) below, the Annual Operating Plan
shall be an "Approved Annual Operating Plan" and shall consist of an "Approved
O&M Plan" and an "Approved Operating Budget".
(b) Owner shall give its approval or disapproval of the Annual
Operating Plan no later than thirty (30) days after receipt thereof from
Operator. If Owner objects to all or any portion of the proposed Annual
Operating Plan, Owner shall furnish its objections in writing to Operator, and
Owner and Operator shall amend such Annual Operating Plan in order to
accommodate to Owner's satisfaction those items to which Owner objects.
(c) An Approved Annual Operating Plan shall constitute authorization
for Operator to operate and maintain the Facility in accordance with such
Approved Annual Operating Plan and the terms of this Agreement, it being
recognized and agreed that Operator shall operate and maintain the Facility in a
prudent and efficient manner so as to maximize both the current performance and
the residual value of the Facility and shall endeavor to ensure that the actual
costs of operating and maintaining the Facility are as low as reasonably
practicable and in any event do not exceed the Approved Operating Budget either
in total or, to the extent reasonably practicable, in any one budgetary
category. Operator shall notify Owner as soon as reasonably possible of any
significant deviations or discrepancies between the costs and expenses actually
incurred by Operator during each Project Year and the costs and expenses
projected to be incurred by Operator as set forth in the Approved Operating
Budget for each such Project Year.
(d) In the event Operator desires to request an adjustment to an
Approved Annual Operating Plan at any time during the Project Year, Operator
shall submit a proposed revised Annual Operating Plan for Owner's consideration,
which Owner shall approve or disapprove within fifteen (15) days after
submission thereof. If the proposed revised Annual Operating Plan is disapproved
by Owner within such fifteen (15) day period, Owner shall furnish Operator with
the reasons for such disapproval and shall immediately begin discussions with
Operator in an effort to reach a mutually agreeable revised Annual Operating
Plan. Upon such agreement, Operator shall revise the Annual Operating Plan with
respect thereto. Until the revised Annual Operating Plan is approved in writing
by Owner, Operator shall not, except in an emergency as described in Section 2.6
hereof, act outside of the Approved Annual Operating Plan for such Project Year
without the prior written consent of Owner. Once approved, Operator's authority
as to the revised, or any additionally revised, Annual Operating Plan shall be
the same as that authorized for the original Approved Annual Operating Plan.
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2.5 Monthly Summary. Within two (2) business days after the end of
each calendar month of each Project Year, Operator shall submit to Owner, in a
form reasonably acceptable to Owner, a preliminary report containing operating
data, meter readings, and other billing documentation for such month sufficient
to generate monthly invoices for the sale of electricity and steam produced at
the Facility. In addition, within ten (10) days after the end of each month of
each Project Year, Operator shall submit to Owner, in a form similar to Exhibit
A attached hereto and made a part hereof for all purposes and otherwise
acceptable to Owner, a monthly operating report summarizing in reasonable detail
all areas of operation and maintenance and all activities performed by Operator
during such month. Operator shall submit the proposed forms of such reports to
Owner for approval on or before thirty (30) days after the date on which this
Agreement is executed.
2.6 Emergencies. Immediately upon the occurrence or imminent
likelihood of an accident or emergency involving the Facility or adjoining
property and endangering the safety of any person or property, or materially
adversely affecting the performance of the Facility or the Facility's compliance
with applicable law, Operator shall, after consultation with the Plant Manager
if the circumstances allow, and without the necessity of obtaining any other
approvals which might otherwise be required hereunder and exercising reasonable
care without special instruction or authorization from Owner, take any
reasonable and necessary or advisable action deemed by Operator to be reasonably
necessary or advisable under the circumstances to prevent, avoid or mitigate
injury, damage or loss to persons or property or to avoid penalties, fines or
damages under applicable law. Operator shall notify Owner thereof as soon as
practicable.
2.7 Inspections.
(a) In addition to its daily activities associated with the operation
and maintenance of the Facility, Operator shall conduct inspections of the
Facility at regular intervals, as required by vendors' or manufacturers'
recommendations and Prudent Utility Practices. Within ten (10) days after the
Execution Date for the first (1st) Project Year and no later than one hundred
twenty (120) days prior to each Project Year thereafter, Operator shall submit
to Owner for approval Operator's proposed inspection schedule (which inspection
schedule shall be included as part of each O&M Plan to be submitted to Owner)
and shall incorporate into the proposed inspection schedule any reasonable
amendments proposed by Owner. Any inspection conducted pursuant to this Section
2.7 shall be conducted in such a manner so as to minimize the impact on the
production of electricity and steam from the Facility.
(b) During such inspections, Operator shall make any necessary
decisions and promptly perform all Work as may be necessary to effect (after
Owner's approval, if necessary) the maintenance, repair or replacement of any
part of the Facility the necessity of which becomes apparent during such
inspection.
(c) Within twenty (20) business days after (i) each inspection and
(ii) the completion of any maintenance or repair work performed after such an
inspection, Operator shall prepare and deliver to Owner a report of the results
of such inspection or any Work completed
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after such inspection, as the case may be, containing a summary of Operator's
observations and recommendations relating thereto. Operator shall arrange for
its personnel to attend any meetings or conferences with Owner's personnel as
Owner may from time to time request to review the results of Operator's
inspections and maintenance work.
(d) Operator shall cooperate in connection with inspections of the
Facility by Owner, the Plant Manager, Lender and any other designees of Owner.
Such inspections may occur at any time, provided that they do not unreasonably
interfere with the performance of Operator's obligations hereunder, and further
provided that if Owner or Owner's designated representative desires to conduct
any such inspection after normal business hours, Owner shall give Operator
reasonable notice thereof. Operator agrees to correct, in accordance with the
terms of Section 7.2 hereof, any failure to comply with the obligations and
standards set forth in this Agreement for the operation and maintenance of the
Facility.
2.8 Operating Procedures and Training.
(a) Owner and Operator shall use due diligence to obtain from any
Equipment vendor or manufacturer all instruction manuals and spare parts lists
not timely submitted by such Equipment vendor or manufacturer, it being
understood that Owner shall coordinate this effort with Operator's assistance
and Owner may pursue all appropriate rights and remedies available to Owner
under any equipment supply agreements. To the extent any supplementary materials
are required for Operator training that are not provided by Equipment vendors or
manufacturers, Operator shall provide such materials, at Operator's sole cost
and expense, except where such supplementary materials are required in
connection with a Reimbursable Cost. "Operator shall review the operating
procedures in effect at the Facility as of the Execution Date (the "Operating
Procedures") and shall prepare and submit to Owner a complete set of revisions
to the Operating Procedures sufficient to ensure the continued safe and
efficient operation and maintenance of the Facility in accordance with vendors'
and manufacturers' warranty requirements and recommendations, Prudent Utility
Practices, the Related Agreements and this Agreement. The Operating Procedures
shall, among other things, include Facility specific preventive and predictive
maintenance procedures integrating (i) vendor and manufacturer recommendations
and warranty requirements, (ii) requirements of the Related Agreements, (iii)
Operator's experience, (iv) adequate safety and fire prevention, response and
reporting measures and procedures, (v) adequate security measures and
procedures, and (vi) the monitoring of the performance of the Facility. In
addition, the Operating Procedures shall include, without limitation, (i)
employee manuals outlining proper employee conduct and general expectations,
rules and procedures, (ii) safety manuals, (iii) emergency preparedness and
response manuals, and (iv) environmental compliance manuals. Within twenty (20)
days of Owner's receipt thereof, Owner shall review revisions to the Operating
Procedures, provide reasonable written comments and suggestions, and Operator
shall duly consider such comments and suggestions in revising the Operating
Procedures. Owner's review and approval of the Operating Procedures shall not
relieve Operator of its obligation to operate and maintain the Facility in
accordance with this Agreement. Operator shall, as often as necessary but not
less often than annually, review and, if necessary, revise and update
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the Operating Procedures, but shall not implement any amendments thereto without
Owner's prior written consent.
(b) Operator shall provide training materials, instructional
personnel and management oversight as necessary to develop and implement a
comprehensive training program for operation of the Facility (including the
Standby Boilers). Operator shall ensure that its personnel are fully trained and
qualified to operate and maintain the Facility in accordance with vendors' and
manufacturers' warranty requirements and recommendations, Prudent Utility
Practices, the Related Agreements and this Agreement.
2.9 Transition Stage.
(a) As the Existing O&M Agreement Termination Date approaches, an
orderly transition from SSOI to Operator must occur. Operator shall participate
in an orderly process of transition from the operation and maintenance of the
Facility by SSOI to the operation and maintenance of the Facility by Operator
(the "Transition Stage"). For purposes of this Agreement, the Transition Stage
shall have commenced as of the Execution Date. During the Transition Stage,
Operator shall cooperate and coordinate with SSOI and shall report to and be
subject to the authority of Owner.
(b) During the Transition Stage, Operator shall (i) plan and prepare
for hiring of the personnel necessary for the operation and maintenance of the
Facility, (ii) establish the Annual Operating Plan for use during the first
(1st) Project Year and obtain approval of Owner thereof, (iii) establish the
inspection schedule for the Facility (which inspection schedule shall be
included as part of the first (1st) Annual Operating Plan and shall be the same
for the first Project Year as the inspection schedule established for such
period of time pursuant to the terms of the Existing O&M Agreement unless Owner
or Operator recommends a change to such inspection schedule) and obtain approval
of Owner thereon, (iv) prepare a detailed monthly report format as described in
Section 2.5 hereof and obtain approval of Owner thereon, and (v) set up and
staff the Regional Office.
(c) At such time as Owner has given written notice to Operator to
commence Transition Stage operations, Operator shall make available, on a phase-
in basis, sufficient personnel experienced in the operation and maintenance of
cogeneration facilities such as the Facility. In addition, Operator shall
perform all such duties and obligations otherwise set forth in this Agreement to
the extent that such duties and obligations are not inconsistent with its
transition role.
(d) Using a format similar to that described in Section 2.4 hereof for
the development of the Annual Operating Plan, Operator shall prepare and submit
to Owner a "Transition Stage Operating Plan," comprised of the "Transition
Stage Plan" and the "Transition Stage Operating Budget." The Transition Stage
Operating Plan shall include expenditures and activities to occur during the
Transition Stage as described in this Section 2.9, and shall be submitted to
Owner for its review and comment on the Execution Date. If Owner objects to all
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or any portion of the proposed Transition Stage operating Plan, Owner shall
promptly furnish its objections to Operator, and Owner and Operator shall work
diligently to resolve such objections.
(e) During the Transition Stage, Operator shall review and report to
the Owner on the status of, and where appropriate, make written recommendations
to Owner with respect to (i) operation and maintenance facilities, tools,
equipment, supplies and spare parts inventories, (ii) reporting, accounting,
maintenance management and communication systems necessary for Operator to
operate and maintain the Facility in accordance with the terms of this
Agreement, (iii) security and safety systems and plans, including any necessary
or desirable special clothing or safety gear for operations and maintenance
personnel, and (iv) such other facilities and systems as shall be necessary or
desirable to operate and maintain the Facility and to fulfill Operator's ongoing
responsibilities under this Agreement.
(f) Upon the Existing O&M Agreement Termination Date, care, custody
and control of the Facility will pass from SSOI to Owner under the terms of the
Existing O&M Agreement and from Owner to Operator under the terms of this
Agreement and the Transition stage shall end. Operator shall thereafter operate
and maintain the Facility in accordance with this Agreement and provide any and
all technical and engineering support required for the safe and efficient
operation and maintenance of the Facility.
(g) During the Transition Stage, Operator or its authorized
representative shall, if reasonably requested by Owner, attend any and all
review meetings between SSOI and Owner. Operator shall, if reasonably requested
by Owner, review and comment upon plans, specifications, documents, or other
data generated by SSOI.
2.10 Limited Authority. Operator shall not have any authority to (i)
negotiate any change to the tariff under the Power Purchase Agreement, (ii)
settle or compromise claims on behalf of Owner under any Related Agreement,
(iii) agree to any amendments to, or waivers, consents or approvals in
connection with, any Related Agreement, (iv) serve any notice of a breach under
any of the Related Agreements, or (v) transfer, dispose of, lease or create any
encumbrance on any assets of Owner.
III.
RESPONSIBILITIES OF OWNER
3.1 Services, Operations, Obligations. Except as otherwise provided
in Section 3.1(3) hereof, Operator shall have no obligation to provide any of
the following services or perform any of the following work which services and
work shall be provided and performed by Owner:
(1) Arrange for a supply of Fuel and water, at no cost to Operator, in such
quantities as are necessary for the performance by Operator of the Work;
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(2) Provide for the sale of steam and electricity generated by the Facility
and for the billing and Collection of revenues therefrom;
(3) Obtain or cause to be obtained all governmental licenses, permits and
approvals necessary to operate the Facility, including environmental licenses,
permits and approvals; provided, however, that Operator shall (i) provide to
Owner such technical information and other assistance as is required from time
to time to obtain licenses, permits or approvals or renewals or extensions
thereof and (ii) keep such records and provide such reports to appropriate
governmental agencies as may be required of Owner or Operator by any such
licenses, permits and approvals;
(4) Designate and advise Operator of the Plant Manager (who shall act and
be designated as Owner's authorized representative);
(5) Provide and grant to Operator full access to the Facility and such
portions of the Site as are necessary to allow Operator to perform the Work;
(6) Arrange for start-up power and back-up power in such quantities as is
necessary for the performance by Operator of the Work;
(7) Pay all applicable federal, state and local taxes (except for sales
taxes which are the responsibility of Operator) attributable to the Facility and
the sale of steam and electricity therefrom, including the preparation of all
tax returns and reports to be filed for federal, state and local income tax
purposes; and
(8) Maintain all insurance coverage as required to be provided by Owner
under Article X hereof.
3.2 Payments. Owner shall compensate Operator for the Work performed
hereunder pursuant to the terms of Articles IV, V and VI hereof.
3.3 Right to Perform Upon Operator's Default. If at any time Operator
fails to perform any obligation hereunder and such failure is likely to cause
injury to any person or damage to the Facility, to exceed or breach the terms or
conditions of any permit or easement, or to breach the terms of any Related
Agreement, Owner, in addition to all other rights and remedies it has under this
Agreement, may, but shall have no duty to, perform or have performed by a third
party any such obligation not performed by Operator. Such performance by Owner
shall reduce any compensation payable to Operator hereunder during the
Transition Stage or in any Project Year by an amount equal to the cost to Owner
of effecting such performance.
-22-
IV.
OPERATING COSTS AND EXPENSES
4.1 Procedure for Incurring Cost. Owner, and not Operator, shall be
ultimately liable for all Reimbursable Costs and Direct Costs expended hereunder
in connection with the Facility and Operator shall receive payment for
Reimbursable Costs in accordance with the terms of Sections 5.2 and 5.4 hereof.
Operator shall submit a written requisition to Owner for any single item
requiring an expenditure in excess of Five Thousand and 00/100 Dollars
($5,000.00) or as otherwise may be required by Owner, and after receipt of
written approval from Owner, but not before, Operator shall be authorized to
prepare Operator's purchase order for such item. Operator shall (i) verify the
receipt at the Site of all materials and services to be delivered to the
Facility covered by Owner's and Operator's purchase orders, (ii) verify the
accuracy of vendors' invoices in connection therewith, and (iii) forward
invoices for Direct Costs to Owner for approval, processing, and payment by
Owner in accordance with the terms of Section 4.2 hereof.
4.2 Procedure for Payment of Direct Costs. Operator shall
periodically, but not more often than once a week, deliver to Owner invoices
received by Operator from third parties for all Direct Costs, accompanied by a
summary of all such invoices which itemizes all such invoices by operating cost
account number. Such invoices shall also be accompanied by a statement from
Operator confirming that all such invoices are accurate, due and payable,
together with all relevant documentation reasonably necessary for Owner to
verify the accuracy thereof. Each invoice submitted to Owner shall be paid by
Owner directly to the payee of such invoice on or before the date such invoice
is due, provided that if Owner disputes any amount set forth in any such
invoice, Owner shall pay the undisputed portion on or before such due date, and
Owner, Operator and such payee shall attempt in good faith to resolve all
disputed items as soon as reasonably practicable.
4.3 Limitation on Ability to Incur Direct Costs. Operator shall
prepare Operator's purchase order for costs and expenses incurred in connection
with the operation and maintenance of the Facility during each month of a
Project Year pursuant to the terms hereof, to the extent and only to the extent
such costs and expenses:
(i) are included within the Approved Operating Budget, and any
approved revision thereof, for the applicable Project Year;
(ii) are incurred in connection with the performance of any
Unscheduled Maintenance, Special Improvements or Capital Improvements as
approved in writing by Owner;
(iii) are incurred in connection with an emergency under Section 2.6
hereof; or
(iv) are otherwise approved by Owner in writing.
-23-
4.4 Payment for Special Improvements. The actual cost of any
alterations, modifications, improvements or additions to the Facility which are
required by any governmental or regulatory agency or are otherwise required to
comply with applicable laws, regulations or requirements ("Special
Improvements") shall be the sole responsibility of Owner. If any such costs are
necessary or advisable and become known to Operator, Operator shall promptly so
inform Owner who shall promptly determine the most feasible manner in which to
pay for such costs. Operator shall not be authorized to incur any expenditure in
relation to any Special Improvements without the prior written consent of Owner.
4.5 Payment for Unscheduled Maintenance. The actual cost of
Unscheduled Maintenance shall be the sole responsibility of Owner. Operator
shall not incur any expenditure in relation to any Unscheduled Maintenance
without the prior written consent of Owner, except in the event of an emergency
as described in Section 2.6 hereof.
4.6 Payment for Major Overhauls. The actual cost of Major Overhauls
shall be the sole responsibility of Owner. Operator shall not incur any
expenditure in relation to any Major Overhauls without the prior written consent
of Owner.
4.7 Payment for Capital Improvements. The actual cost of Capital
Improvements shall be the sole responsibility of Owner. Operator shall not incur
any expenditure in relation to any Capital Improvements without the prior
written consent of Owner.
4.8 GE Equipment. Owner agrees to purchase from Operator, and Operator
agrees to sell to Owner, (i) all Parts that Owner desires to purchase during the
term of this Agreement for GE Equipment, at a discount of thirty-five percent
(35%) less than the Published Price for such Parts (the "Parts Discount"), (ii)
all Services that Owner desires to purchase during the term of this Agreement
for GE Equipment, at a discount of fifteen percent (15%) less than the
Published Price for such Services (the "Services Discount") and (iii) all
Repairs that Owner desires to purchase during the term of this Agreement for GE
Equipment, at a discount of fifteen percent (15%) less than the Published Price
for such Repairs. The parties anticipate that, over the term of this Agreement,
Operator will sell to Owner, and Owner will purchase from Operator, Parts and
Services for GE Equipment based on the schedule set forth on Exhibit C attached
hereto and made a part hereof for all purposes, which Parts and Services have an
estimated value of approximately Twenty-Five Million and 00/100 Dollars
($25,000,000.00) based on current prices and including the Parts Discount and
Services Discount. The foregoing provisions of this Section 4.8 are expressly
made, subject to the following:
(a) the foregoing shall not be construed as an obligation by Owner to
purchase from Operator any Parts, Services and/or Repairs for GE
Equipment during the term of this Agreement, but is only an
obligation by Owner that if Owner does in fact purchase any Parts,
Services and/or Repairs for GE Equipment during the term of this
Agreement, then Owner shall purchase such Parts, Services and/or
Repairs for GE Equipment from Operator;
-24-
(b) the decision whether to purchase Parts, Services and/or Repairs
for GE, Equipment and the timing of any such purchases shall be
made by Owner in Owner's sole and absolute discretion;
(c) if at any time Operator is unable to provide Parts, Services
and/or Repairs for GE Equipment in a timely or cost effective
manner, then Owner shall have the right to obtain such Parts,
Services and/or Repairs that Operator is unable to provide in a
timely or cost effective manner from alternate sources;
(d) Owner shall evaluate Operator on its performance in managing each
Forced Outage and Scheduled Outage in a cost effective and time
efficient manner, and, subject to Owner's sole and complete
discretion, refund to Operator up to fifty percent (50%) of the
Services Discount attributable to the Services performed during
such outage; and
(e) upon the expiration or other termination of this Agreement, Owner
shall have no further obligation to purchase from Operator, and
Operator shall have no further obligation to sell to Owner, Parts,
Services and/or Repairs for GE Equipment.
Owner shall have the right to have a financial audit of Operator's books,
accounts and records conducted by a third party selected by Owner which is
reasonably acceptable to Operator for the sole purpose of verifying the accuracy
of the Published Prices, including, without limitation, the right to audit such
books, accounts and records to determine the prices and rates for Parts,
Services and/or Repairs for GE Equipment paid by Operator's and its Affiliates'
other customers; provided, however, the results of such audit and the books,
accounts and records reviewed in connection therewith shall be deemed to be
Operator Confidential Information. If such audit reveals errors in the
calculation of any amounts paid by Owner. Operator shall promptly reimburse
Owner for any amounts improperly paid by Owner. Furthermore, if such audit
reveals errors of more than two percent (2%) in the calculation of the Published
Prices, then Operator shall pay to Owner the cost of the audit.
4.9 Wage Increases in Excess of CPI. In the event that Operator finds
it necessary to increase salaries and/or wages, then, without the prior written
consent of Owner, Operator shall not increase the Effective Hourly Rate from one
Project Year to the next Project Year by an amount which exceeds the percentage
increase in the Base Index from the beginning of such Project Year to the
beginning of such next Project Year; provided, however, there shall be no
obligation on behalf of Owner to approve any such increase in salaries and/or
wages.
-25-
V.
PAYMENTS TO OPERATOR
5.1 O&M Fee. As compensation for the performance of the Work by
Operator, Owner shall pay to Operator an operations and maintenance fee in the
amount of Fifteen Thousand Six Hundred Twenty-Five and 00/100 Dollars
($15,625.00) per month (the "O&M Fee"), beginning with the thirteenth (13th)
full calendar month after the month in which the Existing O&M Agreement
Termination Date occurs and continuing for each month thereafter throughout the
term of this Agreement. The O&M Fee shall be payable monthly, in arrears, with
the first such payment being due and payable on the last business day of the
thirteenth (13th) full calendar month after the month in which the Existing
O&M Agreement Termination Date occurs, and with a like payment on the last
business day of each month thereafter throughout the term of this Agreement. If
the last day of the term of this Agreement does not fall on the last day of a
month, the O&M Fee for such partial month shall be prorated. If during the term
of this Agreement conditions or circumstances change from those in effect on
the Existing O&M Agreement Termination Date such that there is either a material
increase or decrease in the responsibilities and obligations of Operator
hereunder from those responsibilities and obligations of Operator as of the
Existing O&M Agreement Termination Date, then Owner and Operator shall meet and
negotiate an equitable adjustment to the O&M Fee.
5.2 Reimbursable Costs. To the extent not paid by Owner as Direct
Costs pursuant to Article IV hereof, Owner shall reimburse Operator for those
costs and expenses actually incurred by Operator in connection with the
operation and maintenance of the Facility during each month of a Project Year or
during the Transition Stage pursuant to the terms hereof, to the extent and only
to the extent such costs and expenses (collectively, the "Reimbursable Costs")
are:
(i) included within the approved Transition Operating Budget and any
approved revision thereof;
(ii) included within the Approved Operating Budget, and any approved
revision thereof, for the applicable Project Year;
(iii) incurred in connection with the performance of any Unscheduled
Maintenance as approved in writing by Owner;
(iv) incurred in connection with an emergency under Section 2.6 hereof;
(v) subject to the limitations set forth in Section 4.9 hereof, the
actual salaries, straight time hourly wages and overtime hourly
wages (including vacation and holiday pay for hourly personnel)
for all Operator Personnel (whether employed directly by Operator
or through a contractor) to the extent pertaining to the Work,
plus (a) the actual cost of associated payroll taxes,
unemployment and disability insurance, worker's compensation,
fringe
-26-
benefits and other statutory compensation or all such Operator
Personnel to the extent pertaining to the Work and (b) five
percent (5%) of the W-2 Wages for all such Operator Personnel
to the extent pertaining to the Work ((a) and (b) above
collectively referred to herein as "Operator Personnel
Overhead"); provided, however, the amount of Operator Personnel
Overhead, other than such Overhead that is required by law, that
is allowed to be included in Reimbursable Costs shall be limited
to (x) twenty-three and 05/100 percent (23.05%) of the W-2 Wages
for all such Operator Personnel per Project Year during each of
the first (1st) through fifth (5th) Project Years and (y) twenty-
four and 05/100 percent (24.05%) of the W-2 Wages for all such
Operator Personnel per Project Year during each of the sixth
(6th) through twelfth (12th) Project Years;
(vi) (a) subject to the limitations set forth in Section 4.9 hereof,
the actual salaries for all GE O&M Personnel to the extent
pertaining to the Work, plus (b) thirty-six percent (36%) of the
W-2 Wages for all such GE O&M Personnel to the extent pertaining
to the Work (the "Overhead Percentage Rate") to offset Operator's
actual cost of associated payroll taxes, unemployment and
disability insurance, worker's compensation, fringe benefits and
other statutory compensation for all such GE O&M Personnel to the
extent pertaining to the Work (such actual cost collectively
referred to herein as "GE O&M Personnel Overhead"), whether such
actual costs are more or less than such percentage; provided,
however, if the amount of GE O&M Personnel Overhead that is
required by law increases or decreases over that in effect as of
the Existing O&M Agreement Termination Date, then the Overhead
Percentage Rate shall be increased or decreased, as the case may
be, to the extent of any such increase or decrease in GE O&M
Personnel Overhead that is required by law; or
(vii) otherwise approved by Owner in writing.
Subject to the limitations imposed in the immediately preceding paragraph,
the term Reimbursable Costs shall include, but not be limited to, the following
costs incurred by Operator in its performance of the Work:
(viii) the actual delivered cost of supplies, Consumables, spare parts
and/or replacement components and all other items Operator is
required to provide and does provide for the Facility under this
Agreement;
(ix) special training costs conducted off-site or by non-Operator
personnel, as approved in advance and in writing by Owner;
(x) community and labor relations costs provided by non-Operator
personnel, as approved in advance and in writing by Owner;
-27-
(xi) relocation and recruitment costs of salaried employees and
recruitment costs (but not relocation costs) of non-salaried
employees;
(xii) the actual costs of suppliers, subcontractors, attorneys,
certified accountants and other third party advisors, as approved
in advance and in writing by Owner;
(xiii) upon Owner's request and subject to Owner's prior written
approval, the cost of services (other than the Work) at mutually
agreed upon prices, terms and conditions;
(xiv) the actual delivered cost for the purchase of certain materials
such as tools, office equipment and office supplies; and
(xv) a fraction of the actual costs incurred by Operator to staff,
operate and maintain the Regional Office, the numerator of which
fraction is the total of all costs and expenses set forth in the
Bayonne Approved Operating Budget for the Project Year in
question and the denominator of which fraction is the total of
all costs and expenses set forth in the Camden Approved Operating
Budget, the Bayonne Approved Operating Budget and the Linden
Approved Operating Budget for such Project Year.
Unless Owner shall otherwise agree in writing, or unless otherwise included
in the approved Transition Stage Operating Budget or an Approved Operating
Budget, the term Reimbursable Costs shall not include and Operator shall not be
entitled to reimbursement for;
(xvi) salaries or other compensation of Operator's officers,
executives, general managers, estimators, auditors, attorneys,
labor consultants, risk managers, accountants, purchasing and
contracting agents and other employees at Operator's principal
office and branch offices, except employees of Operator at the
Facility and the Regional Office;
(xvii) expenses of Operator's principal and branch offices other than
the field office at the Facility and the Regional Office;
(xviii) any of Operator's general and administrative expenses of any
kind;
(xix) all costs of insurance paid by Operator and payments for
deductibles or self-insured retentions associated with such
insurance;
(xx) all costs and expenses incurred in connection with any
engineering services provided by Operator in connection with the
performance of the Work (e.g., maintaining Facility drawings,
specifications and technical documents
-28-
up-to-date) to the extent performed by Operator's employees other
than the Operator Personnel or the GE O&M Personnel;
(xxi) all costs and expenses incurred in connection with the
preparation of all reports required to be made by Operator
pursuant to the terms of this Agreement to the extent performed
by Operator's employees other than the Operator Personnel or the
GE O&M Personnel; and
(xxii) all employee bonuses paid by Operator to the Operator Personnel
and the GE O&M Personnel pursuant to Section 6.8 hereof.
5.3 CPI Adjustment. The O&M Fee and the Annual Fee Adjustment Amount
(together, the "CPI Adjusted Payments") shall be adjusted on the first day of
each Project Year (except the first Project Year) throughout the term of this
Agreement and any extensions hereof. On each such date each of the CPI Adjusted
Payments shall be adjusted to a new CPI Adjusted Payment calculated in
accordance with the following equation:
New CPI Adjusted Payment = (Applicable Adjustment Amount)
multiplied by (A/B)
"Applicable Adjustment Amount" equals the original dollar amount set
forth in this Agreement for a given CPI Adjusted Payment.
"A" equals the average of the Consumer Price Index for all urban
consumers for the ▇▇▇ ▇▇▇▇/▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ (▇▇▇▇-▇▇ = 100), published by
the Bureau of Labor Statistics, United States Department of Labor (the
"Base Index") for the last three full calendar months prior to the
commencement of the Project Year for which the new CPI Adjusted Payments
are to be computed.
"B" equals the Base Index for the last calendar month prior to the
month in which the Existing O&M Agreement Termination Date occurs.
5.4 Procedure for Payment of Reimbursable Costs. On or before the
tenth (10th) day of each month commencing after the Existing O&M Agreement
Termination Date, Operator shall render an invoice to Owner for all Reimbursable
Costs, if any, paid by Operator during the preceding month. Such invoices shall
be accompanied by a certificate from Operator confirming that all such
Reimbursable Costs have been paid, together with all relevant documentation
necessary for Owner to verify the accuracy thereof, including all relevant
invoices for Consumables, spare parts and replacement components and labor costs
and benefits computations incurred by Operator for the relevant staff and
specialists. Each invoice submitted to Owner shall be paid by Owner by wire
transfer not later than the tenth (10th) day of the next calendar month after
the month in which such invoice was received, but in no event shall Owner be
required to pay an invoice earlier than thirty (30) days after receipt of such
invoice provided that if Owner disputes any amount set forth in any such
invoice, (i) Owner shall promptly notify
-29-
Operator of such dispute, (ii) Owner shall pay the undisputed portion to
Operator within said period and (iii) Owner and Operator shall attempt in good
faith to resolve disputed items as soon as reasonably practicable.
5.5 Late Payments. All payments that are past due and are not
disputed, or disputed and subsequently demonstrated to be payable to Operator,
shall accrue interest from the date such payments are due until such payments
are made at a per annum rate equal to the Default Rate.
VI.
FACILITY PERFORMANCE, LIQUIDATED DAMAGES AND BONUS
6.1 Annual Fee Adjustment Amount. To provide incentive for Operator to
Operate and maintain the Facility in such a way so as to maximize profitability
and efficiency of operation, achieve target operating levels of performance, and
protect the overall life and viability Of the Facility, the O&M Fee earned by
Operator shall be subject to an annual adjustment. The amount Of such adjustment
(the "Annual Fee Adjustment Amount" or "AFAA") shall be the sum of bonuses
earned by and/or liquidated damages assessed against Operator in each of six (6)
separate categories of evaluation. The six (6) categories of evaluation are:
(i) Power Generation,
(ii) Change in Rated Capacity,
(iii) Steam Delivery,
(iv) Net Plant Heat Rate,
(v) O&M Costs, and
(vi) Subjective Factors.
In each category the maximum bonus or liquidated damage will be limited to
a specific dollar amount. The AFAA shall be the sum of the bonuses earned and
liquidated damages assessed in each individual category and in any Project Year
shall never exceed One Hundred Twenty-Five Thousand and 00/100 Dollars
($125,000.00), plus or minus, as the case may be.
(a) Power Generation. The maximum bonus or liquidated damages capable
of being earned by or assessed against Operator in the Power Generation category
of the AFAA in any Project Year shall be Twenty-Five Thousand and 00/100 Dollars
($25,000.00). To determine the amount of bonus or liquidated damages
attributable to such category, a calculation will be made to determine the Power
Generation Factor (as defined hereinbelow) for a Project Year. Subject to the
Twenty-Five Thousand and 00/100 Dollars ($25,000.00) limitation, if the Power
Generation Factor is greater than or equal to ninety-five percent (95%),
Operator shall be entitled to a bonus under the Power Generation category of the
AFAA calculated in accordance With the following formula:
Bonus = $12,500 + [(PGF - .95) x $416,667]
-30-
For a given Project Year, if the Power Generation Factor is less than
ninety-five percent (95%), but not less than ninety-two and one-half percent
(92.50%), the AFAA for the Power Generation category for such Project Year
shall be zero. Subject to the Twenty-Five Thousand and 00/100 Dollars
($25,000.00) limitation, if the Power Generation Factor is less than ninety-two
and one-half percent (92.50%), Operator shall be assessed liquidated damages
under the Power Generation category of the AFAA calculated in accordance with
the following formula:
Liquidated Damages = $12,500 + [(.925 - PGF) X $416,667)]
For purposes of the foregoing calculations, the following definitions shall
apply:
"Actual kWh" shall be equal to the amount of kWh actually generated by the
Facility in a Project Year.
"FM kWh" shall be equal to the sum of the product, if any, for each
calendar month during a given Project Year, of (i) the applicable Plant
Capacity for a given calendar month for that portion of the Facility that, as a
result of Force Majeure, either is unable to generate electricity or generates
electricity at a reduced capacity multiplied by (ii) the actual number of hours
in such calendar month up to but not exceeding twenty-four (24) that the
Facility was affected by such event of Force Majeure.
"Power Generation Factor ("PGF")" shall be equal to the quotient of (i) the
sum of the Actual kWh and the FM kWh for a Project Year (the "Numerator")
divided by (ii) the sum of the product, for each calendar month during such
Project Year, of (x) the applicable Plant Capacity for a given calendar month
multiplied by (y) the number of hours in such calendar month (the
"Denominator"); provided, however, that the Denominator shall be reduced by (a)
the sum total of, for each event of Force Majeure in such Project Year, the
product of the applicable Plant Capacity for a given calendar month for that
portion of the Facility that, as a result of an event of Force Majeure, either
is unable to generate electricity or generates electricity at a reduced
capacity, multiplied by the actual number of hours in such calendar month in
excess of twenty-four (24) that the Facility was affected by such event of Force
Majeure and (b) the sum total of, for each major inspection (such major
inspections being recommended by the original equipment manufacturer's turbine
maintenance procedures to be performed approximately every 24,000 and 48,000
operating hours) (a "Major Inspection") performed in such Project Year, the
product of the applicable Plant Capacity for the calendar month in which the
Major Inspection occurs for that portion of the Facility that, as a result of a
Major Inspection, either is unable to generate electricity or generates
electricity at a reduced capacity multiplied by the actual number of hours in
excess of one hundred twenty (120) hours that the Facility was affected by such
Major Inspection. The Power Generation Factor shall be expressed as a decimal,
rounded to the nearest one-thousandth.
-31-
"Plant Capacity", for a given calendar month, shall mean the ambient
temperature and steam export adjusted output of the Facility, expressed in
kilowatts, based upon gas turbine output curves provided by the gas turbine
manufacturer.
(b) Change in Rated Capacity. The maximum bonus or liquidated damages
capable of being earned by or assessed against Operator in the Change in Rated
Capacity category of the AFAA in any Project Year shall be Twelve Thousand Five
Hundred and 00/100 Dollars ($12,500.00). As incentive to attain the level of
Rated Capacity required by Owner, Operator shall be entitled to receive a bonus
or, alternatively, be assessed liquidated damages in the Change in Rated
Capacity category of the AFAA based on the results of the quarterly Rated
Capacity Test compared with the results of the quarterly Rated Capacity Test
conducted during the corresponding period in the immediately preceding Project
Year (the "Target Rated Capacity"); provided, however, if either Owner or
Operator desires not to use the results of the quarterly Rated Capacity Test
conducted during the corresponding period in the immediately preceding Project
Year as the Target Rated Capacity, then the Target Rated Capacity shall be
mutually agreed to by Owner and Operator, but, if Owner and Operator cannot
agree prior to the running of such test, then the Target Rated Capacity for such
test shall be the Rated Capacity as demonstrated by the quarterly Rated Capacity
Test conducted during the corresponding period in the immediately preceding
Project Year. By no later than forty-five (45) days prior to each quarterly
Rated Capacity Test, Operator shall prepare and submit for Owner's approval a
plan for such Rated Capacity Test (the "Test Plan") which shall clearly identify
the measures to be taken by Operator to meet the Target Rated Capacity. The Test
Plan shall be subject to Owner approval, provided, however, in the event that
Owner objects to all or any portion of the Test Plan, Owner shall notify
Operator in writing and Owner and Operator shall promptly meet to resolve any
differences in order to establish an approved Test Plan by no later than twenty
(20) days prior to the quarterly Rated Capacity Test.
For each Rated Capacity Test conducted during a Project Year, Operator
shall be entitled to receive a bonus of Three Thousand One Hundred Twenty-Five
and 00/100 Dollars ($3,125.00 in the Change in Rated Capacity category of the
AFAA if the Rated Capacity, as demonstrated by such Rated Capacity Test, is
greater than or equal to one hundred one percent (101%) of the Target Rated
Capacity for such Rated Capacity Test. Operator shall be assessed liquidated
damages of Three Thousand One Hundred Twenty-Five and 00/100 Dollars ($3,125.00)
in the Change in Rated Capacity category of the AFAA if the Rated Capacity, as
demonstrated by such Rated Capacity Test, is less than ninety-nine percent (99%)
of the Target Rated Capacity for such Rated Capacity Test. In the event the
Rated Capacity, as demonstrated by such Rated Capacity Test is greater than
ninety-nine percent (99%) of the Target Rated Capacity for such Rated Capacity
Test, but less than one hundred one percent (101%) of the Target Rated Capacity
for such Rated Capacity Test, Owner may, in Owner's sole discretion, pay
Operator a bonus in the Change in Rated Capacity category of the AFAA of up to
Three Thousand One Hundred Twenty-Five and 00/100 Dollars ($3,125.00).
If an event of Force Majeure prevents or disrupts the running of a
scheduled Rated Capacity Test, Operator shall neither be assessed liquidated
damages nor receive a bonus under
-32-
such test. The sole effect of Force Majeure under this Section 6.1(b) shall be
to cause a rescheduling of such Rated Capacity Test. After conducting four (4)
Rated Capacity Tests, and paying bonuses and/or liquidated damages in accordance
with this Section 6.1(b), in the first two (2) Project Years, Owner and Operator
shall meet and, in consideration of actual Facility operation, actual Rated
Capacity Test results and the amounts of bonuses paid and/or liquidated damages
assessed, reevaluate the method used in determining the Change in Rated Capacity
category of the AFAA.
For purposes of this Section 6.1(b), the following definitions shall apply:
"Rated Capacity" shall mean the capacity of the Facility, expressed in
kilowatts, as determined by a Rated Capacity Test.
"Rated Capacity Test" shall mean a quarterly test conducted, in accordance
with the Test Plan, to determine the Rated Capacity of the Facility. Each Rated
Capacity shall be conducted on the date determined by Owner, but no later than
March 31st for the first such test during a Project Year, no later than June
30th for the second such test during a Project Year, no later than September
30th for the third such test during a Project Year and no later than December
31st for the fourth such test during a Project Year.
(c) Steam Delivery. The maximum bonus or liquidated damages capable of
being earned by or assessed against Operator in the Steam Delivery category of
the AFAA in any Project Year shall be Twelve Thousand Five Hundred and 00/100
Dollars ($12,500.00). If, over the course of a Project Year, fewer than two (2)
interruptions occur in the delivery of steam to Steam Purchasers, then Operator
shall receive a bonus in the amount of Twelve Thousand Five Hundred and 00/100
Dollars ($12,500.00) under the Steam Delivery category of the AFAA for such
Project Year. If two (2) or three (3) interruptions occur in the delivery of
steam to Steam Purchasers during a Project Year, then the AFAA for the Steam
Delivery category of the AFAA for such Project Year shall be zero. If more than
three (3) interruptions occur in the delivery of steam to Steam Purchasers
during a Project Year, Operator shall be assessed liquidated damages in the
amount of Twelve Thousand Five Hundred and 00/100 Dollars ($12,500.00) under the
Steam Delivery category of the AFAA for such Project Year. In no event shall the
amount of bonus earned or liquidated damages assessed in the Steam Delivery
category of the AFAA exceed Twelve Thousand Five Hundred and 00/100 Dollars
($12,500.00) in any Project Year. As used in this Section 6.1(c), "interruption"
shall not include (i) any interruption caused by an event of Force Majeure that
affects the operation of both of (x) the combined cycle cogeneration facility,
and (y) the Standby Boilers, (ii) any interruption in the delivery of steam
during the calendar months of November, December, January, February, March or
April where delivery of steam is resumed within thirty (30) minutes after such
interruption or (iii) any interruption in the delivery of steam during the
calendar months of May, June, July, August, September or October where delivery
of steam is resumed within two (2) hours after such interruption.
(d) Net Plant Heat Rate. The maximum bonus or liquidated damages
capable of being earned by or assessed against Operator in the Net Plant Heat
Rate category of the AFAA
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in any Project Year shall be Eighteen Thousand Seven Hundred Fifty and 00/100
Dollars ($18,750.00). Over the course of a Project Year, operation of the
Facility at the optimum net plant heat rate increases profitability. Owner shall
evaluate Operator on its ability to achieve the optimum net plant heat rate,
and, subject to Owner's sole and complete discretion, award Operator a bonus of
up to Eighteen Thousand Seven Hundred Fifty and 00/100 Dollars ($18,750.00) or
assess Operator with liquidated damages of up to Eighteen Thousand Seven Hundred
Fifty and 00/100 Dollars ($18,750.00) in the Net Plant Heat Rate category of the
AFAA. The initial net plant heat rate shall be determined pursuant to a
performance test conducted within sixty (60) days after the Existing O&M
Agreement Termination Date.
(e) O&M Costs. The maximum bonus or liquidated damages capable of
being earned by or assessed against Operator in the O&M Costs category of the
AFAA shall be Twenty-Five Thousand and 00/100 Dollars ($25,000.00). During each
Project Year, this Agreement contemplates the existence of an Approved Operating
Budget. Developing reliable budgets based on obtainable forecasts and realistic
expectations, and receiving such budgets and any revisions thereof in a timely
manner, are essential elements of Owner's ability to monitor its investment in
the Facility. Owner shall evaluate and compare the Approved Operating Budget for
a given Project Year against the costs and expenses actually incurred and,
subject to Owner's sole and complete discretion, award Operator a bonus of up to
Twenty-Five Thousand and 00/100 Dollars ($25,000.00) or assess Operator with
liquidated damages of up to Twenty-Five Thousand and 00/100 Dollars ($25,000.00)
in the O&M Costs category of the AFAA.
(f) Subjective Factors. The maximum bonus or liquidated damages
capable of being earned by or assessed against Operator in the Subjective
Factors category of the AFAA in any Project Year shall be Thirty-One Thousand
Two Hundred Fifty and 00/100 Dollars ($31,250.00). The Subjective Factors
category of the AFAA depends solely upon Owner's subjective evaluation of
Operator's overall performance of its obligations and services rendered
hereunder. Subject to Owner's sole and complete discretion, Owner shall evaluate
Operator's performance with respect to various qualitative factors, which, for
illustrative purposes only and, not by way of limitation, may include:
frequency of insurance claims and increases in related insurance costs,
community and public relations, compliance with permits, and easements, safety
and environmental records, turn-over of personnel development of apprentice
programs, personnel management relevant to Urban Enterprise Zone criteria,
timeliness of response to and handling of events of Force Majeure, working
relationship with Owner and Lender, professionalism, profitability of the
Facility and overall handling and care of the Facility. Periodically but no more
often than every three (3) months during each Project Year, Owner shall deliver
to Operator a list of the various qualitative factors to be used by Owner in its
subjective evaluation of Operator's performance for the remainder of such
Project Year. Based on Owner's subjective evaluation of Operator's performance
during a Project Year, Owner shall, in Owner's sole and complete discretion,
either award Operator a bonus of up to Thirty-One Thousand Two Hundred Fifty and
00/100 Dollars ($31,250.00) or assess Operator liquidated damages of up to
Thirty-One Thousand Two Hundred Fifty and 00/100 Dollars ($31,250.00) under the
Subjective Factors category of the AFAA for such Project Year.
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6.2 Quarterly Meetings. Owner and Operator shall schedule and attend
regular quarterly meetings to discuss Operator's performance Of the Work and
Owner's evaluation thereof and, when necessary, to review and revise the list of
qualitative factors described in Section 6.1(f) above.
6.3 Partial Project Year. In any partial Project Year, the amounts
attributable to each category of the AFAA and the overall limitation placed on
the AFAA itself shall be prorated based on the number of calendar days in such
partial Project Year divided by 365 or 366, as the case may be.
6.4 Payment of Annual Fee Amount. Not later than thirty (30) days
after the end of each Project Year, Owner shall render a statement to Operator,
with all necessary and appropriate supporting documentation, calculating the
amount of bonus payments due to Operator and/or the amount of liquidated damages
due to Owner under each category of the AFAA. If the AFAA results in an amount
payable by Operator to Owner, such amount shall be set off against that portion
of the O&M Fee for such Project Year that has not yet been advanced to Operator,
and the balance, if any, shall be paid by Operator to Owner within thirty (30)
days after Owner delivers the statement therefor to Operator. If the AFAA
results in an amount payable by Owner to Operator, such amount shall be paid by
Owner within thirty (30) days after Owner delivers the statement therefor to
Operator. A party's obligation to pay the AFAA to the other party shall survive
the termination of this Agreement, even though such AFAA may not be capable of
being calculated until after the termination of this Agreement.
6.5 Application of CPI Adjustment. Each of the dollar amounts
indicated in Section 6.1 above shall be adjusted in accordance with the
provisions of Section 5.3 hereof.
6.6 Change in Conditions or Circumstances. If during the term of this
Agreement conditions or circumstances change from those in effect on the
Existing O&M Agreement Termination Date such that there is either a material
increase or decrease in the responsibilities and obligations of Operator
hereunder from those responsibilities and obligations of Operator as of the
Existing O&M Agreement Termination Date, then Owner and Operator shall meet and
negotiate an equitable adjustment to the manner in which the AFAA is determined,
including, without limitation, revisions to the categories of evaluation used in
determining the AFAA, the relative weightings thereof and the overall limit on
the AFAA, if necessary.
6.7 Second Project Year. Notwithstanding anything to the contrary
herein contained, for purposes of the calculation of the AFAA for the second
(2nd) Project Year, each of the dollar amounts indicated in Section 6.1 above
shall be reduced by fifty percent (50%), subject, however, to proration in
accordance with Section 6.3 hereof.
6.8 Employee Bonuses. Beginning with the second (2nd) Project Year
and for each Project Year thereafter, Operator shall pay to the Operator
Personnel and the GE O&M Personnel as bonuses in the aggregate not less than
twenty-five percent (25%) of the AFAA for each such Project Year; provided,
however, Owner may pay, in Owner's sole discretion,
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additional bonuses to the Operator Personnel and the GE O&M Personnel during any
Project Year.
VII.
WARRANTY; CORRECTION OF DEFECTS
7.1 Warranty. Operator warrants that (i) the Work hereunder shall be
performed in a first-class, competent, cost-conscious manner by appropriately
qualified personnel, (ii) the Work shall be performed in accordance with the
terms and conditions of this Agreement, including all standards set forth
herein, and (iii) all aspects of such Work shall be suitable for their required
purposes.
7.2 Consequence of Breach. In the event Operator breaches any warranty
described in Section 7.1 above, Operator shall re-perform any defective service,
replace any unfit or unqualified personnel and train new personnel, and repair
or replace any components of the Facility damaged as a consequence of such
breach. Any such re-performance, training, repair or replacement by Operator
pursuant to this Section 7.2 shall be at Operator's sole cost and expense.
7.3 Vendor Warranties. Operator shall use its best efforts to obtain
not less than one-year vendor warranties for all spare parts and replacement
parts, other than parts having a useful life of less than one year and parts
supplied by Owner pursuant to Article III. Any warranties obtained by Operator
from outside vendors or subcontractors shall be assignable and passed through to
Owner, but, during the term of this Agreement, Operator shall maintain,
administer and enforce such warranties for the benefit of Owner; provided,
however, Operator shall not file suit to enforce any such warranty without the
prior written consent of Owner.
VIII.
TERM
Unless sooner terminated as provided herein, the term of this
Agreement shall begin on the Execution Date and shall extend for an initial
term expiring on November 1, 2008; provided, however, Owner shall have the
right, in Owner's sole discretion, to (i) terminate this Agreement for
convenience effective as of the end of the fourth (4th) Project Year by
delivering to Operator written notice of such termination on or before one
hundred eighty (180) days prior to the end of the fourth (4th) Project Year and
payment of the Fourth Year Termination Fee (as defined hereinbelow) in
accordance with the terms hereof, (ii) terminate this Agreement for convenience
effective as of the end of the seventh (7th) Project Year by delivering to
Operator written notice of such termination on or before one hundred eighty
(180) days prior to the end of the seventh (7th) Project Year and payment of the
Seventh Year Termination Fee (as defined hereinbelow) in accordance with the
terms hereof, and (iii) terminate this Agreement for convenience, at no cost to
Owner, effective as of the end of the tenth (10th) Project Year by delivering to
Operator written notice of such termination on or before one hundred eighty
(180) days prior to the end of the tenth (10th) Project Year.
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The "Fourth Year Termination Fee" shall be due and payable as follows:
(i) Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), which shall
be due and payable by Owner to Operator within thirty (30) days after the
termination of this Agreement, plus
(ii) the reasonable costs actually incurred by Operator in transferring,
relocating and/or terminating Operator's personnel at the Facility and
terminating subcontracts pertaining to the Facility up to a maximum of One
Hundred Fifty Thousand and 00/100 Dollars ($150,000.00), which shall be
due and payable by Owner to Operator within thirty (30) days after receipt
by Owner from Operator of an invoice accompanied by all relevant
documentation reasonably necessary for Owner to verify the accuracy
thereof, plus
(iii) an amount equal to ten percent (10%) of the Published Price (as
determined at the time of acquisition) of the Parts for GE Equipment
actually purchased by Owner from Operator during the term of this
Agreement, which amount shall be due and payable within thirty (30) days
after receipt by Owner from Operator of an invoice accompanied by all
relevant documentation reasonably necessary for Owner to verify the
accuracy thereof, but in no event earlier than thirty (30) days after the
termination of this Agreement.
The "Seventh Year Termination Fee" shall be due and payable as follows:
(i) Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), which shall
be due and payable by Owner to Operator within thirty (30) days after the
termination of this Agreement, plus
(ii) the reasonable costs actually incurred by Operator in transferring,
relocating and/or terminating Operator's personnel at the Facility and
terminating subcontracts pertaining to the Facility up to a maximum of One
Hundred Fifty Thousand and 00/100 Dollars ($150,000.00), which shall be
due and payable by Owner to Operator within thirty (30) days after receipt
by Owner from Operator of an invoice accompanied by all, relevant
documentation reasonably necessary for Owner to verify the accuracy
thereof plus
(iii) an amount equal to five percent (5%) of the Published Price (as
determined at the time of acquisition) of the Parts for GE Equipment
actually purchased by Owner from Operator during the term of this
Agreement, which amount shall be due and payable within thirty (30) days
after receipt by Owner from Operator of an invoice accompanied by all
relevant documentation reasonably necessary for Owner to verify the
accuracy thereof, but in no event earlier than thirty (30) days after the
termination of this Agreement.
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IX.
TERMINATION
9.1 Event of Default. Should any of the following events or conditions
occur, the same shall constitute an event of default under this Agreement
(herein called an "Event of Default"):
(a) Operator breaches any of its material obligations under this
Agreement.
(b) Owner breaches any of its material obligations under this
Agreement.
(c) If any representation or warranty of Operator or Owner under
Article XIV hereof shall prove untrue in any material respect.
(d) If in any two (2) successive Project Years, Operator incurs the
maximum liquidated damages possible under Article VI hereof for each such
successive Project Year, then such occurrence shall be an Event of Default by
Operator.
(e) If Operator's aggregate limit of liability over the term of this
Agreement as set forth in Section 17.1 hereof is reached, then such occurrence
shall be an Event of Default by Operator.
9.2 Termination upon Breach. If either party commits an Event of
Default, the other party (hereinafter the "Non-Defaulting Party") may give such
party in default (the "Defaulting Party") a written notice describing such
default in reasonable detail and demanding that the Defaulting Party cure such
default, provided, however, Operator shall have no right to cure the Events of
Default set forth in Sections 9.1(d) and (e) above. If the Defaulting Party
does not cure its default within twenty (20) days after its receipt of such
notice, or if the default is such that it cannot be cured within such period of
time and the Defaulting Party does not promptly commence action within such
twenty (20) day period Which is calculated to cure such default and thereafter
diligently pursue such action to completion, the Non-Defaulting Party shall have
the right to terminate this Agreement by written notice to the Defaulting Party,
without prejudice to any remedies at law or in equity which are available to the
Non-Defaulting Party by reason of the Defaulting Party's default Provided
Operator is performing all of its obligations under this Agreement in accordance
with the terms and conditions hereof, it shall not constitute an Event of
Default if Operator fails to earn a bonus for any Project Year, so long as
Operator shall pay Owner when due any associated liquidated damages required to
be paid under Article VI hereof and promptly makes all corrections to the
Facility as may be required hereunder. Notwithstanding anything stated herein, a
good faith dispute with respect to the payment of any amount claimed to, be due
hereunder, for so long as such dispute remains unresolved and contested in good
faith, shall not be considered an Event of Default.
9.3 Termination for Insolvency. Subject to Article XII hereof, either
party may terminate this Agreement by written notice to the other party if the
other party (i) commences a
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proceeding under Federal or state bankruptcy, insolvency or reorganization law,
or (ii) has such a proceeding filed against it and fails to have such proceeding
stayed or vacated within sixty (60) days or upon the end of any such stay, fails
to have such involuntary proceeding vacated within sixty (60) days thereafter,
or (iii) admits the material allegations of any petition in bankruptcy filed
against it, or (iv) is adjudged bankrupt, or (y) makes a general assignment for
the benefit of its creditors, or (vi) has a receiver appointed for all or a
substantial portion of such party's assets which receiver is not discharged
within sixty (60) days after his appointment. Any termination of this Agreement
pursuant to this Section 9.3 shall be considered to be by reason of anticipatory
breach of contract, and such termination shall be without prejudice to any
rights the terminating party may have by reason of such anticipatory breach.
9.4 Owner's Additional Remedies. After termination of this Agreement
by Owner by written notice pursuant to Section 9.2 or 9.3 hereof, Owner may, in
addition to its other rights hereunder, take possession of and utilize any
materials, tools, equipment, manuals, records and other property of any kind
furnished by Operator, paid for by Owner, and necessary or intended to be used
to operate the Facility. Operator shall not be entitled to receive any further
payments under this Agreement except for payments for services provided prior to
termination of this Agreement. Operator and Owner shall continue to be bound by
such provisions of this Agreement that shall survive the termination hereof. In
addition, Operator shall remain liable for all liquidated damages hereunder
which have accrued but have not yet been paid at the time of such termination.
9.5 Transfer of Options Upon Termination. Upon termination of this
Agreement for any reason, Operator shall fully cooperate with Owner in the
transfer of the performance of Operator's obligations hereunder to Owner or a
third party designated by Owner. Without limiting the foregoing, Operator shall
provide Owner and such third party with such information as may be reasonably
necessary for the safe and proper operation and maintenance of the Facility. The
parties acknowledge Owner's interest that the Facility be operated and
maintained during the final Project Year of this Agreement or portion thereof,
whether or not commensurate with the term hereof, to the same standards as it is
operated and maintained throughout the term of this Agreement and that personnel
of Owner have an opportunity to gain experience in the operation and maintenance
of the Facility during such final Project Year. Accordingly, Operator agrees
that Owner may send its personnel to the Facility during the final Project Year
for the purposes of monitoring Operator's performance under the terms of this
Agreement and gaining experience in operation and maintenance of the Facility,
without charge to Owner (except for the cost of Owner's personnel), provided
that Owner's personnel do not interfere with the continuing operation and
maintenance of the Facility by Operator pursuant to the terms hereof. Owner,
however, shall remain fully liable for the actions and inactions of its
employees during such time period. Upon termination of this Agreement, Operator,
to the extent permitted by law, shall assign to Owner any existing warranties
obtained by Operator on the Facility or any portion thereof and shall promptly
deliver to Owner all copies of the Facility Data, drawings, books and originals
or certified copies of all records relating to the operation and maintenance of
the Facility that are required to be maintained by Operator hereunder as of the
date of such termination.
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9.6 Condition of Facility Upon Termination. Upon expiration or
termination of this Agreement, Operator shall leave the Facility in as good
condition as on the Existing O&M Agreement Termination Date, normal wear and
tear excepted, and with the equivalent supply of Consumables (other than spare
parts) and other operating items as were provided by Owner to Operator. All
special tools, improvements, inventory of supplies, spare parts, safety
equipment (as provided to or obtained by or provided by Operator during the term
of this Agreement) and any other items furnished by Operator hereunder will be
left at the Facility and Will become or remain the property of Owner without
additional charge.
9.7 Survival of Obligations. Termination of this Agreement for any
reason shall not relieve Owner or Operator of any obligation accrued or accruing
prior to such termination. Without limiting the generality of the foregoing,
Owner and Operator shall continue to be bound by Section 6.4, Article VII,
Sections 9.4, 9.5, 9.6 and 9.7, Article XIII, Article XVII, Article XVIII,
Article M, Article XX, and such provisions shall survive the termination of this
Agreement.
X.
INSURANCE
10.1 Operator Insurance Coverage. Operator shall secure and maintain
as a minimum during the term of this Agreement the following insurance:
(a) Worker's Compensation, subject to statutory limits.
(b) Employer's Liability, with limits as follows:
(i) Bodily Injury by Accident - $1,000,000 per accident;
(ii) Bodily Injury by Disease - $1,000,000 policy limit; and
(iii) Bodily Injury by Disease - $1,000,000 per each employee.
(c) Comprehensive (Business) Automobile Liability including automobile
contractual liability endorsement, in an amount equal to a "combined single
limit" coverage for bodily injury and property damage limit of One Million and
00/100 Dollars ($1,000,000.00) per accident, in comprehensive form and covering
hired, owned and non-owned vehicles, including, without limitation, vehicles
leased by Operator from Owner. Such insurance shall name Owner and Leader as
Additional Insureds.
(d) Comprehensive (Commercial) General Liability Insurance in an
amount equal to at least One Million and 00/100 Dollars ($1,000,000.00) per
occurrence, "combined single limit" coverage. Such insurance shall contain such
coverages as Operator normally maintains for its own protection to include
Premises/Operations, Explosion, Collapse and Underground Hazards, Broad Form
Contractual, Independent Contractors, Products/Completed Operations, Broad Form
Property Damage (excluding care, custody and control), Personal Injury, Cross
Liability including a Broad Form
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Contractual endorsement to meet the liability assumed in Section 13.1 hereof.
Such insurance shall name Owner and Lender as Additional Insureds.
(e) Excess (or Umbrella) Lability insurance providing total or excess
limits for, and following the form of, the policies referred to in Section 10.1
(b) (c) and (d) so as to bring the total of each up to Twenty-Five Million and
00/100 Dollars ($25,000,000.00) per occurrence, and in the annual aggregate
where applicable. Such insurance shall name Owner and Lender as Additional
Insureds.
(f) Aircraft and Marine insurance should any aircraft or watercraft be used
in the Work. Such insurance shall be at limits at least equal to those specified
in Section 10.1(e) above. Such insurance shall name Owner and Lender as
Additional Insureds.
10.2 Owner Insurance Coverage. Owner shall secure and maintain during
the term of this Agreement the following insurance:
(a) Worker's Compensation, subject to statutory limits.
(b) Employer's Liability, with limits as follows:
(i) Bodily Injury by Accident - $1,000,000 per accident;
(ii) Bodily Injury by Disease - $1,000,000 policy limit; and
(iii) Bodily Injury by Disease - $1,000,000 per each employee.
(c) Commercial General liability Insurance covering legal liability of
the insured for damage to property of third parties or bodily injury to third
parties arising out of the ownership, operation and maintenance of the Facility,
in an amount equal to One Million and 00/100 Dollars ($1,000,000.00) per
occurrence, "combined single limit" property damage/bodily injury coverage. Such
insurance policy shall be endorsed naming Lender as an Additional Insured and
Operator as an Additional Insured in connection with claim arising out of or
relating in any way to Operator's presence on the Site or for the Work to be
performed pursuant to this Agreement only, and shall include
Premises/Operations, Explosion, Collapse and Underground Hazards, Broad Form
Contractual. Independent Contractors, Products/Completed Operations, Broad Form
Property Damage, Personal Injury, Cross Liability (Insured vs. Insured) and a
Broad Form Named Insured endorsement; provided, however, if a claim is made
under such insurance and the claim is not based upon the negligence or willful
misconduct of Operator, then Operator acknowledges it shall have no right to any
recovery with respect to such claim and, in furtherance thereof, Operator shall
execute and deliver to Owner the appropriate waiver forms necessary for a check
to be issued by the insurer solely in the name of Owner.
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(d) Excess (Or Umbrella Liability insurance providing total or excess
limits for, and following the form of, the policies referred to in Section 10.2
(b) and (c) so as to bring the total of each up to Twenty-Five Million and
00/100 Dollars ($25,000,000.00) per occurrence, and in the annual aggregate
where applicable. Such insurance policy shall be endorsed naming Lender as an
Additional Insured and Operator as an Additional Insured in connection with
claims arising out of or relating in any way to Operator's presence on the Site
or for the Work to be performed pursuant to this Agreement only; provided,
however, if a claim is made under such insurance and the claim is not based upon
the negligence or willful misconduct of Operator, then operator acknowledges it
shall have no right to any recovery with respect to such claim and, in
furtherance thereof, Operator shall execute and deliver to Owner the appropriate
waiver forms necessary for a check to be issued by the insurer solely in the
name of Owner.
(e) Property Insurance on an "All Risk basis covering physical damage or
loss to all real and personal property of Owner located at the Site and to off-
premises, electrical, gas, and steam transmission lines and facilities, and
other equipment for which Owner has an insurable interest and in an amount not
less than one hundred percent (100%) of the full replacement value of such
property. Such coverage shall meet all requirements for property insurance set
forth in the Related Agreements, shall name Lender as an Additional Named
Insured and shall name Operator as an Additional Insured.
(f) Boiler and Machinery Insurance on the Facility for all insurable
objects, including but not limited to pressure vessels, turbines and equipment,
electrical generators, motors, air tanks, boilers, machinery, pressure piping or
similar apparatus, on a comprehensive form in an amount not less than one
hundred percent (100%) of the full replacement value of such property. Such
insurance policy shall cover objects at all locations required to be insured
under Section 10.2(e) above and shall name Lender and Operator as Additional
Insureds. Owner shall have the right at any time, and from time to time, at
Owner's sole option, to combine the Property Insurance and the Boiler and
Machinery Insurance into a single policy. Owner shall be relieved of the
obligation to renew the business interruption coverage under said Property
Insurance and Boiler and Machinery Insurance in the event such business
interruption coverage cannot be purchased at commercially reasonable rates.
10.3 Form and Content of Insurance. All policies, and binders with
respect to insurance provided pursuant to this Article X shall be as follows:
(a) Form of Policies. All insurance provided for hereunder shall be
placed on forms reasonably acceptable to Owner, Operator, and Leader.
(b) Insurance Companies. All insurance required hereunder shall be
issued by and binding upon insurance companies reasonably acceptable to
Owner, Operator and Lender that are licensed or authorized to do business
in the State of New Jersey.
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(c) Additional Insureds shall include the officers, directors and employees
of each entity so named as its interests may appear.
(d) Severability. All liability insurance shall contain a severability of
interest provision providing that, except with respect to the total limits of
liability, the insurance shall apply to each Insured or Additional Insured in
the same manner as if separate policies had been issued to each.
(e) Non-Recourse. All insurance shall provide that there will be no
recourse against the Additional Insureds for the payment of premiums or
commissions or (if such policies provide for the payment thereof) additional
premiums or assessments.
(f) Waiver of Subrogation. All insurance maintained by Operator and Owner
hereunder except for the insurance required pursuant to Section 10.l(b) and (c)
and Section 10.2(b) hereof shall provide for the waiver of any right of
subrogation by the insurers thereunder against Owner, Operator and Lender and
the officers, directors and employees, agents and representatives of each of
them, and any right of the insurers to any setoff or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of
any such person insured under such policy.
(g) Notice of Cancellation. All insurance shall provide that it may not be
canceled or materially changed without giving Owner,Operator, and Lender thirty
(30) days prior written notification thereof, except in cases of non-payment of
premium for which ten (10) days prior written notice shall be provided (unless a
longer notice period for non-payment is agreed to by the relevant insurer).
(h) Breach of Warranty. The interest of any Insured or Additional Insured
shall not be invalidated by any action or inaction of any of the other parties
so named.
10.4 Additional Requirements.
(a) Certificates; Proof of Loss. Prior to the performance of any Work by
Operator hereunder, each party shall furnish certificates of insurance to the
other party evidencing the insurance required of such party pursuant to this
Agreement. The party maintaining each policy hereunder shall make all proofs of
loss under each such policy, and shall take all other action reasonably
required to ensure collection from insurers for any loss under any such policy,
except that Owner may require Operator to provide such proof of loss and take
such other action on behalf of Owner in the case of the insurance by Owner
pursuant to Section 10.2(c), (d), (e) and (f). Operator shall provide Owner
with copies of insurance policies obtained by it promptly upon owner's request.
(b) Insurance Report. Concurrently with the furnishing of the
certification referred to in Section 10.4(a), Operator shall furnish Owner and
Leader with an opinion of each insurance broker stating that all premiums then
due have been paid and that, in the
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opinion of such broker, the insurance then carried and maintained with respect
to the Facility is in accordance with the terms of this Article. Furthermore,
Operator shall cause each insurer or such broker to advise Owner and Lender in
writing of any default in the payment of any premiums or any other act or
omission on the part of Operator which might invalidate or render unenforceable,
in whole or in part, any insurance provided hereunder Owner may at its sole
option obtain such insurance if not provided by Operator and, in such event,
Operator shall reimburse Owner upon demand for the cost thereof.
(c) Payment of Deductables and Self-Insured Retention Amounts. Owner shall
be responsible for deductibles or self-insured retention under all of the
insurance policies required to be carried by Owner pursuant to Section 10.2
hereof, except in the event of loss or damage due to the negligence or willful
misconduct of Operator, in which case Operator shall be liable proportionately
to the extent of Operator's negligence or willful misconduct, for the
deductibles and/or self-insured retention applicable to such insurance up to but
not exceeding Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) per
occurrence. In addition, Operator shall be responsible for all deductibles and
self insured retention under other policies maintained by Operator. Owner may,
in its sole discretion, change the deductibles or self-insured retention under
any of the insurance policies that it is required to carry pursuant to Section
10.2 hereof and shall promptly give Operator written notice of any such change;
provided, however, that Operator shall not be responsible for any deductibles or
self-insured retention in excess of Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) per occurrence.
(d) Subcontractor Insurance. Operator shall require all subcontractors and
suppliers to obtain, maintain, and keep in force, prior to entry on the Site and
during the time in which they are engaged in performing services to be furnished
by Operator adequate coverage in accordance with Operator's normal practice and
shall provide Owner with current certificates of insurance evidencing such
coverage.
(e) Notification. Operator agrees to advise Owner as soon as practicable in
writing of any notice of claim to which insurance pursuant to this Article X
applies.
(f) Owner's and Lender's Rights. Should Operator fail to provide or
maintain any of the insurance policies required of it, Owner and/or Lender shall
have the right to provide and/or maintain such coverage at Operator's expense
once Operator has had a reasonable time to cure.
(g) Capitalized Terms. Capitalized terms used in this Article X and not
otherwise defined in this Agreement shall have the meanings generally ascribed
to them in the commercial insurance industry in the United States of America.
(h) Disclosure. Operator agrees to make full disclosure to insurers of all
material facts and circumstances as required by the term of any insurance
policy under which Operator is named as an Additional Insured.
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XI.
NOTIFICATIONS
Any notice to either party required or permitted hereunder shall be in
writing and shall be given by (i) personal delivery, (ii) commercial courier
(iii) registered or certified U.S. mail, return receipt requested, postage
prepaid, or (iv) telecopy if also given by personal delivery, commercial courier
or registered or certified U.S. mail, return receipt requested, postage prepaid
within three (3) days after the telecopied transmission, all such notices to be
addressed as follows:
If to Owner:
Cogen Technologies NJ Venture
c/o Cogen Technologies NJ, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Vice President and Chief Financial Officer
Cogen Technologies NJ Venture
c/o Cogen Technologies NJ, Inc.
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Senior Vice President and Chief Operating
Officer
with copy to:
Cogen Technologies NJ Venture
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▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Plant Manager
If to Operator:
GE Global O&M Services
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇-▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Manager of Global O&M Services
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If to Lender:
Prudential Power Funding
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Notice by personal delivery shall be effective when made and notice by
commercial courier or by mail shall be deemed effective upon receipt. A copy of
each such notice shall, to the extent reasonably practicable, also be forwarded
by telecopier.
XII.
ASSIGNMENT; LENDER'S RIGHTS
12.1 Assignment. Neither Owner nor Operator may assign all or any part
of their interests in this Agreement without the prior written consent of the
other, which consent shall not be unreasonably withheld, delayed or conditioned;
provided, however, Owner may assign its rights under this Agreement as security
for the payment of any indebtedness payable or to become payable to Lender. Such
assignment shall be in a form substantially similar to Exhibit B attached hereto
and made a part hereof for all purposes. In connection therewith, if requested
by Lender, Operator will execute an appropriate consent to any such assignment
in a form substantially similar to Exhibit C attached hereto and made a part
hereof for all purposes.
12.2 Lender's Rights. (a) Operator agrees that so long as any such
assignment to Lender shall remain in effect or until written notice of
satisfaction is given to Operator by Lender, the following provisions will
apply:
(1) except for the natural expiration of the term of this Agreement
(after giving effect to any renewal terms), there shall be no modification
of this Agreement without the prior written consent of Lender which consent
shall not be unreasonably withheld;
(2) Operator will not terminate, cancel or surrender this Agreement by
reason of Owner's default without giving Leader the same notice and right
to cure such default as Owner may have (plus an additional thirty (30)
days); provided, that if the default is a non-monetary default and (i) is
of such nature that it cannot be cured without first taking possession of
the Facility or (ii) is of such nature that it is not susceptible of being
cured by Lender, then Operator shall have no right to terminate this
Agreement by reason of such default if and so long as Lender shall proceed
diligently to attempt to obtain possession of the Facility or exercise its
remedies pursuant to the financing agreements including possession by a
receiver and upon obtaining such possession, Lender shall proceed
diligently to cure such default if such default is susceptible of being
cured by Lender;
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(3) Operator will not terminate this Agreement by reason of Owner's
default under Section 9.3 if Lender has cured any monetary default and has
diligently commenced and is diligently continuing to exercise its remedies
under any of the financing agreements;
(4) Operator will deliver to Lender a copy of each notice of default
and notice of termination, extension or renewal at the same time that any
such notice is delivered to Owner;
(5) upon instructions from Lender, Operator will make any payments due
to Owner hereunder in accordance with such instructions; and
(6) if Lender or a Permitted Transferee shall acquire title to or
possession of the Facility or shall appoint a new managing venturer of
Owner, then Operator shall accept performance from Lender or such
Permitted Transferee so long as Lender or such Permitted Transferee shall
have paid to Operator all costs and fees herein provided for, and then due
and payable, and shall comply or cause Owner to comply with the other
provisions of this Agreement. Upon acquiring title to or possession of the
Facility, Lender shall have the same rights as Owner with respect to the
availability and review of books and records of the Facility.
(b) Lender, as such, shall not be deemed to assume the performance of
any of the terms, covenants or conditions on the part of Owner to be performed
hereunder, but the purchaser, assignee or transferee of this Agreement under any
instrument of sale, assignment or transfer pursuant to or in connection with any
proceedings for the foreclosure of any leasehold mortgage affecting the Facility
shall be deemed to be an assignee or transferee within the meaning of this
Agreement, and shall be deemed to have agreed to perform all of the terms,
covenants and conditions on the part of Owner to be performed hereunder from and
after the date of such purchase and assignment, but only for so long as such
purchaser or assignee is the owner of such leasehold estate.
(c) Notwithstanding any other provisions of this Agreement, any sale,
transfer, or assignment of this Agreement to Lender or a Permitted Transferee
pursuant to or in connection with (1) any proceedings for the foreclosure of any
leasehold mortgage affecting the Facility or (2) the exercise by Lender of any
other remedies under any of the financing agreements shall be deemed to be a
permitted sale, transfer or assignment of this Agreement.
(d) Any Lender or any Permitted Transferee may sell, assign or
transfer this Agreement to a Permitted Transferee; provided, however, that such
Lender or Permitted Transferee shall remain liable hereunder for the
obligations, if any, incurred by it prior to the sale, assignment or transfer.
12.3 Estoppel Certificates. Operator shall, without charge at any time
and from time to time hereafter, but not more frequently than twice in any one-
year period (or more frequently if such request is made in connection with any
sale or mortgaging of Owner's leasehold
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interest), within thirty (30) days after written request of Owner certify by
written instrument duly executed and acknowledged to any Lender or Permitted
Transferee or any other person, firm or corporation specified in such request:
(a) as to whether this Agreement has been supplemented or amended, and if so,
the substance of such supplement or amendment; (b) as to the validity and force
and effect of this Agreement; (c) as, to the existence of any Event of Default
hereunder; (d) as to the existence of any offsets, counterclaims or defenses
hereto on the part of Owner; and (e) as to any other matters as may be
reasonably so requested. Any such certificate may be relied upon by Owner and
any other person, firm or corporation to whom the same may be exhibited or
delivered, and the contents of such certificate shall be binding on Operator.
12.4 Legal Opinion. Incident to the execution of this Agreement, if
requested by Owner, Operator shall furnish to Owner and any Lender or Permitted
Transferee an opinion of counsel to Operator with respect to the enforceability
of this Agreement against Operator and covering such other matters as may be
reasonably requested by Owner.
XIII.
INDEMNIFICATION
13.1 Operator Indemnity. Operator shall indemnify, defend and hold
harmless Owner, Lender, IMTT-Bayonne, IMTT-BX and their respective Affiliates,
and partners, joint venturers, officers, agents, employees, successors and
assigns (collectively, the "Owner Indemnitees") from and against any and all
suits, actions, legal or administrative proceedings, claims, demands, penalties,
costs and expenses (Including attorneys' fees, court costs and all costs or
expenses related to environmental clean-up, containment, remediation or removal
of hazardous waste or pollution to property of third parties) of any nature for
personal injury or death or physical damage to property of any third party
(including employees of Operator and its subcontractors) arising out of or
resulting from the performance or non-performance of the Work or any other
activities on or about the Site or other locations where the Work is performed
to the extent that the same is caused by any negligent act or negligent omission
of, or willful misconduct or intentional act by, Operator or its subcontractors
or suppliers, or anyone employed by any of them or anyone for whose acts any of
them may be liable, unless solely caused by the negligence of any of the Owner
Indemnitees. In the event that such damage or injury is caused by the joint or
concurrent negligence of Owner, its employees, subcontractors (other than
subcontractors of operator) or agents, the loss shall be borne by Operator and
Owner proportionately to their degree of fault. In the event Operator shall be
liable for any loss, costs and expenses pursuant to this Section 13.1, the
proceeds of the insurance policies referred to in Section 10.2(c) and (d) shall
first apply, other than as stipulated therein, to the loss, costs and expenses.
If such proceeds are insufficient to cover all such loss, costs and expenses,
Operator shall be liable for and shall pay for all sums in excess of such
insurance proceeds; provided, however, in the event that such loss, costs and
expenses are caused by the joint or concurrent negligence of Owner, its
employees, subcontractors (other than subcontractors of Operator) or agents, the
loss, costs and expenses shall be borne by Operator and Owner proportionately to
their degree of fault. Notwithstanding anything herein to the contrary, in the
event of loss or damage due to the negligence or willful misconduct of Operator,
Operator shall be liable, proportionately to the extent of Operator's
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negligence or willful misconduct, for the deductibles, self-insured retention
and waiting period deductibles applicable to the insurance Policies required to
be carried by Owner pursuant Section 10.2 hereof.
13.2 Owner indemnity. Owner shall indemnify, defend and hold harmless
Operator and its Affiliates and partners, joint venturers, officers, agents,
employees, successors, and assigns (collectively, the "Operator Indemnitees")
from and against any and all suits, actions, legal or administrative
proceedings, claims, demands, penalties, costs, and expenses (including
attorneys' fees, court costs and all costs or expenses related to environmental
clean-up, containment, remediation or removal of hazardous waste or pollution to
property of third parties) of any nature for personal injury or death or
physical damage to property of any third party (including employees Of Owner and
its subcontractors) arising out of or resulting from the performance or non-
performance of Owner of its obligations hereunder or any of Owner's activities
on or about the Site or other location where Owner is to perform its obligations
hereunder to the extent that the same is caused by any negligent act or
negligent omission of, or willful misconduct or intentional act by, Owner, its
subcontractors (other than subcontractors of Operator) or suppliers (other than
suppliers of Operator), or anyone employed by any of them, or anyone for whose
acts any Of them may be liable, unless solely caused by the negligence of any of
the Operator Indemnitees. In the event that such damage or injury is caused by
the joint or concurrent negligence of Operator or its employees, contractors,
subcontractors or agents, the loss shall be borne by Operator and Owner
proportionately to their degree of fault.
13.3 No Limitation. In any and all claim against any of the Owner
Indemnitees by any employee of operator, any of Operator's subcontractors or
suppliers, or anyone directly or indirectly employed by any of them or anyone
for whose acts any of them may be liable, the indemnification obligation under
Section 13.1 shall not be limited in any way by any limitation on the amount or
type of damages, compensation or benefits payable by or for Operator or any of
its subcontractors or suppliers under workers' or workmen's compensation acts,
disability benefit acts or other employee benefits acts, nor by the provision by
Operator of any insurance required to be provided under this Agreement.
XIV.
REPRESENTATIONS AND WARRANTIES
14.1 Representations and Warranties of Owner. Owner hereby represents
and warrants to Operator as follows:
(a) Owner is a joint venture duty organized and existing in good
standing under the laws of the State of New Jersey.
(b) Owner possesses all requisite power and authority to enter into
and perform this Agreement and to carry out the transactions contemplated
herein.
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(c) Owner's execution, delivery, and performance of this Agreement
have been duly authorized, and this Agreement has been duly executed and
delivered and constitutes Owner's legal, valid, and binding obligation,
enforceable against Owner in accordance with its terms, except as may be limited
by bankruptcy, insolvency and other legal principles pertaining to creditor's
rights.
(d) No suit, action or arbitration, or legal, administrative or other
proceeding is pending or, to Owner's knowledge, threatened against Owner that
would affect the validity or enforceability of this Agreement or the ability of
Owner to fulfill its obligations and commitments hereunder.
14.2 Representations and Warranties of Operator. Operator hereby
represents and warrants to Owner as follows:
(a) Operator is a corporation duly organized and existing in good standing
under the laws of the State of New York and is qualified to do business in the
State of New Jersey.
(b) Operator possesses all requisite power and authority to enter into and
perform this Agreement and to carry out the transactions contemplated herein.
(c) Operator's execution, delivery, and performance of this Agreement have
been duly authorized, and this Agreement has been duly executed and delivered
and constitutes Operator's legal, valid, and binding obligation, enforceable
against Operator in accordance with its terms, except as may be limited by
bankruptcy, insolvency and other legal principles pertaining to creditors'
rights.
(d) No suit, action or arbitration, or legal, administrative or other
proceeding is pending or, to Operator's knowledge, threatened against Operator
that would affect the validity or enforceability of this Agreement or the
ability of Operator to fulfill its obligations and commitments hereunder.
(e) No material consents or approvals are required in connection with the
execution, delivery and performance by Operator of this Agreement.
(f) The execution, delivery and performance by Operator of this Agreement
will not (i) violate any law, rule or regulation applicable to Operator, (ii)
result in any breach of, or constitute any default under, any contractual
obligation of Operator, or (iii) result in, or require, the creation or
imposition of any lien or other encumbrance on any of the properties or revenues
of Owner.
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XV.
BOOKS, RECORDS AND REPORTS
15.1 Books and Records. Operator Shall Maintain books and records at
the site reflecting solely transactions arising from the operation and
maintenance of the Facility pursuant to the terms of this Agreement, including,
without limitation, accounting, bookkeeping and administrative reports relating
to Facility performance data, the accrual and payment of items constituting
operating expenses and Reimbursable Costs, and the payment of all O&M Fees and
other monies to Operator. Such books and records shall (a) reflect only
transactions in connection with the Facility, (b) be kept Physically apart from
any other books and records maintained by Operator for whatever purpose, and (c)
be available to Owner upon Owner's request for examination Or Copying during the
normal business hours of Operator. Operator shall cooperate with Owner's
accountant in the event Owner requests such accountant to conduct a financial
audit of the services provided by Operator hereunder. If such audit reveals
errors in the calculation of any amounts paid by Owner, operator shall promptly
reimburse Owner for any amounts improperly paid by Owner or Owner shall promptly
reimburse operator for any amounts not paid by Owner, as the case may be.
Furthermore, if such audit reveals errors of more than two percent (2%) in the
calculation of Reimbursable Costs during any given month, then Operator shall
pay to Owner the cost of the audit. At the termination of this Agreement,
Operator shall furnish to Owner one copy of each report previously delivered to
Owner pursuant to Section 15.2 hereof, and one copy of such other books and
records which (i) relate to the Facility, and (ii) Operator maintains at the
time of such termination in the normal course of its record keeping under this
Article XV.
15.2 Reports. In addition to any other report required to be made by
Operator pursuant to the terms of this Agreement, Operator shall furnish to
Owner all such reports concerning the operation and maintenance of the Facility,
including any reports which may be required under the Related Agreements and as
may be required by the Lender. Operator shall provide such reports in the manner
and at the times as may be required under the Related Agreements or by the
Lender.
XVI.
FORCE MAJEURE
16.1 Force Majeure. Neither party shall be responsible or liable for
or deemed in breach hereof because of any delay in the performance of their
respective obligations hereunder due to circumstances beyond the reasonable
control of the party experiencing such delay, including but not limited to acts
of God; unusually severe weather conditions; strikes or other labor difficulties
(except that Operator's performance shall not be excused by strikes by persons
employed directly by Operator at the Site or by strikes limited to the Site);
war; riots; requirements, actions or failures to act on the part of governmental
authorities preventing performance; inability despite due diligence to obtain
required licenses, permits or governmental approvals; accidents; fire; damage to
or breakdown of necessary facilities; transportation delays or accidents;
failure or refusal of and of the Power Purchasers to accept deliveries of
electricity
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under any of the Power Purchase Agreements; failure or refusal of any of the
Steam Purchasers to accept deliveries of steam under any of the Steam Purchase
Contracts; or unavailability of Fuel (such causes hereinafter called "Force
Majeure"); provided that the non-performing party is materially and adversely
affected by the event of Force Majeure and:
(a) The non-performing party gives the other party, as soon as reasonably
practicable but in any event within forty-eight (48) hours of such Force Majeure
occurrence, written notice describing the particulars of the occurrence;
(b) The suspension of performance is of no greater scope and of no longer
duration than is required by the Force Majeure;
(c) The non-performing party uses its best efforts to mitigate the effects
of the Force Majeure and remedy its inability to perform;
(d) When the non-performing party is able to resume performance of its
obligations under this, Agreement, that party shall give the other party written
notice to that effect; and
(e) The Force Majeure was not caused by or connected with any negligent or
intentional acts, errors, or omissions, or failure by the non-performing party
to comply with any law, rule, regulation, order, or ordinance or for any breach
or default of this Agreement.
The term Force Majeure does not include changes in market conditions or
governmental action that affect the cost of Owner's supply of Fuel or any
alternative supplies of Fuel or the demand for Owner's products.
16.2 Effect of Force Majeure. If after an event of Force Majeure that
has caused Operator to suspend or delay performance of the Work hereunder,
Operator has faded to take such action as Operator could lawfully and
reasonably initiate to remove or relieve either such event of Force Majeure or
its direct or, indirect effects, Owner may, in its sole discretion, at
Operator's expense, initiate such reasonable measures as will be designed to
remove or relieve such event of Force Majeure or its direct or indirect effects
and thereafter require Operator to resume full or partial performance of the
Work hereunder.
16.3 Extended Force Majeure. In the event an event of Force Majeure
hereunder or under any of the Related Agreements continues for thirty (30) days
or more, then Owner shall have the right, upon delivery of thirty (30) days
advance written notice to Operator, to cause Operator to de-mobilize, and
effective thirty (30) days after Operator's receipt of such notice, Owner shall
be permanently relieved of the obligation to make payment of the O&M Fee to
Operator for those months during such extended event of Force Majeure that
Operator is de-mobilized. Owner shall pay all costs and expenses incurred in
connection with de-mobilization and re-mobilization to the extent such costs
and expenses are approved in writing by Owner. In
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addition, if such de-mobilization continues for a period of one hundred eighty
(180) or more consecutive days, then Owner may terminate this Agreement by
delivering written notice of termination to Operator, such termination to be
effective no earlier than thirty (30) days after Operator's receipt of such
notice.
16.4 Payments to Operator During an Event of Force Majeure. During
the continuance of an event of Force Majeure, Owner's obligation to make
payments to Operator for the O&M Fee and the AFAA shall be limited to the net
income (including insurance proceeds) derived from the Facility; provided,
however, (i) after the event of Force Majeure terminates, Owner shall bring
current the payment of all O&M Fees and AFAA (which are unpaid and accrued
during the event of Force Majeure) to Operator at such time as there is
sufficient net income from the Facility to make such payments and (ii) any such
delayed payments of the O&M Fee and the AFAA shall accrue interest at the rate
of interest announced by The Chase Manhattan Bank, N.A., from time to time, at
its principal office located at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (or any successor financial institution), as its prime commercial lending
rate; provided, however, Operator shall not be entitled to any O&M Fees for
those periods in which Operator was de-mobilized pursuant to Section 16.3
hereof. Owner's obligations under this Section 16.4 shall survive the
termination or expiration of this Agreement.
XVII.
LIMITATION OF LIABILITY
17.1 Operator. In no event, whether in tort, negligence, strict
liability, breach of contract, warranty or otherwise, shall, Operator's total
liability hereunder to Owner exceed (a) in any project year, Two Million and
00/100 Dollars ($2,000,000.00) and (b) over the term of this Agreement, a total
aggregate amount of Six Million and 00/100 Dollars ($6,000,000-00) provided,
however, that the foregoing limitation on liability shall not apply to any
liability of Operator to Owner (i) resulting from willful misconduct or
intentional acts by Operator or (ii) otherwise covered by the insurance policies
required to be maintained by Operator pursuant to Section 10.1 hereof up to the
minimum amounts therein stated. Notwithstanding anything contained herein to the
contrary, in no event, whether in tort, negligence, strict liability, breach of
contract, warranty, indemnity or otherwise, shall. Operator be liable to Owner
for special, incidental, exemplary or consequential damages, including but not
limited to, loss of profits or revenues.
17.2 Owner. In no event, whether in tort, negligence, strict liability,
breach of contract, warrant or otherwise, shall Owner's total liability
hereunder to Operator exceed (a) in any project Year, Two Million and 00/100
Dollars ($2,000,000.00) and (b) over the term of this Agreement, a total
aggregate amount of Six Million and 00/100 Dollars ($6,000,000.00); provided,
however, that the foregoing limitation on liability shall not apply to any
liability of Owner to Operator (i) resulting from willful misconduct or
intentional acts by Owner, or (ii) otherwise covered by the insurance policies
required to be maintained by owner pursuant to Section 10.2 hereof up to the
minimum amounts therein stated. Notwithstanding anything contained herein to
the contrary, in no event, whether in tort negligence, strict liability, breach
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of contract, warranty, indemnity or otherwise, shall Owner be liable to Operator
for special incidental, exemplary or consequential damages, including but not
limited to, loss of profits or revenues, except Owner shall indemnify Operator
against claims from Owner's customers for special, incidental, exemplary or
consequential damages up to, but not in excess of, a total aggregate amount of
Three Million and 00/100 Dollars ($3,000,000.00) over the term of this
Agreement.
XVIII.
RESOLUTION OF DISPUTES
18.1 Resolution by Parties.
(a) In the event that a dispute arises hereunder between the parties,
the parties shall attempt in good faith to settle such dispute by mutual
discussions within thirty (30) days after the date that a party gives written
notice of the dispute to the other party; provided, however, that if the dispute
involves the amount of an invoice and after ten (10) days of mutual discussion
either party believes in good faith that further discussion will not resolve the
dispute to its satisfaction, such party may immediately refer the matter to the
expert for consideration pursuant to Section 18.2 hereof.
(b) In the event that the dispute is not resolved in accordance with
Section 18.l(a) hereof, either party may refer the dispute to the chief
executive officers or chief operating officers of the respective parties for
further consideration. In the event that such individuals are unable to reach
agreement within fifteen (15) days, or such longer period as they may agree,
then either party may refer the matter to an expert in accordance with Section
18.2 hereof.
18.2 Mediation by Expert.
(a) In the event that the parties are unable to resolve a dispute in
accordance with Section 18.1 hereof, then either party, in accordance with this
Section 18.2, may refer the dispute to an expert for consideration of the
dispute and to obtain a recommendation from the expert as to the resolution of
the dispute; provided, that with respect to disputes that involve the amount of
an invoice, either party may before any such dispute arises require that an
expert be appointed in accordance with the provisions of Section 18.2(b) hereof
and shall nominate a person it proposes to be the expert. Such an expert shall
have responsibility for considering all disputes that involve the amount of
invoices until replaced in accordance with the provisions of Section 18.2(b)
hereof.
(b) The party initiating submission of the dispute to the expert shall
provide the other party with a notice stating that it is submitting the dispute
to an expert and nominating the person it proposes to be the expert. The other
party shall, within fifteen (15) days of receiving such notice, notify the
initiating party whether such person is acceptable. If the party receiving such
notice fails to respond or notifies the initiating party that the person is not
acceptable, the parties shall meet and discuss in good faith for a period of ten
(10) days to agree upon a person
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to be the expert. If the parties are unable to agree, the responding party shall
by the end of such ten (10) day period nominate a person to be an expert,
Whereupon the two nominated experts shall meet and agree upon a third person who
shall be the expert. Should an expert die, resign, refuse to act or become
incapable of performing his or her functions, the vacancy shall be filled by the
method by which the expert was originally appointed.
(c) (i) Consideration of the dispute by an expert shall be initiated
by the party who is seeking consideration of the dispute by the expert
submitting to both the expert and the other party written materials setting
forth:
(A) a description of the dispute;
(B) a statement of the party's position; and
(C) copies of records supporting the party's position.
(ii) Within ten (10) days of the date that a party has submitted the
materials described in Section 18.2(c)(i) hereof, the other party may submit to
the expert:
(A) a description of the dispute;
(B) a statement of the party's position; and
(C) copies of any records supporting the party's position.
The expert shall consider any such information submitted by the
responding party within the period provided in Section 18.2(c)(ii) hereof and,
in the expert's discretion, may consider any additional information submitted by
either party at a later date.
(d) The parties shall not be entitled to apply for discovery of
documents, but shall be entitled to have access to the other party's relevant
records and to receive copies of the records submitted by the other party.
(e) Each party shall designate one person knowledgeable about the
issues in dispute who shall be available to the expert to answer questions and
provide any additional information requested by the expert. Except for such
person, a party shall not be required to, but may, provide oral statements or
presentations to the expert or make any particular individuals available to the
expert.
(f) Except as provided in Section 18.2(h) hereof with respect to the
payment of costs, the proceedings shall be without prejudice to any party and
any evidence given or statements made in the course of this process may not be
used against a party in any other proceedings. The process shall not be regarded
as an arbitration and the laws relating to commercial arbitration shall not
apply. Unless the parties agree in writing signed by both parties
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at the time the expert is selected that the decision of the expert will be
binding, the determination of the expert shall not be binding.
(g) When consideration of the dispute by an expert is initiated, the
expert shall be requested to provide a recommendation within fifteen (15) days
after the ten (10) day response period provided in Section 18.2(c)(ii) above has
run. If the expert's recommendation is given within such fifteen (15) day
Period, or if the expert's recommendation is given at a later time and neither
party has at such time initiated any other proceeding concerning the dispute,
the parties shall review and discuss the recommendation with each other in good
faith for a period of ten (10) days following delivery of the recommendation
before proceeding with any other actions.
(h) If a party does not accept the recommendation of the expert with
respect to the dispute, it may initiate arbitration proceedings in accordance
with Section 18.3 hereof, provided, however that prior to initiating the
arbitration proceedings it shall have paid all costs of the expert (including
the reimbursement of any costs paid to the expert by the other party) and all
out-of-pocket costs of the other party. Similarly if the expert has not
submitted its recommendation within the time period provided in Section 18.2(g)
hereof, a party may initiate arbitration proceedings in accordance with Section
18.3 hereof, provided that prior to initiating the arbitration proceedings it
shall have paid all costs of the expert (including the reimbursement of any
costs paid to the expert by the other party).
(i) Except as provided in Section 18.2(h) hereof, the costs of
engaging an expert shall be borne equally by the parties and each party shall
bear its own costs in preparing materials for, and making presentations to, the
expert.
(j) Without prejudice to the parties' rights to initiate arbitration
proceedings following the recommendation of the expert in accordance with
Section 18.2(h), the parties shall act in accordance with the recommendation of
the expert until resolution of the dispute by arbitration.
18.3 Arbitration. In the event a dispute arises between Owner and
Operator which is not resolved pursuant to Section 18.1 or 18.2 hereof, as
applicable, each party, as its sole remedy, other than mediation pursuant to the
terms of Section 18.2 hereof, for resolution of such dispute, shall have the
right to pursue arbitration pursuant to the terms hereof. All claims, disputes,
and other matters in question arising out of or relating to this Agreement or
the breach thereof and which are resolved by arbitration shall be decided by
arbitrators selected as hereinafter provided and shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then obtaining, unless the parties mutually agree otherwise. The
resolution of such disputes shall not delay Operator's performance of its
undisputed obligations under the term of this Agreement nor Owner's payment to
Operator for such Work. The arbitration shall be held in New York, New York, and
any arbitration demand must be filed with the American Arbitration Association
office located closest to New York, New York. If the claim or defense of either
party was without merit, the arbitrators may require that the party at fault pay
or reimburse the other party for (i) fees and expenses, including, attorneys and
expert fees and
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expenses, and (ii) reasonable out of pocket expenses incurred by the other party
in connection with. the arbitration proceedings.
18.4 Selection of Arbitrators. Each dispute shall be submitted to
three (3) arbitrators, one (1) arbitrator being selected by Owner, one (1)
arbitrator being selected by Operator, and the third arbitrator being selected
by the two (2) so selected. The party initiating the arbitration shall include
in its notification under Section 18.5 below the designation of its selected
arbitrator and the party receiving such notification shall designate its
arbitrator within fifteen (15) days thereafter and notify the initiating party
and its arbitrator of the selection. If the arbitrators selected by Owner and
Operator cannot agree on a dud arbitrator within fifteen (15) days after the
second arbitrator is selected, the third arbitrator shall be selected by the
American Arbitration Association. In the event the party receiving notification
of a demand for arbitration shall not have selected its arbitrator and given
notice thereof to the other party and its arbitrator within fifteen (15) days
after receiving such notification, such arbitrator shall be selected by the
American Arbitration Association. Should a vacancy arise because any arbitrator
dies, resigns, refuses to act or in the opinion of his fellow arbitrators
becomes incapable of performing his or her functions, the vacancy shall be
filled by the method by which that arbitrator was originally appointed.
18.5 Notice. Notice of demand for arbitration shall be filed in
writing with the other party to this Agreement and with the American Arbitration
Association. The demand shall be made within a reasonable time after the claim,
dispute or other matter in question has arisen. In no event shall the demand for
arbitration be made after the date when the applicable statute of limitations
would bar institution of a legal or equitable proceeding based on such claim,
dispute, or other matter in question; provided, however, any claims asserted by
Owner with respect to a breach of the warranty set forth in Section 7.1 hereof
shall be made within one (1) year after the termination of this Agreement.
18.6 Award. This agreement to arbitrate shall be specifically
enforceable under the prevailing arbitration law. The award rendered by the
arbitrators shall be final and judgment may be entered upon it in accordance
with applicable law in any court having jurisdiction thereof.
18.7 This, Article XVIII shall survive termination of this Agreement.
XIX.
CONFIDENTIALITY AND INTELLECTUAL PROPERTY
19.1 Confidential Information. Operator agrees to keep confidential
and not to disclose to any person for use for any purpose other than the
performance of the Work any written or other tangible information which is
marked or designated by Owner as confidential or proprietary (including
documents, computer records, specifications, formulae, evaluations, methods,
processes, technical descriptions, reports and other data, records and
information) provided to or created or acquired by Operator solely in the course
of the performance of the Work (collectively, "Owner Confidential Information").
Owner agrees to keep confidential and
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not to disclose to any person for use for any purpose other than in connection
with owner's ownership of the Facility any written or other tangible information
which is marked or designated by Operator as confidential or proprietary
(including documents, computer records, specifications, formulae, evaluations,
methods, processes, technical descriptions, reports and other data, records and
information) provided to it by Operator, but not provided to or created or
acquired by Operator solely in the course of the performance of the Work
(collectively, "Operator Confidential Information", and together with the Owner
Confidential information, the "Confidential Information"). Notwithstanding the
foregoing, Operator and Owner shall be entitled to disclose Owner Confidential
Information or Operator Confidential Information, as the case may be:
(i) to its respective directors, officers, employees, subcontractors,
agents or professional advisors to the extent necessary for
performance of its obligations under this Agreement or to its
auditors for the purposes of any audit of its accounts, provided
that it first obtains from any such person or entity to whom the
disclosure is to be made an agreement of confidentiality in favor
of the other party with respect to the Confidential Information
in question substantially on the terms of this Article XIX;
provided, however, in the case of employees, the party desiring
to disclose Confidential Information need not obtain a
confidentiality agreement from such employees, but shall make
such employees aware of, and require that such employees comply
with, the confidentiality obligations contained herein;
(ii) when required to do so by law or by or pursuant to the rules of
any order having the force of law of any court, association or
agency of competent jurisdiction or any governmental agency,
provided that the party seeking to disclose Confidential
Information fast informs the other party of its intent to
disclose such Confidential Information so that such other party
can seek a protective order or other equitable relief to prevent
disclosure of such Confidential Information;
(iii) to the extent that the Confidential Information has, except as a
result of breach of confidentiality by a party, become publicly
available or generally known to the public at the time of such
disclosure;
(iv) to the extent that a party has acquired the Confidential
Information from a third party who is not in breach of any
obligation as to confidentiality;
(v) to the extent that the Confidential Information has been
independently developed by employees who have not had access to
the Confidential Information of the other party; or
(vi) to any person with the prior written consent of the other party.
19.2 Return of Confidential Information. Upon termination of this
Agreement, Operator shall return to Owner the Owner Confidential Information
(including all copies thereof)
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within its possession or control and Owner Information (including all copies
thereof) within its possession or control.
19.3 Continuation of Confidentiality. The obligations under this
Article XIX shall continue for a period of three (3) years following the
termination of this
Agreement.
19.4 Ownership of Confidentiality Information. All owner Confidential
Information shall be and shall remain the property of Owner and all Operator
Confidential Information shall be and shall remain the property of Operator.
19.5 Intellectual Property.
(a) All of Owner's intellectual property rights shall remain the
property of Owner, but owner hereby grants to Operator an irrevocable, non-
exclusive, royalty-free, non-transferable license to use such intellectual
property to the extent that Operator requires use of such intellectual property
in connection with the performance of the Work during the term of this
Agreement.
(b) Operator hereby grants to Owner an irrevocable, non-exclusive,
royalty-free license to use any intellectual property rights owned by Operator
and required in connection with the Facility. Such license shall be non-
transferrable and limited for the use and benefit of the Facility, except that
Owner may assign the benefit of such license to Lender.
(c) Before entering into an agreement with a third party relating to
the supply of materials specifically created by such third party for the
Facility, Operator shall request that such third party grant licenses to
Operator and Owner (with rights to Owner to assign or sub-license to any person
appointed operator of the Facility) to use all intellectual property rights
which arise in connection with such materials. In addition, Operator shall use
reasonable efforts to procure that intellectual property rights owned or
developed by and parties and used by Operator in connection with the Facility be
licensed either (i) to both Operator and Owner or (ii) to Operator solely, but
with rights to sub-license such intellectual property rights to Owner.
(d) Owner shall have the right either to 01 assign all sub-licenses of
intellectual property rights granted to it or (ii) grant sub-licenses to any new
operator of the Facility in respect of intellectual property in respect of which
a sub-license has been granted to Owner; provided, however, any such sub-
licenses shall limit the use of intellectual property for the benefit of the
Facility
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XX.
MISCELLANEOUS
20.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey, without giving effect to
the conflict of laws principles thereof.
20.2 Severability. Every provision of this Agreement is intended to be
severable such that if any term or provision hereof is illegal or invalid for
any reason, such provision shall be severed from this Agreement and shall not
affect the validity of the remainder of this Agreement.
20.3 Entire Agreement. This Agreement constitutes the entire agreement
between Owner and Operator relating to the subject matter hereof and Supersedes
and replaces all prior and contemporaneous agreements and understandings not
incorporated herein by reference thereto, whether written or oral, and sets
forth all the representations, covenants and warranties upon which Owner and
Operator rely in entering into this Agreement.
20.4 Amendments. No amendment or modification hereof shall be valid or
binding upon the parties hereto unless evidenced in writing and signed by a duly
authorized representative of Owner and Operator and consented to by Lender.
20.5 Waiver. No failure by Owner to insist upon the strict performance
of any term, covenant or condition of this Agreement, or to exercise any right
or remedy upon breach of any provision, and no acceptance of payment or
performance during the continuation of any such breach, shall constitute a
waiver of any term, covenant or condition herein or a waiver of any subsequent
breach or default in the performance of any term, covenant or condition herein.
20.6 Original and Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original for all
purposes, but all of which shall constitute one and the same instrument.
20.7 Independent Contractor Operator. Shall perform its duties and
obligations hereunder as an independent contractor, and nothing contained herein
shall be deemed to create a relationship of employer/employee, master/servant,
agency (except as otherwise expressly set forth herein), partnership or joint
venture.
20.8 Limited Recourse. Any claim against Owner that may arise under
this Agreement shall be made only against, and shall be limited to the assets
of Owner, and no judgment, order or execution entered in any suit, action or
proceeding thereon shall be obtained or enforced against any partner or joint
venturer of Owner or the assets of such partner or joint venturer or any
incorporator, shareholder or other equity holder, employee, officer or director
thereof, whether acting individually or in a representative capacity hereunder
or in connection with the ownership, operation or Maintenance of the Facility
(or, in the case of such partners or joint
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venturers that are partnerships, of any partner thereof), or against any direct
or indirect parent, corporation or affiliate or any incorporator, shareholder or
other equity holder, employee, officer or director of any thereof, whether
acting individually or in a representative capacity hereunder or in connection
with the ownership, operation or maintenance of the Facility, for the purpose of
obtaining satisfaction of any payment of any amount owing under this Agreement.
20.9 Captions. The captions contained in this Agreement are for
convenience and 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.
20.10 Exhibits. All Exhibits referenced in this Agreement shall be
incorporated into this Agreement by such reference and shall be deemed to be an
integral part of this Agreement.
20.11 Effectiveness of Agreement. This Agreement shall only become
effective upon the termination of the Existing O&M Agreement by Owner pursuant
to the terms of the Termination Agreement. If Owner does not elect to terminate
the Existing O&M Agreement pursuant to the Termination Agreement, then this
Agreement shall be null and void and of no force or effect.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date and year first above written.
OPERATOR:
GENERAL ELECTRIC COMPANY
By: /s/ ▇.▇. ▇▇▇▇▇
---------------------------
Name: ▇.▇. ▇▇▇▇▇
-------------------------
Title: Gen. Mgr-Global O&M
Services
------------------------
OWNER:
COGEN TECHNOLOGIES NJ VENTURE
BY: COGEN TECHNOLOGIES ▇▇.▇▇▇.,
its Managing Venturer
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Title: Sr. VP/COO
------------------------
By: ENRON COGENERATION FIVE
COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
Title: Manger - Operations
------------------------
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By: CEA BAYONNE, INC.
By: /s/ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇. ▇▇▇▇▇▇
-------------------------
Title: Vice President
------------------------
By: TEVCO/MISSION BAYONNE
PARTNERSHIP
By: TM Bayonne, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Title: Senior Vice President
------------------------
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