EXHIBIT 10.63
EXECUTION COPY
PANDA-BRANDYWINE LIMITED PARTNERSHIP
AMENDED AND RESTATED
TURNKEY COGENERATION FACILITY AGREEMENT
BETWEEN
PANDA-BRANDYWINE, L.P.
AND
RAYTHEON ENGINEERS & CONSTRUCTORS, INC.
Dated as of March 30, 1995
AMENDED AND RESTATED
TURNKEY COGENERATION FACILITY AGREEMENT
DATED AS OF MARCH 30, 1995
BETWEEN PANDA-BRANDYWINE, L.P. AND
RAYTHEON ENGINEERS & CONSTRUCTORS, INC.
Table of Contents
ARTICLE I
GENERAL MATTERS 2
1.01 Contract Documents 2
1.02 Definitions 4
1.03 Description of Plant 16
1.04 General Scope of Work; Applicable Standards 16
1.05 Contract Price and Payment Thereof 19
1.06 Construction Lender's Requirements and Lien Waivers 21
1.07 Financing of Plant 23
ARTICLE II
CONTRACTOR'S SUPPLY OF PLANT 24
2.01 Commencement of Performance 24
2.02 Commencement of Construction 24
2.03 Time Allowed for Performance 24
2.04 Matters Pertaining to Job or Plant Site 24
2.05 Permits and Authorizations; Easements and Rights of Way 25
2.06 Compliance with Law and PEPCO Contracting Practices 26
2.07 Quality of Workers 27
2.08 Identification of Workers and Vehicles 28
2.09 Project Management 28
2.10 Methods of Work 29
2.11 Cooperation with Other Contractors 29
2.12 Safety Measures, Contractor Negligence and
Protection of Property 29
2.13 Inspection and Testing of Work in Progress 30
2.14 Defective Work 30
2.15 Changes 31
2.16 Drawings and Engineering Data 35
2.17 Contractor's Environmental Obligations 36
ARTICLE III
ADDITIONAL OBLIGATIONS OF CONTRACTOR 38
3.01 Operating and Maintenance Manuals 38
3.02 Training of Owner's Personnel 39
3.03 Subcontractors 39
3.04 Claims and Liens for Labor and Materials 40
3.05 Taxes 41
3.06 Parent Guaranty 42
3.07 Risk of Loss; Passing of Title 42
3.08 Insurance 43
3.09 Claims of Patent Infringement and
Misappropriation of Proprietary Information 47
3.10 Spare Parts Availability 48
3.11 Additional Documentation 49
3.12 Technical Support and Development 49
3.13 Temporary Office Quarters 50
3.14 Letters of Credit 50
3.15 Grubbing and Clearing of Job Site 51
3.16 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
3.17 Punch List 52
3.18 Road Easements 52
ARTICLE IV
CERTAIN OBLIGATIONS OF OWNER 53
4.01 Contract Administration 53
4.02 Fuel Supply 53
4.03 Permit Applications 53
4.04 Gas and Electric Interconnection Facilities 54
4.05 Job Site Access 55
4.06 Owner's Cooperation 55
4.07 Owner's Representative 56
4.08 Unreasonable Interference 56
4.09 Permits 56
4.10 Taxes 57
4.11 Reimbursement of Taxes Paid 57
4.12 Third Party Cooperation 57
4.13 Right to Construct; Survey of Plant Site 58
4.14 Notice to Contractor 58
4.15 Notice of Project Funding 58
4.16 Insurance 58
ARTICLE V
CONTRACTOR'S GUARANTEES AND WARRANTIES 60
5.01 Warranties 60
5.02 Time of Completion of Plant 64
5.03 Equipment and Services 69
5.04 Performance Guarantees 69
5.05 PEPCO Interconnect and Transmission Facilities 74
ARTICLE VI
START UP, PERFORMANCE TESTS AND ACCEPTANCE 74
6.01 Commencement of Testing and Start-Up 74
6.02 Initial Operation 74
6.03 Performance Tests 75
6.04 Final Acceptance and Substantial Completion of the Plant 76
ARTICLE VII
FORCE MAJEURE AND OWNER CAUSED DELAY 79
7.01 Force Majeure 79
7.02 Owner Caused Delay 81
ARTICLE VIII
TERMINATION OF AGREEMENT 82
8.01 Termination for Owner's Convenience 82
8.02 Termination for a Party's Default 82
8.03 Termination by Reason of Insolvency, etc. 84
8.04 Suspension of Work or Termination of Agreement
by Contractor 85
8.05 [Deleted] 86
8.06 Effect of Termination; Post-Termination
Obligations of Parties 86
8.07 Consequences of Suspension of Work by Owner 88
ARTICLE IX
INDEMNIFICATION; LIABILITY LIMITATION 88
9.01 Indemnification of the Parties 88
9.02 Owner's Environmental Indemnification 89
9.03 Limitation of Remedies 90
ARTICLE X
DISPUTES 91
10.01 Arbitration of Disputes 91
10.02 Selection of Arbitrators 92
10.03 Place, Time and Procedure 92
10.04 Winner Take All 92
10.05 Binding Award 93
10.06 Contractor To Continue Work 93
ARTICLE XI
MISCELLANEOUS PROVISIONS 93
11.01 Interest on Overdue Payments 93
11.02 Contractor's Records 94
11.03 Confidentiality of Information 94
11.04 Status of Contractor 95
11.05 Notices 95
11.06 Entire Agreement; Amendment of Agreement 96
11.07 Waiver of Rights 97
11.08 Severability of Provisions 97
11.09 Assignment; Effect of Agreement 97
11.10 Governing Law; Interpretation 98
11.11 Survival 98
Exhibit A - Scope of Work
Exhibit B - Special Conditions
Exhibit C - Legal description of Plant Site
Exhibit D - Milestone Payment Schedule
Exhibit E - Form of Milestone Payment Certificate
Exhibit F - List of governmental permits and property rights
Exhibit G - Air Permit Application Emission Rates
Exhibit H - Form of Certificate for Waiver of Liens
Exhibit I - Utilization of Small Business Concerns and Small
Business Concerns Owned and Controlled by Socially
and Economically Disadvantaged Individuals.
Exhibit J - Clearing & Grubbing Specifications
Exhibit K - Contractor's Rate Schedule
Exhibit L - Power Purchase Agreement between Potomac Electric
Power Company and Panda-Brandywine, L.P., dated
August 9, 1991, as amended.
Exhibit M - Steam Sales Agreement
Exhibit N - Contractor Critical Date Schedule
Exhibit O - Raytheon Parent Guaranty
Exhibit P - Exhibit P - Distilled Water Facility Scope of Work
Exhibit Q - Conditions Listed in Application of Panda-
Brandywine for a Certificate of Public Convenience
and Necessity for the Construction of a 248 MW
Generating Station, PSC Case 8488
Exhibit R - Temporary Road
Exhibit S - Change Orders Executed Prior to the Date of this
Agreement
Exhibit T - Pending or Known Potential Change Orders
Exhibit U - Lay Down Agreement
AMENDED AND RESTATED
TURNKEY COGENERATION FACILITY AGREEMENT
This AGREEMENT ("Agreement") dated as of March 30, 1995
by and between Panda-Brandywine L.P., a Delaware limited
partnership, having its headquarters at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (hereinafter called "Owner") and
Raytheon Engineers & Constructors, Inc. (formerly known as United
Engineers & Constructors Inc., dba Raytheon Engineers &
Constructors), a Delaware corporation having an office at ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
called "Contractor").
W I T N E S E T H:
WHEREAS, Owner proposes to build a cogeneration
facility on its property located south of Brandywine, Maryland,
in Prince George's County, for the purpose of supplying electric
power to Potomac Electric Power Company ("PEPCO") and thermal
energy to a distilled water facility (the "Steam Host"); and
WHEREAS, Owner wishes to have Contractor design,
construct and start-up such cogeneration facility (the "Plant")
under a Turnkey Firm-Fixed Price agreement; and
WHEREAS, Contractor after thoroughly and fairly
evaluating the Plant, is willing to design, construct and startup
the Plant under a Turnkey Firm-Fixed Price agreement on the
terms and conditions hereinafter set forth;
WHEREAS, Contractor and Owner entered into a Turnkey
Cogeneration Facility Agreement dated as of December 2, 1993 (the
"Original EPC Contract") and hereby wish to amend and restate the
Original EPC Contract in its entirety.
NOW, THEREFORE, in consideration of the premises, and
their mutual promises and covenants herein contained, Owner and
Contractor hereby agree that the Original EPC Contract be amended
and restated to read in its entirety as follows:
ARTICLE I
GENERAL MATTERS
1.01 Contract Documents
This Agreement consists of the following writings:
(a) This document.
(b) Exhibit A - Scope of Work
(c) Exhibit B - Special Conditions.
(d) Exhibit C - Legal description of Plant Site.
(e) Exhibit D - Milestone Payment Schedule.
(f) Exhibit E - Form of Milestone Payment Certificate.
(g) Exhibit F - Lists of governmental permits, authorizations,
property easements and rights-of-way.
(h) Exhibit G - Air Permit Application Emission Rates
(i) Exhibit H - Form of Certificate for Waiver of Liens.
(j) Exhibit I - Utilization of Small Business
Concerns and Small Business Concerns Owned and Controlled by
Socially and Economically Disadvantaged Individuals.
(k) Exhibit J - Clearing and Grubbing Specifications
(l) Exhibit K - Contractor's Rate Schedule
(m) Exhibit L - Power Purchase Agreement between
Potomac Electric Power Company and Panda-Brandywine, L.P., dated
August 9, 1991, as amended.
(n) Exhibit M - Steam Sales Agreement
(o) Exhibit N - Contractor Critical Date Schedule
(p) Exhibit O - Raytheon Parent Guaranty
(q) Exhibit P - Distilled Water Facility Scope of Work
(r) Exhibit Q - Conditions Listed in Proposed
Orders of Hearing Examiner for Certificate of Public Convenience
and Necessity
(s) Exhibit R - Temporary Road.
(t) Exhibit S - Change Orders Executed Prior to
the Date of this Agreement
(u) Exhibit T - Pending or Known Potential Change Orders
(v) Exhibit U - Lay Down Agreement
Copies of Exhibits A through U are attached to this
document. This document and such exhibits (hereinafter
sometimes referred to collectively as "the Contract Documents")
are, but only if so explicitly stated, intended to be
complementary, and in such case, anything required by that
document is as binding as if required by all documents. However,
in the event of any conflict or inconsistency between this
Agreement and any Exhibit, this Agreement shall prevail over
such Exhibit.
1.02 Definitions
As used in this Agreement, the following terms shall
have the meanings set forth below:
(a) "Affiliate" means, in relation to any Person,
any Person: (i) which directly or indirectly controls, or is
controlled by, or is under common control with, such other
Person; or (ii) which directly or indirectly beneficially owns or
holds fifty-one percent (51%) or more of any class of voting
stock of such other Person; or (iii) which has fifty-one percent
(51%) or more of any class of voting stock that is directly or
indirectly beneficially owned or held by such other Person, or
(iv) who either holds a general partnership interest in such
other Person or such other Person holds a general partnership
interest in the Person.
(b) "Agreement" means this "Amended and Restated
Turnkey Cogeneration Facility Agreement", dated as of March 30,
1995 by and between Panda-Brandywine, L.P. and Raytheon Engineers
& Constructors, Inc., as the same may be further amended,
supplemented or otherwise modified from time to time.
(c) "Applicable Laws" means any statute, law,
regulation, permit, license, ordinance, rule, judgment, order,
decree, directive, guideline or policy (to the extent mandatory)
or any similar form of decision or determination by, or any
interpretation or administration of, any of the foregoing by any
Federal, state or local government, any political subdivision or
any governmental, quasi-governmental, judicial, public or
statutory instrumentality, administrative agency, authority, body
or other entity with jurisdiction over the Plant, the Job Site,
the performance of the Work or other services to be performed
under this Agreement.
(d) "Applicable Permits" means the permits for
the Plant, both obtained and un-obtained, listed in Exhibit F,
including any variances or waivers in effect from time to time.
If any permit is unobtained, the contents of the application
therefor shall be a "permit" for all purposes hereunder.
(e) "Applicable Standards" shall have the meaning
set forth in Section 1.04(c).
(f) "Business Day(s)" means Monday through Friday
excluding holidays recognized by PEPCO. As of the date of this
Agreement, these holidays include New Year's Day, ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇'▇ Birthday, Inauguration Day, Washington's Birthday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Day
after Thanksgiving, and Christmas Day.
(g) "Change of Law" has the meaning set forth in
Section 2.06(a).
(h) "Changes" and "Change Order" have the
meanings set forth in Section 2.15.
(i) "Commencement of Construction" or "Commence
Construction" means the date when continuing work has started on
the Plant with the pouring of concrete foundations for the
structures to be erected and the equipment to be installed at the
Plant Site.
(j) "Commercial Operation" means the date when
the Forty-Eight (48) Hour Net Electrical Output Performance Test
required under Section 19.5.1.1 of the Scope of Work (under the
procedure set forth in Section 19.5.2) has been successfully
completed within one hundred and ten percent (110%) of the Net
Plant Heat Rate Guarantee and the Independent Engineer (as such
engineer is defined in the PEPCO Contract) acknowledges, as of
the date of such Forty-Eight Hour (48) Net Electrical Output
Performance Test, that the Plant has successfully completed the
"Net Capability" test described in Appendix D of the Power
Contract.
(k) "Completion Certificate" means a document
issued by Owner upon Final Acceptance of the Plant.
(l) "Construction Lender" means the institutional
person or persons providing financing to Owner for the entire
expected cost of the development, construction, design,
engineering and procurement of the Plant and items relating
thereto.
(m) "Construction Lender's Engineer" means
Pacific Energy Systems, Inc., or any successor entity as
appointed by Construction Lender.
(n) "Construction Loan Agreement" means the
agreement (and all documents relating thereto) between the Owner
and Construction Lender pursuant to which Construction Lender
agrees to provide construction financing for the Plant.
(o) "Contract Documents" means this document and
the Exhibits described in Section 1.01 as a group.
(p) "Contract Price" has the meaning set forth in
Section 1.05(a).
(q) "Contract Price Discount" shall mean a
reduction in the total Contract Price, as adjusted by this
Agreement, for the decrease in the value of the Work and the
Plant as a result of untimely Commercial Operation or failure to
meet any Performance Guarantee.
(r) "Contractor" means Raytheon Engineers &
Constructors, Inc. (formerly known as United Engineers &
Constructors Inc. dba Raytheon Engineers & Constructors), a
Delaware corporation, including its employees, directors and
officers.
(s) "Contractor Critical Date Schedule" means the list
of construction milestones, displayed in Exhibit N hereto.
(t) "Cost Plus Formula" means the price of a Change Order
determined in accordance with Exhibit K.
(u) "CPM Schedule" means a document that shows
the planned progression of the Work.
(v) "Defect or Deficiency" means, any designs,
engineering, software, drawings, components, tools, supplies,
equipment, materials, installation, construction, workmanship or
work, (i) that does not materially conform to the Scope of Work,
the Final Plans and the specifications (ii) that is not of
uniform good quality, free from material defects or deficiencies
in design, application, manufacture or workmanship, or that
contains materially improper or inferior workmanship or (iii)
that either would materially and adversely affect (x) the
performance of the Plant under normal operating conditions
(unless, in the alternative, Contract Price Discount for such
defect or deficiencies has been paid) or (y) the continuous safe
operation of the Plant during the Plant's design life, all as
determined by reference to Prudent Utility Practices. The term
"Defects or Deficiencies" shall neither be construed to include
material damage caused by Owner's acts or omissions to the extent
arising out of abuse, misuse, negligence in operations,
maintenance and repair (unless such act or omission was taken or
made at the direction of the Contractor) or failure to follow
Contractor's or vendor's recommendations and directions and
Prudent Utility Practices nor shall the term "Defects or
Deficiencies" be construed to include ordinary wear and tear,
erosion, corrosion, and deterioration (unless as a result of a
defect or deficiency) or any other defect or deficiency that has
no material impact on the Plant's appearance, operation, or
useful life.
(w) "Drawings" means all drawings (except detailed
manufacturing drawings) diagrams, illustrations, schedules,
and performance charts, including data in the form of electronic
media, prepared by Contractor or any subcontractor, manufacturer
or supplier for delivery to Owner in accordance with this
Agreement which illustrates any of the materials, supplies or
Equipment or any other portion of the Work, either in
components or as completed.
(x) "Early Completion Bonus" means the bonus
payable to Contractor for achieving Commercial Operation of the
Plant prior to the Guaranteed Completion Date.
(y) "Substantial Completion Bonus" means the
bonus payable to Contractor for achieving Substantial Completion
prior to October 31, 1996 and/or September 30, 1996.
(z) "Substantial Completion" has the meaning set
forth in Section 6.04(f) below.
(aa) "Final Acceptance" has the meaning set forth
in Section 6.04(a).
(bb) "Final Plans" has the meaning set forth in
Section 2.16(b).
(cc) "Financial Closing" means the date on which
Owner executes the necessary documents to borrow, on a long term
basis, the funds necessary to construct the Plant.
(dd) "Force Majeure" has the meaning set forth in
article VII.
(ee) "Force Majeure Event" means an event of Force
Majeure.
(ff) "Forced Outage" has the same meaning as
"forced outage" under the Power Contract.
(gg) "Forty-eight (48) Hour Net Electrical Output
Performance Test" has the meaning set forth in Section 19.5.1.1
of the Scope of Work.
(hh) "Guaranteed Completion Date" means the date
set forth in Section 2.03 for the Commercial Operation of the
Plant.
(ii) "Hazardous Material" means any substance
deemed as hazardous by any federal, state or local agency with
jurisdiction over the Site.
(jj) "Interconnect Facilities" means all
facilities (except for Transmission Facilities) necessary to
enable PEPCO to receive the electrical power from the Plant,
including but not limited to, all metering devices, transformers
and associated equipment, communications equipment, relay and
switching equipment, circuit breakers and other protective
devices and safety equipment, and telecommunications equipment,
wherever located.
(kk) [Intentionally Deleted]
(ll) "Job Site" means the Plant Site, the laydown
area, or other areas, access to which by Contractor is pursuant
to an easement or license obtained by Owner for the benefit of
Contractor, and any other areas where Contractor may temporarily
obtain care, custody and control, use, easement or license for
purposes directly, indirectly or incidentally related to
performance of, or as an accommodation to, the Work.
(mm) "Letter Of Credit" has the meaning set forth
in Section 3.14.
(nn) "Loan Agreement" means that certain agreement
executed between Owner and Contractor on December 2, 1993, as
amended by the Amended and Restated Development Loan Agreement
dated as of March 23, 1994 among the Owner, General Electric
Capital Corporation, as agent and a lender and the Contractor, as
a lender, as the same may be amended, supplemented or otherwise
modified from time to time.
(oo) "Milestone Payment" means an installment of
the Contract Price to be paid as provided in Exhibit D.
(pp) "Milestone Payment Certificate" means that
certificate, in the form of Exhibit E, which is submitted by
Contractor to Owner prior to the making of a Milestone Payment by
Owner.
(qq) "Milestone Payment Schedule" means that
schedule of Milestone Payments which is set forth in Exhibit D.
(rr) "Net Plant Heat Rate" and "Net Plant Heat
Rate Guarantee" have the meanings set forth in Section 5.04(b).
(ss) "Net Plant Heat Rate Test" means the test so
described in Section 19.5.1.2 of the Scope of Work.
(tt) "Net Power Output" means the electrical
energy output of the Plant (net of auxiliary load of the Plant)
in kilowatt hours metered by the PEPCO-owned metering equipment
and delivered at the Interconnection Facilities.
(uu) "Net Power Output Guarantee" have the
meanings set forth in Section 5.04(a).
(vv) "Nominal Operating Conditions" means those
values specified in Scope of Work.
(ww) "O&M Contractor" means an organization
selected by Owner for the operation and maintenance of the Plant,
subsequent to Commercial Operation.
(xx) "Over-Funding Letter of Credit" has the
meaning set forth in Section 3.14(c).
(yy) "Owner" means Panda-Brandywine, L.P., a
Delaware limited partnership.
(zz) "Owner Caused Delay" means, a delay of
material effect, to the extent caused by Owner's failure to
perform under this Agreement, that actually and demonstrably
causes a material and corresponding delay in Contractor's efforts
hereunder.
(aaa) "Owner's Engineer" means
▇▇▇▇▇▇▇/Commonwealth, Inc., a Delaware corporation, or the
successor entity as appointed by Owner.
(bbb) "Owner's Representative" means the
representative of Owner designated pursuant to Section 4.07.
(ccc) "PEPCO" means Potomac Electric Power Company,
a Virginia and District of Columbia corporation.
(ddd) "PEPCO Contract" or "Power Contract" means
the agreement between Panda-Brandywine, L.P. and PEPCO, executed
on August 9, 1991, as amended from time to time.
(eee) "Performance Guarantees" shall mean the
guarantees described in Section 5.04 of this Agreement.
(fff) "Performance Tests" means the Forty-Eight
(48) Hour Net Electrical Output Performance Test, Net Plant Heat
Rate Test, the Two-Hundred (200) Hour Capacity Test, the Stack
Test and the Noise Test, all more fully described in Section 19.5
of the Scope of Work.
(ggg) "Performance Tests Notice" has the meaning
set forth in Section 6.03(a).
(hhh) "Person" means an individual, partnership,
corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental
authority, or other entity of whatever nature.
(iii) "Plant" means the cogeneration facility and
distilled water facility described in the first preamble to this
document and in Section 1.03.
(jjj) "Plant Site" means that certain piece of real
property owned or controlled by Owner, located south of
Brandywine, Maryland, in Prince George's County, and more
particularly described in Exhibit C, on which the parties
acknowledge that the Plant will be constructed.
(kkk) "Noise Test" means the test so described in
Section 19.5.1.5 of the Scope of Work.
(lll) "Pre-Existing Hazardous Material" means
Hazardous Material that existed on or in the Job Site and Plant
Site prior to Site Mobilization.
(mmm) "Road Easements" means, collectively, (i) the
Lay Down Agreement ("Lay Down Agreement") between Owner and
Prince George's County attached hereto as Exhibit U, with only
such changes as are approved by both Contractor and Owner and
(ii) the ▇▇▇▇▇ Boulevard Temporary Construction Easement dated as
of December 23, 1994 between Owner and Brandywine D.C., Inc. with
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ (as addressee of such Agreement only).
(nnn) "Project Manager" means the person designated
by Contractor as having the centralized responsibility, authority
and supervisory power of Contractor for design, construction,
testing and start-up of the Plant, as well as all matters
relating to the administration of the provisions of this
Agreement.
(ooo) "Project Engineering Manager" means the
person designated by Contractor as having the responsibility,
authority, and supervisory power over the engineering and design
of the Plant.
(ppp) "Project Funding" means the date upon which
all conditions precedent to the availability of funds to Owner
under the Construction Loan Agreement have been satisfied or
waived and there is also an expectation by Owner that
disbursements under the Construction Loan Agreement will
thereafter take place in the ordinary course of business without
interruption.
(qqq) "Prudent Utility Practices" means the
practices generally followed by the United States electric
utility industry with respect to design, construction,
operation, and maintenance of electric generating, transmission,
and distribution facilities (including but not limited to, the
engineering, operating and safety practices generally followed by
the electric utility industry).
(rrr) "Punch List" means that list prepared by
Owner with Contractor's assistance, detailing all Punch List
Items.
(sss) "Punch List Item(s)" means only those items
of unfinished Work that do not, in any material way, affect the
safety, reliability, performance or operation of the Plant under
all operating and climatic conditions.
(ttt) "Qualified Insurer" has the meaning set forth
in Section 3.08 of this Agreement.
(uuu) "Raytheon Parent Company" has the meaning set
forth in Section 3.06 of this Agreement.
(vvv) "Scope of Work" means the Plant and distilled
water facility specifications, technical requirements and other
provisions set forth in Exhibits A and P respectively and the
clearing and grubbing and temporary road work set forth in
Sections 3.15 and 3.16 and Exhibits J and R hereto, and all
modifications or additions thereto set forth in the Change Orders
attached hereto in Exhibit S or any Change Orders adopted
pursuant to Section 2.15 below after April 10, 1995.
(www) "Site Manager" means an employee of
Contractor, working under the supervision of the Project Manager,
located at the Job Site on a daily basis.
(xxx) "Site Mobilization" means the date on which
Contractor commences and continues construction on the Job Site.
(yyy) "Special Conditions" means the Special
Conditions referred to in Exhibit B.
(zzz) "Specifications" means the plans, drawings,
specifications (as updated to reflect all changes) and Final
Plans created by Contractor, its vendors or sub-contractors.
(aaaa) "Stack Test" shall have the meaning set forth
in Section 19.5 of the Scope of Work.
(bbbb) "Start-up Energy" means the net electric
energy delivered at the PEPCO Interconnection Facilities
associated with the start-up testing of the Plant prior to
Commercial Operation as metered by PEPCO's metering equipment.
(cccc) "Steam Host" has the meaning set forth in the
preamble of this Agreement.
(dddd) "Stipulated Interest Rate" means the lesser
of (1) interest at the annual rate quoted from time to time by
Citibank, N.A., New York, N.Y., as its base rate plus one percent
(1%) or (2) the maximum rate permitted by applicable law for
loans to corporate borrowers.
(eeee) "Substantial Subcontractor" shall have the
meaning set forth in Section 1.06(d) of this Agreement.
(ffff) "Termination Payment" has the meaning set
forth in Section 8.06(a).
(gggg) "Transmission Facilities" means the
transmission lines and associated equipment for connecting the
Plant at Interconnect Facilities to PEPCO's Burches Hill 230kV
substation.
(hhhh) "Turnkey Firm-Fixed Price" means the
Contractor controlling the means, method, sequencing and course
of Work to perform its underlying obligation that it owes to
Owner under this Agreement, to wit: the obligation to provide
the Plant, that is (i) capable in all material respects of
performing Owner's obligations to PEPCO and the Steam Host under
the Power Contract and the Steam Sales Agreement, respectively,
under those operating conditions required by PEPCO and the Steam
Host, (ii) in accordance with the Scope of Work (except as the
Contractor's payment of Contract Price Discounts in lieu of
Contractor's obligation to meet the Performance Guarantees),
(iii) complete at or before the Guaranteed Completion Date
(except as the Contractor's payment of Contract Price Discounts
in lieu of Contractor's obligation to meet Guaranteed Completion
Date) and (iv) in accordance with the Contract Price, as such may
be adjusted hereunder.
(iiii) "Two-Hundred (200) Hour Capacity Test" shall
have the meaning set forth in Section 19.5.1.3 of the Scope of
Work.
(jjjj) "Work" has the meaning set forth in Section
1.04(a).
1.03 Description of Plant
The Plant shall consist of two (2) General Electric
model MS 7001 EA gas combustion turbine generators, two (2) heat
recovery steam generators, one (1) condensing steam turbine
generator and all ancillary equipment, structures and other
improvements to the Plant Site and the distilled water facility,
all as more particularly described in the Scope of Work. The
Plant shall be situated on the Plant Site as described in Exhibit C.
1.04 General Scope of Work; Applicable Standards
(a) Contractor shall, at its own expense, design,
engineer, manage, supply all labor, equipment and materials for,
construct, start up, and carry out Performance Tests on the
Plant, all on a Turnkey Firm-Fixed Price basis, in accordance
with the Contractor's Critical Date Schedule listed as Exhibit N,
the Scope of Work and other performance requirements of
Contractor set forth in this Agreement, all as modified or
amended by any Change Order attached hereto as Exhibit S and any
Change Order adopted pursuant to Section 2.15 of this Agreement
after April 10, 1995 (all of the foregoing obligations of
Contractor being collectively referred to in this Agreement as
the "Work").
(b) This is a turnkey contract. Thus, components, when
installed and operating in various configurations, could result
in overall system performance in excess of that required by the
Scope of Work as a result of Contractor having obtained, on a
component-by-component basis, performance specifications superior
to those that would be required merely to meet, when combined in
the Plant's systems with all components, the Performance
Guarantees. Owner acknowledges that such design and performance
margins are obtained by Contractor at Contractor's expense to
protect Contractor against the risk that Contractor will be
unable to meet one or more Performance Guarantees, and that Owner
is merely an incidental beneficiary of any such superior
performance in any component. Contractor shall at all times
specify the configuration for operating the Plant and its
individual components, in any way necessary, in combination or
individually, that permit Contractor to meet any Performance
Guarantee, including, for example, requiring greater performance
by one component to make up for deficiencies in performance in
one or more of the other components, so long as operation of any
component is in accordance with Prudent Utility Practices and at
a performance level that equals or exceeds that contained in the
Scope of Work.
(c) The Plant and the Work shall, at a minimum,
meet or exceed the standards and quality of a utility-grade Plant
as generally described in this Agreement and be capable of
performing the obligations of Owner under the PEPCO Contract
while delivering the required steam or thermal energy to the
Steam Host, without violating any Applicable Laws or Applicable
Permits. All items of equipment and improvements comprising the
Plant shall be designed, manufactured, installed and tested where
applicable in accordance with the latest editions (as in effect
on June 30, 1994) of the published standards ("Applicable
Standards") of the organizations listed in Section 2.1 of the
Scope of Work. Contractor shall notify Owner of any standards of
the above listed organizations, of which it becomes aware, that
are inconsistent with each other and advise Owner of the manner
in which it intends to resolve such inconsistency in the exercise
of good engineering judgment and Prudent Utility Practices.
(d) Except as may be otherwise specifically
provided in the Scope of Work, the Plant shall also be designed,
constructed and manufactured to operate in accordance with the
standards promulgated pursuant to the following licenses, permits
and statutes (including the regulations issued thereunder), as in
effect on June 30, 1994, to the extent that such statutes are
applicable: (i) Federal Statutes -- Clean Air Act (42 U.S.C.A.
Par. 7401, et. seq.); Clean Water Act (33 U.S.C.A. Par. 1251, et seq.);
Resource Conservation and Recovery Act (42 U.S.C.A. Par. 6901, et.
seq.); the Public Utility Regulatory Policies Act (16 U.S.C.
Par. 2601); and the Occupational Safety and Health Act of 1970, as
amended (29 U.S.C. Par. 651, et seq.), (ii) the Conditions listed in
the Final Orders of the Hearing Examiner for the Certificate of
Public Convenience and Necessity attached hereto as Exhibit Q
issued by the Maryland Public Service Commission to Owner, and
(iii) all other applicable state or local statutes, regulations,
ordinances, order of any kind provided, however, that nothing
herein shall obligate Contractor to obtain any permit or
approvals under such statute for the construction or operation of
the Plant, other than as specified in Section 2.05(a).
1.05 Contract Price and Payment Thereof
(a) Owner shall pay Contractor the sum of one
hundred eighteen million two hundred fifty-eight thousand eight
hundred sixteen dollars ($118,258,816) (the "Contract Price"), as
full payment for all Work to be performed by Contractor under
this Agreement. Notwithstanding the foregoing, Contractor shall
be entitled to a price increase (not to exceed $3,400,000
regardless of any Change Order entered into prior to April 10,
1995) for construction of a distilled water facility to be part
of the Plant pursuant to the Scope of Work set forth in Exhibit P
hereto and Agreement Change Request/Change Order No. 004 dated
May 2, 1994 and ACR No. 004 Rev. 2 dated October 10, 1994 between
Contractor and Owner set forth in Exhibit S hereto. Contractor
represents that the Change Orders set forth in Exhibit S hereto
are the only existing Change Orders and the Change Orders listed
in Exhibit T are the only pending or known potential Change
Orders that Contractor is aware of as of April 10, 1995.
Excluding the price increase of up to $3,400,000 for construction
of a distilled water facility and any Early Completion Bonus or
Substantial Completion Bonus earned by Contractor as described
below, the Contract Price of one hundred eighteen million two
hundred fifty-eight thousand eight hundred sixteen dollars
($118,258,816) includes all Contract Price modifications set
forth in all Change Orders entered into by Owner and Contractor
on or prior to April 10, 1995. Notwithstanding any other
provision (unless specifically otherwise provided herein), all
Change Orders attached hereto as Exhibit S are hereby
incorporated into this Agreement and made a part of this
Agreement as of the date hereof.
(b) Subject to the provisions of paragraph (d) of
this Section 1.05, the Contract Price shall be payable in
accordance with the Milestone Payment Schedule included in this
Agreement as Exhibit D, and after the Project Manager has
delivered to Owner's Representative a Milestone Payment
Certificate in the form attached hereto as Exhibit E.
(c) Within thirty (30) days after its receipt of
an invoice on or before the 16th day of the month for all
Milestones certified in the month represented by the invoice,
Owner shall pay to Contractor the amount that remains after the
deduction from the Milestone Payment requested of (i) any portion
thereof that Owner disputes as not being due and owing, (ii) any
overpayment made by Owner for any previous period, and (iii) any
past-due Contract Price Discount due Owner hereunder plus
interest thereon at the Stipulated Interest Rate from the due
date thereof. The payment made by Owner shall be accompanied by
a written notice to Contractor specifying the amount of each
deduction and setting forth the reason(s) why the deduction is
justified. Failure or forbearance on the part of Owner in
withholding any amounts due under a Milestone Payment shall not
be construed as accepting or acquiescing to any disputed claims.
If any such amount deducted from the requested amount is
subsequently determined, by agreement of the parties or by
arbitration pursuant to Article X, to have been unjustifiably so
deducted, Contractor shall be entitled to payment of such amount,
plus interest thereon, at the Stipulated Interest Rate from the
date that such amount should have been paid, in an invoice
submitted by it to Owner after the determination or, if final
payment thereunder has been previously made, then in a written
demand. Pending the resolution of any disputed Milestone
Payment, Contractor shall continue performance of the Work.
(d) The making of any Milestone Payment by Owner
shall not constitute an admission by it that the Work covered by
such payment (or any Work previously performed) is satisfactory
or timely performed, and it shall have the same right to
challenge the satisfactoriness and timeliness of such Work as if
it had not made such payment. If, after any such payment has
been made, it is subsequently determined by agreement of the
Parties or by arbitration pursuant to Article X that Contractor
was not entitled to all or a portion of any such payment,
Contractor shall refund all or a portion of such payment to Owner
with interest thereon at the Stipulated Interest Rate from the
date that Contractor received such payment to the date of refund.
1.06 Construction Lender's Requirements and Lien Waivers
(a) Contractor acknowledges that Owner will
borrow certain funds from the Construction Lender to finance the
construction of the Plant and that, as a condition to making
loans to Owner, the Construction Lender may from time to time
require certain documents from Contractor and its subcontractors,
materialmen and suppliers. In that connection, Contractor agrees
to furnish to the Construction Lender, and to use all reasonable
efforts to cause its subcontractors, materialmen and suppliers to
furnish to the Construction Lender, such written information,
certificates, copies of invoices and such receipts, lien waivers
(upon payment), affidavits and other like documents as the
Construction Lender may reasonably request. At the closing of
the Construction Loan Agreement, Contractor shall state in
writing as a condition precedent to financing, whether or not it
is satisfied with Owner's performance to that date.
(b) As a condition precedent to the making of any
payment hereunder, Owner may require that Contractor and each of
its Substantial Subcontractors (as that term is defined below)
supply Owner with a certificate (in substantially the same form
as Exhibit H attached hereto, "mutatis mutandis") stating that
all amounts due to Contractor (excluding known disputed amounts
noted in the certificate) and its subcontractors have been paid.
Contractor shall obtain such certificates simultaneously with the
payment to a Substantial Subcontractor, or as soon thereafter as
possible, and submit the same upon request of the Construction
Lender.
(c) Contractor hereby subordinates any liens or
security interests to which it may be entitled by law or under
the provisions of this Agreement to any lien or security interest
granted in favor of the Construction Lender. In addition,
Contractor shall submit proof satisfactory to Owner that it has
included in each subcontract entered into by it with a
Substantial Subcontractor a requirement that any lien or security
interest to which such Substantial Subcontractor may be entitled
thereunder or by law shall be subordinate and inferior to any
lien and security interest granted in favor of the Construction
Lender.
(d) A "Substantial Subcontractor" for purposes of
Paragraph (c) above is a subcontractor, materialman or supplier,
whose contract or contracts with Contractor call for a payment or
payments by Contractor totalling at least $150,000.
1.07 Financing of Plant
(a) This Agreement shall be the document referred
to in the Construction Loan Agreement as the agreement between
the Owner and Contractor for the Work.
(b) The Construction Loan Agreement will require
that so long as Owner is not in default under the Construction
Loan Agreement and Contractor is not in default hereunder, and
provided that all other conditions precedent set forth in the
Construction Loan Agreement have been satisfied, the Construction
Lender shall, under the terms of the Construction Loan Agreement,
disburse funds for the purpose of Owner making the payments
called for by this Agreement, except for those payments that are
disputed in accordance with this Agreement.
(c) Contractor shall promptly execute any
additional customary documentation reasonably requested by
Construction Lender, including but not limited to documents
evidencing Contractor's consent to assignment of this Agreement
to Construction Lender.
ARTICLE II
CONTRACTOR'S SUPPLY OF PLANT
2.01 Commencement of Performance
Contractor shall (i) immediately recommence performance
for the timely progression and completion of all Work (including
design, engineering, procurement and construction of a distilled
water facility in accordance with Exhibit P and construction of a
temporary road and clearing and grubbing in accordance with
Sections 3.15 and 3.16 hereof and Exhibits J and R), in
accordance with this Agreement and (ii) except for pending or
known potential agreement change requests submitted by Contractor
to Owner set forth in Exhibit T hereto prior to Contractor's
execution hereof, waive all claims it may have against Owner and
all excuses to performance under this Agreement, which have
accrued up to April 10, 1995.
2.02 Commencement of Construction
Subject to Project Funding occurring by April 11, 1995,
Contractor shall Commence Construction on or before August 9,
1995.
2.03 Time Allowed for Performance
Contractor shall perform the Work so that Commercial
Operation of the Plant will occur on or before October 31, 1996,
as may be adjusted in accordance with this Agreement ("Guaranteed
Completion Date"); provided, however, that this date shall not be
further modified by any Change Order set forth in Exhibit S or
Exhibit T hereto.
2.04 Matters Pertaining to Job or Plant Site
(a) Contractor shall be solely responsible for
performing any preliminary Work on the Job Site necessary for
Commencement of Construction to occur, including removal of all
impediments to performing Work on the Job Site, above or below
ground. Contractor shall keep the Job Site and the Plant in a
generally clean condition during construction of the Plant
without impeding the carrying out of the Work, and upon
completing the Plant the Contractor shall leave the Job Site free
of undesired materials (except for stored equipment and supplies
needed in connection with the Plant's operation) and in a clean
condition.
(b) Except as may be otherwise provided in Sections
2.17(d) and (e) and 9.02 below, Contractor assumes the
risk of all surface conditions at the Job Site.
(c) Within ten (10) days after Project Funding (and
following execution of this Agreement with respect to
clearing and grubbing and temporary road construction work), the
employees and agents of Contractor and its subcontractors and
suppliers will have uninterrupted access to the Job Site, subject
only to such restrictions as may be reasonably imposed by Owner
in order to assure that only authorized persons enter the Job
Site. As used above, the references to uninterrupted access
contemplate that not only will the individuals referred to be
able to enter upon and leave the Job Site but that they also will
be able to bring onto and remove from the Job Site any and all
kinds of personal property required for performance of the Work.
2.05 Permits and Authorizations; Easements and Rights of Way
(a) Contractor shall, at its own expense, obtain,
or cause to be obtained, all permits and authorizations necessary
for it and its subcontractors and suppliers to do business in the
State of Maryland and in the municipality and county where the
Plant Site is situated. Contractor shall also obtain any local
building permits required in order for it to perform the Work,
and Owner agrees to reimburse Contractor for plan fees, permit
fees and inspection fees, actually paid to governmental agencies
by Contractor.
(b) Notwithstanding the provisions of paragraph
(a), Contractor shall, to the best of its knowledge, prior to
Project Funding, independently identify in writing all other
necessary governmental requirements for the construction of the
Plant not already identified in this Agreement or shall agree
that there are not any other governmental requirements required
to construct the Plant in compliance with the Scope of Work,
other than those governmental approvals already identified in
this Agreement.
2.06 Compliance with Law and PEPCO Contracting Practices
(a) Contractor shall, and shall cause all of its
subcontractors and shall cause all other persons that it has
a right to direct who are engaged in the performance of any of
the Work to comply with all Applicable Laws, Applicable Permits
and the regulations thereunder pertaining to performance of the Work,
including without limitation any which may be enumerated in the Scope
of Work and those relating to hours of work, the payment of employees
and adherence to required safety standards. In addition,
Contractor shall comply with the following Federal Acquisition
Regulations: (i) Equal Opportunity, CFR 52.222-26; (ii)
Affirmative Action for Special Disabled and Vietnam Era
Veterans, 48 CFR 52.222-35; (iii) Affirmative Action for
Handicapped Workers, 48 CFR 52.222-36, (iv) Utilization of Small
Business Concerns and Small Disadvantaged Business Concerns, 48
CFR 52.219-8, and (v) Clean Air and Water, CFR 52.223-2. If,
after June 30, 1994, any law or regulation materially affecting
Contractor's performance of the Work is adopted, or changed
("Change of Law"), with the direct result that Contractor is
materially delayed in or prevented from performing its
obligations under this Agreement (or Contractor's cost of
performing the Work is materially increased), then such Change of
Law shall be treated as a Change Order in accordance with Section
2.15; provided, however, that any requirements by any public
authorities for more stringent monitoring and reporting standards
and parameters for the Plant's continuous emission monitoring
system from those specified in Exhibit A hereto shall constitute
a Change Order notwithstanding that notice of such possibility
occurred prior to July 1, 1994. If the parties are unable to
agree on the result of a Change of Law, then the dispute shall be
resolved in accordance with Article X hereof.
(b) Contractor shall comply with PEPCO's
"Minority Class Owned and Controlled Business Policies" contained
in Exhibit I attached hereto.
2.07 Quality of Workers
Contractor shall employ in the construction of the Work
only workers, whether supervisors, skilled workers or laborers,
who are competent to perform their assigned duties and shall use
all reasonable efforts to see that its subcontractors adhere to
the same standard with respect to their workers. In addition,
the Contractor shall only employ workers who are members in good
standing with the union of their respective trade. The Contract
Price reflects the use of union labor and Contractor shall not
seek a Change Order due to the cost of union labor.
2.08 Identification of Workers and Vehicles
Contractor shall cause its, and its subcontractors'
workers, vehicles and self-propelled equipment entering on the
Job Site to be identified as required by Special Condition 13.
2.09 Project Management
(a) During the performance of the construction
Work, Contractor shall maintain an office at the Job Site, as
required by Special Condition 7, and shall also maintain
continuously at the Job Site adequate management, supervisory,
administrative, security and technical personnel, including the
Site Manager, to ensure expeditious and competent handling of all
matters related to the Work, according to its determination of
the staffing required for this purpose. Contractor has
designated a management team, and any future members must be
approved by Owner in writing prior to his/her designation.
Contractor will not re-assign the Project Manager, Project
Engineering Manager or Site Manager without Owner's prior written
consent.
(b) Contractor shall promptly replace its Project
Manager, Project Engineering Manager or Site Manager, upon
written request of Owner, if such individual is disorderly or if
in Owner's reasonable opinion, such individual is otherwise
incompetent for his position and responsibilities.
(c) Project management, engineering and
procurement shall be performed by personnel assigned to
Contractor's Houston, Texas office.
2.10 Methods of Work
Contractor shall inform Owner in advance concerning its plans
for carrying out each phase of the Work.
2.11 Cooperation with Other Contractors Contractor shall cooperate
and cause its subcontractors to cooperate with Owner and other
unrelated contractors who may be working nearby at the Job Site
with a view toward assuring that neither Contractor, nor any of
its subcontractor(s) hinders or increases, or makes more
difficult than necessary the work being done by Owner and other
unrelated contractors.
2.12 Safety Measures, Contractor Negligence and Protection
of Property
(a) Contractor shall comply with the requirements of
Special Condition 22 relating to safety and accident protection
and with the requirements of Special Condition 23 relating to
protection against fire.
(b) [deleted]
(c) Prior to Commercial Operation, but always
subject to the provisions of Section 9.01, Contractor shall be
responsible for the protection of all persons (including members
of the public), employees of Owner and employees of Contractor,
other contractors or sub-contractors and all public and private
property including structures, sewers and service facilities
above and below ground, along, beneath, above, across or near the
Plant Site or Job Site, or other persons or property that are in
any manner affected by the prosecution of the Work. After
Commercial Operation, but always subject to the provisions of
Section 9.01, Owner shall be responsible for the protection of
all persons (including members of the public), employees of Owner
and employees of Contractor, other contractors or sub-contractors
and all public and private property including structures, sewers
and service facilities above and below ground, along, beneath,
above, across or near the Plant Site or Job Site, or other
persons or property that are in any manner affected by the
prosecution of the Work.
2.13 Inspection and Testing of Work in Progress
Each item of equipment or material to be supplied by
Contractor shall be subject to inspection and testing during and
upon completion of its fabrication and installation in accordance
with the provisions of the Scope of Work and Special Condition
26, and Contractor shall give Owner the notice of readiness for
inspection required by Special Condition 26 and provide Owner
each month during performance of the Work a schedule of all
testing proposed for the following three-month period in
compliance with the requirements of the Scope of Work. In
addition to any inspection agent Owner may designate, Contractor
will also permit PEPCO's representatives, Owner's Engineer and
Construction Lender's Engineer to inspect, test, and observe the
Work from time to time; provided, however, that PEPCO's
representatives, Owner's Engineer and/or Construction Lender's
Engineer shall have no authority or responsibility for such Work
and shall not unreasonably interfere with Contractor's execution
of the Work.
2.14 Defective Work
Prior to Commercial Operation, Contractor shall at its
own expense correct or replace any Work that contains a Defect or
Deficiency, or is not otherwise in accordance with the Scope of
Work; provided however, that once the warranty period referred to
in Section 5.01(c) has begun, Contractor's obligation to repair
or replace defective Work shall be governed exclusively by the
warranty provisions of such Section. Materials and equipment
that are replaced, if situated on the Job Site or Plant Site,
shall be removed by it from the Job Site at Contractor's expense.
2.15 Changes
(a) Owner may at any time, by written notice to
Contractor, request an addition to or a deletion from the Work or
other changes in the Work (hereinafter "Change" or "Changes"),
which may have the effect of increasing or decreasing the
Contract Price, shortening or lengthening the Guaranteed
Completion Date, modifying Contractor's warranty obligations
under this Agreement, or requiring modification of Contractor
warranties in Article V. Contractor shall make a written
response to any requested Change within fourteen (14) days after
receiving it or, if it fails to do so, shall be deemed to have
accepted the proposed Change unconditionally and without
additional consideration, in which event such Change shall be
deemed to become part of this Agreement. If Contractor believes
that giving effect to such Change will increase or decrease its
cost of performing the Work, shorten or lengthen the time needed
for completion of the Work, or require modification of its
warranties in Article V or require a modification of any other
provisions of this Agreement, its response to the Change request
shall set forth the Change or Changes that Contractor deems
necessary and its justification for such Changes together with
any necessary alterations or amendments to this Agreement. If
Contractor does not provide a written response to Owner
specifying the effect of such Changes as to cost, time and
warranty obligations of Work within fourteen (14) days of Owner's
notice under this Section 2.15(a), then Contractor waives any
claims or offsets against Owner as a result of the Change Order,
provided, however, that notwithstanding the foregoing, if such
Changes as to cost, time and warranty obligations of the Work
cannot be determined within the 14 day period, and Contractor
submits notice within such fourteen (14) day period that the
Changes will have an effect on costs, time or warranty
obligations and provides the expected date (which shall be as
soon as reasonably practicable) for cost, time or warranty effect
response, Contractor shall not be deemed to have waived such
claims or offsets. If Owner accepts the Change(s) (together with
any necessary alterations or amendments to this Agreement)
proposed by Contractor, or if the parties agree upon a
modification of such proposed Change(s), the parties shall then
sign a change order ("Change Order") setting forth the agreed
upon Change in the Work and agreed upon amendments to this
Agreement, and such Change Order shall operate as an amendment to
this Agreement. If there occurs a Change of Law that has a
material impact on the Work, each party shall bargain reasonably
and in good-faith for the execution of a mutually acceptable
Change Order. Owner may request a Change Order to require
Contractor's compliance with such Change of Law.
(b) Owner may at any time, by written notice to
Contractor, propose Changes in the Work or the CPM Schedule due
to a Force Majeure Event or an Owner Caused Delay. If there is a
material impact on Work or the CPM Schedule as a result of such
Force Majeure Event or an Owner Caused Delay, then the parties
agree to bargain reasonably and in good-faith for the execution
of a mutually acceptable Change Order.
(c) Contractor may at any time, by written notice
to Owner, propose Changes in the Work and if such proposed
Changes are agreed to by Owner they shall be set forth in a
Change Order signed by the parties, with the same effect as a
Change Order pursuant to paragraph (a) of this Section 2.15. If
Contractor believes that such Change Order will increase or
decrease its cost of performing the Work, lengthen or shorten the
time needed for completion of the Work, or require modification
of its warranties in Article V or require a modification of any
other provisions of this Agreement, it shall set forth its
justification for such Changes and the effect of such Changes.
If Contractor does not provide a written notice to Owner
specifying the effect of such Changes as to cost, time and
warranty obligations of Work within five days of proposing a
Change Order under this Section 2.15(c), then Contractor waives
any claims or offsets against Owner as a result of the Change
Order. For purposes of this Section 2.15, a Contractor requested
Change Order involving a Change in the location of the Plant on
the Job Site shall be considered within the general scope of this
Agreement.
(d) Contractor may at any time, by written notice to
Owner, propose Changes in the Work to the extent of a Force Majeure
Event; provided, however, such Force Majeure Event will have a schedule
impact that will actually, demonstrably, adversely and
materially affect Contractor's ability to meet agreed project
milestones. Contractor may at any time, by written notice
to Owner, propose Changes in the Work due to an Owner Caused
Delay, provided, however, such Owner Caused Delay has a
demonstrable material cost increase or schedule impact that will
actually, demonstrably, adversely and materially affect
Contractor's ability to meet agreed project milestones, or both.
If Owner agrees that Contractor has met all of the forgoing
condition precedents, then Owner and Contractor will sign a
mutually acceptable Change Order.
(e) Any Contractor response to a Change Order
under paragraphs (a) or (b) and any Contractor proposed Change
Order under paragraph (c) or (d), shall be accompanied by a
proposed all-inclusive final lump sum cost to Owner. In the
event that the parties are unable to reach a mutually acceptable
agreement on an all inclusive final lump sum cost to Owner,
Contractor agrees to perform the Change Order using the Cost Plus
Formula as consideration for the Change Order.
(f) A Change Order initiated by either party may
have the effect of either increasing or decreasing the Contract
Price. Any Contract Price increase or decrease resulting from a
Change Order taking effect under this Section 2.15 shall become
an addition or deletion to the Milestone Payment or Payments to
which it properly belongs. In the event that Owner and
Contractor are unable to reach agreement on Change Orders under
this Agreement as proposed by either Owner or Contractor, at the
direction of the Owner, Owner's proposed Changes shall become
effective, Contractor shall continue to perform the Work in
accordance with Owner's Change Order on a Cost Plus Formula basis
and the parties will resolve such Changes in accordance with
Article X of this Agreement.
2.16 Drawings and Engineering Data
(a) Contractor shall comply with the provisions
of Special Condition 1 pertaining to drawings and engineering
data. Contractor shall maintain at the Job Site one copy of all
specifications, Drawings, detailed construction drawings, Change
Orders and other modifications in good order and marked to record
all changes made during construction.
(b) Contractor shall furnish Owner with documents
that correctly reflect, with substantial completeness, the Plant
or the portion of the Work against which a Milestone Payment
Certificate is issued at the time the Milestone Payment
Certificate is issued. Except as provided in Section 8.06, final
Specifications, final Drawings and final detailed operating
drawings ("Final Plans"), if not furnished earlier, shall be
furnished to Owner upon Contractor's request for a Completion
Certificate of the Plant or upon termination of this Agreement
prior to issuance of a Completion Certificate for the Plant.
Such Final Plans shall include as-built drawings (in both hard
copy and magnetic media at no extra charge to Owner), P&ID
drawings, underground structure drawings, electric one-line's,
electric schematics and connection diagrams.
(c) Within twenty-five (25) days after Financial
Closing, Contractor shall furnish Owner with conceptual
engineering drawings and the specifications pertaining to the
electric generators and step-up transformers of the Plant,
including demonstrations that (i) the requirements for reactive
supply facilities at the Plant will be met, and (ii) the Plant
will meet the guidelines and performance standards for parallel
operation set forth in PEPCO's "Guidelines and Performance
Standards for Parallel Operation of Customer Generation Equipment
on the PEPCO System", Revision "D", dated 8-12-88, attached to
this Agreement in Scope of Work.
2.17 Contractor's Environmental Obligations
(a) Contractor shall and shall cause its
Subcontractors to (i) comply with all laws regarding Hazardous
Material, (ii) comply with all environmental permits and licenses
and (iii) apply for, obtain, comply with, maintain and renew all
permits required of Contractor by laws regarding Hazardous
Material and necessary, customary or advisable for the
construction activities contemplated by this Agreement.
(b) Contractor shall conduct its activities under
this Agreement, and shall cause each of its Subcontractors and
vendors to conduct its activities, in a manner designed to
prevent pollution of the environment or any other release of any
Hazardous Material by Contractor and its Subcontractors and
vendors in a manner or at a level requiring remediation pursuant
to any law.
(c) Contractor shall not cause or allow the
release or disposal of Hazardous Material at the Plant Site,
bring Hazardous Material to the Plant Site, or transport
Hazardous Material from the Plant Site, except in accordance with
the laws regarding Hazardous Material. Contractor shall cause
all Hazardous Material brought onto or generated at the Job Site
by it or its Subcontractors or vendors, if any, (i) to be
transported only by carriers maintaining valid permits and
operating in compliance with such permits and laws regarding
Hazardous Material pursuant to manifest and shipping documents
identifying only Contractor as the generator of waste or person
who arranged for waste disposal, and (ii) to be treated and
disposed of only at treatment, storage and disposal facilities
maintaining valid permits operating in compliance with such
permits and laws regarding Hazardous Material, from which there
has been and will be no release of Hazardous Material.
(d) If Contractor or any of its Subcontractors or
vendors releases any Hazardous Material on, at, or from the Job
Site, or becomes aware of any third person who releases Hazardous
Material on, at, or from the Job Site during the Work, Contractor
shall immediately notify Owner in writing. If Contractor's work
involved the area where such release occurred, Contractor shall
immediately stop any Work affecting the area. Contractor shall,
at its sole expense, diligently proceed to take all necessary or
desirable remedial action to clean up fully the contamination
caused by (i) any knowing or negligent release by Contractor or
any of its Subcontractors or vendors of any Pre-Existing
Hazardous Material or (ii) any release of Hazardous Material that
was brought onto or generated at the Job Site by Contractor or
any of its Subcontractors or vendors, whether on or off the Job
Site.
(e) If Contractor discovers any Hazardous
Material that has been stored, released or disposed of at the Job
Site by a person or entity other than Contractor, its
Subcontractors and vendors, Contractor shall immediately notify
Owner in writing. If Contractor's Work involves the area where
such a discovery was made, Contractor shall immediately stop any
work affecting the area and Owner shall determine a reasonable
course of action. Contractor shall not, and shall cause its
subcontractors and vendors to not, knowingly or negligently take
any action that may exacerbate any such contamination. If Owner
desires Contractor to perform all or part of any remediation or
evacuation that may become necessary as a result of the discovery
of any such Hazardous Material, it shall request a Change Order
pursuant to Section 2.15(a) hereof; provided, however, that,
notwithstanding the provisions of Section 2.15(a), (b) and (e)
hereof, Contractor shall not itself be obliged to proceed with
any such environmental remediation work unless and until Owner
and Contractor shall have agreed upon mutually satisfactory terms
and conditions for the Change Order, including, without
limitation, any appropriate supplemental environmental
indemnification necessary to protect Contractor from liabilities
it incurs as a result of performing such remediation. Contractor
shall cooperate with and assist Owner in making the Job Site
available for taking necessary remedial steps to clean up any
such contamination at Owner's request and expense.
ARTICLE III
ADDITIONAL OBLIGATIONS OF CONTRACTOR
3.01 Operating and Maintenance Manuals
Contractor shall supply Owner with manuals or handbooks
which provide, either in such a single manual or handbook or
collectively, complete operating and maintenance instructions for
each major piece of equipment and system of the Plant. Each such
manual or handbook shall comply with the requirements of Special
Condition 27 and the Scope of Work as to quantity, content, the
time when such manuals are to be supplied to Owner and shall be
substantially complete and delivered to Owner on Commercial
Operation.
3.02 Training of Owner's Personnel
During the construction of the Plant, and prior to the
date of Commercial Operation, Contractor shall provide, at its
own expense, a training program in Plant operation and
maintenance for Owner's Plant personnel and the O&M Contractor's
Plant personnel ("O&M Personnel"). The training program provided
by Contractor shall (i) include classroom and field training,
(ii) include all manuals, drawings, and other educational
materials necessary or desirable for the adequate training of O&M
Personnel, and (iii) establish quality controls so that O&M
Personnel are suitably trained and capable of operating and
maintaining the Plant after Commercial Operation. Contractor
shall make every reasonable effort to use the O&M Personnel
during Plant start-up and initial operation; however, neither
Owner nor O&M Contractor shall be obligated to supply personnel
for the construction of the Plant. Contractor shall be totally
responsible for directing, coordinating and monitoring O&M
Personnel during Plant start-up and initial Plant operations.
The cost of the O&M Personnel's travel, lodging, food and other
living expenses shall be borne by Owner.
3.03 Subcontractors
Contractor shall be free to subcontract to others the
performance of various portions of the Work. Except for
Affiliates of Contractor, Contractor shall not subcontract a
"substantial" (as defined below) portion of the Work to any one
subcontractor without first obtaining Owner's approval of the
proposed subcontractors, which approval shall not be unreasonably
withheld or delayed; provided that for any subcontract which is
not for a "substantial" portion of the Work but for which the
contract price exceeds $1,000,000, Contractor shall give prior
notice to Owner of the proposed subcontractor and consult with
Owner (and Construction Lender) regarding the merits of such
selection. For the purpose of obtaining Owner's approval,
Contractor may submit from time to time a list of subcontractors
proposed for a substantial portion of the Work. The
subcontracting of any portion or portions of the Work shall not
in any way relieve Contractor of full responsibility for the
proper and timely performance of the subcontracted Work or
otherwise relieve Contractor of any obligations under this
Agreement, whether or not such obligations are related to
subcontracted Work. For the purpose of this Section 3.03, a
portion of the Work shall be deemed to be "substantial" if it
represents at least two percent (2%) in contract value of the
total Work.
3.04 Claims and Liens for Labor and Materials
If any act or omission (or alleged act or omission) of
Contractor, or any subcontractor or other person providing labor
or materials in connection with the Work, results in or gives
rise to any lien or other charge against or security interest on
or in the Plant Site or any fixtures, personalty or equipment
included in the Work (whether or not any such lien, charge, or
security interest is valid or enforceable as such), Contractor
shall at no cost, charge or expense to Owner discharge and cause
the same to be released, by payment or the posting of an
appropriate surety bond, not later than thirty (30) days after it
receives a written demand for the discharge of same from Owner.
Notwithstanding the foregoing provision, as long as Owner, in its
sole discretion, determines that the Plant Site and the
improvements thereon will not be subject to any liability,
penalty or forfeiture, Contractor may contest the validity,
enforceability or applicability of any such lien, charge or
security interest in which event Owner shall provide such
cooperation as Contractor may reasonably request. Contractor
shall indemnify Owner against, and hold it harmless from, any
liability, damage, loss, claim, demand, cost or expense
(including attorneys' fees from legal professionals that Owner
retains) suffered or incurred by Owner in connection with any
such lien, charge or security interest. This Section 3.04 shall
survive Final Acceptance and the termination of this Agreement.
3.05 Taxes
Contractor shall pay all customs duties and other
Federal, state, local and foreign taxes that become payable in
connection with its performance of the Work, except for
applicable sales, excise, use or similar taxes which shall be
paid by Owner. Most of the cost of the equipment and materials
purchased for the Plant should qualify for exemption from
Maryland sales and use taxes under either the sale-for-resale
exemption in section 11-101(e) or the manufacturing exemption in
section 11-210 of the Maryland tax statutes. Contractor will use
all reasonable efforts to claim these exemptions. In the event
Contractor pays any taxes that are the responsibility of Owner
under this section, Contractor will send Owner copies of the tax
forms and Owner will promptly reimburse Contractor therefor.
3.06 Parent Guaranty
Contractor shall provide prior to Project Funding to
Owner, in the form of Exhibit O, a corporate guaranty of Raytheon
Company, a Delaware corporation ("Raytheon Parent Company"), for
the benefit of Owner and Construction Lender under terms and
conditions acceptable to Owner and Construction Lender
("Corporate Guaranty"). In order to provide Owner and
Construction Lender with evidence of Contractor's and Raytheon
Parent Company's financial ability to complete the Plant,
Contractor agrees to provide the financial statements of Raytheon
Parent Company within forty-five (45) days of the date such
statements are published. The failure of Contractor to provide a
suitable Corporate Guaranty of Raytheon Parent Company prior to
Project Funding shall constitute a default by Contractor pursuant
to Section 8.02 and will give rise to the remedies set forth in
Section 8.06(b). Any Corporate Guaranty shall require Raytheon
Parent Company to pay the reasonable costs and expenses,
including attorneys' fees, of collection from Raytheon Company in
the event of a default by Contractor or Raytheon Company.
3.07 Risk of Loss; Passing of Title
(a) All risk of damage to or destruction of the
Plant shall belong to Contractor until Commercial Operation, and
to Owner after Commercial Operation of the Plant. In the event
of any such damage or destruction to the Plant while the risk of
such damage or destruction belongs to Contractor, Contractor
shall at its own expense repair or replace the damaged or
destroyed property.
(b) Unless and to the extent earlier elected by
Owner following payment therefor, all materials, supplies and
equipment furnished by Contractor for incorporation in the Plant
shall become the property of Owner at Commercial Operation of the
Plant.
3.08 Insurance
(a) Prior to commencing any construction pursuant
to this Agreement and continuing until Owner has issued Final
Acceptance of the Plant as provided in Section 6.04, Contractor
shall maintain in force insurance policies providing the
following coverages:
Amount of Coverage
Type of Coverages of Insurance Policy
Worker's Compensation
that complies with the laws of
the State of Maryland Statutory
Employer's Liability
Insurance $1,000,000
Comprehensive General
Liability Insurance,
occurrence form, for
all locations, including but
not limited to coverage for
demolition of any building or
structure, collapse, blasting
excavation below surface of
the ground, operations,
broad form contractual
liability covering all liabilities
assumed by Contractor, property
damages and personal injury $25 Million per occurrence
Comprehensive automobile
liability, on an occurrence basis
including coverage for all owned,
leased, or non-owned licensed
automotive equipment $25 Million per occurrence,
(b) [deleted]
(c) Each insurance policy required by this
Section 3.08 shall be written on an occurrence basis, unless it
is unavailable except on a claims-made basis. Subject to the
limits on amounts and coverages specified in Section 3.08(a)
hereof, Contractor shall name Owner, PEPCO, and Construction
Lender as additional insureds on Contractor's liability policies
required to be carried by Contractor by the provisions of Section
3.08(a) of this Agreement but only to the extent of actual
liabilities expressly assumed by Contractor under this Agreement
and in no event shall Owner be afforded separate, supplemental,
or "other" insurance coverage for its own acts or omissions
(including Owner's negligence) by virtue of so being named such
additional insureds. Each insurance policy shall provide, either
in its printed text or by endorsement, (i) that it shall be
primary with respect to the interest of Owner, Construction
Lender and PEPCO (including their officers, directors and
employees) and that any other insurance maintained by Owner,
Construction Lender or PEPCO is in excess and not contributory to
the insurance provided in this Section 3.08 in all instances
regardless of any like insurance coverage that Owner,
Construction Lender and PEPCO may have but only to the extent of
actual liabilities expressly assumed by Contractor under this
Agreement.
(d) Contractor shall require the issuers of the
Comprehensive General Liability Insurance to amend such insurance
policy required by this Section 3.08 to: (i) include Owner,
Construction Lender and PEPCO, their directors, officers and
employees as additional insureds, but only to the extent of
actual liabilities expressly assumed by Contractor under this
Agreement and in no event shall Owner be afforded separate,
supplemental, or "other" insurance coverage for its own acts or
omissions (including Owner's negligence) by virtue of so being
named such additional insureds, (ii) include a waiver of all
rights of subrogation against PEPCO, Construction Lender and
Owner, their directors, officers and employees, but only to the
extent of actual liabilities expressly assumed by Contractor
under this Agreement, (iii) contain a severability of interest
provision, (iv) provide that none of PEPCO, Construction Lender
or Owner, their directors, officers or employees shall be liable
for the payment of premiums under such policy, (v) provide that
complete copies of all inspection or other reports required or
performed for the insurer shall be provided to both Owner,
Construction Lender and PEPCO within thirty (30) days of delivery
to Contractor, (vi) provide that Owner, Construction Lender and
PEPCO must be given at least thirty (30) days' prior written
notice (and Contractor will use all reasonable efforts to require
sixty (60) days' prior written notice) of any change in, non-
renewal or cancellation of such coverages which are initiated by
insurer, and (vii) provide that Owner, Construction Lender and
PEPCO must be given at least thirty (30) days' prior written
notice (and Contractor will use all reasonable efforts to require
sixty (60) days' prior written notice) of any change in, non-
renewal or cancellation of such coverages initiated by
Contractor. In addition to the endorsements described above,
Contractor shall require all insurers under this Section 3.08 to
provide PEPCO, Construction Lender and Owner with certificates of
insurance evidencing the policies and endorsement upon
Commencement of Construction, (or issuance of such policies, if
earlier) and on each issuance anniversary while such insurance is
in effect.
(e) The foregoing provisions of this Section 3.08
notwithstanding, if any insurance coverage specified above is
unavailable from an insurer rated "A-" or higher by Best's
Insurance Guide (a "Qualified Insurer"), or is available from a
Qualified Insurer only in an amount less than that required,
Contractor shall (i) in the event of such unavailability, provide
the most nearly comparable coverage that is available from a
Qualified Insurer, or (ii) in the event of any such limited
availability, provide the maximum amount of coverage that is
available from a Qualified Insurer. Contractor shall have a duty
to semi-annually confirm that such required insurance is
available, and if available, Contractor shall immediately become
obligated to secure the same.
(f) All insurance policies providing the
coverages required by this Section 3.08 shall be written by
insurance carriers reasonably acceptable to Owner, PEPCO and
Construction Lender. Contractor shall provide from each insurer
a certificate to Owner, PEPCO and Construction Lender, reasonably
satisfactory to Owner, PEPCO and Construction Lender as to form
and substance, describing the insurance policies required under
this Section 3.08.
(g) Nothing in this Section 3.08 shall be deemed
to limit Contractor's liability under this Agreement to the
insurance coverages required by this Section.
(h) Except for the coverage limits of liability
for insurance companies set forth in Section 3.08(a), no
limitation of liability provided to Contractor under this
Agreement is intended nor shall run to the benefit of any
insurance company or in any way prejudice, alter, diminish,
abridge or reduce, in any respect, the amount of proceeds of
insurance otherwise payable to Owner, PEPCO, or Construction
Lender under coverage required to be carried by Contractor under
this Agreement, it being the intent of the parties that the full
amount of insurance coverage bargained for be actually available
notwithstanding any limitation of liability contained in this
Agreement.
3.09 Claims of Patent Infringement and Misappropriation of
Proprietary Information
Contractor agrees that it will, at its own expense,
defend and indemnify Owner against, and hold Owner harmless from,
all damages and costs resulting from any suit or proceeding
instituted against Owner insofar as such suit or proceeding is
based on any claim that any equipment, constitutes an
infringement of a United States patent or a patent issued in the
country of such equipment's manufacture or that proprietary
information of others has been misappropriated in connection with
construction of the Plant, provided that Owner gives Contractor
prompt written notice of the institution of such suit or
proceeding, permits Contractor to defend against same through
counsel retained by Contractor and approved by Owner, and gives
Contractor all information, assistance and authority necessary to
enable it to defend against such suit or proceeding. At its
option, Contractor may either procure for Owner the right to
continue using the alleged infringing equipment or replace or
modify such equipment so that it becomes non-infringing provided
that the replaced or modified equipment performs in accordance
with the Specifications. This indemnity shall survive
termination of this Agreement.
3.10 Spare Parts Availability
(a) Contractor agrees to use all reasonable
efforts to obtain from General Electric Corporation ("GE") or the
appropriate Affiliate thereof an assignable guaranty that GE will
have available for purchase by Owner for a period of five (5)
years from Commercial Operation all GE Spare Parts (as defined
below) required to keep the Plant in good operating condition, it
being understood that some of such parts are not "shelf items"
and will have to be manufactured by GE after it receives an order
for them. In addition, Contractor agrees to use all reasonable
efforts to make spare parts other than GE Spare Parts available
for purchase by Owner for a period of five (5) years from
Commercial Operation to the extent that Contractor is able to
obtain them from the manufacturer who supplied them for the Plant
as originally built. Should it be unable to obtain such spare
parts from such manufacturer, it further agrees to use all
reasonable efforts to find another source that can supply them.
For the purpose of this Section 3.10, GE Spare Parts consist of
replacements for parts manufactured by GE included in the Plant
as originally built but do not include replacements for parts
purchased from other manufacturers included in the Plant as
originally built.
(b) Contractor shall be responsible for obtaining
and for the cost of all spare parts required for Plant start-up
and testing. Owner shall be responsible for obtaining all spare
parts required for the normal operation of the Plant. Owner
shall have ordered such operational spare parts by the
commencement of startup operations at the Plant. Contractor may
use Owner's operational spare parts in stock in connection with
its startup and testing of the Plant; provided that such spare
parts used by Contractor shall be promptly replaced at
Contractor's expense.
3.11 Additional Documentation
(a) In addition to all other reports or documents
required under this agreement, Contractor will provide Owner, at
least one hundred and seventy (170) days prior to Guaranteed
Completion Date, with at least two (2) sets of generator
manufacturer's capability curves, relay types, instrument
transformer types including curves, and proposed relay settings
for review and inspection.
(b) In addition to Contractor's obligations under
Section 11.02 Contractor will provide Owner with any reasonably
necessary assistance, including all documents, cost information
and other information that Owner believes necessary, in a form
acceptable to Owner, for Owner's federal, state or local tax
filings, exemptions or position advocated by Owner, including,
without limitation, sales, use and property taxes; provided,
however, that such access to cost information (and other
information) shall be limited to an independent auditor of
Owner's choice that agrees to keep secret from Owner,
Contractor's costs, internal accounting, Subcontractor costs, or
numbers expressed by Contractor in any document as a multiplier
or percentage.
3.12 Technical Support and Development
(a) Contractor shall provide any assistance
necessary concerning Owner's efforts to obtain any government
certificate, permit or approval described in Exhibit F,
including, but not by way of limitation, witnesses testimony,
depositions, preparation of exhibits, technical calculations, and
meetings. Upon the occurrence of Project Funding, Contractor
shall be paid for all Work performed prior to Project Funding
from the initial draw of Project Funding.
3.13 Temporary Office Quarters
Contractor shall provide Owner's Representative,
Owner's Engineer and Construction Lender's Engineer with
reasonably adequate office space, including all utilities,
contemporaneously with the existence of Contractor's site office
specified in Section 2.09. For purposes of this Section 3.13,
"reasonably adequate" would at a minimum include facilities
comparable to those of Contractor's site office (including all
utilities except for telephone).
3.14 Letters of Credit
(a) At Project Funding, Contractor shall provide
Owner with a letter of credit, issued in a form and from a
financial institution acceptable to Owner and Construction
Lender, in their sole discretion ("Acceptable LC Issuer"), in an
amount equal to the product of the total Milestone Payments
(actually paid) multiplied by 0.1 (the "Letter of Credit").
Owner shall have the unconditional right to draw upon such Letter
of Credit for Contract Price Discounts, damages, compensation or
otherwise under Sections 3.04, 5.02, 5.04, or for the completion
of Punch List Items if Contractor has failed to complete such
Punch List Items by the date agreed upon pursuant to Section 6.04
or for any other purpose specified in the draw certificate to the
Letter of Credit.
(b) Owner shall reduce the Letter of Credit at
Commercial Operation to an amount equal to the greater of five
(5) percent of the Milestone Payments made up to and including
Commercial Operation or the expected cost (as determined in
Owner's reasonable opinion) to complete Punch List Items. At
Final Acceptance, Owner shall further reduce the Letter of Credit
to an amount equal to twice the cost (as determined in Owner's
reasonable opinion) for completing all Punch List Items. Upon
completion of the Punch List Owner shall return the Letter of
Credit to the issuing bank with instructions for cancellation.
(c) Contractor shall provide a second irrevocable
letter of credit in the amount of $3 million to cover a period of
over-funding by Owner to Contractor (the "Over Funding Letter of
Credit"). Such Over-Funding Letter of Credit shall be issued in
a form and from a financial institution acceptable to Owner and
Construction Lender. Such Over-Funding Letter of Credit shall be
effective two months after Project Funding and shall expire eight
months after Project Funding, at which time Owner shall return
the Over-Funding Letter of Credit to the issuing bank for
cancellation. Owner shall have the unconditional right to draw
upon such Over-Funding Letter of Credit only in the event that
Contractor has been provided notice of Termination for Default in
accordance with Section 8.02(a) and Contractor has failed to cure
such default in accordance with Section 8.02(a).
3.15 Grubbing and Clearing of Job Site
Contractor shall clear and grub the Job Site prior to
Commencement of Construction, in accordance with Exhibit J and
shall, subject to the provisions of Section 2.17(e) and 9.02, be
responsible for all conditions on the Job Site after the date of
this Agreement.
3.16 Temporary Road
Contractor shall provide a temporary construction road
allowing ingress and egress to the Job Site.
3.17 Punch List
No later than 14 days after Commercial Operation,
Contractor shall prepare and submit to Owner, a comprehensive
list of items to be completed or connected. Within fourteen (14)
days of receipt of Contractor's list, Owner shall prepare a
"Punch List" which may include items on Contractor's list as well
as items which are not on such list.
3.18 Road Easements
The Road Easements are in form and substance
satisfactory to Contractor and the rights granted therein are
adequate for the purposes for which they are intended. Except to
the extent that the configuration of ▇▇▇▇▇ Boulevard shown on
Exhibit A to the Lay Down Agreement differs from that described
in the Scope of Work, Contractor assumes and agrees to perform
all of the obligations and liabilities of Owner under the Road
Easements, all as part of the Work hereunder. The additional
costs to comply with the configuration as shown in Exhibit A to
the Lay Down Agreement may be subject to a Change Order. If
Contractor suffers material interference with its intended use of
the lay down area specified in the Lay Down Agreement other than
on account of Contractor's nonperformance of its obligations
under the Lay Down Agreement (after reasonable efforts to
mitigate such interference) Contractor may be entitled to an
appropriate Change Order.
ARTICLE IV
CERTAIN OBLIGATIONS OF OWNER
4.01 Contract Administration
During Contractor's performance of the Work, Owner
shall maintain an office at its headquarters in Dallas, Texas to
receive notices, other communications and documents from
Contractor. Any such notice, other communication or document
delivered by Contractor to Owner's Representative shall be deemed
to have been delivered to Owner.
4.02 Fuel Supply
Prior to and including the first actual or attempted
run for each of the Performance Tests listed in Section 1.02
(fff), Owner shall supply all gas and fuel oil at the Job Site
needed by Contractor in connection with the installation,
adjustment and testing of the Plant. For required runs of such
tests which were failed or aborted, Owner shall supply, at
Contractor's expense, all gas and fuel oil at the Job Site needed
by Contractor in connection with the installation, adjustment and
testing of the Plant. In the event PEPCO purchases test energy
generated by gas or fuel oil supplied by Owner at Contractor's
expense, Owner will offset the cost of such gas or fuel with
associated payments of test energy actually paid by PEPCO to
Owner, but only up to the cost of such gas or fuel oil. All gas
and fuel oil supplied by Owner hereunder shall comply in all
material respects with the fuel specifications in Appendix H to
Exhibit A hereunder.
4.03 Permit Applications
If any application for a permit or authorization that
Contractor is required to obtain under Section 2.05(a) must be in
Owner's name, or otherwise requires action or cooperation by
Owner, Owner shall upon request by Contractor sign such
application or take such action or provide such cooperation, as
reasonably appropriate. Owner reserves the right to review any
such application of Contractor, provided, however, that Owner's
exercise of such right shall not unreasonably delay Contractor's
filing of such application or, under any circumstances, be
considered an approval of the necessity, effect or contents of
such application or the related permit.
4.04 Gas and Electric Interconnection Facilities
(a) Owner shall furnish or cause to be furnished
the natural gas interconnection flange, up to and including the
metering station at least four (4) months prior to Guaranteed
Completion Date. Contractor shall be responsible for all other
Work on the natural gas interconnection flange on the Plant Site.
(b) Owner shall furnish or cause to be furnished
the Interconnection Facilities four (4) months prior to
Guaranteed Completion Date, as adjusted by Force Majeure and
Owner Caused Delays, if any. Owner shall be responsible in
general for timely performance of those obligations of PEPCO
required of it hereunder.
(c) Owner shall furnish or cause to be furnished
the interconnection with Southern Maryland Electric Cooperative
(SMECO) for the permanent facilities (such as the warehouse,
office building, and distilled water facility) seven months (7)
prior to Guaranteed Completion Date as adjusted by Force Majeure
and Owner Caused Delays, if any.
(d) Owner shall furnish or cause to be furnished
sufficient power to the extent needed by Contractor for facility
startup and checkout of Plant system and equipment normally
powered from utility supplied backfeed through the main power
transformers seven (7) months prior to Guaranteed Completion Date
as adjusted by Force Majeure and Owner Caused Delays, if any.
Contractor is responsible for the cost of such power had it been
purchased from SMECO under SMECO Schedule GS-9 for rates in
effect at that time, Owner will reimburse Contractor the
difference. If Owner requests Contractor to furnish such power
for a portion of that period, Owner will reimburse Contractor in
accordance with Exhibit K for the actual costs associated with
temporary diesel generators (rental cost, fuel, additional
facilities, operation and maintenance, permitting and noise
abatement, as required), or equivalent, alternative, temporary
start-up source of power that are greater than the cost of such
power if it had been purchased from the SMECO under SMECO
Schedule GS-9.
4.05 Job Site Access
Owner shall obtain at its own expense any easements and
rights of way over the property of others as required, in order
that the personnel and construction equipment of Contractor and
its subcontractors and suppliers have ingress to and egress from
the Job Site, except for any transportation rights of way,
permits, or easements.
4.06 Owner's Cooperation
Owner shall cooperate in all material respects to
permit Contractor to perform hereunder and shall make reasonable
efforts to supply to Contractor, in a timely manner, either
directly or indirectly, material information and data that is
available to Owner and that is required for the Performance of
the Work.
4.07 Owner's Representative
Owner shall designate a representative who shall have
authority to administer this Agreement on behalf of Owner,
approve Contractor's submissions hereunder, inspect and have
authority to accept the Work, as reasonably necessary for
Contractor's performance of the Work.
4.08 Unreasonable Interference
Owner shall not interfere unreasonably with
Contractor's performance of its obligations under this Agreement.
4.09 Permits
Except as provided in paragraph (a) of Section 2.05,
Owner shall obtain at its own expense all Applicable Permits,
including without limitation any permit or authorization required
under the Public Utility Regulatory Policies Act of 1978, as
amended, (hereinafter "PURPA"), environmental permits, zoning
permits, Certificates of Necessity and Convenience from
regulatory authorities, Power Plant Industrial Fuel Use Act
permits, and any permits required in relation to water use, sewer
construction or the disposal of wastes from the Plant. A list
prepared by Owner (and reviewed by Contractor) of all
governmental permits and authorizations required to be obtained
by it under this paragraph in connection with the construction of
the Plant, and of all easements and rights of way (if any) needed
for the purpose set forth in the preceding sentence, is attached
hereto as Exhibit F, and is hereby represented by Owner to have
specified correctly all material permits Owner is required to
obtain under this Agreement. Prior to Commencement of
Construction at the Job Site, Owner shall deliver to Contractor
evidence reasonably satisfactory to Contractor that all permits,
authorizations, easements and rights of way listed in Exhibit F
necessary to begin construction of the Plant have been received
by Owner or, if any such required permit or authorization has not
actually been issued, that it has been approved for issuance, or
in the opinion of Owner, will be approved for issuance.
4.10 Taxes
Owner shall pay all real property taxes assessed
against the Plant Site and any permanent use charges or
assessments such as water or sewer, but excluding temporary
charges for construction utilities, which shall be Contractor's
responsibility.
4.11 Reimbursement of Taxes Paid
Except for those taxes Owner contests in good faith,
Owner shall reimburse Contractor for all applicable sales, use,
excise, value added, or other taxes or duties for which
Contractor is liable by law or regulation, in connection with its
purchase of equipment and materials to be incorporated in the
Plant. Owner shall not be liable for any taxes based on or
related to Contractor's or a subcontractor's work force or
Contractor's income or a subcontractor's income. In any
situation where Owner is required to pay additional state and
local income taxes because Contractor failed to follow
instructions of Owner appropriately, Contractor shall be
responsible for the cost of such taxes.
4.12 Third Party Cooperation
Owner shall notify any third party for witnessing
Performance Tests. Owner shall be entitled to request Contractor
to reasonably reschedule Performance Tests to accommodate the
schedules of persons whom the Owner deems necessary to attend the
Performance Tests. Contractor shall be responsible for notifying
any equipment supplier or vendor representative that it deems
necessary to be present at the Performance Tests.
4.13 Right to Construct; Survey of Plant Site
On or before Project Funding, Owner shall deliver to
Contractor (i) a copy of the final Maryland Certificate of Public
Convenience and Necessity (which is no longer open for judicial
appeal) issued by the Maryland Public Service Commission and an
officer's certificate of Owner stating that it has the permission
to build and operate the Plant on the Plant Site (provided,
however, that Owner has previously delivered to Contractor a
statement that Owner has permission from the landowners for
Contractor to commence clearing and grubbing and construct the
temporary road prior to Project Funding) and (ii) a complete and
correct survey of the Plant Site showing, among other things, the
location of all easements and rights of way and the location of
all means of ingress to and egress from the Site which will be
available to Contractor.
4.14 Notice to Contractor
Any notice must be delivered by Owner to Contractor in
the manner described in Section 11.05, except as otherwise agreed
in writing by the parties.
4.15 Notice of Project Funding
Owner shall give Contractor prompt notice of the date
of Project Funding.
4.16 Insurance
(a) Owner at its sole cost and expense shall
provide and maintain an All Risk Installation and Builder's Risk
Insurance Policy (the "Builder's Risk Policy") in an amount at
least equal to the full replacement value of the Project. A
Certificate of Insurance evidencing the Builder's Risk Insurance
coverage and the Delay in Opening Insurance Policy shall be
furnished to Contractor prior to field mobilization by
Contractor. Contractor and its subcontractors of any tier shall
be named an additional insured thereunder only as their
respective interest may appear.
(b) The Builder's Risk Policy shall contain the
following terms:
(i) Contract Prices and Perils Insured: an
amount equal to the full replacement value of the Work
for "all risks" of physical loss or damage except as
hereinafter provided, including coverage for earth
movement, flood, boiler & machinery, transit and off
site storage accident exposure, start-up and testing
coverage until Final Acceptance but excluding
Contractor's tools, construction aids and equipment.
In addition, Construction Lender, Contractor and its
subcontractors of any tier and their assigns shall be
named as additional insureds as their respective
interests may appear under the Builders' Risk Policy.
(ii) Subject to insurance company underwriting
and approval, Delay in Opening Insurance shall be
provided and maintained by Owner in an amount covering
a period of indemnity equal to twelve (12) months.
Such Delay in Opening Insurance shall only apply in the
event of physical loss or damage to the Work caused by
an insured peril as described in Section 4.16(b)(i)
above. Owner shall apply proceeds thereof to defray
and offset Owner's losses and costs in lieu of the
Contract Price Discounts due Owner if such loss or
costs arise under an insured peril under the Builder's
Risk Policy.
(c) Should a loss be sustained under the
Builder's Risk Policy, such loss will be adjusted by Owner and/or
Construction Lender with the insurance companies. Contractor
will assist the Owner and Construction Lender in the adjustment
of losses. Contractor shall replace or repair any loss or damage
(so long as Contractor is compensated therefor from any proceeds
received as a result of such loss) and complete the work in
accordance with this Agreement. Contractor shall assist the
Owner and Construction Lender in the adjustment of losses.
ARTICLE V
CONTRACTOR'S GUARANTEES AND WARRANTIES
5.01 Warranties
(a) The Contractor warrants that the Plant shall
be constructed with new parts and equipment of good quality.
(b) The Contractor warrants that, at Final
Acceptance, the Work and the Plant, individually and together,
(i) conform with, and are in all material respects, designed and
constructed in accordance with the Final Plans and specifications
as such shall have evolved and been completed by Contractor, (ii)
conform with, and are designed and constructed in accordance with
Prudent Utility Practices, Applicable Laws and Applicable Permits
at the time of Final Acceptance, (iii) contains materials and
equipment suitable for use under the operating and climatic
conditions described in the Scope of Work, (iv) demonstrates Work
performed in a good and workmanlike manner, and (v) as designed
and supplied by the Contractor to Owner under this Agreement,
individually and collectively, do not constitute an infringement
of any patent or the misappropriation of any trade secret.
(c) Contractor warrants that the Work and the
Plant shall conform to the requirements of this Agreement and
will be free from Defects or Deficiencies until the later of (i)
one year following Commercial Operation or (ii) one year from the
discovery and repair of any such Defect or Deficiency, (but in no
event later than the second anniversary of Final Acceptance);
provided that if a particular item is repaired, replaced or
renewed one time and becomes defective again during the
applicable warranty period, then Contractor agrees that: (x)
unless the problem has caused a performance deficiency as to
which a Contract Price Discount has been paid; or (y) unless
Contractor can demonstrate to Owner's reasonable satisfaction
that there is not an unreasonable risk of the reoccurrence of
such problem; Contractor will undertake a technical analysis of
the problem and clear the "root cause". If within the period
described above, the Work or the Plant is found to contain
Defects or Deficiencies, Contractor shall at its expense, except
for costs associated with warranty replacement of General
Electric supplied combustion turbine generator and steam turbine
generator components and General Electric warranty repairs and/or
adjustments for the combustion turbine and steam turbine
generator components (which will be at Owner's expense) correct,
repair or replace such Defect or Deficiency as promptly as
practicable upon being given timely notice thereof. If
Contractor fails to make good the Defect or Deficiency noticed
herein in a timely manner, Owner, at its option, may correct the
Defect or Deficiency and the cost thereof shall be charged to the
Contractor and may be deducted from any amounts due, or which
thereafter became due to Contractor, or if no amounts are or
become due, the difference shall be promptly paid to Owner by
Contractor plus any and all other damages to which Owner may be
entitled hereunder on account of Contractor's default. The only
warranties made by Contractor are those expressly enumerated in
this Article V. Any other statement of fact or descriptions
expressed in this Agreement shall not be deemed to constitute a
warranty of the Work or any part thereof. THE WARRANTIES SET
FORTH IN THIS SECTION 5.01 ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES, WHETHER STATUTORY, EXPRESS OR IMPLIED (INCLUDING ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE AND ALL WARRANTIES ARISING FROM COURSE OF DEALING AND
USAGE OF TRADE).
The foregoing sentence is not intended to disclaim any
other obligations of Contractor set forth herein (including under
Section 1.04).
(d) In the Scope of Work, there may be certain
specifications, ratings, and other performance characteristic
descriptions related to various components procured by
Contractor, which components will become a part of the Plant.
Owner expressly acknowledges that, to the extent that final
component performance specifications, ratings or descriptions
exceed those set forth in the Scope of Work, they are in no way
binding on Contractor as enforceable component performance
obligations hereunder nor do they create any rights or remedies
for the Owner against Contractor. With respect to matters of
component performance, it is the intent of this Agreement that
Contractor, as a Turnkey Firm-Fixed Price contractor, be
obligated only for compliance with the Performance Guarantees as
set forth in Section 5.04 and the Plant warranties set forth in
Sections 5.01(a),(b) and (c). However, this Section 5.01(d) is
not intended in anyway to relieve the Contractor from any of its
obligations under the standards, specifications and descriptions
contained in this Agreement or the Scope of Work.
(e) If after Commercial Operation, the Contractor
neglects to make or undertake with due diligence to make the
necessary correction of a Defect or Deficiency, within twenty
(20) days after Owner gives Contractor notice of a Defect or
Deficiency Owner shall have the authority to make the correction
itself or order the Work to be done by a third party, and the
cost of the corrections shall be borne by the Contractor. Owner
shall be permitted to make repairs or replacements on equipment
without affecting the warranty or without prior notice to the
Contractor so long as repair or replacement involves the correct
installation of spare parts. Owner shall also be permitted to
adjust or test equipment as outlined in the instruction manuals
provided by the Contractor.
(f) In the event of an emergency and, in the
reasonable judgment of Owner, the delay that would result from
giving formal notice to Contractor would cause serious loss or
damage which could be prevented by immediate action, any action
including correction of Defects and Deficiencies may be done by
Owner or a third party chosen by Owner, without giving prior
notice to the Contractor, and the reasonable cost of correction
shall be paid by the Contractor in the case of a Defect or
Deficiency. In the event such action is taken by Owner, the
Contractor shall be promptly notified, and shall assist whenever
and wherever possible in making the necessary corrections.
(g) In the event that it is necessary (in order
to fulfill Contractor's warranty obligations under Article V) to
dismantle piping, ducts, machinery, equipment or other Work
furnished or performed by the Contractor in order to obtain
access to the Work, to correct a Defect or Deficiency, the cost
of all such dismantling and reassembly will be borne by the
Contractor.
5.02 Time of Completion of Plant
(a) Contractor guarantees to Owner that
Commercial Operation of the Plant will occur no later than the
Guaranteed Completion Date for the Plant, or Contractor shall
refund a Contract Price Discount therefor as provided below.
Owner's right to terminate this Agreement because of Contractor's
default of its obligations under this paragraph (a) shall be
governed by Section 8.02(a). Should Commercial Operation of the
Plant occur after the Guaranteed Completion Date, Contractor
shall refund to Owner a Contract Price Discount as the exclusive
remedy only for Contractor's failure to meet the Guaranteed
Completion Date, the sum of: (i) eighty thousand dollars
($80,000) per day for each day (or portion thereof) that
Commercial Operation of the Plant occurs after the Guaranteed
Completion Date.
(b) [Intentionally deleted]
(c) Anything in paragraph (a) above to the
contrary notwithstanding, the total Contract Price Discount
refundable under this Section 5.02 shall not exceed $14,400,000.
The Contract Price Discount provided by this Section 5.02 is in
addition to the Contract Price Discount provided by Section 5.04
and all warranty claims under Section 5.01.
(d) Owner shall invoice Contractor monthly for
amounts of Contract Price Discount payable pursuant to this
Section 5.02. Any such invoice shall be payable within thirty
(30) days after Contractor's receipt of such invoice. Owner
shall also have the right to offset any past-due Contract Price
Discount payable by Contractor to Owner against Milestone
Payments or draw upon the Letter of Credit therefor under Section
3.14 hereof.
(e) In the event that Commercial Operation of the
Plant occurs prior to the Guaranteed Completion Date, Owner shall
pay Contractor an Early Completion Bonus as follows:
(i) Sixteen thousand six hundred dollars
($16,600) per day for each day (or portion thereof)
that Commercial Operation of the Plant occurs on or
before October 31, 1996 but only for those days of
early completion during the month of October 1996;
(ii) Forty thousand dollars ($40,000) per day for
each day (or portion thereof) that Commercial Operation
of the Plant occurs on or before September 30, 1996 and
on or after August 1, 1996 and shall apply for all days
of early completion during the months of September 1996
and August 1996.
No Early Completion Bonus shall be paid for any early completion
days occurring prior to August 1, 1996.
(f) In the event that Substantial Completion of
the Plant occurs on or prior to October 31, 1996, Owner shall pay
Contractor a Substantial Completion Bonus of $300,000. In the
event that Substantial Completion of the Plant occurs on or prior
to September 30, 1996, Owner shall pay Contractor an additional
Substantial Completion Bonus of $300,000, or a total aggregate
Substantial Completion Bonus of $600,000. No Substantial
Completion Bonus shall be paid if Substantial Completion of the
Plant occurs after October 31, 1996.
(g) (i) The aggregate of any Early Completion
Bonus and/or Substantial Completion Bonus shall be payable to
Contractor in three (3) interest-free (until due, owing and
unpaid), equal quarterly payments out of "Distributable Cash" (as
hereinafter defined) three (3) Business Days after each of the
three "Basic Rent Payment Dates" (as such term is defined in
Appendix A to the Construction Loan Agreement and Lease
Commitment dated as of March 30, 1995, among Owner, Panda
Brandywine Corporation and General Electric Capital Corporation)
immediately following Final Acceptance of the Plant. Any amounts
not paid hereunder due to the inadequacy of "Distributable Cash"
shall be carried over for payment (with interest thereon accruing
at the Stipulated Interest Rate) three (3) Business Days after
the next Basic Rent Payment Date (it being understood that no
equity distributions may be made to any partner of the Owner
until any due or past-due Early Completion Bonus or Substantial
Completion Bonus amount is paid to Contractor).
(ii) Contractor understands and agrees that the
distributions of Distributable Cash may be restricted by the
Construction Loan Agreement now or in the future and that the
Security Deposit Agreement may be changed to provide for the
payment of additional amounts to other parties (whether now or
hereafter provided for in the Security Deposit Agreement). The
Contractor agrees that its right to receive Early Completion
and/or the Substantial Completion Bonus is not a debt of the
Owner. Contractor also agrees that any default, breach,
rejection or repudiation by Owner of any obligation or provision
contained in these Sections 5.02(e), (f) and (g) shall not be a
default by Owner under this Agreement; provided, however, that if
Owner repudiates (a) its obligations to make payments first to
Contractor before any distributions to any other person, or (b)
to cause the Security Agent to make payments to Contractor
required by Section 5.02(g)(iv) hereof, as to which, in both
cases, Contractor shall have a legal claim sounding in debt, but
only against such Distributable Cash held by Owner but not paid
to Contractor when owed, and in no event shall Contractor
terminate this Agreement on account of any such repudiation. In
no event shall Contractor make any claim against or assert any
lien on the Facility or any other asset of Owner by reason of the
matters set forth in these Sections 5.02(e), (f) and (g). The
obligations to pay Early Completion and/or Substantial Completion
Bonus shall be non-recourse to Owner except to the extent Owner
receives Distributable Cash, and then recourse shall be limited
to such Distributable Cash. Contractor agrees that it shall have
no right to institute any action or proceeding or otherwise take
any action against the Construction Lender or any security agent
or owner trustee with respect to these Sections 5.02(e), (f) and
(g). Contractor further agrees that it shall have no right to
institute any action or proceeding or otherwise take any action
against Owner to enforce payment or performance of any obligation
or agreement contained in these Sections 5.02(e), (f) and (g)
unless and until the Construction Lender have been paid in full
all amounts outstanding under any of the Construction Loan
Agreement and such Agreement has terminated; provided, however,
that Contractor shall have the right to seek to compel specific
performance of Owner's obligations set forth in these Sections
5.02(e), (f) and (g).
(iii) For purposes of these Sections 5.02(e), (f)
and (g), (A) "Distributable Cash" shall mean, at any time in
question, all cash then distributable to Owner pursuant to
Section 4.9(b) of the Security Deposit Agreement, but only if the
conditions in such Section to distribution have been satisfied;
and (B) "Security Deposit Agreement" shall mean that certain
Security Deposit Agreement dated as of March 30, 1995 among the
Owner, Panda Brandywine Corporation, General Electric Capital
Corporation and Shawmut Bank Connecticut, National Association,
as security agent, owner trustee and lessor, as such agreement
may be amended, modified or supplemented from time to time.
(iv) For so long as the Security Deposit
Agreement is in effect, Owner agrees to cause the Security
Deposit Agent to promptly distribute to Contractor, on a
quarterly basis, to the extent of funds available therefor, the
Distributable Cash, if any, payable to Contractor hereunder, as
provided in this Section 5.02(g) and pursuant to the terms of the
Security Deposit Agreement, in all cases senior and prior to any
payments of Distributable Cash to any other person.
(v) If the Security Deposit Agreement shall be
amended or terminated so that cash is no longer distributed to
Owner thereunder, but is distributed to Owner free and clear of
any lien of the Construction Lender pursuant to some other
agreement, then "Distributable Cash" shall mean such cash being
distributed to Owner pursuant to such other agreement. If the
Construction Lender is paid in full all amounts outstanding under
the Construction Loan Agreement and such Agreement has been
terminated, then "Distributable Cash" shall mean all revenues of
the Plant.
(h) The provisions of Sections 5.02(e), (f) and
(g) above represent the entire agreement of the parties
concerning the payment of an Early Completion Bonus and
Substantial Completion Bonus and supersede, and shall not be
modified by, any Change Order set forth in Exhibit S hereto.
5.03 Equipment and Services
Upon Final Acceptance of the Plant or the earlier
termination of this Agreement, Contractor shall assign to Owner
all warranties received by it from subcontractors or suppliers of
goods and services used in the Work. Such assignment of
warranties to Owner must also allow Owner to further assign such
warranties. However, in the event that Owner makes any warranty
claim against Contractor with respect to goods or services
supplied in whole or in part by any such subcontractor or
supplier, Contractor shall be entitled to enforce for its own
benefit any warranty given by such subcontractor or supplier with
respect to such goods and services.
5.04 Performance Guarantees
(a) Net Power Output Guarantee. Contractor
guarantees to Owner that the Net Power Output of the Plant will
be 230,000 kilowatts at Commercial Operation, corrected to 92o F
dry bulb 50% relative humidity with 34,000 lbs/hr of saturated
steam at 15 psig at the process interface and 80% of condensate
returned with no boiler blowdown (the "Net Power Output
Guarantee"). Contractor shall be able to declare Commercial
Operation notwithstanding its failure to achieve the Net Power
Output Guarantee by electing to make a Contract Price Discount
payment for such failure in the amount of $1000 per kilowatt that
the Net Power Output (as corrected in this paragraph) is less
than the Net Power Output Guarantee; provided, however, that no
such election may be made by Contractor unless and until
Contractor has achieved a Net Power Output of 210,000 kilowatts
or greater (as corrected in this paragraph). Contractor shall
provide a notice and declaration to Owner that: (a) a 210,000
kilowatt (or greater) Net Power Output (as corrected in this
paragraph) has been achieved in accordance with the terms of this
Agreement; and (b) Commercial Operation is hereby declared by
Contractor, to be effective for all purposes of this Agreement as
of the date of such notice and declaration. Any Contract Price
Discount owing to Owner in consequence thereof shall be paid in
accordance with Section 5.04(c).
(b) Net Plant Heat Rate Guarantee. Contractor
guarantees to Owner that the net heat rate of the Plant (the "Net
Plant Heat Rate") will not exceed 7,124 Btu/kWh LHV when firing
design basis natural gas, as determined by the Net Plant Heat
Rate Test corrected to 92 degrees F dry bulb 50% relative
humidity with 34,000 lbs/hr of saturated steam at 15 psig at the
process interface and 80% of condensate returned with no boiler
blowdown (the "Net Plant Heat Rate Guarantee"). Should the
actual Net Plant Heat Rate as determined by the Net Plant Heat
Rate Test be greater than the Net Plant Heat Rate Guarantee plus
the Dead Band Tolerance, Contractor shall refund to Owner, as a
Contract Price Discount and cost adjustment for such deficiency
in actual Net Plant Heat Rate, a sum equal to forty-five thousand
dollars ($45,000) for each Btu/kWh in excess of the Net Plant
Heat Rate Guarantee plus the Dead Band Tolerance. The Dead Band
Tolerance of the Net Plant Heat Rate shall be plus or minus two
(2) percent of the Net Plant Heat Rate Guarantee.
(c) Maximum Contract Price Discount. Owner shall
invoice Contractor, for such Contract Price Discount payable by
Contractor pursuant to this Section 5.04, promptly after the
final test performed pursuant to Section 6.04(b) demonstrates
that the Plant has failed to achieve the Net Plant Heat Rate
Guarantee and/or Net Power Output Guarantee thereby resulting in
a deficiency. Any such invoice shall be payable within thirty
(30) days after Contractor's receipt of such notice. The
Contract Price Discount provided by this Section 5.04 is in
addition to the Contract Price Discount provided by Section 5.02
and the warranty claims pursuant to Section 5.01. Anything in
paragraphs (a) and (b) above to the contrary notwithstanding, the
total and cumulative Contract Price Discount payable under
Sections 5.02 and 5.04 shall not exceed twenty-five percent (25%)
of the Contract Price.
(d) Emissions Guarantee. Contractor guarantees
that the emission of air contaminants into the atmosphere from
the Plant will meet the emissions limitations (as demonstrated
through the use of the air quality sampling criteria and the
techniques referenced therein) of the EPA Prevention of
Significant Deterioration ("PSD") permit and the permits granted
pursuant to the CPCN proceeding, attached hereto in Exhibit G.
(e) Noise Abatement Guarantee. Contractor
guarantees the Plant will function at a noise level that does not
exceed that required by the State of Maryland and Prince George's
County requirements at the property line (and at any other point
of measurement required by law) of the Plant Site under all
normal operating conditions in accordance with Section 20.5 of
the Scope of Work.
(f) Fuel Oil Net Power Output. After Commercial
Operation is achieved, the Net Power Output shall be demonstrated
during a six hour test when firing distillate fuel oil following
the procedures set forth in Section 6.03. During this test, the
Net Power Output corrected to 92 degrees F dry bulb 50% relative
humidity with 34,000 lbs/hr of saturated steam at the process
interface and 80% of condensate returned with no boiler blowdown
shall be greater than or equal to the Net Power Output as
corrected to the same conditions as determined during the 48 hour
test on natural gas.
If the Net Power Output when firing distillate fuel oil
is less than the Net Power Output when firing natural gas and
less than 230,000 KW after appropriate test correction factors,
then Contractor shall either (i) implement corrective measures
and retest to achieve the required output level, or (ii) elect to
pay a Contract Price Discount of $1,000 per kilowatt that the Net
Power Output is less than the Net Power Output level on natural
gas.
In the event that Net Power Output during the
distillate fuel oil test is greater than the natural gas Net
Power Output, or is greater than or equal to 230,000 KW,
Contractor shall be deemed to have passed this distillate fuel
oil test.
(g) Determination of Compliance. Contractor's
compliance with the guarantees set forth in paragraph (a), (b),
(d) and (e) of this Section 5.04, or the degree of its failure to
comply with any such guarantee, shall be determined on the basis
of the Performance Tests of Section 6.03 and the results of such
tests shall be conclusive for such purpose.
(h) Net Power Output Bonus. In the event that
Contractor achieves a Net Power Output (as corrected in Paragraph
5.04(a)) in excess of the Net Power Output Guarantee (as such Net
Power Output is determined by the last Forty Eight (48) Hour
Performance Test), then in such event, a bonus shall be owing to
Contractor from Owner in an amount that is the aggregate of $300
per kilowatt by which such Net Power Output exceeds the Net Power
Output Guarantee; provided, however, that no bonus shall be paid
for any Net Power Output in excess of 233,000 KW. Such bonus
shall be paid within 30 days after Final Acceptance.
(i) Net Plant Heat Rate Bonus. In the event that
Contractor achieves a Net Plant Heat Rate (as corrected in
Paragraph 5.04(b)) that is less than the Net Plant Heat Rate
Guarantee less the Dead Band Tolerance (as such Net Plant Heat
Rate is determined by the Net Plant Heat Rate Test), then, in
such event, a bonus shall be owing to Contractor from Owner in an
amount that is the aggregate of $22,500 per Btu/kWh by which such
Net Plant Heat Rate is less than the Net Plant Heat Rate
Guarantee less the Dead Band Tolerance. Such bonus shall be paid
within 30 days after Final Acceptance.
5.05 PEPCO Interconnect and Transmission Facilities
Contractor covenants that neither it nor its Sub
Contractors will tamper with PEPCO's side of the Interconnect
Facilities or the Transmission Facilities on the line side of the
Plant's line disconnect switch without the prior written consent
of Owner and PEPCO; except in situations where such actions are
taken to prevent immediate injury, death, or property damage, and
Contractor uses all reasonable efforts to provide Owner and PEPCO
with advance notice of the need for such actions.
ARTICLE VI
START UP, PERFORMANCE TESTS AND ACCEPTANCE
6.01 Commencement of Testing and Start-Up
The Contractor shall provide Owner with at least thirty
30 days advance notice of any testing of the Plant that involves
delivering energy to PEPCO. After the Plant has been
substantially completed whereby it can operate normally and
continuously under all operating conditions, the Contractor shall
start-up and test the Plant in accordance with Scope of Work and
this Article VI. No test under this Section 6.01 that delivers
net electrical output shall be conducted unless Contractor gives
prior notice to Owner's representative.
6.02 Initial Operation
Following the start-up of the Plant as provided for in
Section 6.01, the Plant will be subject to trial operation, field
checkout and demonstration of full load operation in accordance
with the provisions of Scope of Work.
6.03 Performance Tests
(a) When, after completion of the start-up, trial
operation, field checkout and demonstration of full load
operation in accordance with the provisions of Scope of Work,
Contractor determines to its satisfaction that the Plant has been
substantially completed and is capable of being operated safely
in accordance with the requirements of this Agreement (although
other minor portions of the Plant not essential to its safe and
reliable operation may remain to be completed), it shall deliver
to Owner a written notice so stating (a "Performance Test(s)
Notice") and specifying a date for commencement of any or all of
the Performance Tests. Contractor shall deliver the Performance
Test(s) Notice at least five (5) Business Days prior to the
commencement of the Performance Test(s). If Owner, within three
(3) Business Days after its receipt of such Performance Test(s)
Notice, delivers to Contractor a written notice (i) denying that
the Plant has been substantially completed or that it is capable
of being operated safely under all conditions in accordance with
the requirements of this Agreement, and (ii) stating the facts
upon which such reasonable denial is based, then upon receipt of
such notice Contractor shall take such action as is appropriate
to remedy the conditions described in such notice. Following any
such remedial action, Contractor may deliver to Owner a new
Performance Test(s) Notice conforming to the requirements of this
paragraph (a), and the provisions of this paragraph (a) shall
apply with respect to such new Performance Test(s) Notice in the
same manner as they applied with respect to the original
Performance Test(s) Notice. The foregoing procedure shall be
repeated as often as necessary until Owner no longer rejects the
Performance Test(s) Notice.
(b) The Performance Test(s) shall be carried out
in accordance with Exhibit A.
6.04 Final Acceptance and Substantial Completion of the
Plant
(a) Contractor may, by written notice to Owner,
request that the Plant be accepted as complete, (i) when the
Performance Tests, mechanical calibrations, electrical continuity
and ground fault tests have been completed, and any Defects and
Deficiencies found have been corrected to Owner's satisfaction,
(ii) the Plant has been constructed in accordance with the Final
Plans and specifications, (iii) the Plant has been synchronized
with PEPCO electrical grid, (iv) no defective or incomplete
portions of the Work exist that could have a materially negative
impact on the normal operation or performance of the Plant and
(v) completion of all remaining Punch List Items will not
interrupt, disrupt or interfere with the normal operation or
performance of the Plant, (vi) thermal energy is available from
the Plant to the Steam Host on a normal and uninterrupted basis
and (vii) the certificate has been delivered pursuant to
Paragraph 6.04(d) below ("Final Acceptance"). A team consisting
of representatives of Owner, Construction Lender and Contractor
shall then make a final inspection of the Plant. Should Owner's
representatives disagree with a contention by Contractor's
representatives that the Plant is complete and in compliance with
the requirements of this Agreement, Contractor's sole remedy is
to submit the dispute to arbitration under Article X.
(b) If the Plant fails any part of its original
Performance Tests, Contractor shall take appropriate corrective
action and the Performance Tests shall then be performed again.
If the Plant fails any part of the retest, Contractor shall take
appropriate corrective action and the Performance Tests shall be
repeated. If six months have elapsed from the date of Commercial
Operation, and the Plant continues to fail the Performance Tests
Contractor shall pay Owner the Contract Price Discount refundable
pursuant to Section 5.04 hereof.
(c) Except as provided in Section 9.01 hereof
with respect to indemnification for third party claims, and
Contractor's obligation to achieve mechanical completion, Owner
shall have no claim against Contractor under this Agreement with
respect to and to the extent that any such claim relates to a
Defect or Deficiency that, is subsumed within, or contributes to
a performance deficiency; provided, however, that such
performance deficiency must have been previously compensated for
by a Contract Price Discount.
(d) After Owner has accepted the Plant and the
Plant is complete, including Punch List Items, Owner shall upon
written request by Contractor issue it a Completion Certificate
evidencing its final acceptance of the Plant as a whole. In the
event that only Punch List Items remain to be completed, Owner
shall issue the Completion Certificate if Contractor agrees that
the Punch List Items will be corrected to Owner's satisfaction
within a reasonable period of time, but in no event later than
six (6) months from Commercial Operation and in the case of
freeze protection, it will be complete by the later of Commercial
Operation or November 1, 1996.
(e) As a condition precedent to Final Acceptance,
Contractor shall submit a signed Certificate that the Plant has
been constructed in accordance with all governmental requirements
identified either by Owner or Contractor pursuant to this
Agreement.
(f) Subsequent to running the first successful
Forty-eight (48) Hour Net Electric Output Performance Test,
Contractor shall provide written notice to Owner that the Plant
has achieved "Substantial Completion" (i) when Commercial
Operation has been achieved under normal operating conditions,
including a plant staff at the ordinary ▇▇▇▇▇▇▇ level for
continuous operation and (ii) all air emission tests on design
basis natural gas comply with the criteria of Applicable Permits
and Section 5.04(d) under normal operating conditions, including
a plant staff at the ordinary ▇▇▇▇▇▇▇ level for continuous
operation (it being understood that state certification is not
required) and (iii) an aggregate potential Contractor liability
formula described as follows has been met: the sum of the
potential maximum amount of Net Power Output Contract Price
Discount plus potential maximum amount of Net Plant Heat Rate
Contract Price Discount plus Guaranteed Completion Date Contract
Price Discount plus potential maximum amount of expected cost to
complete construction plus potential maximum amount of Punch List
is less than or equal to $15,000,000 (with the Net Power Output
and Net Plant Heat Rate Test performed in accordance with Article
VI of this Agreement and the Contract Price Discounts in
accordance with Article V). The date of Contractor's written
notice under this Section shall be the date of "Substantial
Completion" (provided "Substantial Completion" shall have
actually occurred, as determined by Construction Lender's
Engineer).
ARTICLE VII
FORCE MAJEURE AND OWNER CAUSED DELAY
7.01 Force Majeure.
(a) Subject to the parties obligations under this
Article VII, a party shall not be considered to be in default
with respect to any obligation (except for the obligation to pay
money) if it is prevented from fulfilling such obligation by
reason of a Force Majeure Event. For purposes of this Agreement,
Force Majeure shall mean an event, condition, or circumstance
beyond the reasonable control and without the fault or negligence
of the Party claiming Force Majeure, that, despite all reasonable
efforts of the Party claiming Force Majeure to prevent it, causes
a material delay or disruption in the performance of any
obligation imposed hereunder. Force Majeure shall include,
without limitation, acts of God, natural disasters, fires,
earthquakes, lightning, floods, storms, civil disturbances,
riots, war, the action of a court or action or failure to act on
the part of any governmental body having or asserting
jurisdiction that is binding upon the Parties and has been
opposed by all reasonable means, strikes, lockouts or other labor
disputes, or such other causes or events to the extent beyond the
reasonable control, and without the fault or negligence, of the
Party relying thereon as justification for not performing an
obligation or complying with any condition required of such Party
under this Agreement. For the avoidance of doubt, the term
"Force Majeure" does not include changes that affect the cost or
availability of equipment, nor shall strikes, lockouts or other
labor disputes with respect to the employees of the Contractor or
any subcontractor (other than General Electric or any other
subcontractor who cannot be replaced without causing a material
delay or disruption in the performance of this Agreement).
(b) A party may only assert a Force Majeure Event
as an excuse to performance under this Agreement if the non
performing party upon the occurrence of a Force Majeure Event:
(i) immediately and continuously uses all reasonable efforts to
alleviate and mitigate the cause and effect of the Force Majeure
Event, (ii) provides accurate notice to the other party
describing the date, expected duration, cause and nature of the
Force Majeure event as well as its effect on Commercial
Operation, if any, within the earlier of: (x) five (5) [Business]
Days after obtaining knowledge of such Force Majeure Event or (y)
in any event sixty (60) calendar days after the commencement of
the Force Majeure Event, (iii) promptly and without delay
provides status reports to the other party as often as the other
party may reasonably request, and (iv) provides written notice to
the other party immediately upon resumption of the excused
performance. The parties agree that any failure by a party to
adhere in all material respects to the provisions of this Section
7.01 shall be deemed a waiver by that party to relief under this
Article VII; provided however that the non-performing party must
strictly adhere to all notice requirements under this Section
7.01.
(c) Anything in this Agreement to the contrary
notwithstanding, (i) the provisions of this Article VII shall not
extend Contractor's time for performance under Section 2.03
beyond the latest date that the "Actual Commercial Operation
Date" may occur under the Power Contract; provided, however,
that, if termination of this Agreement occurs under the last
sentence of Section 8.02(b) by reason of Force Majevre, Owner's
rights and remedies shall be limited to those afforded to it by
Sections 8.06(b) and (c) below and (ii) any excuse for
performance of Work under this Article VII shall be no greater in
scope or duration than that required as a direct result of the
impact of the Force Majeure Event.
(d) Owner shall not be responsible for the cost
of de-mobilization and/or remobilization if Contractor has a
Force Majeure Event.
7.02 Owner Caused Delay
Contractor's time of performance under this Agreement
shall be extended if, and to the extent, Contractor is able to
demonstrate to Owner that Contractor has suffered a material and
adverse impact on its obligation to achieve Commercial Operation
(or any other project schedule obligations) by reason of Owner's
failure to perform its obligations hereunder. Contractor's
rights under this section are conditioned on Contractor: (i)
delivering detailed written notice to Owner within five (5) days
after Owner's acts or omissions describing the consequences of
the Owner Caused Delay on the Guaranteed Completion Date (or any
other project schedule obligations) and (ii) providing all
assistance reasonably necessary to Owner for the elimination or
mitigation of the Owner Caused Delay.
ARTICLE VIII
TERMINATION OF AGREEMENT
8.01 Termination for Owner's Convenience
Owner may terminate this Agreement at any time for its
convenience. This Agreement may be terminated under this Section
8.01 by giving Contractor written notice of termination. Upon
receiving any such notice of termination, Contractor shall stop
performing the Work and shall cancel as quickly as possible all
orders placed by it with subcontractors and suppliers and shall
use all reasonable efforts to minimize cancellation charges.
8.02 Termination for a Party's Default
(a) If either party commits a material breach of
its obligations under this Agreement (other than a failure by
Owner to make a Milestone Payment when it becomes due (which
failure is exclusively governed by Section 8.04), 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 it. If the Defaulting Party does not cure the default
within fifteen (15) days after its receipt of such notice or, if
the default is such that it cannot be cured within such period of
time, does not promptly commence action designed to cure such
default within a reasonable period of time and thereafter
diligently pursues such cure to completion (not to exceed 180
days), the Non-Defaulting Party shall have the right to terminate
this Agreement by written notice to the Defaulting Party, without
prejudice to any other remedies which are available to the Non-
Defaulting Party by reason of the Defaulting Party's default.
Except as provided in paragraph (b) of this Section 8.02, Owner
may not terminate this Agreement for a default by Contractor in
meeting the Guaranteed Completion Date so long as both (i)
Contractor diligently pursues actions which are reasonably
calculated to achieve Commercial Operation within such 180 days
and (ii) Contractor pays and continues to pay Owner up to the
limitation set forth in Section 5.02(c) the Contract Price
Discount set forth in Section 5.02 for the failure to meet such
Guaranteed Completion Date.
(b) Notwithstanding Contractor's efforts to cure
a default pursuant to paragraph (a) of this Section, Owner shall
have the right to terminate this Agreement upon ten (10) days'
prior written notice to Contractor if (i) Contractor fails to
meet any critical milestone listed in Exhibit N, Contractor
Critical Date Schedule. In addition, if, one hundred eighty
(180) days before June 1, 1997 (except to the extent that the
latest date for the "Actual Commercial Operation Date" under the
Power Contract is extended by PEPCO beyond June 1, 1997), Owner
should have good reason to believe that, because of a breach or
breaches of Contractor's obligations under this Agreement
(including but not limited to a failure by Contractor to
diligently carry out performance of the Work), Commercial
Operation of the Plant will not occur by June 1, 1997 (except to
the extent that the latest date for the "Actual Commercial
Operation Date" under the Power Contract is extended by PEPCO
beyond June 1, 1997) then in such event, Owner shall be entitled
by written demand to insist that Contractor furnish to Owner,
within thirty days from the date of such demand, a plan prepared
by Contractor showing the ability of Contractor to recover
schedule to the extent required to meet the then-required date
for achieving Commercial Operation (the "Plan"). For a period of
ten business days after Contractor's submittal of the Plan,
either party may demand and be entitled to meet with the other
for the purposes of discussing the merits of the Plan. At the
end of such ten (10) Business Day discussion period, if Owner
continues to have good reason to believe that, because of a
breach or breach of Contractor's obligations under this Agreement
that Commercial Operations will not occur by the then-required
date, Owner shall have the right to terminate this Agreement;
provided, however that if such termination is due to Force
Majeure, Contractor shall not be deemed to be in default of this
Agreement; and provided, further, that in such a case Owner shall
only have the right to terminate this Agreement and avail itself
of the rights and remedies of Sections 8.06(b) and (c) below as a
result of such termination.
(c) In the event of termination by the Owner
pursuant to paragraph (b) of this Section 8.02, Owner's rights
and Contractor's obligations resulting from such termination
shall be determined pursuant to Section 8.06.
(d) Contractor's rights in the event that Owner
does not make a Milestone Payment when it becomes due shall be
governed by Section 8.04.
8.03 Termination by Reason of Insolvency, etc.
Either party may terminate this Agreement by written
notice to the other party if the latter party (a) commences a
voluntary proceeding under any Federal or state bankruptcy,
insolvency or reorganization law, or (b) has such a proceeding
filed against it and fails to have such proceeding stayed or
vacated within forty-five (45) days, or (c) upon the end of any
such stay, fails to have such involuntary proceeding vacated
within thirty (30) days thereafter, or (d) admits the material
allegations of any petition in bankruptcy filed against it, or
(e) is adjudged bankrupt, or (f) makes a general assignment for
the benefit of its creditors, or if a receiver is appointed for
all or a substantial portion of such party's assets and is not
discharged within sixty (60) days after his appointment. Any
termination of this Agreement pursuant to this Section 8.03 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.
8.04 Suspension of Work or Termination of Agreement by
Contractor
(a) In the event that Owner fails to make any
undisputed payment (in the reasonable opinion of Owner) to
Contractor by the date such payment becomes due, Contractor may
give written notice ("First Notice") pursuant to this Section
8.04. If the sum owed, plus interest thereon as provided in
Section 11.01 from the date payment was due to the date of
payment, is not made within fifteen (15) days after the date of
Owner's receipt of such First Notice ("First Cure Period"), then
Contractor shall have, at its option, the right to suspend its
performance of the Work.
(b) If the Contractor suspends performance
hereunder pursuant to paragraph (a), Contractor may give a second
written notice ("Second Notice") of its intent to terminate this
Agreement. If all amounts due, including interest, are not made
within ten (10) days after such Second Notice, Contractor shall
have the right to terminate this Agreement immediately.
8.05 [Deleted]
8.06 Effect of Termination; Post-Termination Obligations of Parties
(a) Upon Owner's termination of this Agreement
pursuant to Section 8.01 or Contractor's termination of this
Agreement due to a default by Owner pursuant to Sections 8.02(a),
8.03 or 8.04, Contractor shall be entitled to receive a
termination payment (the "Termination Payment") equal to the sum
of (i) that portion of the Contract Price that is applicable to
Work completed up to the date of termination that has not
previously been paid to Contractor, (ii) the costs reasonably
incurred by Contractor in withdrawing its equipment and personnel
from the Job Site and in otherwise demobilizing, and (iii) the
costs reasonably incurred by Contractor in terminating contracts
with subcontractors and suppliers pertaining to the Work.
Representatives of Owner and Contractor shall determine the
Contract Price amount referred to in clause (i) above in
accordance with the Milestone Payment Schedule in Exhibit D, and
Contractor shall document the costs claimed under clause (ii) and
(iii) above to Owner's satisfaction and shall supply Owner copies
of the subcontractor and supplier invoices covering amounts
claimed under clause (iii) above. Contractor shall submit an
invoice to Owner for the Termination Payment with the supporting
information and documents referred to above, and Owner shall pay
such invoice within thirty (30) days after its receipt of same
unless it disputes certain elements thereof, in which event only
the undisputed portion of the Termination Payment need be made
within such 30-day period and the dispute over the remainder of
the claimed Termination Payment may be submitted to arbitration
pursuant to Article X.
(b) If the Owner terminates this Agreement
pursuant to Sections 8.02 or 8.03, Contractor shall be liable to
Owner for all costs and expenses reasonably incurred by Owner in
completing the Plant or in correcting deficiencies in the Work to
the extent that the Contract Price payments made to Contractor
together with such costs and expenses exceed the Contract Price.
Contractor shall not be entitled to receive any Termination
Payment as a result of Owner's termination pursuant to Section
8.02 or 8.03.
(c) Upon a termination of this Agreement,
pursuant to this Article VIII, Contractor shall leave the Job
Site and Owner shall take possession of the Job Site and of the
equipment, materials, and supplies at the Job Site, in transit,
or otherwise (and the warranties associated therewith) to which
Owner has title pursuant to Section 3.07 subject to the
provisions of Section 8.01 (if they are applicable) Owner may
then finish the Work by whatever method it may deem expedient.
Upon written request by Owner, Contractor agrees, in connection
with any such termination, to promptly assign any contract rights
(including warranties, licenses and patents) that it may have to
other equipment, materials and supplies intended for delivery and
incorporation in the Plant. Contractor shall also, in connection
with a termination under this Article VIII furnish Owner with
copies of all specifications, final detailed operational
drawings, manuals and other records described in Section 1 of the
Special Conditions for the equipment and materials paid for
improvements to realty made prior to the date of termination to
the extent that such Specifications, etc. have not previously
been delivered to Owner.
8.07 Consequences of Suspension of Work by Owner
In the event Owner suspends the Work without
terminating this Agreement such suspension shall be treated as an
Owner Caused Delay (subject to the requirements of Section 7.02)
for all purposes hereunder and Contractor shall have the option
to terminate this Agreement if the duration of such delays and
suspensions (occurring after Project Funding) exceed, in the
aggregate, 180 days. In the event of such Contractor
termination, Contractor shall have the same remedies and
obligations as if Owner had terminated this Agreement for
convenience pursuant to Section 8.01 hereof.
ARTICLE IX
INDEMNIFICATION; LIABILITY LIMITATION
9.01 Indemnification of the Parties
(a) To the extent and in proportion to their
respective shares of negligence, each party shall defend and
indemnify the other party (and in the case of Contractor's
indemnification obligations, PEPCO and Construction Lender) its
directors, officers and employees (collectively "Indemnitees")
against, and hold them harmless from, any and all losses, claims,
suits, liabilities and legal expenses, directly or indirectly,
arising out of, resulting from or related to third party claims
associated with this Agreement or the Work, including any damage
to or destruction of property of third parties, or death of or
bodily injury to persons (whether they are employees of the
Indemnitees or any Subcontractor or are persons unaffiliated with
the Plant or the Work); provided, however, that the party against
whom indemnification is sought shall be promptly notified in
writing of any such claim or suit brought against any such
Indemnitee (within ten (10) days in the case of a suit).
(b) Contractor shall also defend and indemnify
Indemnitees against, and hold them harmless from that portion of
any and all losses, claims, suits, liabilities, damages, of
whatever kind or nature, legal and other expenses, (including
without limitation, cleanup costs, study and investigative costs
and attorneys' and experts' fees and disbursements) incurred by
or asserted against Indemnitees arising directly or indirectly
from the exacerbation of any Pre-Existing Hazardous Material
known to Contractor, or in cases when Contractor has acted
wilfully and such conduct has materially exacerbated the
condition from that originally discovered by Contractor; from
disposal of any Hazardous Material generated or brought on the
Job Site by Contractor, its Subcontractors, and vendors; or from
Contractor's breach of any obligations set forth in Section
2.17(a), (c), (d) and (e). Contractor shall be responsible for
that portion of costs for the removal and remediation of any
contamination covered by this indemnification at no additional
cost to Owner.
9.02 Owner's Environmental Indemnification
Owner shall defend and indemnify Contractor against,
and hold them harmless from and against, any and all losses,
claims, suits, liabilities, damages, of whatever kind or nature,
and legal and other expenses (including without limitation,
cleanup costs, study and investigative costs and attorneys' and
experts' fees and disbursements) incurred by or asserted against
Contractor arising directly or indirectly from Pre-Existing
Hazardous Material on the Site, except to the extent that
Contractor's act or omissions have been negligent or willful and
thereby caused a release of Pre-Existing Hazardous Material or
rendered removal or remediation of Pre-Existing Hazardous
Material more costly.
9.03 Limitation of Remedies
(a) Except as specifically provided by this
Agreement Contractor shall not be liable to Owner under any
theory for incidental or consequential damages, including but not
limited to loss of revenues or profit, by reason of anything done
or omitted to be done by it under or in connection with this
Agreement.
(b) Except as otherwise provided below, anything
herein to the contrary notwithstanding, Contractor's aggregate
and cumulative liability to Owner, whether such liability arises
in contract, tort (including negligence) strict liability or
otherwise, shall in no event exceed 30% (excluding claims for
indemnification arising under Section 9.01 above where a limit of
liability of 40% of the Contract Price shall exist separately
from other limits imposed hereby, e.g. Contractor could be liable
for indemnification claims up to 40% of the Contract Price plus
other claims up to 30% of the Contract Price hereunder) of the
Contract Price. In the event that Contractor fails to achieve
mechanical completion of the Plant or in the event that Owner
finishes the Plant and attains mechanical completion after
termination of this Agreement due to a default by Contractor
hereunder, Contractor's aggregate and cumulative liability to
Owner hereunder shall be increased to 50% of the Contract Price
from 30% of the Contract Price.
(c) The remedies provided for herein are
expressly agreed between the parties to be exclusive with respect
to claims arising under contract (including breach of contract),
tort (including negligence), strict liability or otherwise, and
are in lieu of all other remedies that may be available to the
parties at law or in equity; and in particular Contract Price
Discounts shall be the exclusive remedy of Owner against
Contractor for Contractor's failure to meet Guaranteed Completion
Date or to achieve the Performance Guarantees, as respectively
appropriate.
(d) Releases from, indemnities against and
limitations on, liability and remedies, expressed in this
Agreement are intended to and shall apply even in the event of
fault, negligence, or strict liability of the party released,
indemnified, or whose liability or remedies are limited.
ARTICLE X
DISPUTES
10.01 Arbitration of Disputes
Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, now or in the future,
which cannot be resolved amicably by the parties shall be settled
by arbitration in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association,
provided, however, that such rules will be subordinate to the
specific provisions of this Article.
10.02 Selection of Arbitrators
Any party electing to arbitrate a dispute shall furnish
a written notice thereof, containing its nomination for
arbitrator, to the other party, whereupon the receiving party
shall, within ten working days thereafter, by return written
notice, designate its nomination for arbitrator. The Arbitrators
shall be three in number, with each party selecting one
arbitrator and the two selected arbitrators choosing a third.
Should either party refuse or neglect to join in the appointment
of the arbitrations, the arbitrator selected by the other party
shall be the sole arbitrator of the dispute.
10.03 Place, Time and Procedure
The place of arbitration shall be Dallas, Texas unless
in any particular case the parties agree upon a different venue.
Within ten days after the parties agree on the third arbitrator,
the three arbitrators shall convene by teleconference and
establish the time and procedure for arbitration; provided,
however, the arbitrators must use their best efforts to establish
the arbitration as soon as practicable, but no later than twenty
one (21) days from such teleconference.
10.04 Winner Take All
In order to avoid situations where disputes are
resolved by compromise rather than on the merits, the arbitration
panel shall, on or before the date of the hearing of the matter,
be instructed in a writing executed by both parties to rule
entirely in favor of the party more nearly correct, on an issue
by issue basis, it being the intent hereof that each party face
an "all or nothing" outcome. The losing party shall bear all of
the winning party's costs and expenses, including attorneys'
fees, as well as the related costs and expenses of the
arbitrators and the American Arbitration Association.
10.05 Binding Award
The award of the arbitrators shall be final and binding
upon the parties, a judgment of which may be entered in any court
having jurisdiction thereof.
10.06 Contractor To Continue Work
Except as provided in Section 8.04 for nonpayment of an
undisputed Milestone Payment, Contractor shall not suspend Work
as a result of any dispute submitted to arbitration, unless
otherwise agreed by Owner and Contractor in writing.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01 Interest on Overdue Payments
Any undisputed sum payable by either party (the
"Debtor") to the other party (the "Creditor") which remains
unpaid by the Debtor more than fifteen (15) days after the Debtor
has requested payment of such sum, shall accrue interest at the
Stipulated Interest Rate from such due date until the date that
payment of such sum is made. If not paid earlier, any such
accrued interest shall be payable whenever any payment on account
of the overdue principal sum is made. The foregoing provision
for the payment of interest by the Debtor on any overdue sum owed
by it to the Creditor shall not be deemed to excuse late payment
of such sum by the Debtor, and the Creditor's entitlement to such
interest shall be in addition to any other remedies available to
it herein. A Milestone Payment Certificate shall be deemed a
request for payment on the date it is delivered, complete and
accurate, to Owner and Construction Lender.
11.02 Contractor's Records
Contractor shall maintain proper and complete records
substantiating all expenses and charges. Notwithstanding Section
3.11, upon reasonable advance notice from Owner that it wishes to
inspect them, Contractor shall make records pertaining to Work
performed on a Cost Plus Formula basis available, at the Job Site
or Contractor's office in the United States and during normal
business hours, for inspection and copying by representatives of
Owner until the end of two years after the Plant has been
accepted pursuant to Section 6.04. Should any such record
disclose that Owner has overpaid or underpaid Contractor,
Contractor shall, in the case of an overpayment, refund the
amount of the overpayment to Owner upon demand and, in the case
of an underpayment, to be entitled to receive the amount of the
underpayment from Owner upon demand. Interest shall be payable
on any such amount that is refundable to the Owner or to the
Contractor at the Stipulated Interest Rate from the date that
Contractor received such overpayment or underpayment,
respectively to the date of the refund.
11.03 Confidentiality of Information
Each party agrees to preserve the confidentiality of
and not make any unauthorized use of any information made
available to it by the other party that is confidential or
proprietary in nature, or is otherwise clearly identified as not
to be made public, and each party agrees to use all reasonable
efforts to preserve the confidentiality of any other information
made available to it by the other party that is of a confidential
or proprietary nature. For the purposes of this Section 11.03,
confidential or proprietary information includes but is not
limited to (a) the negotiations leading to and the terms of this
Agreement, (b) all documents, data, drawings, studies,
projections, plans and other information, whether written or
oral, which relate to economic benefits to either party pursuant
to this Agreement or costs of design, construction or operation
of the Plant, including, without limitation, the cost and
quantities of fuel, and (c) all plans, drawings, documents,
studies, and other information relating to design, construction,
and operation of the Plant. The foregoing notwithstanding,
neither party shall be required to keep confidential any
information that becomes public through no fault on its part, and
the obligations of each party under this Section 11.03 shall
expire five (5) years after the Plant has been accepted under
Section 6.04, or five (5) years after termination of this
Agreement if Final Acceptance is not achieved.
11.04 Status of Contractor
Contractor shall perform the Work as an independent
contractor and not as an agent of Owner.
11.05 Notices
Any notice by one party to the other required or
permitted by this Agreement shall be in writing and shall be
deemed to have been given when actually received at the address
of the parties set forth below or, in the case of Contractor, it
shall be deemed received when actually sent by Owner to the
Project Manager:
If to Owner: Panda-Brandywine, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention:
Chairman & General Counsel &
Brandywine Project Manager
Owner's site manager Panda-
Brandywine, L.P.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Site Manager
If to Contractor: Raytheon Engineers &
Constructors, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention:
V.P. & General Manager
Copy to: ▇.▇. ▇▇▇▇
Contract Manager
However, either party may at any time and from time to
time change the address for communications to it by delivering
written notice of the change of address to the other party. The
parties may develop other notice procedures, such procedures, and
the parties' agreement to follow the same, to be set forth in
writing.
11.06 Entire Agreement; Amendment of Agreement
This Agreement contains the entire agreement of Owner
and Contractor relating to the Turnkey Firm-Fixed Price
construction of the Plant and supersedes and replaces any prior
oral or written agreements or understandings between them
relating to the subject matter of this Agreement. No amendment
or modification of this Agreement shall be effective unless set
forth in a writing signed by both parties. Contractor agrees to
make such modifications of this Agreement as may be reasonably
requested of Owner by Construction Lender or PEPCO.
11.07 Waiver of Rights
No failure by either party 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
hereof, 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.
11.08 Severability of Provisions
In the event that any provision of this Agreement, or
the application thereof, is held by any court of competent
jurisdiction to be illegal or unenforceable, the parties shall
attempt in good faith to agree upon an equitable adjustment to
this Agreement in order to overcome to the extent possible the
effect of such illegality or unenforceability, and the validity
and enforceability of the remaining portions of this Agreement
shall not be affected.
11.09 Assignment; Effect of Agreement
(a) Neither party shall assign this Agreement
without first obtaining the prior written consent of the other
party, provided that without obtaining the consent of the other
party Owner may assign this Agreement to any wholly owned
Affiliates of Owner, parent or other entity whose voting
securities are at least fifty-one percent owned by Owner or the
Construction Lender or any other Lender holding a security
interest in the Plant.
(b) Subject to the provisions of paragraph (a)
above, this Agreement shall enure to the benefit of and be
binding upon Owner and Contractor and their respective successors
and assigns. Nothing in this Agreement shall be deemed to confer
any rights on any third party as a third party beneficiary of
this Agreement except to the extent specifically provided in
Article IX.
11.10 Governing Law; Interpretation
This Agreement shall be governed by and construed in
accordance with the law of the State of Maryland, excluding
choice of law rules which may call for the application of the law
of another jurisdiction. The Article headings in this Agreement
are intended for convenience in identifying subject matter only
and shall be disregarded in any interpretation of this Agreement.
11.11 Survival
All indemnities and guaranties given herein by the
parties and the other obligations of the parties contained in
Article X and the following Sections of this Agreement shall
survive Final Acceptance and the termination of this Agreement:
1.05(d), 2.03, 2.14, 3.04, 3.05, 3.09, 3.10, 4.07 to 4.13, 4.17,
5.01, 5.02, 5.03, 5.04, 5.05, 8.06, Articles IX, X, and XI.
IN WITNESS WHEREOF, each party has caused multiple
originals of this Agreement to be signed respectively by its name
and on its behalf by a general partner and an officer thereunto
duly authorized, as of the day and year first above mentioned.
PANDA-BRANDYWINE, L.P. RAYTHEON ENGINEERS &
by its General Partner, CONSTRUCTORS, INC.
Panda-Brandywine Corporation
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/
Title: Vice President Construction Title: Sr. Vice President