OPERATION & MAINTENANCE CONTRACT
by and among
O'BRIEN (PARLIN) COGENERATION, INC.
as OWNER,
and
STEWART & STEVENSON OPERATIONS, INC.
as OPERATOR
dated as of April 1, 1994
PARLIN PROJECT
TABLE OF CONTENTS
PAGE
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .
ARTICLE 2 SCOPE OF SERVICES TO BE PROVIDED BY OPERATOR . . . . .
ARTICLE 3 OWNER'S RESPONSIBILITIES . . . . . . . . . . . . . . .
ARTICLE 4 OPERATION OF THE PROJECT . . . . . . . . . . . . . . .
ARTICLE 5 TERM; TERMINATION AND DEFAULT. . . . . . . . . . . . .
ARTICLE 6 ANNUAL MANAGEMENT FEE; REIMBURSABLE COSTS. . . . . . .
ARTICLE 7 COVENANTS TO PERFORM . . . . . . . . . . . . . . . . .
ARTICLE 8 LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . .
ARTICLE 9 BILLING AND PAYMENTS . . . . . . . . . . . . . . . . .
ARTICLE 10 FORCE MAJEURE; STRIKES. . . . . . . . . . . . . .
ARTICLE 11 INSURANCE . . . . . . . . . . . . . . . . . . . .
ARTICLE 12 DISPUTE RESOLUTION. . . . . . . . . . . . . . . .
ARTICLE 13 INTENTIONALLY OMITTED . . . . . . . . . . . . . .
ARTICLE 14 PAYMENT OF FINES AND PENALTIES. . . . . . . . . .
ARTICLE 15 DEFECTIVE WORK. . . . . . . . . . . . . . . . . .
ARTICLE 16 OPERATOR'S REPRESENTATIONS. . . . . . . . . . . .
ARTICLE 17 OWNER'S REPRESENTATIONS . . . . . . . . . . . . .
ARTICLE 18 INTENTIONALLY OMITTED . . . . . . . . . . . . . .
ARTICLE 19 INDEMNIFICATION . . . . . . . . . . . . . . . . .
ARTICLE 20 INTENTIONALLY OMITTED . . . . . . . . . . . . . .
ARTICLE 21 MISCELLANEOUS PROVISIONS. . . . . . . . . . . . .
APPENDIX 1 OPERATIONS AND MAINTENANCE STAFF. . . . . . . . .
APPENDIX 2 PERFORMANCE . . . . . . . . . . . . . . . . . . .
APPENDIX 3 GAS TURBINE DEGRADATION,. . . . . . . . . . . . .
APPENDIX 4 SCOPE OF ARTICLE 6 PAYMENTS . . . . . . . . . . .
APPENDIX 5 LIQUIDATED DAMAGES AND BONUS . . . . . . . . . .
APPENDIX 6 OPERATING PERIOD INSURANCE. . . . . . . . . . . .
APPENDIX 7 GUARANTEE . . . . . . . . . . . . . . . . . . . .
APPENDIX 8 MOBILIZATION BUDGET . . . . . . . . . . . . . . .
<PAGE 1>
OPERATION AND MAINTENANCE CONTRACT dated as of April 1, 1994
by and among O'BRIEN (PARLIN) COGENERATION, INC., a Delaware
Corporation having its principal place of business at 225 South
Eighth Street, Philadelphia, Pennsylvania 19106, hereinafter called
"Owner," and STEWART & STEVENSON OPERATIONS, INC., a Delaware
corporation having its principal place of business at 16415
Jacintoport Blvd., Houston TX 77015, hereinafter called "Operator",
whose obligations hereunder shall be fully guaranteed by Stewart &
Stevenson Services, Inc. pursuant to the Guarantee in Appendix 7.
RECITALS
WHEREAS, Owner has constructed and desires to operate a gas
and #2 fuel oil fired 110 net megawatt cogeneration facility for
the production of electricity and steam at property owned by E.l
Dupont De Nemours & Company (Inc.) in Sayerville, New Jersey (as
further described in Article 1 hereof, the "Project");
WHEREAS, Owner has selected Operator to operate and maintain
the Project;
WHEREAS, Operator is willing to operate and maintain the
Project in good working order in accordance with the terms of
this Agreement; and
WHEREAS, Operator is willing to covenant to operate and
maintain the Project to meet or exceed certain performance
standards, as provided in the Appendices to this Agreement;
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises and
agreements of the Parties herein expressed, and intending to be
legally bound, the Parties hereby agree as follows:
Article 1
DEFINITIONS
In construing this Agreement and the Appendices hereto, the
following terms shall have the meanings herein assigned to them:
Agreement shall mean this Operation and Maintenance
Agreement (including all Appendices hereto), as it may be
amended, restated or supplemented from time to time in accordance
herewith.
Agreement Date means the date that appears on the cover page
of this Agreement, which shall be the date that this Agreement is
executed by both Parties.
Agreement Month means each month within each Agreement Year,
commencing on the first day of the month next following the
Effective Date and on the first day of every month thereafter,
except that the first Agreement Month shall commence on the
Effective Date.
Agreement Year means (i) in the case of the first Agreement
Year, the period commencing on the Effective Date and ending on
the next June 30, and (ii) in the case of each succeeding
<PAGE 2>
Agreement Year, the twelve-month period ending on each June 30
thereafter, provided the ceiling amounts applicable to the Annual
Management Fee and Liquidated Damages, and all other amounts
payable with respect to, and calculations (such as Availability)
based upon, an Agreement Year shall be adjusted rata for the
first Agreement Year to the extent that the first Agreement Year
consists of less than 12 calendar months.
Annual Management Fee means the annual fee to be paid by
Owner to Operator, as described in Section 6.1 hereof.
Annual Operating Plan means the annual plan for the
operation and maintenance of the Project as described in Section
4.3 hereof.
Approvals and Permits means all approvals, permits,
licenses, certificates, inspections and authorizations required
by any Governmental Authority arising out of, incident to or
related to the operation and maintenance of the Project.
Average Calculated Heat Rate shall have the meaning
described in Appendix 2.
Average Expected Heat Rate shall have the meaning described
in Appendix 2.
Availability means the percentage of time the Project is
made available to operate as determined in accordance with the
formula set forth in Appendix 2.
Bonus shall have the meaning described in Appendix 5 herein.
Business Day means any day other than a Saturday, Sunday, or
legal holiday in the State of New Jersey.
Change in Law means (a) the adoption, promulgation or
modification after the Effective Date of (i) any federal statute,
regulation, ruling or executive order not adopted, promulgated or
modified or officially published in The Congressional Record or
The Federal Register on or before the Effective Date or (ii) any
State, local or administrative statute, ordinance, regulation or
executive order that was not so adopted, promulgated or modified
on or before the Effective Date, or (b) the imposition by a
Governmental authority of any material conditions in connection
with the issuance, renewal or modification of any official
permit, license or approval after the Effective Date, which in
the case of either (a) or (b) established requirements affecting
the operation or maintenance of the Project materially more
burdensome than the most stringent requirements (x) in effect as
of the Effective Date, (y) agreed to in any applications of Owner
for official permits, licenses or approvals pending as of the
Effective Date or (z) contained in any official permits,
licenses, or approvals with respect to the Project obtained as of
the Effective Date; provided, however, that a change in any
income tax law shall not constitute a Change in Law hereunder.
Change in Project Agreements means any amendment after the
Effective Date to the Project Agreements, or any one of them, or
the Site Lease which established requirements affecting the
operation or maintenance of the Project materially more
burdensome than the requirements contained in either of the
Project Agreements or the Site Lease as of the Effective Date.
<PAGE 3>
Claims has the meaning set forth in Section 21.22 (c)
hereof.
Contract Capacity shall have the meaning set forth in the
Electricity Purchase Agreement.
Credit Agreement means the Construction and Term Credit
Agreement entered into between Owner and Lender as of December 1,
1988 as amended and as it may be amended further and supplemented
from time to time.
Default has the meaning set forth in Sections 5.3 and 5.4
hereof.
Dispute means any claim, dispute, disagreement or other
matter in question between Operator and Owner that arises with
respect to the terms and conditions of this Agreement or with
respect to the performance, nonperformance or breach by Operator
or Owner of their respective obligations under this Agreement.
Effective Date shall mean the date the Operator accepts
care, custody, and control of the Project and commences the
services described in Article 2 hereof, such date being no later
than 15 April 1994.
Electricity Purchase Agreement means the agreement dated
October 28, 1986, as amended between the Electricity Purchaser
and O'Brien Energy Systems, Inc. for the sale of the electricity
output of the Project, as such agreement has been assigned to
Owner and as such agreement may be further amended, restated or
supplemented from time to time.
Electricity Purchaser means Jersey Central Power & Light
Company.
Energy Revenues means, for any Agreement Month, Agreement
Year or other referenced period, the sum of (a) gross revenues
received during such Agreement Month, Agreement Year or other
referenced period from all sales of electricity and steam
generated by the Project and (b) any amount paid as liquidated
damages by, or recovered pursuant to any judgment against, or
settlement with, the Electricity Purchaser or the Steam Purchaser
pursuant to the Electricity Purchase Agreement or the Steam
Purchase Agreement in such Agreement Month, Agreement Year or
other referenced period in respect of any Dispute regarding the
amounts due to Owner pursuant to the Electricity Purchase
Agreement or the Steam Purchase Agreement, net of all reasonable
costs of collecting such amounts.
Force Majeure shall mean the following acts, events or
occurrences to the extent such acts, events or occurrences
prevent the operation or maintenance of the Project: act of God,
war, declared or undeclared, reasonably unforeseeable Change in
Law, a Change in Project Agreements, riot, revolution, freight
embargoes, fires, labor strike, walkout or similar labor Dispute
(official or unofficial) (but excluding a strike by the employees
of Operator, the employees of Operator's subcontractor(s) or a
Dispute limited to the Site), sabotage, the act of, or failure to
act in accordance with the terms hereof by the other Party to
this Agreement, breaking of or accidents to machinery or
equipment caused directly by an act of God or by the act or
omission of a third party (other than Operator's
subcontractor(s)) over whom the affected Party has no control, or
any other cause reasonably unforeseeable and beyond the
reasonable control of the affected Party arising after the
Effective Date: provided that (i) any such act, event or
occurrence resulting from the negligence (by commission or
<PAGE 4>
omission) of the affected Party or any of its subcontractors
shall not constitute Force Majeure, (ii) unexplained breakdowns
and unexplained accidents to machinery or equipment shall not
constitute Force Majeure.
Fuel means the natural gas and/or alternate fuel necessary
for the normal operation and maintenance of the Project.
Governmental Authority means any Federal, state, local,
administrative or other governmental authority having
jurisdiction over the project, including any department,
subdivision, commission, board, bureau, agency or instrumentality
thereof.
Guarantee means the guarantee set out in Appendix 7.
Guarantee Points means the guarantees set forth by the
Operator for Availability and Heat Rate as shown in Appendix 2
and Appendix 5.
Guarantor means Stewart & Stevenson Services, Inc.
Heat Rate shall have the meaning described further in
Appendix 2.
Interconnection Facilities means the interconnection
equipment and other facilities to be maintained by the
Electricity Purchaser as set forth in the Electricity Purchase
Agreement which are required to connect the Project to the
electrical supply system operated by the Electricity Purchaser.
ISO shall mean the base condition of the Project or a
component of the Project to be used for comparison in determining
the Heat Rate or Availability. The reference conditions stated as
follows shall apply: fifteen (15) degrees Celsius ("C"), sixty
percent (60%) relative humidity, the altitude of the Project, no
inlet or exhaust losses, and a steam delivery rate of [42,000
Ibm/hr at 155 psig and 365"F.]
Lender means the National Westminster Bank PLC.
Liquidated Damages means the payments described in Section
8.1 and Appendix 5 hereof.
Major Breakdown means sudden breakdowns not attributable to
Operator negligence to the gas turbine rotors and casings, the
gas turbine generator rotors and stators, the steam turbine
rotors and casings, the steam turbine generator rotors and
stators and the waste heat recovery boilers.
Major Repairs shall mean overhauls of the gas turbine, the
steam turbine, and the gas turbine and steam turbine generators,
hot gas path inspections of the gas turbine, combustion
inspections of the gas turbine.
Manuals means the manuals to be provided by Owner, as the
same may be updated from time to time by Operator pursuant to
Section 2.11 hereof, and such other manuals and similar materials
as may be required to be prepared and maintained by Operator with
respect to the Project in order to comply with Requirements of
Law.
<PAGE 5>
Meter Error shall have the meaning described in Appendix 2.
Mobilization and Program Implementation Period means the
period commencing on the Effective Date and ending on June 30,
1994 as further described in Section 2.1.
Operating Margin shall mean the amount calculated as per
Section 5.4 in Appendix 5.
Operator means Stewart & Stevenson Operations, Inc.
Output means the electrical energy produced by the Project
(after subtracting parasitic load and electrical energy supplied
to the Steam Purchaser) at the Point of Delivery (as defined in
the Electricity Purchase Agreement).
Owner means O'Brien (Parlin) Cogeneration, Inc.
Party or "Parties" means Owner and/or Operator.
Performance means the combination of Availability and Heat
Rate as further described and determined in Appendix 2 herein.
Person means an individual, corporation, partnership,
business trust, joint venture, company, firm, Unincorporated
association, governmental body or any other entity.
PPI shall mean the Producer Price Index for Finished Goods
as published annually by the Bureau of Labor Statistics. The base
month for this index shall be January 1994. The Parties
acknowledge that if this index can be specified for the region of
the United States where the Project is located, then the
regionalized index shall be used.
Prime Rate has the meaning given it in the Credit Agreement.
Project has the meaning given it in the Recitals and
includes the buildings and other structures, fixtures, machinery,
equipment, materials and things of all kinds used in connection
with the cogeneration facility at the Site, and all substitutes,
additions, replacements and modifications thereto.
Project Agreements means the Electricity Purchase Agreement
and the Steam Purchase Agreement and the Dupont Electricity
Purchase Agreement dated 18 Jan 1988.
Reimbursable Costs means the costs to be reimbursed by Owner
to Operator pursuant to Article 6 and as discussed further in
Article 2 and Appendix 4 herein.
Requirement of Law shall mean any statute, rule, regulation,
code, standard, ordinance or other law of any Governmental
Authority and any order, including an injunction, judgment, writ,
award, determination or decree of any arbitrator, court or other
Governmental Authority, in each as applicable to or binding upon
the Project (including the use, maintenance and operation thereof
or any Party or to which the Project (including the use,
maintenance and operation thereof or any Party is subject,
including those relating to building, environmental (including
<PAGE 6>
those relating to emissions, discharges, disposals, hazardous
wastes or materials), health and safety matters, the giving of
notices and access to the Project.
SCR System means the selective catalytic reduction system
constituting a component of the Project.
Site means the real property in Sayerville, New Jersey on
which the Project is constructed, operated and maintained, as
more fully described in the Steam Purchase Agreement.
Site Lease means the ground lease for the Site entered into
between Owner and Steam Purchaser on 02 January 1987, as such
lease may be amended, restated or supplemented from time to time.
Steam Purchase Agreement means the agreement dated December
8, 1986 as amended between the Steam Purchaser and Owner
(formerly O'Brien Cogeneration IV, Inc.) for the sale of the
steam output of the Project, and as such agreement may be further
amended, restated or supplemented from time to time.
Steam Purchaser means E.l DuPont De Nemours & Company
(Inc.).
Term means the term of this Agreement as provided in Section
5.1 hereof and any extensions or renewals thereof.
Time Period shall mean those parts of a day, week, or
calendar year defined below (subject to modification in
accordance with the Electricity Purchase Agreement), appropriate
to the context:
SEASON A SEASON B SEASON C
TIME PERIOD 01 December 01 June 01 March
to to to
28 or 29 February 30 September 31 May
and
01 October
to
30 November
8 a.m. to 8 p.m. On-Peak with On-Peak with On-Peak without
Monday through Friday Capacity Capacity Capacity
Natural Gas Natural Gas Natural Gas
and Oil
8 p.m. to 8 a.m plus Off-Peak Off-Peak Off-Peak
All day Saturday, Natural Gas Natural Gas Natural Gas
Sunday, and Holidays and Oil
Uncontrollable Circumstance shall have the meaning given to
such term in Section 5.6 hereof.
<PAGE 7>
ARTICLE 2
SCOPE OF SERVICES TO BE PROVIDED BY OPERATOR
2.1 Mobilization and Program Implementation Period.
Beginning on the Effective Date and in conjunction with its other
responsibilities under Article 2 herein, the Operator will
commence a Mobilization and Program Implementation Period During
this period, which shall continue until June 30, 1994, Operator
shall oversee the temporary personnel described in Appendix 8
herein in the initiation of (i) the Operator's programs relating
to safety, training, qualification, maintenance, inventory
control, accounting, and administration and (ii) an improvement
in the safety, cleanliness, and material conditions of the
Project. The Parties recognize that the purpose of this
mobilization is to allow the Operator to concentrate the efforts
of its permanent employees at the Project on qualification and
the safe, reliable generation of electricity and steam while at
the same time implementing the programs and conditions necessary
to fulfil its obligations under this Article 2 throughout the
Term of this Agreement.
2.2 Intentionally Omitted.
2.3 Continuous Operation. Beginning on the Effective Date
and throughout the Term of this Agreement, Operator shall operate
and maintain the Project, according to the terms of this
Agreement and each Annual Operating Plan, in such a manner as to
maximize operating hours and net Energy Revenues, giving due
consideration to (a) the Off-peak, on-peak, seasonal, capacity
structures and bonus price incentives in the Electricity Purchase
Agreement and the Steam Purchase Agreement, (b) avoiding
excessive Fuel consumption and other excessive variable costs of
electricity and steam production, (c) generally accepted and
sound engineering Practices, (d) the design parameters of the
Project and (e) the Manuals. Operator shall to the extent
practical and in accordance with (a) through (e) above, arrange
scheduled maintenance during such periods as will both minimize
the loss of Energy Revenues and comply with the requirements of
the Project Agreements.
2.4 Proper Maintenance. Operator shall maintain the entire
Project at all times properly and in a good, clean, orderly
condition, and shall perform or cause to be performed all
necessary maintenance and clean-up, implementation of necessary
repairs and replacements and the purchase and installation of
necessary replacement equipment or parts of the Project. Operator
shall maintain appropriate inventories of replacement equipment,
spare parts and consumables. Operator shall perform or cause to
be performed in accordance with manufacturer's recommendations
normal and customary overhauls of the Project equipment,
including the major overhauls anticipated at about 50,000 and
100,000 hours of gas turbine operation, or as otherwise may be
required. Operator shall not make any additions, alterations or
other changes to the Project which are not included in the
approved Annual Operating Plan without the written approval of
Owner. For expenditures made by Operator under Section 6.2.3
herein, Operator shall use contractors from a list which has been
approved by Owner. For major overhauls and other expenditures not
covered by the ceiling in Section 6.2.2, Owner shall have the
exclusive right to select the subcontractor utilized by Operator.
Operator will supervise the subcontracts for these repairs on the
Owner's behalf. Contractors on such list shall be mutually
acceptable to the Parties, and consent for an addition or
deletion of a contractor from such list shall not be unreasonably
withheld. Should Owner desire that Operator utilize a contractor
not on said list, Operator shall not have liability for defects
in the work or for reductions in Output directly caused by such work.
<PAGE 8>
2.5 Compliance. Operator shall operate and maintain the
Project in compliance with all applicable Requirements of Law and
all Approvals and Permits. Operator furthermore covenants to
perform its obligations in accordance with the Site Lease and the
Project Agreements, including, without limitation, obligations to
demonstrate "Contract Capacity" and perform such other tests as
are required under the Electricity Purchase Agreement and/or
Steam Purchase Agreement, such demonstrations and tests to be
undertaken and performed by Operator. If at any time Operator
discovers a defect in the Project that would prevent or inhibit
the Project from complying under this section it shall
immediately notify Owner of such defect.
2.6 Site Maintenance. Operator shall (i) maintain the Site
in a good, safe, clean, orderly, and well landscaped condition,
(ii) maintain the exterior of all structures on the Site
(excluding structural repairs thereto) in a safe, clean and
attractive condition, and (iii) not make any changes in the
landscaping of the Site or the exterior appearance of the Project
unless specifically approved in writing by Owner.
2.7 Maximum Efficiency. Consistent with the Manuals, sound
operating and engineering practice and Owner's objective of
maximizing the economic efficiency of Project operations,
Operator shall operate the Project so as to maximize the useful
life of the equipment and minimize downtime for repairs.
2.8 Safety Procedures. Operator shall comply with all
applicable safety procedures, whether contained in the Manuals,
required by insurance companies, or required by applicable
Requirements of Law or the terms of any Approvals and Permits,
necessary or appropriate to prevent accidents or injuries to
Persons or damage to property on or about the Site.
2.9 Intentionally Omitted.
2.10 Scope of Services. Operator shall provide, subject to
reimbursement pursuant to Section 6.2, full-time office services,
including bookkeeping and secretarial services, office equipment,
and supplies, as well as other services, according to the
requirements described in Appendix 4 hereto.
2.11 Revise Manuals. Operator shall, as often as necessary
but not less often than annually, review, revise and update the
Manuals that are kept by the Operator at the Site.
2.12 Provisions. In order to satisfy Operator's obligations.
Operator shall provide, or cause to be provided by
subcontractors:
2.12.1 All permanent staff, temporary staff and
specialists for the operation and maintenance of the Project
including the permanent staff described in Appendix 1. Operator
shall be solely responsible for the screening, hiring, assignment
and supervision of all such personnel.
2.12.2 All spare parts (other than spare parts supplied
by Owner under Section 3.2) required for the operation and
maintenance of the Project. Spare parts shall be held in
inventory for immediate replacement of parts required to maintain
the operation of the Project.
<PAGE 9>
2.12.3 All consumables (other than consumables supplied
by Owner under Section 3.4) required for the operation and
maintenance of the Project.
2.12.4 Policies of insurance in accordance with Article
11 and Appendix 6 hereof.
2.12.5 The repair and/or replacement of any broker or
damaged parts or components of the Project (including the
installation and replacement of spare parts and components for
the SCR System provided at Owner's cost pursuant to Section 3.6).
2.12.6 The preparation, generation, maintenance and
storage at the Site of all operating and maintenance logs,
performance data, records, cost data and scheduled reports on
behalf of Owner, such information to be prepared, generated and
maintained in accordance with the applicable requirements of the
Project Agreements.
2.13 Waste Disposal Operator shall handle and arrange for on
Owner's behalf the disposal of solid and liquid waste and
Hazardous Materials generated by the Project by licensed, insured
contractors in a safe manner and in accordance with all Approvals
and Permits and Requirements of Law.
ARTICLE 3
OWNER'S RESPONSIBILITIES
3.1 Acceptance of Project. The responsibility for the
continuous operation of the Project, as provided in Section 2.3,
shall be delivered to Operator, and Operator shall accept and
shall be deemed to have accepted such responsibility, on the
Effective Date.
3.2 Spare Parts Inventory. Owner will establish and provide
an initial inventory of spare parts reasonably acceptable to the
Parties which shall consider the recommendations of the equipment
vendors and the Project Availability requirements of Owner:
Operator shall, at the Owner's request, procure the inventory of
behalf of the Owner.
3.3 Provision of Project Facilities. Owner shall provide
Operator with a site office, workshop, messing and associated
facilities. The office and workshop shall be furnished and
equipped by Owner to recognized standards to enable Operator to
fulfill its obligations under this Agreement.
3.4 Site Services. Owner shall provide the following Site
services as necessary for the operation and maintenance of the
Project in accordance with Section 2.7, at no cost to Operator:
Ingress and egress to the Site including reasonable Site security
systems, fuel, water, ammonia, waste water disposal, standby
power, electricity and other Site services and materials of a
similar nature reasonably required for the operation and
maintenance of the Project and not required to be provided by
Operator under Article 2 hereof. No Party shall have any
liability to any other Party for any performance shortfall to the
extent such shortfall is caused by disruption of or interruption
to these services, unless caused by such Party's negligence.
<PAGE 10>
3.5 Approvals and Permits. Owner shall be responsible for
obtaining and maintaining all permits, authorizations,
franchises, licenses and other approvals necessary for the
Project to be legally authorized to operate, and shall provide
Operator with a copy of all Approvals and Permits. Operator shall
provide full and reasonable continuing cooperation in obtaining
and maintaining all such permits, authorizations, franchises,
licenses and other approvals necessary to permit it to operate
the Project. Operator shall review Owner's applications for
accuracy if requested.
3.6 SCR System: Interconnection Facilities. Owner shall pay
for all spare parts and replacement components of the SCR System
and all off-site refurbishment repairs to the SCR System pursuant
to separate agreement with the vendor of the SCR System. At
Owner's option, Operator shall accept an assignment of the
agreement(s) with the vendor of the SCR System and shall perform
the obligations of Owner thereunder from and after the effective
date of such assignment provided that (i) Owner shall reimburse
Operator for the actual costs incurred by Operator in performing
such obligations and (ii) Owner shall be entitled to require
Operator to re-assign the SCR System Agreement(s) to Owner at any
time upon reasonable notice to Operator. Owner and Operator
furthermore agree and acknowledge that Electricity Purchaser is
to maintain, repair and/or replace the Interconnection Facilities
or components thereof as and when necessary for the operation of
the Project and any failure by Electricity Purchaser to do so
shall, to the extent such failure prevents or limits the
operation and maintenance of the Project, constitute Force
Majeure; provided that Owner shall have no liability to Operator
for Electricity Purchaser's failure to maintain, repair and/or
replace the Interconnection Facilities and any such failure by
Electricity Purchaser shall not constitute a breach by Owner
under this Agreement.
3.7 Access to Project Documents. Owner will provide
Operator all Project related documents and changes thereto
required for the performance of Operator's responsibilities
hereunder. These shall be maintained in confidence by Operator.
ARTICLE 4
OPERATION OF THE PROJECT
4.1 Party Representatives. Within five (5) days after the
Agreement Date, each Party shall notify the other in writing of
its designation of an individual to act as its representative
with respect to matters which may arise with respect to the
operation of the Project. At any time after the initial
designation by any Party of its representative, such Party may
designate a successor representative by similar written notice to
the other Party.
4.2 Visits and Reviews by Owner. Owner and its
representatives shall have the right, during both normal working
hours and other hours during which any representative of Operator
is on the Site, to stay at the Site throughout the term of the
Agreement in order to monitor Operator's performance under this
Agreement and to inspect the Site and any part or component of
the Project, and all other things pertaining to the operation of
the Project, and may take all reasonable steps necessary to
verify Operator's performance pursuant to this Agreement,
provided that should such inspections adversely affect the safety
at or Availability of the Project, Operator shall have no
liability to Owner thereunder. Owner and its representatives
shall also have the right to take visitors, after reasonable
notice, onto the Site and into the Project to observe the various
services which Operator performs; provided that such visits shall
be conducted in a manner so as to minimize interference with
<PAGE 11>
Operator's obligations hereunder. Owner, its representatives, and
its visitors shall at all times adhere to the Operators visitor
policy at the Site, which shall not unreasonably interfere with
Owners ability to bring visitors to the Site during normal
business hours.
4.3 Annual Operating Plan. Not later than forty-five (45)
days prior to the first day of each Agreement Year (with the
exception of the first Agreement Year during which there will be
no Annual Operating Plan), Operator shall submit to Owner for
approval a proposed Annual Operating Plan for the upcoming
Agreement Year. The Annual Operating Plan shall describe in
detail maintenance and overhaul schedules, staffing plans,
capital expenditure requirements, equipment acquisitions and
spare parts inventories (including a breakdown of capital items
and expense items), hours of operation, holidays to be observed
(if any), schedules of contract services, projected electricity
and steam generated for sale, projected Energy Revenues and such
other matters as Owner may reasonably require. The proposed
Annual Operating Plan shall also include a budget for operation
and maintenance of the Project, including the estimated prices
based on time and materials for all anticipated operating and
maintenance costs for the upcoming Agreement Year. Owner shall
indicate in writing its approval or disapproval of the Annual
Operating Plan within fifteen (15) days of such submission, and
in the event of disapproval, the parties shall promptly meet and
subject to the terms set forth in the last sentence of this
Section 4.3 and Article 12, resolve in good faith any areas of
disagreement. If the Annual Operating Plan is not agreed to by
Owner and Operator or resolved in accordance with Article 12
herein by the commencement of the Agreement Year to which it will
apply, the previous year's plan shall remain in effect and all
budgeted expenditures shall escalate at the PPI for the previous
twelve month period. Any actions proposed under the Annual
Operating Plan shall be consistent with the Manuals and Operator's
obligations as described in Sections 2.3 and 7.1. The Annual Operating Plan
shall be updated quarterly. Operator shall notify Owners soon as
reasonably possible of any significant deviations or
discrepancies from the projections contained in the Annual
Operating Plan. Any adjustment to manpower requirements proposed
by Operator shall be subject to Owner's prior written approval.
4.4 Monthly Summary. Operator shall provide Owner, in a
form reasonably acceptable to Owner, a monthly summary of all
operations and scheduled maintenance activities performed by
Operator during the preceding month, together with all costs (by
category) which make up the Reimbursable Costs associated
therewith, and a comparison of the current total of such costs
for the Agreement Year with the budget prepared pursuant to the
Annual Operating Plan. A revised annual budget shall also be
prepared in the event of the significant deviations or
discrepancies from the budget prepared pursuant to the Annual
Operating Plan. Operator shall also cooperate with Owner in
complying with the reporting requirements set forth in Section
5.06(m) of the Credit Agreement subject to the provisions of
Section 4.3.
4.5 Unscheduled Maintenance. Operator shall perform or
cause to be performed all maintenance, repair and replacement
requirements of the Project (excluding only the Interconnection
Facilities) notwithstanding that the same were not anticipated or
included in the approved Annual Operating Plan, and shall attempt
to perform any such maintenance that will require an interruption
in electrical generation during Off-Peak Time Periods with the
exception of maintenance required during emergencies. Operator
shall undertake such work and notify Owner as soon as such notice
is reasonably practicable. Owner's obligation to reimburse
Operator for such work shall be subject to the limitations in
Article 6.
<PAGE 12>
ARTICLE 5
TERM; TERMINATION AND DEFAULT
5.1 Initial Term and Renewal. The Term of this Agreement
shall commence on the Effective Date, and shall conclude on the
last day of the ninth (9th) Agreement Year. The Parties, upon
mutual consent, shall have the option to extend the Term of this
Agreement for an additional six (6) years by notice in writing
not less than six (6) months prior to the end of the initial
Term.
5.2 Rights to Terminate. Owner shall have the option to
terminate this Agreement in the event of a Default by Operator as
set forth in Section 5.3, in the event of an Uncontrollable
Circumstance as set forth in Section 5.6(a), or in the event of a
strike as provided in Section 1 0.2. Operator shall have the
option to terminate this Agreement in the event of a Default by
Owner as set forth in Section 5.4(b); provided, in the event of
an alleged Owner Default which is disputed in good faith by
Owner, Operator must continue to operate the Project but may
simultaneously pursue its remedies for Owner's alleged Default in
arbitration proceedings under Article 12.
5.3 Default by Operator. Each of the following shall
independently constitute a Default by Operator:
(a) The failure or refusal by Operator, unless
excused, in any case, by Force Majeure (i) to operate, repair and
maintain the Project in accordance with this Agreement: (ii) to
earn greater than 20% of the Annual Management Fee for two
consecutive Agreement Years due to the payment of Liquidated
Damages under Appendix 5 herein; (iii) to comply with applicable
Requirements of Law or Approvals and Permits; or (iv) to fulfill
any of its other obligations, whether designated as agreements,
covenants or otherwise, under this Agreement; provided, however,
that a failure or refusal under (i), (iii) or (iv) shall not
constitute a Default unless and until:
(i) Owner has given notice to Operator specifying
Operator's default or defaults; and
(ii) Operator either has not corrected such
default, or has not initiated reasonable
steps to correct the same within 10 days of
its receipt of such notice and thereafter
does not continue to take all reasonable
steps necessary to expeditiously correct such
default.
(b) The persistent or repeated failure of Operator to
timely perform its obligations in accordance with the terms of
this Agreement, notwithstanding the payment by Operator of
Liquidated Damages or other amounts provided for under this
Agreement.
(c) The commencement by Operator or Guarantor of a
voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by
Operator or Guarantor to the entry of an order for relief in an
involuntary case under any such law, or the consent by Operator
or Guarantor to the appointment of, or taking possession by, a
receiver, liquidator, assignee, trustee, custodian, sequestrator
(or similar official) of Operator or Guarantor or of any
substantial part of either of their properties, or the making by
<PAGE 13>
Operator or Guarantor of any general assignment for the benefit
of creditors, or the failure by Operator or Guarantor generally
to pay its debts as they become due or any corporate action in
furtherance of any of the foregoing.
(d) The issuance by court having jurisdiction over
Operator of a decree or order for relief in respect of Operator
in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
the appointment by any such court of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official)
of Operator or any substantial part of its property, or the
ordering by any such court of the winding up or liquidation of
the affairs of Operator if such decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive
days.
(e) the failure of Operator to make any payment due
Owner under the terms of this Agreement as and when the same
becomes due under Section 9.1, unless such refusal is permitted
under Section 9.3 hereof.
(f) the occurrence of any default under the Guarantee.
5.4 Default by Owner. Each of the following shall
constitute a Default by Owner:
(a) The failure or refusal by Owner to fulfill its
obligations under this Agreement, unless excused by an
Uncontrollable Circumstance or by Force Majeure; provided,
however, that such failure or refusal shall not constitute a
Default unless and until:
(i) Operator has given written notice to Owner
specifying Owner's default or defaults: and
(ii) Owner either has not corrected such default
or has not initiated reasonable steps to
correct the same within 10 days of its
receipt of such notice, and thereafter does
not continue to take all reasonable steps
necessary to expeditiously correct such
default.
(b) The failure or refusal by Owner to make any
payment due Operator under the terms of this Agreement as and
when the same becomes due under Section 6.1, Section 6.2, or
Section 9.1, unless such refusal is disputed pursuant to Section
9.2 hereof, in which event such Dispute shall be subject to the
terms of Section 9.4.
(c) The commencement by Owner of a voluntary case
under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by Owner to the entry
of an order for relief in an involuntary case under any such law,
or the consent by Owner to the appointment of, or taking
possession by, a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or similar official) of Owner or of any
substantial part of either of its properties, or the making by
Owner of any general assignment for the benefit of creditors, or
the failure by Owner generally to pay its debts as they become
due or any corporate action in furtherance of any of the
foregoing.
(d) The issuance by court having jurisdiction over
Owner of a decree or order for relief in respect of Owner in an
involuntary case under any applicable bankruptcy, insolvency or
<PAGE 14>
other similar law now or hereafter in effect, or the appointment
by any such court of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Owner or any
substantial part of its property, or the ordering by any such
court of the winding up or liquidation of the affairs of Owner if
such decree or order shall remain unstayed and in effect for a
period of sixty (60) consecutive days.
5.5 Termination for Events of Default.
(a) If Owner elects to terminate this Agreement, Owner
shall give Operator notice of the termination date, which shall
be not less than 5 nor more than 20 days from the date the notice
is given. Termination in the event of a Default by either Party
shall not affect any accrued liabilities or obligations
hereunder.
(b) If Owner terminates this Agreement, Owner may
require Operator to vacate the Site and make the Project
available to Owner and may pursue such remedies for Operator's
breach of this Agreement (except as limited by the last sentence
of Section 8.1 and by Section 21.21) as may be available to Owner
under applicable law. Operator shall pay Owner all Liquidated
Damages accrued through the date of termination.
5.6 Termination for Uncontrollable Circumstances. In the
event of (i) material damage to or destruction of the Project not
caused by the negligence of Owner, or (ii) interruption of the
operation of the Project caused by Force Majeure which materially
impairs the operation of the Project for at least two hundred
seventy (270) consecutive days, or (iii) if any part of the
Project or the Site is taken by eminent domain and such taking
materially impairs the operation of the Project, or (iv) in the
event a Change of Law which renders operation of the Project as
intended illegal, or (v) in the event of the cessation of
operation of the Project, Owner shall have the option in any of
such circumstances (each, an "Uncontrollable Circumstance"), to
terminate this Agreement, and the obligations of the Parties
shall cease except for obligations that have accrued prior to the
effective date of such termination.
5.7 Transfer of Operations on Termination. If this
Agreement is terminated by Owner as a result of a Default by
Operator under Section 5.3 or expires under Section 5.1, Operator
shall cooperate and work with Owner or any other party operating
the Project to achieve a prompt and smooth transition. Owner
shall have the right immediately to retake possession of the
Project, as well as all tools, spare parts, drawings and Manuals.
Operator shall (a) grant to Owner a paid-up, royalty-free
nonexclusive license to any patents, trademarks, copyrights and
trade secrets and "shop rights" which were utilized by the
Operator in the performance of this Agreement and are necessary
in order to operate and maintain the Project; (b) supply all
repair parts, Project supplies and any proprietary components
needed for continuing the operation and maintenance of the
Project in the manner contemplated by this Agreement, which, if
not already paid for by Owner, shall be supplied at fair market
prices; (c) assign or cause to be assigned for the benefit of
Owner, or any subsequent Project manager or operator, all
maintenance and supply contracts relative to the Project that the
Operator retains the right to assign and use its best efforts to
cause any other Site specific maintenance and supply contracts to
be so assigned; and (d) at the Owner's request and expense,
assist Owner, or any subsequent Project manager or operator, for
a period not to exceed ninety (90) days as may reasonably be
necessary to enable Owner to continue with the operation and
maintenance of the facility. Operator shall make available to
Owner and its representatives all operational, technical and
<PAGE 15>
non-technical information, whether or not proprietary, licenses
and Approvals and Permits in its possession or control necessary
to continue the operation of the Project.
5.8 Rights and Remedies. Except as otherwise provided
herein, all rights and remedies of the Parties under any
provision of this Agreement shall be cumulative and in addition
to any other rights and remedies provided for by law (including
all forms of legal and equitable relief and may, to the extent
permitted by law, be exercised concurrently or separately, and
the exercise of any one right or remedy shall not be deemed to be
an election of such right or remedy or to preclude or waive the
exercise of any other right or remedy. With respect to equitable
remedies, the Parties acknowledge that any condition which
incapacitates the operation of the Project, or any part thereof,
constitutes immediate, imminent, substantial and irreparable harm
to Owner, and the Parties hereto consent to the entry of
temporary immediate injunctive relief to restrain such harm,
where appropriate.
5.9 Right of Intervention. In the event Operator fails to
deliver steam, as requested, to the Steam Purchaser or its
successors or assigns for any reason for longer than 24-hours
unless excused by force majeure under the Steam Purchase
Agreement, as amended from time to time, Owner or its designees,
may, at its option, intervene and immediately attempt to remedy
the failure to deliver steam and Operator shall assist Owner or
its designee in such efforts.
ARTICLE 6
ANNUAL MANAGEMENT FEE: REIMBURSABLE COSTS
6.1 Annual Management Fee
Owner shall pay to Operator an Annual Management Fee of
$500,000 for each Agreement Year during the Term hereof, which
shall be payable in monthly installments in arrears during the
Term of this Agreement payable within 30 days following the date
of invoice. The Annual Management Fee shall be paid to Operator
during the Term hereof, notwithstanding any on-going Disputes
between the Parties regarding other matters hereunder and shall
not, in the event of a Dispute regarding a proposed offset or
reduction, be subject to offset or reduction for amounts claimed
to be owed to Owner by Operator unless such amount shall have
been reduced to and incorporated in a final decision under the
Dispute resolution provisions in Article 12. The Annual
Management Fee shall be reduced if Performance in any Agreement
Year is below the conditions set forth in Appendix 2, as provided
in Section 8.1 and Appendix 5. If the Operator fails to pay
accrued, undisputed Liquidated Damages in any Agreement Year in
accordance with the provisions of Article 9 herein, Owner may
elect to reduce the Annual Management Fee in the subsequent
Agreement Year by the amount of Liquidated Damages not under
Dispute owed to Owner.
6.2 Reimbursable Costs. In addition to the Annual
Management Fee, Owner shall pay the following Reimbursable Costs:
6.2.1 The actual cost of recruitment and employment of
permanent staff shown in Appendix 1 from and after the Effective
Date, such cost to include employment related benefits applicable
to Operator's permanent employees at the Site at no more than
forty (40) percent of the sum of (i) all wages in respect of
non-overtime hours and (ii) the straight-time portion of all
wages in respect of overtime hours. Notwithstanding this
provision, the amounts payable to Operator for such costs in any
<PAGE 16>
Agreement Year shall not exceed $1,670,000 provided that in the
event that such costs in any Agreement year shall be less than
$1,670,000, the difference between $1 ,670,000 and the amount
expended shall be accrued on a cumulative basis for each
Agreement Year and applied against such costs incurred in any
subsequent Agreement Year in excess of $1,670,000.
6.2.2 The actual cost of consumables, water treatment
chemicals, outside contractors supplying services under this
paragraph, spare parts and repairs and/or replacement components
supplied by Operator in accordance with the provisions of
Sections 2.12.2. 2.12.3, 2.12.5, 2.13 and 4.5 hereof.
Notwithstanding this provision, except as otherwise provided in
this Agreement, the amounts payable to Operator for such costs in
any Agreement Year shall not exceed $1,017,000: provided that in
the event that such costs in any such years shall be less than
$1,017,000, the difference between $1,017.000 and the amount
expended shall be accrued on a cumulative basis for each
Agreement Year and applied against such costs incurred in any
subsequent Agreement Year in excess of $1,017,000.
Notwithstanding the foregoing, costs incurred by the Project to
conduct major overhauls of the combustion and steam turbines, hot
gas path inspections of the combustion turbine, annual combustion
inspections and to repair Major Breakdowns shall not be subject
to the ceiling set forth in this section but shall be incurred as
direct costs by the Owner. Owner shall have the right to contract
for such services directly, subject to Operator's responsibility
to supervise the provision of such services.
6.2.3 Any other costs incurred by Operator with Owner's
prior approval and not otherwise covered by Section 6.2.1 and/or
6.2.2 hereof, including but not limited to any insurance premium
paid by Operator, subject to the terms of Article 11, interest
carrying costs (at a per annum rate not to exceed the Prime Rate
plus 1%) on any overdue payments due Operator by Owner; provided,
Operator shall pay the income and franchise taxes arising out of
any payments made hereunder to Operator. Any Federal, state or
other sales, use, value-added, gross receipts or similar tax with
respect to the operation and maintenance of the Project (such as
a sales tax on direct cost of replacement parts used by Operator)
shall be included in this section but shall not require Owner's
approval to the extent that they are incurred through
expenditures under Section 6.2.1 or 6.2.2.
6.2.4 During the Mobilization and Program Implementation
Period, Owner shall pay Operator all costs as identified in
Appendix 8 invoiced to Owner and not also incurred as a
Reimbursable Cost for the same expenditure up to a ceiling of
$393,925. Each capital expenditure under this Section in excess
of $10,000 shall require Owner approval which shall not be
unreasonably withheld. Operator shall deliver invoices stating
the costs incurred during the prior Agreement Month. Such costs
incurred shall be due within 30 days following the date of
invoice.
6.2.5 Notwithstanding the provisions of 6.2.1 and 6.2.2
above, Operator shall reimburse Owner for all costs referred to
in 6.2.1 and 6.2.2 to the extent any such costs arise out of
equipment failures caused by the negligence of Operator.
6.2.6 In the event the Operator's Reimbursable Costs
under either Section 6.2.1 or 6.2.2 exceed the applicable ceiling
amount in any Agreement Year, Operator shall be entitled to
utilize any unused cost allowance under either of these two
Sections in order to cover the excess costs. Any unexpended
amounts with respect to any accrued unused cost allowance under
Sections 6.2.1 and 6.2.2 at the end of the initial Term of this
Agreement or at the end of any extension thereof will be shared
on an equal basis between Owner and Operator.
<PAGE 17>
6.3 Adjustment of Maximum Compensation. The Annual
Management Fee in 6.1 above, the ceiling amounts in 6.2.2, and
the Operating Margin amounts in Appendix 5 shall be adjusted at
the beginning of each Agreement Year after the initial Agreement
Year during the Term to reflect changes in the PPI. The ceiling
amount in 6.2.1 shall be adjusted at the beginning of each
Agreement Year after the initial Agreement Year during the Term
to reflect charges in the United States Department of Labor's
Employment Cost Index (the "ECI") (Table 2 - Seasonally Adjusted
Wages and Salaries) effective as at January 1, 1994. The parties
acknowledge that if the ECI is issued as a regional ECI for the
area of the United States where the Project is located, the
regional ECI will be used.
6.4 Adjustment for Change in Law or Change in Project
Agreements. To the extent the Reimbursable Costs contemplated by
Sections 6.2.1 and 6.2.2 increase or decrease in any Agreement
Year as a direct consequence of either a Change in Law which is
reasonably unforeseeable as of the Effective Date or a Change in
Project Agreements, Operator shall notify Owner in detail of the
nature and extent of the increased or decreased Reimbursable
Costs resulting from the Change in Project Agreements or Change
in Law, as the case may be, and the ceiling amounts in Section
6.2.1 , 6.2.2 and 6.3 shall be adjusted for that Agreement Year
and for any subsequent Agreement Years affected, only to the
extent necessary to reflect the change in Reimbursable Cost
caused by such Change in Project Agreements or Change in Law.
6.5 Adjustment for Certain Events. To the extent the
Reimbursable Costs contemplated by Sections 6.2.1 and 6.2.2
increase in any Agreement Year as a direct consequence of
breaking of or accident to machinery or equipment directly caused
by an act of God or by the act or omission of a third party
(excluding subcontractors of Operator) over whom Operator has no
control, Operator shall promptly notify Owner in detail of the
nature and extent of the increased Reimbursable Costs and the
circumstances surrounding the breaking or accident, and the
ceiling amounts in Section 6.2.1 and 6.2.2 shall be increased,
for that Agreement Year only to the extent necessary to permit
Operator to be reimbursed for the increase in Reimbursable Costs.
In either case above, the Parties may agree to have the Owner
directly pay for the costs above, such agreement shall not be
unreasonably withheld. In the event of a Dispute regarding such
increased costs paid by the Operator, Owner shall pay to Operator
the undisputed amount of any such increase, but shall have the
right to escrow any Disputed amounts until such time as the
Dispute is resolved by the Parties pursuant to Article 12. At
such time any amount placed in escrow plus interest shall be paid
to the Parties in such proportions as are determined in
accordance with the final resolution.
ARTICLE 7
COVENANTS TO PERFORM
7.1 Minimum Performance. Operator warrants that it shall
achieve at least 85% of the Annual Operating Plan projection for
production of electricity and steam in each Agreement Year:
provided that Electricity Purchaser and Steam Purchaser's demand
is consistent with the projections in the Annual Operating Plan
for that Agreement Year.
ARTICLE 8
LIQUIDATED DAMAGES
<PAGE 18>
8.1 Liquidated Damages. In the event that Operator shall
fail to achieve the Performance goals set forth in Appendix 2 and
Appendix 5 in any Agreement Year, then Operator shall pay to
Owner Liquidated Damages according to the terms set forth in
Appendix 5. Liquidated Damages shall, except for Owner's right to
terminate this Agreement pursuant to Section 5.2, be the sole
remedy of Owner and the sole liability of Operator for Operator's
failure to meet the Performance requirements set forth in
Appendix 2 and Appendix 5.
8.2 Billing of Liquidated Damages. Not later than twenty
(20) days after the end of each Agreement Year, Operator shall
render a statement to Owner, with all necessary and appropriate
supporting documentation, calculating the amount of Liquidated
Damages due to Owner, in accordance with Section 8.1 and Appendix
5, for the period from the beginning of the Agreement Year
through the end of such Agreement Year. Any amounts due to Owner
on account of Liquidated Damages shall be paid by Operator
simultaneously with the delivery of a statement therefor, but
Owner's acceptance of such amounts shall not preclude it from
disputing under Section 9.2 the accuracy of the amount of
Liquidated Damages owed as set forth on the statement. Any Bonus
payable to Operator under Appendix 5 shall be payable in
accordance with Section 9.1 herein.
ARTICLE 9
BILLING AND PAYMENTS
9.1 Invoices. Operator shall render invoices to Owner
monthly for Reimbursable Costs. Said invoices shall be
accompanied by all relevant documentation including payroll data
and benefits computations for the relevant staff and specialists
and all relevant invoices for consumables, water treatment
chemicals, spare parts and replacement components. Each
undisputed invoice shall be paid, subject to Section 9.2. not
later than thirty (30) days after receipt thereof by Owner. Owner
invoices to Operator as contemplated by this Agreement shall be
paid by Operator, subject to Section 9.3, not later than thirty
(30) days after receipt thereof by Operator.
9.2 Owner's Dispute. Owner may, within fifteen (15) days
after receiving any invoice or statement rendered pursuant to
Sections 9.1 or 8.2 , by written notice to Operator, Dispute any
amount set forth in such invoice or statement: provided that
Owner shall pay undisputed amounts notwithstanding the existence
of any Dispute with respect to the balance of such payment.
9.3 Operator's Dispute. Operator may, within fifteen (15)
days after receiving an invoice from Owner, by written notice to
Owner, Dispute any amount set forth in such invoice; provided
that Operator shall pay undisputed amounts notwithstanding the
existence of any Dispute with respect to the balance of such
payment.
9.5 Dispute Resolution. Operator and Owner shall, as soon
as practicable after either Party's receipt of any notice
pursuant to Section 9.2 or 9.3 above, attempt in good faith to
resolve all Disputed items described therein. If all such
Disputed items are not so resolved within thirty (30) days after
receipt by either Party of such notice, either Party may, within
ninety (90) days thereafter, commence Dispute resolution
procedures pursuant to Article 1 2, in accordance therewith. In
the event that such Dispute resolution procedures result in an
award in favor of either Party, the other Party shall pay any
balance owed with interest provided in Section 21.18.
<PAGE 19>
ARTICLE 10
FORCE MAJEURE: STRIKES
10.1 Effect of Force Majeure. In the event that either
Operator or Owner shall be prevented by Force Majeure from
performing or fully performing its obligations under this
Agreement (other than obligations to make payments required
herein, which may not be excused by Force Majeure), the Party
unable to perform or fully perform shall promptly notify the
other Party and shall keep the other Party informed of the
situation for the duration of such event. Upon the giving of such
notice, the obligations of the Party giving the notice shall be
reduced during, but no longer than, the continuance of the Force
Majeure, provided such obligations shall be reduced only to the
extent the affected Party's performance is adversely affected
solely by the Force Majeure, and only to the extent such adverse
effects cannot be mitigated by the affected Party's best efforts.
The affected Party shall use its best efforts to resume
performance as quickly as possible and shall suspend or operate
at less than full performance only for such period of time as is
necessary as a result of the Force Majeure.
10.2 Strikes. In the event of a whole or partial
non-operation of the Project due to a strike or other form of
labor action by Operator's personnel, Owner shall have the right
to continue operating the Project and to retain such other
personnel or agents as Owner in its sole discretion deems
necessary or advisable for such purposes. If any strike or labor
stoppage that affects the Operator's ability to perform its
duties hereunder continues for a period beyond thirty (30) days,
Owner shall be entitled to terminate this Agreement.
ARTICLE 11
INSURANCE
11.1 Insurance Coverage. (a) During the Term of this
Agreement, Operator shall provide and maintain such policies as
shown in Appendix 6(B), the costs of which shall be a
Reimbursable Cost under Section 6.2.3 herein. Owner shall provide
and maintain such policies as shown in Appendix 6(A) herein. The
terms of all such policies shall comply with the provisions of
Section 5.03 of the Credit Agreement. The cost of all such
insurance shall be Reimbursable Costs as described in Section 6
2.3.
(b) Certificates of Insurance evidencing the coverages
provided by Operator and copies of such policies shall be
delivered to Owner prior to the Effective Date. Owner, the
Lender, Steam Purchaser, and any Person who owns an interest (as
mortgagee, secured party, for otherwise) in the Site or who has
the right (present or contingent) to own the Project, and any of
their respective successors and assigns, shall be named as
additional insureds under specified policies. These certificates
as well as all insurance policies required by this Article shall
contain a provision that the policy will not be cancelled or
allowed to expire or amended in any material manner (including as
to scope, type or limits of coverage), until at least ten (10)
days prior written notice or such additional advance notice as
may be required under Section 5.03 of the Credit Agreement has
been given to Owner and all other Persons named as additional
insureds. Should Operator fail to provide or maintain insurance
coverage pursuant to this Section, Owner shall have the right but
not the obligation to provide or maintain such coverage.
<PAGE 20>
(c) All insurance provided by Operator shall be with
reputable and solvent insurance carriers which are reasonably
satisfactory to Owner and Lender and licensed to do business in
the State of New Jersey.
11.2 Waiver of Subrogation. Operator and Owner hereby waive
any and every claim for recovery from the other for any and all
loss or damage resulting from the performance of this Agreement,
to the extent such loss or damage is recovered under the
insurance policies described herein. All insurance policies shall
contain waivers of subrogation as to Steam Purchaser.
ARTICLE 12
DISPUTE RESOLUTION
12.1 Procedure. In the event a Dispute arises between Owner
and Operator regarding the application or interpretation of any
provision of this Agreement which has not been resolved pursuant
to Section 9.5, the aggrieved party shall promptly notify the
other party to this Agreement of the Dispute within ten (10)
Business Days after such Dispute arises. If the parties shall
have failed to resolve the Dispute within ten (10) Business Days
after deliver of such notice, each party shall, within five (5)
Business Days thereafter, nominate a senior officer of its
management to meet at the Facility, or at any other mutually
agreed location, to resolve the Dispute. Should the parties be
unable to resolve the Dispute to their mutual satisfaction within
(i) ten (10) Business Days after such nomination, or (ii) in the
case of a dispute under Article 9, in the time provided in
Section 9.5, the Dispute shall be resolved by binding arbitration
under the auspices of the American Arbitration Association
("AAA"). The Parties shall endeavor to agree upon a single
arbitrator qualified by education and training to pass upon the
particular question or questions in Dispute. If the Parties
cannot agree within five (5) days on a single arbitrator, an
arbitrator shall be appointed by the AAA. The decisions of the
arbitrator shall be in writing, signed, and shall be binding on
the Parties as to any question or questions so submitted to
arbitration. The compensation and expenses of the arbitrator
shall be paid in equal proportions by Owner and Operator. All
performance required by either party under this Agreement shall
continue during arbitration proceedings. In the event either
Party refuses or otherwise fails to abide by the decision
rendered by the arbitrator(s), judgement may be entered against
such Party upon such decision in accordance with applicable law
in any court having jurisdiction thereof.
ARTICLE 13
INTENTIONALLY OMITTED
ARTICLE 14
PAYMENT OF FINES AND PENALTIES
14.1 Payment of Fines and Penalties. Notwithstanding the
provisions of Section 6.5, payment at any time of any fine or
penalties payable to any state or the United States as a result
of the Operator's failure to operate and maintain the Project in
accordance with Requirements of Law or Approvals and Permits
<PAGE 21>
applicable to the operation and maintenance of the Project shall
be the sole responsibility of Operator and such fines or
penalties shall not result in any increase of the costs to be
borne by Owner.
ARTICLE 15
DEFECTIVE WORK
15.1 Work to be Fit. Operator warrants that the operation
and maintenance services described in Article 2 will be performed
properly, in a competent, cost-conscious manner and by qualified
personnel, in accordance with sound and generally accepted
operating and engineering practices, and that said services will
be generally fit for their prescribed purpose performed to be a
standard of the highest quality.
15.2 Consequence of Breach. In the event Operator fails to
perform its work as required by this Agreement, Operator shall at
its cost re-perform any defective service, replace any unfit or
unqualified personnel and repair or replace any components of the
Project damaged as a consequence of said failure.
15.3 Vendor Warranties. Operator shall obtain, when
available and subject to Owner's prior written approval, on
commercially reasonable terms, one-year vendor warranties for all
spare parts and replacement parts, other than parts having a
useful life of less than one year and parts supplied by Owner
pursuant to Section 3.2 or 3.6. Any warranties received from
outside vendors or subcontractors shall be passed through to
Owner, but Operator shall maintain, administer and assist Owner
in the enforcement of such warranties. The costs of all such
warranties to the extent not included in the normal purchase
price shall be Reimbursable Costs and shall not be subject to the
ceilings described in Article 6.
ARTICLE 16
OPERATOR'S REPRESENTATIONS
Operator represents and warrants that:
16.1 Corporate Standing: Authorization. It is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware. The execution, delivery and
performance of this Agreement are within Operator's corporate
powers. The execution, delivery and performance of this Agreement
(i) has been duly authorized by all requisite corporate action;
and (ii) does not violate any existing Requirement of Law or any
agreement, certificate, undertaking, commitment, instrument or
other document to which it or any of its assets may be bound or
affected.
16.2 Enforceability. This Agreement constitutes its legal,
valid and binding obligations enforceable against it in
accordance with its respective terms, except as such enforcement
may be limited by bankruptcy, moratorium, insolvency and similar
debtor rights laws, and has been executed and delivered by its
duly authorized officers.
<PAGE 22>
16.3 No Violation of Law. It is not in violation of any
Requirement of Law which violations, individually or in the
aggregate, could materially affect Operator's performance of any
obligations under this Agreement.
16.4 Litigation. It is not a party to any legal,
administrative, arbitration, investigatorial or other proceeding
or controversy pending, or, to the best of its knowledge,
threatened, which could materially adversely affect its ability
to perform its obligations under this Agreement.
16.5 Qualifications. It has: (i) examined each of the
Project Agreements thoroughly and it is very familiar with their
terms; (ii) substantial experience in the operation and
maintenance of cogeneration plants and is fully qualified to
operate and maintain the Project in accordance with the terms
hereof; and (iii) thoroughly familiarized itself with the
conditions under which the obligations entered into hereunder are
to be performed and correlated its observations with the
requirements hereof.
16.6 Waiver of Liens. It will cause each subcontractor to
waive and release, to the extent it may do so, any and all liens
and/or encumbrances which it or they have or may have against
Owner or the Project on account of work to be performed pursuant
to this Agreement. Before any subcontractor performs any work
pursuant to this Agreement, it shall (i) obtain the consent of
each such subcontractor to such a waiver of liens and
encumbrances; and (ii) file a copy of such a waiver of liens and
encumbrances with Governmental Authorities required by Owner.
16.7 Intentionally Deleted.
16.8 Default under Project Agreements. It shall not take any
action which would cause a default under the Site Lease or the
Project Agreements.
16.9 Approvals and Permits. It is the holder of all material
Approvals and Permits in general required to conduct its business
in the State of New Jersey. Except for Approvals and Permits
required to be maintained by Owner pursuant to Section 3 5, no
consent (except consents, if any hereof of any Person, and no
Approval and Permit of, notice of report to, or registration,
filing or declaration with, any Person, is or will be required,
in connection with its execution, delivery and performance of
this Agreement.
16.10 General. No representation or warranty by it
contained herein contains any untrue statement of any material
fact or any omission of any material fact necessary to make such
representation or warranty not misleading in light of the
circumstances under which it was made.
ARTICLE 17
OWNER'S REPRESENTATIONS
Owner represents and warrants as follows:
17.1 Corporate Standing; Authorization. It is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware. The execution, delivery and
performance of this Agreement are within Owner's corporate
<PAGE 23>
powers. The execution, delivery and performance of this Agreement
(i) has been duly authorized by all requisite corporate action;
and (ii) does not and will not violate any Requirement of Law or
any agreement, certificate, undertaking, commitment, instrument
or other document to which it is a party or by which it or any of
its assets may be bound or affected.
17.2 Enforceability. This Agreement constitutes its legal,
valid and binding obligations, enforceable against it in
accordance with its respective terms, except as such enforcement
may be limited by bankruptcy, moratorium, insolvency and similar
debtor rights laws, and has been executed and delivered by its
duly authorized officers.
17.3 No Violation of Law. It is not in violation of any
Requirement of Law which violations, individually or in the
aggregate, could materially affect Owner's performance of any
obligations under this agreement.
17.4 Litigation. It is not a party to any legal,
administrative, arbitration. investigatorial or other proceeding
or controversy pending, or, to the best of its knowledge,
threatened, which could materially adversely affect its ability
to perform its obligations under this Agreement.
17.5 Approvals and Permits. It is the holder of all material
Approvals and Permits in general required to conduct its business
and will use reasonable efforts to acquire prior to the Effective
Date all Approvals and Permits necessary to operate the Project.
Except for the Approvals and Permits to be maintained by it
pursuant to Section 3.5 hereof, no consent (except consents, if
any, obtained prior to the date hereof of any Person, and no
Approval and Permit of, exemption by, notice or report to, or
registration, filing or declaration with, any Person, is or will
be required in connection with its execution, delivery and
performance of this Agreement.
17.6 Capability of Project to Comply with Project
Agreements. Owner represents that the Project has been designed
and constructed to comply with the Project Agreements, and is
capable of meeting such requirements if operated in accordance
with prudent utility practice.
17.7 General. No representation or warranty by it contained
herein contains any untrue statement of any material fact or any
omission of any material fact necessary to make such
representation or warranty not misleading in light of the
circumstances under which it was made.
ARTICLE 18
INTENTIONALLY OMITTED
ARTICLE 1 9
INDEMNIFICATION
19.1 Operator Indemnity.
Operator shall indemnify, defend and hold harmless
Owner and Lender and their respective officials, officers,
employees and gents (all of the aforementioned being hereinafter
referred to as the "Owner Indemnified Parties") from and against
any Claims arising out of, incident to the or related to the
<PAGE 24>
Operator's performance of this Agreement, made by any Person
(other than the Owner Indemnified Parties), whether based on
contractor (including any breach of any agreement respecting any
subcontractor but specifically excluding any breach of the
Project Agreements or the Site Lease), strict liability or
otherwise (except to the extent any such Claims arise out of, are
incident to or related to the negligence of or the breach of this
Agreement by any Owner Indemnified Parties, in which event the
Claims shall be borne by the Parties in proportion to the
respective fault of each party), including (i) any Claims by or
otherwise involving any employee of Operator, any subcontractor,
any Person directly or indirectly employed by any of them and any
other Person for whose acts they may be liable or otherwise
responsible, and (ii) any Claims respecting or made by any
Governmental Authority, infringement of proprietary rights,
non-payments of amounts due subcontractors, bodily injury,
sickness, death, injury, and injury or destruction of tangible
property of any Person. The indemnification obligations under
this Article 19.1 shall not be limited by any limitation on the
amount or type of damages, compensation or other employee benefit
payable under any worker compensation or other employee benefit
acts or insurance policies. The indemnity provisions contained in
this Article 19.1 shall in no manner amend or otherwise modify or
limit any other of Operator's obligations expressed elsewhere in
this Agreement except as expressly provided with respect to
liquidated damages.
19.2 Owner Indemnity. Owner shall indemnify, defend and
hold harmless Operator and its officials, officers, employees and
agents (the "Operator Indemnified Parties") from and against any
Claims arising out of, incident to or related to Owner's failure
to perform its obligations hereunder with respect to the Project
made by any Person (other than Operator and the Operator
Indemnified Parties) whether based on contract, tort (including
negligence, by commission or omission), strict liability or
otherwise (except to the extent any such Claims arise out of, are
incident to or related to the negligence of or the breach of this
Agreement by Operator Indemnified Parties, which event the Claims
shall be borne by the Parties in proportion to the respective
fault of each Party), including (i) any Claims by or otherwise
involving any employee of Owner, or any Person for whose acts
Owner may be liable or otherwise responsible, and (ii) any Claims
respecting or made by any Governmental Authority, infringement of
proprietary rights, non-payment of amounts due subcontractors,
bodily injury, sickness, death, injury, and injury or destruction
of tangible property of any Person. The indemnification
obligation under this Article 19.2 shall not be limited to any
limitation on the amount or type of damages, compensation or
other benefits payable under any workman compensation or other
benefit payable under any workman compensation or other benefit
acts or insurance policies. The indemnity provisions contained in
this Article 19.2 shall in no manner amend or otherwise modify or
limit any other of Owner's obligations expressed elsewhere in
this Agreement.
19.3 Cooperation Regarding Claims. If any Party hereto or
the Lender (each an "Indemnified Party") shall receive notice or
have knowledge of any Claim that may result in a claim for
indemnification by such Indemnified Party against a Party
pursuant to this Article 19, such Indemnified Party shall, as
promptly as possible, give the indemnifying Party notice of such
Claim, including a reasonable detailed description of the facts
and circumstances relating to such Claim, and a complete copy of
all notices, pleadings and other papers related thereto, and the
basis for its potential claim for indemnification with respect
thereto in reasonable detail: provided that failure promptly to
give such notice or to provide such information and documents
shall not relieve the indemnifying Party of any obligation of
indemnification it may have under this Article 19 unless such
failure shall materially diminish the ability of such
indemnifying Party to respond to or to deferred the Indemnified
Party failing to give such notice against such Claim. The
<PAGE 25>
Indemnified Parties shall consult with each other regarding, and
cooperate in respect of, the response to and the defense of any
such Claim, and the Party against whom indemnification is claimed
shall, upon its acknowledgement in writing of its obligation to
indemnify, the Indemnified Party seeking indemnification be
entitled to assume the defense or to represent the interests of
the Indemnified Party seeking indemnification in respect of such
Claim, which shall include the right to select and direct legal
counsel and other consultants, appear in proceedings on behalf of
such Indemnified Party and to propose, accept or reject offers of
settlement, all at its sole cost.
ARTICLE 20
INTENTIONALLY OMITTED
ARTICLE 21
MISCELLANEOUS PROVISIONS
21.1 Entire Agreement. This Agreement contains the entire
understanding of the Parties with respect to the subject matter
hereof and supersedes any and all prior agreements and
commitments with respect thereto.
21.2 Further Assurance. Each Party agrees that upon request
of any other Party, it shall, from time to time, do any and all
other acts and things as may reasonably be required to carry out
its obligations hereunder and to consummate the transactions
contemplated hereby, including the execution and delivery of
documents.
21.3 Amendments. No change, amendment or modification of
this Agreement shall be valid or binding upon the Parties unless
made in writing by all Parties.
21.4 Joint Effort. Preparation of this Agreement has been a
joint effort of the Parties and this Agreement shall not be
construed more severely against one of the Parties.
21.5 Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter
gender, shall include all other genders; the singular shall
include the plural, and vice versa. Titles of Articles and
Sections are for convenience only, and neither limit nor amplify
the provisions of this Agreement. This Agreement shall always be
deemed to mean this Agreement and the Appendices hereto. All
references herein to Articles, Sections and subsections shall
refer to the corresponding Articles, Sections or subsections of
this Agreement unless specific reference is made to Articles,
Sections or subsections of another document. Use of the words
"hereby", "herein" "hereunder" and similar words shall be deemed
to refer to this Agreement in its entirety and not merely to the
Articles, Sections or subsections thereof wherein any such word
may appear.
21.6 Notice. Any notice, demand, offer, consent, report,
approval or other written instrument required or permitted to be
given pursuant to this Agreement shall be in writing signed by
the Party giving such notice and shall be sent via facsimile with
<PAGE 26>
the original hand delivered or sent by receipt confirmed telex or
registered letter to the other Party at address as set forth
below and shall be effective upon receipt.
(a) if delivered to Owner:
O'Brien (Parlin) Cogeneration, Inc.
225 South 8th Street
Philadelphia, PA 19106
Attn: President
Fax: (215) 627-1839
with a copy to:
Mr. Robert Rauch
O'Brien (Parlin) Cogeneration, Inc.
P.O. Box 640
17 Glen Andrews Road
White Sulphur Springs, W.VA 24986
Fax: (304) 536-4617
(b) if delivered to Operator:
Vice President General Manager
Stewart & Stevenson Operations, Inc.
7400 Roundpond Rd.
Syracuse, NY 13212
Fax: (315) 452-9951
with a copy to:
President
Stewart & Stevenson Operations, Inc.
16415 Jacintoport Blvd.
Houston, TX 77015
Fax: (713) 457-7596
Each Party shall have the right to change the place to which
notice shall be sent or delivered by similar notice sent or like
manner to the other Parties, The effective date of notice issued
pursuant to this Agreement shall be as of the addressee's receipt
of such notice.
21.7 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance(s) shall be
invalid or unenforceable to any extent, (a) the remainder of this
Agreement and the application of such provision to other
Person(s), entity(ies) or circumstance(s) shall not be affected
thereby and (b) each such provision shall be enforced to the
greatest extent permitted by law.
<PAGE 27>
21.8 Assignment. Operator shall neither assign nor otherwise
transfer this Agreement (or any right or obligation contained
herein) without the prior written consent of Owner and Lender (if
Lender requires that its consent be obtained) and any such
assignment, subletting or other transfer without such consent
shall be void. Owner shall have the right to assign this
Agreement (i) as security for or as required by any lender of
funds to Owner or (ii) in connection with a sale or transfer of
the Project and/or the Site Lease.
21.9 No Waiver. No consent or waiver, express or implied by
a Party to or of any breach or default by the Party in the
performance by it of any of its obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any other
breach or default in the performance by such Party of the same or
any other obligation of such Party hereunder. Except as otherwise
provided herein, failure on the part of a Party to complain of
any act or failure to act of the other Party or to declare such
other act or failure to act of the other Party or to declare such
other Party in default, irrespective of how long such failure
continues, shall not constitute a waiver by a Party of its rights
hereunder.
21.10 Applicable Law. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the
State of New Jersey, exclusive of conflicts of laws provisions.
For the purposes of this Agreement, the Parties hereby submit to
the jurisdiction of the courts of the state of New Jersey.
21.11 Successors and Assigns. Subject to the
restrictions on transfers set forth herein, this Agreement shall
inure to the benefit of, be binding upon and be enforceable by
and against the Parties and their respective successors and
assigns.
21.12 Appendices. All Appendices referred to in this
Agreement shall be fully incorporated into this Agreement by such
reference and shall be deemed to be an integral part of this
Agreement.
21.13 Relationship of Parties.
(a) Nothing contained in this Agreement shall be construed
as constituting a joint venture or partnership between Operator
and Owner. Operator shall be deemed to be an independent
contractor. Operator's creditors shall not be third party
beneficiaries under this Agreement.
(b) Operator hereby declares that it is engaged in an
independent business and agrees to perform the services as an
independent contractor and not as the agent, employee or servant
of Owner. Operator has and hereby retains the right to exercise
full control and supervision of its services and full control
over the employment, direction, compensation and discharge of all
persons assisting it in the performance of this Agreement.
Operator agrees to be solely responsible for all matters relating
to the payment of its employees, including compliance with social
security. Operator agrees to be responsible for its own actions
and those of its subordinates, employees, and subcontractors
during the life of this Agreement. Without Owner's approval,
Operator shall have no authority to make any statements
representations or commitment of any kind or take any action
which shall be binding upon Owner.
21.14 Survival of Agreements. All of the
representations, warranties, covenants and agreements of each of
the Parties, including those contained in Article 12 hereof,
<PAGE 28>
shall survive the execution and delivery and performance of this
Agreement and the consummation of the transaction contemplated
hereby except as provided herein.
21.15 Dollar Amounts. All amounts of money in this
Agreement are denominated in United States Dollars.
21.16 Business Day. In the event that an obligation to
be performed under this Agreement fails due on a Saturday, Sunday
or legal holiday in the State of New Jersey, the obligation shall
be deemed due on the next Business Day thereafter.
21.17 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an
original, but all of which when taken together shall constitute
but one agreement. It shall not be necessary that any counterpart
be signed by all Parties so long as each Party shall have
executed two counterparts.
21.18 Overdue Obligations to Bear Interest. All amounts
due hereunder, whether as damages, credits, revenue or
reimbursements, that are not paid when due shall bear interest at
1% over the Prime or Base Rate of Citibank, N.A. , on the amount
outstanding from time to time, on the basis of a 365-day year,
counting the actual number of days elapsed, and all such interest
accrued at any time shall, but only to the maximum extent
permitted by applicable law, be deemed added to the amount due,
as accrued.
21.19 Proprietary Information. If either Party transmits
to the other any information (including, without limitation,
drawings, technology, reports and designs) which the disclosing
Party designated in writing as "proprietary information", the
receiving Party shall receive and hold such proprietary
information in confidence, shall use it exclusively in connection
with the Project (including necessary disclosures on a
proprietary basis, to others directly engaged in the operation or
financing of the Project such as consultants, trustees and
lenders engaged for that purpose provided that such third Party
shall consent in writing to be bound by the provision of this
Section 21.19, but in any event excluding disclosures to other
Project suppliers) and shall not publish or otherwise disclose it
to others.
Notwithstanding the foregoing restrictions, either Party
will have the right to disclose proprietary information furnished
hereunder to a governmental authority to the extent required by
such governmental authority; provided, however, that if such
Party undertakes to so use such proprietary information, it
agrees to give the other Party advance written notice of such
undertaking, to make reasonable efforts to secure confidential
treatment of such proprietary information by the governmental
authority in questions and to permit such other Party to
participate in discussions with such governmental authority with
regard to such confidential treatment. In the event that efforts
to secure confidential treatment are unsuccessful, the owner of
the proprietary information shall have the right, if legally
permissible to revise such proprietary information to make it
nonproprietary or to minimize the loss of its proprietary value.
21.20 Intentionally Omitted.
21.21 No Consequential Damages. In no event shall either
Party be liable (whether based on contract, indemnity, warranty,
tort, strict liability or otherwise) for any special, incidental,
<PAGE 29>
exemplary, indirect or consequential damages, including but not
limited to, loss of profits or revenues, arising from the
performance or non-performance of such Party's obligations under
this Agreement, except to the extent provided in Section 8.1.
21.22 Environmental Liability.
(a) In no event shall Operator be responsible for present
or future "Claims" (hereinafter defined) directly or indirectly
related to or arising out of the actual or alleged existence,
generation, use, collection, treatment, storage, transportation,
recovery, removal, discharge or disposal of "Hazardous Material"
(hereinafter defined) at the Site and/or adjacent areas, arising
out of the period prior to the Effective Date. Without limiting
the foregoing, Owner shall defend, indemnify and hold Operator
harmless against, and shall reimburse Operator for such Claims.
(b) In no event shall Owner be responsible for present or
future Claims directly or indirectly related to or arising out of
the actual or alleged existence, generation, use, collection,
treatment, storage, transportation, recovery, removal, discharge
or disposal of Hazardous Material at the Site arising out of the
negligent, wilful, reckless acts or omissions of Operator or any
of their officials, agents or employees, contractors or
subcontractors of any tier and Operator shall defend, indemnify
and hold Owner harmless against, and shall reimburse Owner for
such Claims: provided, however, that nothing contained herein
shall be construed as requiring Operator to take any corrective
action with respect to any Hazardous Material in existence prior
to the start-up of the Project unless directed to do so by a
Governmental Authority, in which case the corrective actions so
undertaken shall be deemed a Claim within the contemplation of
paragraph (a) of this Section 21.22.
(c) As used in this Agreement, "Claims" shall mean any and
all claims, demands, causes of action, suits, proceedings,
administrative proceedings, lawsuits, judgments, decrees, debts,
damages, liabilities, court costs and reasonable attorneys' fees
including, but not limited to, the cost of civil fines or
penalties or other expenses incurred, assessed or sustained by or
against the affected Party whether asserted under a theory of
strict liability or otherwise.
(d) As used in this section 21.22, "Hazardous Materials"
shall mean materials defined as "hazardous substances",
"hazardous wastes" or "solid wastes" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. 9601-9675, and any amendments thereto the Resource
Conversation and Recovery Act, 42 U.S.C. 6901 -6987, and any
amendments thereto, the New Jersey Industrial Site Recovery
Act(N.J.S.A. 13:1 K-6 et. seq.) ("ISRA"); or the New Jersey Spill
Compensation and Control Act (N.J-S.A. 58:10-23.11 et. seq.) and
any other substance, the existence of which on the Site imposes
any liability or responsibility on any Person under any present
or future applicable federal, state, local or common law relating
to the protection of the environment or public health and safety,
whether similar or dissimilar to the foregoing.
(e) If ISRA must be complied with during the Term of this
Agreement, Operator shall reasonably assist Owner in preparing
and filing with the appropriate Governmental Authority the
notices, plans, submissions and other materials and information
necessary to comply with ISRA; provided that the cost of any
outside consultants, sampling and cleanup (or other remedial
work) shall be deemed a Claim, the cost and expense of which is
to be borne by the Owner, except as provided in paragraph (b) of
this Section. If no cleanup (or other remedial work) is required
under ISRA, the costs of any outside consultants and/or sampling
work performed in order to comply with ISRA shall be borne by the
Owner. All aspects of any ISRA proceedings and all filings made
in connection therewith shall be performed only after mutual
consultation of Owner and Operator. Owner shall pay for all costs
referred to in this subparagraph (e) except as provided in
paragraph (b) of this Section.
21.23 Owner's Approval. Wherever in this Agreement
Owner's approval is set forth as a condition, such approval shall
not be unreasonably withheld.
21.24 Lender's Approval. The Parties acknowledge that
this Agreement shall only become effective upon written approval
by the Lender. If such approval is not received within sixty (60)
days, this Agreement shall be null and void, and neither Party
shall have any further obligation to the other.
IN WITNESS WHEREOF, the Parties have hereto set their hands
and seals as of the 1st day of April, 1994.
O'Brien Parlin Cogeneration, Inc.
By:/s/
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Title:
Stewart & Stevenson Operations, Inc.
By:/s/
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Title: