CONTRACT OF SALE
PC25TM MODEL C FUEL CELL POWER PLANTS
ONSI Corporation("SELLER") and Chugach Electric Association, Inc. ("BUYER")
agree as follows:
1. PRODUCTS AND SERVICES
SELLER shall manufacture and deliver to BUYER six (6) PC25 Fuel Cell
Power Plants as described in Attachment A ("Power Plants") and as set
forth below in Section 2.
SELLER will provide the service options as set forth in Section 2
below.
SELLER shall furnish installation and service manuals prior to or upon
delivery of the first Power Plant.
2. DELIVERIES
Power Plants
The Power Plants shall be delivered on or before the below listed
delivery dates:
Quantity Part Number Unit Price Total Delivery Date
6 TBD $627,500 $3,765,000 December 1998
(Power Plant with
Grid Independent
Parallel; High Grade
Heat)
Services Price
1. ONSI will provide the site installation design $0.00 based on
our standard installation drawings.
This effort will include the initial site visit (up to two
days) followed by one on-site design review.
3. PRICE AND PAYMENT
The total price of this Contract (subject to increase due to the
exercise of the option in Article 5) is $3,765,000. BUYER shall pay to
SELLER in installments within thirty (30) days of presentation of
SELLER's invoices in accordance with the following schedule:
Upon execution of this Contract. 20% of the unit price of
each Power Plant
Two months prior to delivery 50% of the unit price of
each Power Plant
Upon delivery or ten (10) days after 20% of the unit price of
notice from SELLER that the Power each Power Plant
Plant is ready for delivery, whichever
occurs first.
Upon initial operation or one hundred 10% of the unit price of
twenty (120) days after the earlier of each Power Plant
delivery or notice of readiness for
delivery, whichever occurs first.
All payments shall be made in U.S. dollar funds by wire transfer of the
required remittance without discount to a U.S. bank designated by
SELLER for credit to SELLER's account.
4. GENERAL PROVISIONS
This Contract is subject to and incorporates the terms of the following
Attachments:
A. Attachment A, PC25(TM) Fuel Cell Power Plant Description
B. Attachment B, ONSI Corporation General Contract Provisions
5. SPECIAL PROVISIONS
The following special provisions are applicable to this Contract:
A. BUYER grants SELLER an option to purchase up to four (4)
additional Power Plants at the price and delivery dates set
forth below subject to the terms of this Contract. This option
may be exercised by the BUYER providing SELLER written
notification no later than August 30, 1998.
Power Plants
Quantity Part Number Unit Price Total Delivery Date
Up to 4 FC13300-01 $600,000 $2,400,000 December 1999
B. i. BUYER acknowledges that the funding to provide the development
of the load share Site Management System may be provided by a
third party. In the event SELLER has not entered a legally
binding agreement for this development effort with a third party
by May 15, 1998, then SELLER and BUYER agree to seek a mutually
agreeable alternative approch, but if agreement is not reached,
then SELLER may terminate this Contract by providing BUYER
written notice of such termination no later than June 30, 1998.
ii. SELLER agrees that if notwithstanding BUYER's best efforts,
funding is not obtained in order to complete the purchase of the
Power Plants hereunder, then BUYER may cancel its order for such
Power Plants upon written notice to SELLER on or before June 30,
1998. BUYER shall forfeit a portion of payments made by BUYER in
respect of such Power Plants to the extent of the costs and
non-cancelable commitments not otherwise recoverable that are
incurred by SELLER to the date of cancellation, but in no event
more than $200,000. Such costs shall be substantiated by
suporting documentataon. Within thirty (30) days of SELLER's
receipt of BUYER's cancellation notice, Seller shall return the
payments made by Buyer less the amount forfeited under this
Section 5B(ii). If, Seller recovers all or a portion of the cost
and non-cancelable commitments incurred under this Contrat by
contating to sell at least four (4) Power Poants withthe grid
independent paralleling option by December 31, 1999, Seller will
return the amount forgeited hereunder by BUYER less SELLER's
unrecovered costs as porvicded above; and if six (6) or more
Power Plants with the grid independent paralleling option are
sold by December 31, 1999, the entire amount forfeited under this
Secion 5 B (ii) will be returned to Buyer up to a maximum amount
of $200,000.
6. NOTICES
Address all notices, which shall be made in writing in the English
language, by certified mail, return receipt requested, or by facsimile
to:
ONSI Corporation Chugach Electric Association, Inc.
P.O. Box 1148 P. O. Box 196300
195 Governor's Highway 5601 Minnesota Drive
South Windsor, CT 06074 U.S.A. Anchorage, AK 99519
Attn: Counsel Attn: Evan J. Griffith, Jr.
Facsimile: (860) 727-2319 Facsimile: 907-762-4514
This Contract has been executed on behalf of SELLER and BUYER by their duly
authorized representatives as set forth below:
ONSI CORPORATION CHUGACH ELECTRIC ASSOCIATION,
INC.
By /s/ R L Suttmeiller By /s/ Eugene N. Bjornstad
Name Robert L. Suttmeiller Name Eugene N. Bjornstad
Title President Title General Manager
Date May 4, 1998 Date April 24, 1998
ATTACHMENT A
PC25(TM) FUEL CELL POWER PLANT DESCRIPTION
(Standard Model C Configuration)
The PC25 is a packaged, self-contained fuel cell Power Plant which operates
unattended and automatically using pipeline natural gas fuel. The standard
configuration PC25 Model C can provide on-site electricity and heat in
connection with the utility grid. The Power Plant's capabilities can be extended
with optional configurations.
Rating
The maximum continuous net electrical power output capability is 200 kW/235 kVA.
The Power Plant will operate continuously at temperatures from -20 to
110(degree)F at 500 feet above sea level.
The maximum heat available from the Power Plant is 750,000 Btu/hr at an ambient
temperature of 60(degree)F.
Fuel
The PC25 operates on pipeline natural gas delivered at pressures between 4 and
14 inches water column with gas composition limits in accordance with Table 1.
Table 1. Fuel Composition Limits - Pipeline Natural Gas
Maximum Allowable
Percent Volume
Methane 100
Ethanes 10
Propane 5
Butanes 1.25
Pentanes, Hexanes, C6+ 0.5
CO2 3
O2 0.2
N2 (continuous) 4
Total Sulfur 30 ppmv maximum (6 ppmv average)
Ammonia 1 ppmv
Chlorine 0.05 ppm (weight basis)
At rated power, the PC25 consumes less than 2000 standard cubic feet per hour of
natural gas with a higher heating value of 1000 Btu/ft3.
PC25 Standard Equipment
The PC25 equipment consists of two modules: a Power Module, designed for outdoor
or indoor operation, and a Cooling Module intended for outdoor operation.
Dimensions of these modules are indicated in Figure 1. These modules include all
equipment necessary to (1) convert natural gas to utility quality ac power, (2)
provide useful heat to the customer and (3) reject excess heat to air. All
controls and instrumentation required for starting and operating the PC25 are
included.
Figure 1. Approximate Module Sizes
[GRAPHIC OMITTED, DEPICTS APPROXIMATE MODULE SIZES]
PC25 Grid-Independent/Paralleling Power Plant Option
When multiple power plants are operated in the grid-independent mode and
connected in parallel to a load, an internal load sharing control is
incorporated into each of the power plants to enable all power plants to operate
in phase, at the same voltage, and share the current properly.
PC25 High-Grade Heat Recovery Option
The standard PC25 power plant provides heat in a single medium-grade stream.
However, the power plant can be configured to provide more than 300,000 Btu/hr
of heat at rated power to heat a customer's pressurized hot water system to
250(degree) F. The remaining 40,000
Btu/hr or more of heat is provided at 140(degree) F. The high grade heat
decreases to zero at approximately half rated power. Similar to the basic PC25
power plant, the estimated high-grade heat availability is dependent upon supply
and return water temperatures.
Customer Furnished Materials and Equipment
The customer must supply a foundation for the equipment, electrical connections
to the building and/or electrical power grid, gas supply plumbing, plumbing
connections to the building and electrical and plumbing connections between the
Cooling Module and Power Module.
In addition, for the Grid-Independent/Paralleling power plant option the
customer must incorporate a Site Management System into the site installation to
coordinate the operation of the multiple fuel cell power plants during
transitions between operating modes and provide the interface communication
capabilities for control of the multi-unit installation. This Site Management
System is site specific and is external to the power plant.
The power plant also requires up to 82 kW of electrical power during start.
The information contained in this document is intended to be representative of
the PC25 configuration. However, the materials and characteristics are subject
to change. All fuel cell power plants are subject to deterioration in
performance over time and with repeated thermal cycles associated with shutdowns
and startups. Deterioration can be minimized by maintaining continuous operation
to the fullest extent possible.
ATTACHMENT B
ONSI CORPORATION
GENERAL CONTRACT PROVISIONS
PROVISION 1 -- TAXES
BUYER shall pay SELLER, in addition to the Price, any and all taxes (not
including income taxes) which may be imposed by any taxing authority arising
from the sale, delivery, or subsequent use of the goods sold, and for which
SELLER may be held responsible for collection or payment, either on its own
behalf or that of BUYER, upon receipt by BUYER from SELLER of its bill therefor.
PROVISION 2 -- DELIVERY, TITLE, SHIPPING AND INSURANCE
Deliveries pursuant to this Contract are FOB SELLER's place of manufacture.
Title and risk of loss for each Power Plant shall pass to BUYER at SELLER's
place of manufacture upon delivery or ten (10) days after notice from SELLER
that the Power Plant is ready for delivery, whichever occurs first. BUYER shall
arrange transportation and insurance from the place of manufacture. SELLER shall
notify BUYER of the actual shipping date at least ten (10) days prior to the
actual shipping date.
PROVISION 3 -- WARRANTY
A. Warranty
1. Power Plant Warranty
SELLER warrants that, at the time of delivery, each Power
Plant furnished hereunder shall be free of defects in
materials and manufacturing workmanship.
SELLER's obligations under this warranty with respect to each
Power Plant shall expire twelve (12) months after initial
operation or use, but in no event later than eighteen (18)
months after the date of its delivery or, if BUYER shall
refuse to accept delivery of the Power Plant when it is
offered for delivery on or after the scheduled delivery date,
the date of such offer for delivery.
SELLER warrants that at the time of initial operation, and for
a period of twelve (12) months thereafter, but in no event
later than eighteen (18) months after the date of its
delivery, each Power Plant furnished under this Contract shall
be capable of functioning as described in Attachment A,
providing BUYER has installed, operated, and maintained each
Power Plant and the Site Managmenetn System according to the
SELLER's specifications and recommendations.
2. Warranty of Services
SELLER warrants to BUYER that all services provided under
the Contract will be
performed in a diligent manner in accordance with the usual
industrial standards. SELLER's liability and BUYER's remedy
under this warranty are limited to SELLER's correction of such
services as are shown to SELLER reasonable satisfaction to
have been defective, provided that written notice of such
defective services shall have been given by BUYER to SELLER
within ninety (90) days after the performance of such services
by SELLER.
B. Remedy and Conditions of Power Plant Warranty
1. SELLER's liability and BUYER's remedy under the
foregoing warranty are limited to the repair or
replacement, at SELLER's option, of defective equipment
or materials or parts thereof, which BUYER will afford
SELLER a reasonable opportunity to inspect, provided
that written notice of the defect shall have been given
by BUYER to SELLER within a reasonable time after
discovery of the claimed defect, but in no event later
than the expiration of the applicable warranty period.
SELLER shall not be responsible for remedying the
effects of ordinary wear and tear.
2. In the event it is necessary to remove any equipment or
materials, or parts thereof, from the Power Plant in
order for BUYER or SELLER to repair or replace the
same, BUYER, at SELLER's election, shall provide the
personnel and equipment necessary for such removal and
reinstallation at SELLER's expense, however, BUYER
shall provide SELLER with its cost estimate of the
removal and reinstallation for any unscheduled work
exceeding one (1) man-day of effort and shall not
proceed with the effort until SELLER's written approval
is received.
3. Any cost of shipment of repaired or replacement
equipment or materials, or parts thereof, to or from
SELLER's plant or any other off-site facility shall be
borne by SELLER, and SELLER shall bear the risk of loss
of such equipment or materials or parts thereof while
they are located away from the location of the Power
Plant.
4. In the event any equipment or materials, or parts
thereof, originally furnished by SELLER are replaced,
SELLER, at its option, shall be entitled to possession
of and title to all of the equipment so replaced. In
the event SELLER, or BUYER acting at SELLER's request,
removes any replaced equipment from the Power Plant
location, title to and risk of loss of such replaced
equipment or materials or parts thereof shall pass to
SELLER at the time it is removed from the Power Plant
location.
5. Where repaired or replacement equipment or materials,
or parts thereof, are furnished pursuant to this
Provision 3, they will be subject to the same
warranties, the same conditions and the same remedies
provided for the original equipment and materials, or
parts thereof, provided that the warranty period for
repaired or replacement equipment and materials or
parts thereof shall be the balance of the applicable
warranty period under Provision 3-A above or the
waranty period porvided by the suppl9ier of hte
reapired or replaced equipment o rmatereials or parts.
In the eveent it is necessary to remove any repoaried
or replaced equipment or materials, or perts thereof,
from thePower Polant inorder for BUYER or SELLER to
reair or replace the same, after the original waranty
period of the
PowerPlant has expired, BUYER shall provide the
personnel and equipment necessary for such removal and
reinstallation at BUYER's expense.
6. BUYER agrees to provide and maintain telephone service
at its own expense so that SELLER can monitor the Power
Plant and its operation remotely throughout the
applicable warranty period under Provision 3-A above.
7. SELLER shall have no obligation to provide the remedy
specified in this Provision 3 for equipment or
materials which have been subjected to accident,
alteration, abuse or misuse or have not been maintained
and operated in accordance with the procedures
prescribed by SELLER, including the providing of
natural gas at the site in accordance with SELLER's gas
specification set forth in Attachment A, and otherwise
in accordance with reasonable and prudent maintenance
and operational standards.
C. Limitation of Warranty and Remedies
THE WARRANTIES AND REMEDIES STATED IN THIS PROVISION 3 ARE EXCLUSIVE
AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED (INCLUDING
WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A
PARTICULAR PURPOSE). IN NO EVENT SHALL SELLER BE LIABLE FOR SPECIAL,
INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY NATURE.
PROVISION 4 - LICENSES AND PERMITS
In order to accomplish the objectives set forth in this Contract, certain
permits, approvals, licenses and/or other authorizations (collectively called
"authorizations") may have to be obtained from governmental authorities. BUYER
shall be responsible for obtaining any authorizations that are necessary for its
acquisition, financing, ownership, shipping, export, installation, operation and
maintenance of the Power Plant. SELLER shall be responsible for obtaining any
authorizations required for performance of its obligations under this Contract.
The parties agree to cooperate and provide support to each other in obtaining
the authorizations required hereunder. All such authorizations shall be obtained
in a timely manner.
SELLER shall be notified of and afforded an opportunity to attend at its expense
all presentations to governmental authorities and insurers relating to or
otherwise affecting the safety or other aspects of the equipment or related
services furnished by SELLER. All materials to be presented to any governmental
authority or to any insurer describing SELLER or the safety or other aspects of
the equipment or related services furnished by SELLER shall be subject to the
approval of SELLER, which approval shall not be unreasonably withheld.
SELLER shall not be obligated to disclose to BUYER information which SELLER
considers confidential or proprietary (hereinafter collectively called
"Proprietary Information"). However, SELLER may, at its discretion, provide
Proprietary Information which is necessary in connection with licensing of the
Power Plant, or in connection with other regulatory matters, or where it is
necessary to repair, operate or maintain the Power Plants. If SELLER furnishes
any Proprietary Information to BUYER, it shall be designated as such. BUYER
shall receive and hold such Proprietary Information in confidence, shall use it
exclusively in connection with the Power Plant
for the purposes specified above (including necessary disclosures on a
proprietary basis to others in that connection, but in any event excluding
disclosures to other suppliers of electric generating equipment) and shall not
publish or otherwise disclose it to others. This obligation of BUYER shall not
apply to information which is in or hereafter comes into the public domain
through no breach of this Contract, which BUYER can show to have been in its
possession before any disclosure hereunder or which BUYER receives from a third
party having a right to make such a disclosure. All Proprietary Information of
SELLER furnished to BUYER shall remain the property of SELLER.
PROVISION 5 - DELAYS
SELLER shall not be liable for delays, interruptions or failures in performing
its obligations arising from any act, delay or failure to act on the part of any
governmental authority, including delay or failure to act in the issuance of
permits, approvals or licenses; acts of God; accidents or disruptions such as
fire, explosion, or major equipment breakdown; failure or delay in securing
necessary materials, equipment, services or facilities; labor difficulties such
as strikes, slowdowns or shortages; delays in transportation; or any cause of a
similar or dissimilar nature beyond SELLER's reasonable control. The time for
performance of this Contract shall be extended for a period equal to any time
lost by reason of the delay. SELLER shall not be obligated to incur any
additional expenses in connection with such a delay unless so directed by BUYER,
in which event the cost of any measures taken to recover any lost time shall be
for BUYER's account.
PROVISION 6 - ASSIGNMENT
Until the payment obligations set forth in Provision 3 of the Contract of Sale
(and any increases due to the exercise of the option in Provision 5 of the
Contract of Sale) are satisfied, neither BUYER nor SELLER may assign any of its
rights or obligations under this Contract, except with the written consent of
the other, and any assignment made without such consent shall be null and void;
provided, however, that SELLER may, upon written notice to BUYER, assign its
rights and obligations without such consent, to an entity which acquires all or
substantially all of SELLER's assets or which controls, is controlled by or is
under common control with SELLER. Such written consent shall not be unreasonably
withheld.
PROVISION 7 - PATENTS
A. SELLER shall conduct, at its own expense, the entire defense of any claim,
suit or action alleging that, without further combination which is the
basis therefor, the use or resale by BUYER of the goods delivered
hereunder, directly infringes any patent of the United States but only on
the condition that (a) SELLER receives prompt (sufficient so as not to
prejudice any of SELLER's interests) written notice of such claim, suit or
action and full opportunity and authority to assume the sole defense
thereof, including settlement and appeals, and all information available to
BUYER for such defense; (b) such claim, suit or action is not based on the
use of the goods in a manner not reasonably contemplated by SELLER and
BUYER; (c) the claim, suit or action is brought against BUYER or one to
whom BUYER is or may become legally obligated for the infringement; and (d)
BUYER has paid all amounts then due and payable hereunder. Provided all of
the foregoing conditions have been met, SELLER shall, at its own expense,
subject to Provision 8 entitled "Liability Limitation", either settle said
infringement claim, suit, or action or pay all
damages and costs awarded by the court therein and, if the use or resale of
such goods is finally enjoined,SELLER shall,at SELLER's option and expense,
(i) procure for BUYER the right to use or resell the goods, (ii) replace
them with equivalent noninfringing goods, (iii) modify them so they become
noninfringing but substantially equivalent, or (iv) remove them and refund
the purchase price (less a reasonable allowance for use, damage and
obsolescence).
B. If a claim, suit or action is based on the use by BUYER of such goods in a
manner not reasonably contemplated by BUYER and SELLER, or on the use or
sale by BUYER of such goods in combination with other goods not delivered
to BUYER hereunder by SELLER, or on the manufacture of such goods to a
design specified by BUYER, then BUYER shall indemnify and hold SELLER
harmless against all liability, costs, expenses and damages arising out of
such claim, suit or action.
PROVISION 8 - LIABILITY LIMITATION
The Price allocable in this Contract to any Power Plant (including all options)
and/or services alleged to be the cause of any loss or damage to BUYER shall be
the ceiling limit on SELLER's liability, whether founded in contract or tort
(including negligence), arising out of, or resulting from, (i) this Contract or
the performance or breach thereof, (ii) the design, manufacture, delivery, sale,
repair, replacement, or (iii) the use of any such Power Plant. Under no
circumstances shall SELLER be liable for any special, incidental, indirect or
consequential damages of any nature whatsoever, including without limitation,
lost profits, revenues or sales, or increased costs of production, whether such
claims are based in contract or tort including negligence, or any other legal
theory or principle.
PROVISION 9 - TERRITORIES
BUYER shall not install or operate a Power Plant delivered hereunder in any
territory in the United States in which (a) SELLER has provided another person
with an exclusive license to install and operate Power Plants and (b) SELLER has
notified BUYER of such territory, unless BUYER shall have received the prior
permission of the person having an exclusive license for such territory. SELLER
hereby notifies BUYER that it has provided other persons with an exclusive
license to install and operate Power Plants in the exclusive natural gas service
or franchise area of Pacific Gas and Electric and Southern California Gas
Company. BUYER shall include this clause with SELLER identified as ONSI
Corporation in any contract under which a Power Plant is resold or that provides
another person with the right to install and operate a Power Plant and shall
notify the Purchaser under any such contract of such territories on behalf of
SELLER. Notwithstanding any other provisions of this Contract to the contrary,
BUYER agrees that the person holding the exclusive license in a territory is a
third party beneficiary of this provision and such person may enforce this
provision.
PROVISION 10 - MISCELLANEOUS
A. Third Party Beneficiaries
The provisions of this Contract are solely for the benefit of the
parties hereto and not for any other person, except as specifically
provided herein.
B. Waivers
Waiver by any party of any default by the other shall not be deemed a
waiver by such party of any other default. No waiver shall be binding
unless in writing and signed by a duly authorized representative of the
party granting the waiver. No alteration or modification of any of the
provisions hereof shall be binding unless in writing and signed by a
duly authorized representative of the party to be bound thereby.
C. Notices
Notices and other communications between the parties shall be addressed
as specified on the signature page of this Contract, provided that
either party may change its respective address by notice to the other.
All notices and communications shall be given in writing, in the
English language, by certified mail, return receipt requested, or
facsimile.
D. Section Headings
The section headings used in this Contract are merely for the
convenience of the parties and do not have substantive meaning. It is
not intended that said headings will be considered in the construction
of this Contract.
E. Compliance with Laws
SELLER and BUYER will each comply with all federal, state and local
laws applicable to the performance of their respective obligations
hereunder.
F. Law Controlling
The rights of all parties under this Contract and the construction and
effect of every provision hereof shall be subject to and construed
according to the laws of the State of Alaska, including the Uniform
Commercial Code, and of the United States of America, excluding the
United Nations Convention on the International Sale of Goods.
G. Entire Agreement
This Contract contains the entire agreement between the parties
regarding the Power Plant(s) and any equipment, materials, services and
information provided in connection therewith. Any previous and
collateral agreements, representations, warranties, promises and
conditions relating to the subject matter of this Contract are
superseded by this Contract. Any representation, warranty, promise or
condition not incorporated in this Contract shall not be binding on
either party. No modification nor any claimed waiver of any of the
provisions hereof shall be binding unless in writing and signed by the
party against whom such modification or waiver is sought to be
enforced.