EXHIBIT 10.22
H Power Corp. Subcontractor
Agreement
SUBCONTRACTOR AGREEMENT
by and between
H POWER CORPORATION
as Contractor
and
HYDROGEN BURNER TECHNOLOGY
as Subcontractor
* * * * *
FUEL FLEXIBLE (DIESEL) FUEL PROCESSING SUBSYSTEM PROJECT
* * * * *
Dated as of October 9, 1998
SUBCONTRACTOR AGREEMENT
SUBCONTRACTOR AGREEMENT dated as of October 9, 1998, by and between H
POWER CORPORATION ("Contractor"), having a place of business at 60 Montgomery
Street, Belleville, New Jersey 07109, and HYDROGEN BURNER TECHNOLOGY, a
corporation incorporated under the laws of the State of California
("Subcontractor"), having its principal place of business at 3925 Vernon
Street, Long Beach, California 90815.
W I T N E S S E T H:
WHEREAS, Contractor has entered into a Participation Agreement dated
August 22, 1997 with the Sacramento Municipal Utility District ("SMUD"),
under which the Contractor will develop a fuel cell and fuel reformer system
(the "System") for the Multifuel Reformer/Fuel Cell Hybrid Bus Project (the
"Project"); and
WHEREAS, Contractor desires to engage Subcontractor to design, develop
and deliver a fuel-flexible (diesel) fuel-processing subsystem (the
"Subsystem"), in accordance with the Technical Specifications attached as
Exhibit B hereto; and
WHEREAS, Subcontractor, in fulfilling its obligations hereto, has agreed
to adhere to certain requirements of the Advanced Research Projects Agency
("ARPA"), which provided a partial funding for the Project to SMUD through a
grant, number MDA972-95-1-0010 and certain modifications thereto
(collectively, the "Grant"), attached as Exhibit I to this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual promises
and agreements of the parties herein expressed, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
Certain capitalized terms used in this Agreement shall have the meanings
specified in Exhibit A hereto. The meanings specified are applicable to both
the singular and plural.
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ARTICLE 2
RELATIONSHIP OF CONTRACTOR, SUBCONTRACTOR AND SUB-SUBCONTRACTORS
2.1 STATUS OF SUBCONTRACTOR. Subcontractor shall, at all times,
perform and execute the provisions of this Agreement as an independent
contractor and shall not be an agent or employee of Contractor. All personnel
supplied by Subcontractor to work on the Project shall be employees of
Subcontractor or a Sub-subcontractor, and shall not be agents or employees of
Contractor. Subcontractor shall bear full responsibility for the actions of
employees, agents or representatives of Subcontractor or any
Sub-subcontractor taken in connection with the Work or the Project.
Contractor shall have no obligation whatsoever to pay wages or other
compensation to such employees, agents or representatives or to withhold,
deduct, pay or reserve for any income taxes, social security, unemployment
compensation or other taxes, charges or deductions due by reason of or
arising from the employment or engagement of such employees, agents or
representatives.
2.2 SUBCONTRACTS AND SUB-SUBCONTRACTORS. Subject to the terms and
conditions of this Agreement, Subcontractor shall have the right to have any
of the Work accomplished by Sub-subcontractors pursuant to written
subcontracts between Subcontractor and such Sub-subcontractors. In
conjunction with directions Contractor may give in regular technical reviews,
or otherwise from time to time, Contractor shall have the right to approve or
reject any vendors or Sub-subcontractors supplying Equipment or services;
provided that if Contractor rejects or withholds its approval of a reputable,
qualified and, if applicable, bonded vendor or Sub-subcontractor that submits
the lowest bid, Subcontractor shall be compensated by Contractor for any
additional direct cost it may incur by contracting with a different vendor or
Sub-subcontractor approved by Contractor. Subject to the foregoing,
Subcontractor shall be solely responsible for the engagement and management of
Sub-subcontractors in the performance of the Work. No contractual
relationship shall be deemed to exist between Contractor and any
Sub-subcontractor with respect to the Work to be performed hereunder. No
Sub-subcontractor is intended to be or shall be deemed a third-party
beneficiary of this Agreement.
ARTICLE 3
SUBCONTRACTOR'S RESPONSIBILITIES
3.1 PROJECT DESIGN AND CONSTRUCTION. Notwithstanding any other
provision in this Agreement, Subcontractor shall design, engineer, procure,
construct and test the Subsystem in a manner which shall be:
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(a) consistent with the description of the Project, System and
Subsystem, and all terms and conditions of the Grant;
(b) consistent with the Scope of Supply and the intent of the
Technical Specifications set out in Exhibit B hereto, and in
accordance with all other terms of this Agreement;
(c) in conformity with the requirements of all applicable Law; and
(d) sufficient, complete and adequate in all respects necessary to
enable the System and Subsystem to meet the Acceptance Tests.
3.2 EMPLOYMENT OF LICENSED PERSONNEL. Whenever required by Law,
Subcontractor agrees to employ only licensed personnel to perform
engineering, design, architectural or other professional services in the
performance of the Work.
3.3 RELATED COSTS. Subcontractor shall provide and pay for all labor,
supervision, inspection and Equipment and all other goods and services as may
be necessary to complete performance of the Work, whether by Subcontractor or
its Sub-subcontractors.
3.4 CONTRIBUTION. Subcontractor agrees to provide a minimum of $42,036
to fund the Subsystem, as contributions and matching funds for the Project,
and as "allowable costs" as further defined in Section 3.8 below.
3.5 EQUIPMENT. Subcontractor shall be responsible for the operation
and maintenance of the Equipment provided by Subcontractor or any
Sub-subcontractor hereunder until the Final Acceptance Date, and shall
provide support services to Contractor during integrated testing of the
System.
3.6 APPROVALS, CERTIFICATES, PERMITS AND LICENSES. Subcontractor shall
secure and pay for the acquisition of all required approvals, certificates,
permits and licenses related to the design, development and construction of
the Subsystem. Subcontractor shall deliver to Contractor certified copies of
all such approvals, certificates, permits and licenses.
3.7 LAWS AND REGULATIONS. Subcontractor shall comply and shall cause
each Sub-subcontractor to comply with all Laws that affect Subcontractor's or
such Sub-subcontractor's performance (i) in the ordinary course of its
business or (ii) of the Work. Without limiting the generality of Section 17.1,
Subcontractor agrees to indemnify, defend and hold Contractor harmless from
and against all fines, penalties, related costs and expenses attributable to
any failure of Subcontractor or any Sub-subcontractor to comply with such
Laws.
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3.8 EXPENDITURES AND COST PRINCIPLES
Federal government administrative requirements and cost principles are
applicable to the Subsystem including, but not limited to the following:
(a) "Cost Principles for State and Local Governments," Office of
Management and Budget Circular A-87, appended as Exhibit G hereto;
(b) "Uniform Administrative Requirements for Grants-in-Aid to State
and Local Governments," OMB Circular A-102, appended as Exhibit H hereto;
(c) "Audits of State and Local Governments." OMB Circular A-128.
(d) Subpart 31.2 of the Federal Acquisition Regulation (48 CFR 31.2),
applicable to commercial firms.
Subsystem expenditures shall meet the requirements of "allowable costs"
and shall have the meaning ascribed to such term in the Office of Management
and Budget's circular A-87, "Cost Principles for State and Local
Governments." In the event Subcontractor incurs a cost determined by
Contractor, SMUD, ARPA or other federal authority to be ineligible as an
"allowable cost," Subcontractor will reimburse Contractor for the ineligible
amount, by the amount below the minimum required matching funds as stated in
Section 3.5 above.
3.9 STATUS REPORTS.
(a) MILESTONE REPORTS. Within 3 (three) business days after the
completion of a payable milestone under the Subsystem Schedule,
Subcontractor shall prepare and submit to Contractor a summary report,
which shall include:
(i) the status of Subsystem tasks and the current projection of
their completion,
(ii) a summary of labor costs incurred to the date of the
report, including a summary of total hours worked for each pay
period for which labor was charged to the Subsystem.
(iii) a summary of all other costs incurred to the date of the
report, including copies of invoices or other supporting
documentation for purchases greater than $5,000, and copies of all
contracts greater than $25,000,
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(iv) in agreement with Subcontractor's books and records, a
detailed project cost accumulation for all Subsystem expenditures
to the date of the report, including indirect charges,
(v) a projection of future costs for the Subsystem (if
differing materially from the Funding Schedule attached hereto as
Exhibit C), and
(vi) a discussion of problems and potential problems that may
require action by Contractor or communication with SMUD or ARPA.
(b) MONTHLY REPORTS. Within 10 (ten) days of the end of each month
following the Effective Date, Subcontractor shall prepare and submit to
Contractor a report summarizing all activities during the previous month
toward accomplishing Subsystem objectives. Said report shall include the
status of all Subsystem tasks, the current projection for their
completion, a summary of expenditures during said month, a projection of
future costs for the Subsystem (if differing materially from the Funding
Schedule attached hereto as Exhibit C), and a discussion of problems and
potential problems that may require action by Contractor or communication
with SMUD or ARPA.
(c) QUARTERLY REPORTS. Within 15 (fifteen) days of the end of each
three-month period following the Effective Date, Subcontractor shall
prepare and submit to Contractor a report summarizing all activities
during the period toward accomplishing Subsystem objectives. Said
report shall include the status of all Subsystem tasks, the current
projection for their completion, a summary of expenditures during said
period including the portion of expenditures made as contributions to
the Subsystem and the portion for which Subcontractor has submitted or
will submit invoices for reimbursement from Contractor, a project of
future costs for the Subsystem (if differing materially from the Funding
Schedule attached hereto as Exhibit C), technical reports for submission
to ARPA and System concerns which may require resolution by SMUD or ARPA.
(d) FINAL REPORT. Within 3 (three) weeks of the Final Acceptance
Date, Subcontractor shall prepare and submit to Contractor a final
report summarizing the findings, conclusions, technology developments,
and other technical information obtained through the Project, including
the design, development and delivery of the Subsystem. Information
relative to predicted performance, predicted or estimated future
production costs, and value of the Project to ARPA and the Project
participants shall also be included in the final report and related to
information as presented in the Project proposal to ARPA. Final
Subsystem expenditure totals shall be included in this report. This
report will be
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supplemented by information from other Project participants prior to
submission to ARPA.
(e) DOCUMENTATION. Subcontractor shall maintain and provide upon
request documentation requested by Contractor, SMUD or ARPA that is
necessary to qualify Subcontractor costs as allowable expenditures for
the ARPA Grant.
3.10 AUDITS.
(a) In addition to the audit rights ARPA, the Federal Government,
or SMUD may have, Contractor may have the right to audit
Subsystem-specific documents and records during normal business hours at
Subcontractor's offices during the term of this Agreement and for a
period of three (3) years after the expiration or earlier termination of
this Agreement.
(b) Contractor shall have an audit of federal financial assistance
performed in accordance with generally accepted accounting standards and
"Government Auditing Standards" issued by the Comptroller General of the
United States. This audit shall be performed annually within 12 months
of the end of the year in which federal funds were first received under
this Agreement, including the year in which the Agreement expires or is
terminated pursuant to its terms.
3.11 INDIRECT COSTS. Subcontractor shall provide to Contractor and SMUD
information related to indirect costs as defined in, and for the purpose of,
preparation and submittal of a Cost Allocation Plan in accordance with OMB
Circular A-87, "Cost Principles for State and Local Governments."
3.12 CONTRACTOR'S RIGHT TO INSPECT. Contractor or any authorized
representative of Contractor shall have the right at all reasonable times to
inspect the Work and, in accordance with Article 11 below, to observe the
Acceptance Tests. Notwithstanding the foregoing, Contractor acknowledges that
neither this Agreement nor the Subsystem Schedule provides for any "hold
points" for inspection of the Work, other than provisions governing
Acceptance Tests. Subcontractor shall make arrangements and provide access
for such inspection and observation of such tests. Subcontractor shall
promptly correct any part of the Work which is defective or not in accordance
with this Agreement, regardless of the stage of its completion or the time or
place of discovery of such errors, and regardless of whether Contractor has
previously accepted it through oversight or otherwise. Any such inspection of
any part of the Work shall in no way affect Subcontractor's obligations to
furnish Equipment and perform the Work in accordance with the intent of the
Technical Specifications and all other terms of this Agreement. In the event
Subcontractor fails to provide Contractor with at least five (5) working
days' prior notice of and access for identified inspections, and if in the
opinion of Contractor it is necessary to dismantle the Equipment for such
inspection, then Subcontractor
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shall bear the expense of such dismantling and for the reassembly of such
Equipment. In the event that Contractor discovers any part of the Work to be
in a defective condition or not conforming to this Agreement or the intent of
the Technical Specifications after the Final Acceptance Date, such discovery
shall not invalidate Final Acceptance; however, Subcontractor shall correct,
repair or replace such defective condition or non-conforming matter as
provided under Article 12 of this Agreement.
3.13 TAXES. Subcontractor shall pay all taxes for the Scope of Supply.
Contractor shall make available to Subcontractor applicable tax exemption
certificates, if any, relating to the Project.
3.14 TRADE SECRETS. Each Party shall hold in strict confidence any
information obtained by it relating to the business of the other Party (or
any of the other Party's affiliated corporations) and shall cause the
employer, agents, representatives and affiliates of said Party and each
subcontractor thereof to keep all such information strictly confidential, in
accordance with a Non-Disclosure Agreement between the Parties dated
January 7, 1997, the provisions of which are specifically incorporated herein.
3.15 INTELLECTUAL PROPERTY. Subcontractor shall at all times retain any
rights it may have to any intellectual property relating to the Subsystem
which Subcontractor develops in fulfilling its obligations under this
Agreement.
3.16 MANUFACTURE OF SUBSYSTEM - LICENSE OF INTELLECTUAL PROPERTY. In
the event of successful completion of the project and a determination in
favor of manufacturing the System and Subsystem, Subcontractor agrees to make
all commercially reasonable efforts necessary to enter into an amenable
contract for said manufacture. In the event Subcontractor cannot or will not
enter into such a contract, Subcontractor agrees, on commercially reasonable
terms, to license to Contractor all intellectual property relating to the
manufacture of the Subsystem, as developed or implemented under this
Subcontract.
ARTICLE 4
CONTRACTOR'S RESPONSIBILITIES
Contractor shall comply with the following provisions in a timely manner
consistent with the Subsystem Schedule:
4.1 PAYMENT. Contractor shall pay the net Contract Price and all other
sums required to be paid by it to Subcontractor pursuant to the terms of this
Agreement, which payments shall be made on the basis of Work performed in
accordance with the Subsystem Schedule, the Funding Schedule and the
provisions of Section 7.3 hereof. On this basis, payment shall be made within
30 days of Contractor's actual receipt of a written invoice
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therefor, with interest on such payment accruing at the Prime Rate beginning
on the 31st day after said receipt.
4.2 DISCLOSURE OF INFORMATION. Contractor agrees to provide
Subcontractor with all non-proprietary information, data and documents in
Contractor's possession which reasonably pertain to the design, development
and/or operation of the Subsystem, provided, however, Contractor assumes no
responsibility for the completeness, accuracy or content of any such
information, data and documents and Subcontractor shall remain solely
responsible for the design, engineering, procurement, development and testing
of the Subsystem.
4.4 APPROVALS, CERTIFICATES, PERMITS AND LICENSES. Contractor shall
have no responsibility whatsoever to secure or pay for the acquisition of any
approvals, certificates, permits and licenses required for the Acceptance
Tests or completion of the Subsystem.
4.5 APPROVAL OF ENGINEERING DRAWINGS BY CONTRACTOR. Contractor shall
be provided with a copy of all engineering plans, specifications and drawings
for the Subsystem, and shall have the right to approve such plans,
specifications and drawings, which approval shall not be unreasonably
withheld. Documents may be stamped "Approved for Construction," "Approved
Except as Noted" or "Rejected for Cause" and returned to Subcontractor for
modification, as appropriate. If, within ten (10) business days after
receiving any plans, specifications and/or drawings, Contractor does not
identify in writing items in said plans, specifications and/or drawings that
require modification, Contractor shall be deemed to have approved such plans,
specifications and/or drawings. Contractor's approval of such plans,
specifications and/or drawings shall not relieve Subcontractor of any of its
obligations or liabilities hereunder, and Contractor assumes no
responsibility for such obligations or liabilities as a result of such
approval.
ARTICLE 5
SUBSYSTEM SCHEDULE
Subcontractor shall perform the Work in compliance with the Subsystem
Schedule attached as Exhibit F hereto, provide the reports contemplated by
Section 3.09 hereof, and provide any further information as Contractor may
reasonably request to verify actual progress and predict future progress.
Subcontractor shall promptly notify Contractor in writing at any time that
Subcontractor has reason to believe that the Subsystem Schedule will not be
met and will specify in said notice the corrective action planned by
Subcontractor.
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ARTICLE 6
CHANGE ORDERS
6.1 CHANGE ORDERS. All Change Orders shall be executed in writing by
Contractor and acknowledged in writing by Subcontractor. Except as otherwise
provided in Section 6.2 hereof, no extra Work or changes to the Work
(including but not limited to changes in the Work, Subsystem Schedule or
Contract Price) shall be made except in accordance with a duly issued Change
Order executed and acknowledged as hereinabove provided specifically
authorizing such extra Work or changes thereto.
6.2 REQUEST BY CONTRACTOR. Contractor may submit a written request to
Subcontractor to perform extra Work or to alter, add to or deduct from the
Work. Within five (5) business days following receipt of such request, or
such other period as shall be agreed upon by the parties, Subcontractor shall
submit to Contractor a written estimate of any adjustment to the Work,
Subsystem Schedule or Contract Price that would result from the changed Work.
If Contractor then elects to proceed with the changed Work, it shall issue a
Change Order to Subcontractor authorizing such extra Work or changed Work,
and any related change in the Subsystem Schedule or Contract Price, as shall
have been agreed to by Contractor and Subcontractor. Contractor may request
minor changes (which do not affect the Contract Price or the Subsystem
Schedule) in the Work which are consistent with the criteria set forth in
Sections 3.1 and 3.2 hereof and for which no price and/or schedule changes
are necessary. Subcontractor may, in its sole discretion, agree to perform
such minor changes in the Work referred to in the preceding sentence without
a Change Order. The foregoing notwithstanding, Subcontractor shall not,
pursuant to this Section 6.2, be required to effect any changes to the Work
without an equitable adjustment to the Subsystem Schedule, if doing so would
otherwise impair Subcontractor's ability to meet the Subsystem Schedule.
6.3 REQUEST BY SUBCONTRACTOR.
(a) Except as otherwise provided herein, Subcontractor shall provide
Contractor with written notice of any condition or event that Subcontractor
is aware of and believes will require any modification in or change to the
Work, Subsystem Schedule, Contract Price or any other obligation of
Subcontractor under this Agreement. Such notice must be issued within five (5)
business days following Subcontractor's becoming aware of such condition and
such notice shall describe such condition or event in detail. Within five (5)
business days following delivery of such notice, or such other period as may
be agreed upon by the parties, Subcontractor shall specify the adjustment to
the Work, Subsystem Schedule, Contract Price or any other obligation of
Subcontractor under this Agreement so requested. Following receipt of such
notice, Contractor shall determine whether any changes to the Work, Subsystem
Schedule, Contract Price or any other obligation of Subcontractor under this
Agreement shall be effected.
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(b) Notwithstanding anything to the contrary in subparagraph (a)
above or subparagraph (c) below, Subcontractor shall not in any event effect
any changes to the Work without Contractor's approval if doing so would (i)
impair Subcontractor's ability to meet the warranties, guaranties, Subsystem
Schedule or other of Subcontractor's obligations under this Agreement, (ii)
result in any diminution in the quality of the Subsystem, the System or any of
the Equipment, (iii) diminish the benefits or increase the burdens of
Contractor under this Agreement or during commercial operation of the System,
or (iv) based on Contractor's determination, violate any of the terms of any
approval, certificate, permit or license; and Subcontractor shall effect
changes to the Work, as may be necessitated arising out of any defects,
omissions or errors in the Subcontractor's design of the Subsystem to ensure
that the Subsystem and System shall meet the Acceptance Tests and the terms of
any approval, certificate, permit or license, provided such changes shall be
effected without any adjustment to the Subsystem Schedule, Contract Price or
any other obligation of Subcontractor under this Agreement.
(c) Except as provided in Section 6.5 hereof, changes to the Work
proposed by Subcontractor shall not, without Contractor's prior written
approval, result in any changes to the Subsystem Schedule or any upward
adjustment of the Contract Price; and, if Contractor elects not to approve
any such changes to the Subsystem Schedule or any such upward adjustment of
the Contract Price (except as may be required under Section 6.5 hereof),
Subcontractor shall not be relieved of any of its obligations under this
Agreement (and, as provided in Section 6.1 hereof, Subcontractor shall not
effect any change to the Work without Contractor's prior written approval in
the form of a Change Order).
6.4 PAYMENT FOR CHANGE ORDER WORK. The price of any Work ordered by a
Change Order shall be determined by one of the following methods, as agreed
to by Contractor: (a) by mutual acceptance of a lump sum price; (b) by unit
prices agreed upon by the parties.
6.5 FORCE MAJEURE. Subcontractor shall give timely notice to
Contractor of any Force Majeure event in accordance with the provisions of
Section 6.3 hereof, which notice shall, if practicable, specify the length of
delay in completion of the Subsystem occasioned by, and any additional costs
incurred by reason of, such event and shall substantiate same to the
reasonable satisfaction of Contractor. In the event that it is impracticable to
specify the length of such delay at the time the notice referred to in the
preceding sentence is delivered, Subcontractor shall provide Contractor with
periodic supplemental notices during the period the Force Majeure event
continues. Such supplemental notices shall keep Contractor informed of any
change, development, progress or other relevant information concerning the
Force Majeure event of which Subcontractor is aware. Contractor shall
(assuming it accepts the Force Majeure event finding), within ten (10)
business days following receipt of a notice which specifies the length of
delay in completion of the Subsystem occasioned by the Force Majeure event,
issue a Change Order (i) adjusting the Subsystem Schedule by extending the
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time for performance of Subcontractor's obligations under this Agreement for
a period equal to the delay in completion of the Subsystem resulting from
such Force Majeure event and (ii) adjusting the Contract Price in accordance
with the terms of Section 6.4 hereof. In the event Contractor does not accept
Subcontractor's Force Majeure finding, the propriety of a Change Order for a
Force Majeure-related change may be submitted to dispute resolution under
Article 18 hereof. Subcontractor shall use its best efforts to minimize the
delay caused by any Force Majeure event.
ARTICLE 7
CONTRACT PRICE: FUNDING AND PAYMENTS TO SUBCONTRACTOR
7.1 CONTRACT PRICE. Subcontractor agrees to perform the Work for the
net Contract Price. Payments of the net Contract Price shall be made by
Contractor directly to Subcontractor in accordance with the net Funding
Schedule, as modified by applicable provisions of this Article 7.
Subcontractor shall provide the corresponding HBT Cost Share funding with the
total of Net Payment and HBT Cost Share funding comprising the Total Funding
for the respective work segments, as provided in the Funding Schedule
attached as Exhibit C hereto.
7.2 PAYMENTS. Contractor shall pay to Subcontractor the full amount
specified in the net Funding Schedule upon the completion of each task
completed thereunder, except to the extent that all or a portion of such
amount is disputed for good reason, in which case (a) Subcontractor shall
continue to perform the Work and (b) the disputed portion shall not be paid
until the dispute is resolved.
7.3 FINAL PAYMENT. Within 30 days following the Final Acceptance Date,
Contractor shall pay to Subcontractor any amount remaining to be paid to
Subcontractor under this Agreement, PROVIDED THAT Contractor may withhold a
reasonable and necessary portion of the net Contract Price to reflect
Punchlist Items which have not been completed by Subcontractor.
7.4 PAYMENTS NOT ACCEPTANCE OF WORK. No payment made hereunder shall
be considered as approval of acceptance of any Work. All payments shall be
subject to correction or adjustment in subsequent progress reviews and
payments.
ARTICLE 8
TITLE AND RISK OF LOSS
8.1 CLEAR TITLE. Subcontractor warrants and guarantees that legal
title to and ownership of the Work, whether or not incorporated in the Subsystem
or System, shall pass to
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Contractor, free and clear of any and all liens, claims, security interests
or other encumbrances, upon the earlier of payment to Subcontractor of the
amount then actually due to Subcontractor for such Work or the incorporation
of such Work in construction of the Subsystem.
8.2 RISK OF LOSS. Subcontractor shall assume risk of loss
of any Equipment or any other Work completed until the Final Acceptance Date
or such time as the Subsystem is terminated, whichever date is earlier. All
Equipment not yet incorporated into the System shall be stored in secured
areas. Subcontractor shall bear the responsibility of preserving,
safeguarding and maintaining such Equipment and any other Work completed.
Any Equipment or any Work lost, damaged, stolen or impaired before the Final
Acceptance Date shall be replaced promptly by Subcontractor at its own
expense.
ARTICLE 9
INSURANCE
9.1 SUBCONTRACTOR'S INSURANCE. Subcontractor shall, prior
to the start of the construction, procure and thereafter maintain, at its own
expense, the following insurance with insurance carriers having a Best's
"Superior" rating or equivalent rating:
(a) Worker's Compensation Insurance as required by
applicable Law covering employees of Subcontractor engaged in the
performance of the Work;
(b) Employer's Liability Insurance with a limit of
liability of not less than $1,000,000 for each accident;
(c) Comprehensive General Liability Insurance
including Automobile Insurance covering owned, non-owned, and hired
automobiles with a primary liability of not less than $1,000,000
and $10,000,000 in excess liability for bodily injury and property
damage with a $10,000,000 annual aggregate liability for the Project.
Coverage extensions under this policy are to include Contractual
Liability Insurance, Products and Completed Operations Insurance for
two years after completion of the work. For product liability and
completed operations, the $10,000,000 ceiling shall be a maximum, and
not an annual ceiling. The policy will name Contractor and SMUD as
additional insureds and loss payees as their interests may appear, and
the insurance carrier will waive its rights of subrogation against all
insureds with respect to losses covered under this policy.
Subcontractor may utilize a combination of primary and Excess
Liability Insurance policies to meet its obligation to provide
Comprehensive General Liability Insurance coverage. Any losses within
the deductible amounts provided for under this policy shall be borne
by Subcontractor.
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9.2 CERTIFICATES AND CANCELLATIONS. Subcontractor shall,
on or prior to the date construction commences, deliver to Contractor
certificates of insurance evidencing the coverage specified in Section 9.1
hereof. All policies of insurance to be secured and maintained by
Subcontractor hereunder shall provide, by endorsement, that Contractor and
any additional insureds shall be provided forty-five (45) days' prior written
notice before cancellation of any such policies.
9.3 NONWAIVER. Failure of Subcontractor to comply with the
foregoing insurance requirements shall in no way waive its obligations or
liabilities under this Agreement or the rights of Contractor hereunder
against Subcontractor, or the rights of Subcontractor hereunder against
Contractor.
9.4 RIGHT TO INSURE. Should Subcontractor fail to procure
or maintain any of the insurance coverages referred to in this Article 9,
Contractor shall have the right to procure or maintain such coverage at
Subcontractor's expense, either by direct charge or set-off.
9.5 ADEQUACY OF INSURANCE. Contractor does not represent
that the insurance coverage specified herein, whether in scope of coverage or
amounts of coverage, is adequate to protect the obligations of Subcontractor
hereunder, and Subcontractor shall be solely responsible for any deficiencies
thereof.
ARTICLE 10
ORIENTATION AND TRAINING
10.1 ORIENTATION AND TRAINING PROGRAM. Not later than
thirty (30) days prior to the Final Acceptance Date, Subcontractor shall
provide Contractor's personnel with a practical, participatory orientation
and training program for the purpose of educating Contractor's personnel in
the proper operation and maintenance of the Subsystem and all Equipment.
Such program shall consist of at least eight (8) to sixteen (16) hours of
instruction based upon the criteria referred to in Exhibit D hereto, and
shall address all aspects of System operation, as modified by the Project,
including normal operation, emergency procedures and routine maintenance.
10.2 OPERATION, MAINTENANCE AND SAFETY INSTRUCTIONS.
Fifteen (15) days prior to the Final Acceptance Date, Subcontractor shall
provide Contractor with three (3) copies of installation, operation and
maintenance documentation for the Subsystem which shall be based upon the
criteria set forth in Exhibit D hereto. Such instructions shall set forth
the proper nomenclature for the Equipment, recommend procedures for Equipment
operation, inspection and maintenance, and contain arrangement and design
drawings and information. Within thirty (30) days following the Final
Acceptance Date, Subcontractor shall deliver to Contractor final
installation, operation and maintenance documentation, reproducible
composite as-built
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drawings, record drawings, specifications, component lists and design sheets,
indicating the as-operating condition of the Subsystem.
ARTICLE II
FINAL ACCEPTANCE
11.1 ACCEPTANCE TESTS. At such time as Subcontractor deems
appropriate in accordance with the Subsystem Schedule, Subcontractor shall
notify Contractor of its intention to commence start-up and testing in
accordance with the terms and procedures specified in this Section 11.1. Such
notice shall be given at least ten (10) business days prior to
Subcontractor's planned commencement of initial testing and Contractor's
representatives shall have the option to witness the Acceptance Tests. All
start-up and test procedures conducted by Subcontractor shall be in
accordance with Exhibit D hereto. Except for the Contractor's costs in
supplying its own personnel and equipment, or as otherwise provided in this
paragraph, the cost of all such testing, including, without limitation, the
cost for Subcontractor's personnel and equipment involved in such testing,
shall be borne solely by Subcontractor. Completion of such testing shall
occur when each of the following requirements has been fulfilled:
(a) each element of the Subsystem is able to perform in
accordance with its design requirements in conformity with the
intent of the Technical Specifications;
(b) each component of the Acceptance Tests has been performed
concurrently (unless otherwise mutually agreed upon), and the
indicated results achieved in accordance with the criteria
specified in Exhibit D hereto; and
(c) all Work shall be substantially completed except for
Punchlist Items, and all such Work shall have been performed in
accordance with the terms of this Agreement.
11.2 NOTICE OF COMPLETION. Once Subcontractor has completed the
testing and has performed all of the requirements in accordance with Section
11.1 hereof, Subcontractor shall submit the Final Acceptance Certificate and,
subject to Section 11.3 hereof, all final payments shall be paid in
accordance with Section 7.3 hereof.
11.3 CONTRACTOR'S ACCEPTANCE. Within fifteen (15) business days
following receipt of the Final Acceptance Certificate, Contractor shall
notify Subcontractor in writing whether, to Contractor's knowledge,
Subcontractor has fulfilled the requirements of this Agreement sufficient to
successfully complete the Acceptance Tests in accordance with the terms of
Section 11.1 hereof. Such notice shall constitute Final Acceptance. Subject
to Section 7.3,
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Contractor shall pay any amounts then owed to Subcontractor within 30
business days after the later of (a) the giving of such notice and (b) the
receipt by Contractor of Subcontractor's itemized invoice for such amounts
(together with any required supporting documentation). However, if Contractor
determines, in accordance with established test procedures referred to in
Exhibit D hereto and the other requirements specified in Section 11.1 hereof
that, notwithstanding Subcontractor's delivery of the Final Acceptance
Certificate, the Subsystem does not substantially fulfill the requirements
specified in Section 11.1 hereof, then Contractor may deliver its written
notice to that effect to Subcontractor. Such notice shall describe in
reasonable detail the deficiencies noted and Final Acceptance and the Final
Acceptance Date shall not be deemed to have occurred.
11.4 CUSTODY OF SYSTEM. Upon the Final Acceptance Date,
Subcontractor shall relinquish and grant to Contractor full and exclusive
custody of the Subsystem, including responsibility for maintenance, operation
and insurance, at which time all risk of loss shall pass to Contractor.
11.5 LONG-TERM OBLIGATIONS. It is expressly understood and agreed
by the parties that nothing contained in this Article II shall in
any way modify or alter Subcontractor's obligations under Articles 12 and 13
hereof.
ARTICLE 12
WARRANTY AND GUARANTY
12.1 SCOPE AND TERM. Subcontractor will use its best efforts to
provide that the Work shall be (i) free from defects in materials and/or
workmanship and (ii) in accordance with the terms of this Agreement and
generally accepted professional engineering standards and practices
applicable to recognized engineers performing design services of a comparable
nature.
12.2 REMEDY. If the warranty set forth in Section 12.1 hereof is
breached prior to or during Final Acceptance Tests, and provided that
Contractor notifies Subcontractor of such breach within a reasonable time
from the day Contractor becomes aware of such breach, Subcontractor shall
correct the defective workmanship, material, and/or design, as the case may
be, within one week of such notice at no cost to Contractor (and at
Subcontractor's sole cost.) If the warranty set forth iin Section 12.1 hereof
is breached after Final Acceptance Tests, but prior to the first anniversary
of the completion of Final Acceptance Tests, and provided that Contractor
notifies Subcontractor of such breach within a reasonable time from the day
Contractor becomes aware of such breach, Subcontractor shall provide any
necessary support, and correct the defective workmanship, material, and/or
design, as the case may be, within one week of such notice at cost to
Contractor (with no markup for Subcontractor profit).
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ARTICLE 13
COMPLETION AND PERFORMANCE GUARANTEES
13.1 GUARANTEE OF TIMELY COMPLETION. Subcontractor hereby guarantees
that the Final Acceptance Date shall occur not later than the Completion Date.
13.2 SUBCONTRACTOR'S OBLIGATION TO REPAIR, REPLACE OR BUY-DOWN. In the
event the Acceptance Tests results deviate from those which are acceptable to
Contractor, then Subcontractor shall be obligated to reschedule up to two (2)
Acceptance Tests at its own cost and expense within two months after the
conclusion of the first attempt to pass the Acceptance Tests, and shall
diligently continue to use its best efforts to repair, redesign or modify the
System or any piece of Equipment or part thereof at its sole cost and expense
in order to satisfy the Acceptance Tests.
ARTICLE 14
SUBCONTRACTOR'S REPRESENTATIONS
14.1 Subcontractor warrants that:
(a) CORPORATE STANDING. It is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and that the execution, delivery and performance of this
Agreement has been duly authorized by all requisite corporate action and will
not violate any provision of any Law, its charter or by-laws or any
indenture, agreement or instrument to which it is a party or by which its
property may be bound or affected.
(b) NO VIOLATION OF LAW. It is not in violation of any applicable
Law, or judgment, order or decree entered by any federal, state, local or
other governmental authority which violations, individually or in the
aggregate, would affect its performance of any obligations under this
Agreement.
(c) LICENSES. It is the holder of all consents, licenses, permits,
or other authorizations, governmental or otherwise, required to conduct its
business now and as contemplated by this Agreement.
(d) LITIGATION. It is not a party to any legal, administrative,
arbitral, investigatorial or other proceeding or controversy pending, or, to
the best of its knowledge, threatened, which would adversely affect its
ability to perform under this Agreement.
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(e) QUALIFICATIONS. It has: (i) examined this Agreement
thoroughly and has become familiar with its terms; (ii) full experience and
proper qualifications to perform the Work, to construct the Subsystem and to
evaluate the need for and obtain all approvals, certificates, permits and
licenses, governmental or otherwise, for the construction and operation of
the System; and other general and local conditions (including labor and
federal, state and local permitting requirements) which might affect its
performance of the Work or the cost thereof.
ARTICLE 15
CONTRACTOR'S REPRESENTATIONS
15.1 The Contractor represents and warrants that:
(a) CORPORATE EXISTENCE. The Contractor: (i) is a corporation
duly organized and validly existing under the laws of the state of its
incorporation and (ii) has all requisite power, and has all material
governmental licenses, authorizations, consents and approvals necessary to
own its assets and carry on its business as now being or as proposed to be
conducted.
(b) NO BREACH. The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and compliance with the
terms and provisions hereof will not conflict with or result in a breach of,
or require any consent under, the charter or by-laws of Contractor, or any
applicable Law, or any order, writ, injunction or decree of any court.
(c) CORPORATE ACTION. Contractor has all necessary power and
authority to execute, deliver and perform its obligations under this
Agreement; the execution, delivery and performance by Contractor of this
Agreement has been duly authorized by all necessary action on its part; and
this Agreement has been duly and validly executed and delivered by Contractor.
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ARTICLE 16
DEFAULT AND TERMINATION
16.1 DEFAULT BY SUBCONTRACTOR:
(a) TERMINATION FOR SUBCONTRACTOR'S INABILITY TO PERFORM. If
any proceeding is instituted against Subcontractor seeking to adjudicate
Subcontractor as a bankrupt or insolvent, or if Subcontractor makes a general
assignment for the benefit of its creditors, or if a receiver is appointed on
account of the insolvency of Subcontractor, or if Subcontractor files a
petition seeking to take advantage of any other Law relating to bankruptcy,
insolvency, reorganization, winding up or composition or readjustment of
debts and, in the case of any such proceeding instituted against
Subcontractor (but not by Subcontractor) such proceeding is not dismissed
within ninety (90) days of such filing or if there is a material adverse
change in the financial condition or operations or the business or prospects
of Subcontractor which substantially affects Subcontractor's ability to
perform the Work in accordance with the Subsystem Schedule, Contractor may,
without prejudice to any other right or remedy Contractor may have, terminate
this Agreement effective seven (7) days after giving written notice of such
termination to Subcontractor.
(b) TERMINATION FOR SUBCONTRACTOR'S FAILURE TO PERFORM. If
Subcontractor refuses or fails, except in cases for which an extension of
time is provided, to deliver the Subsystem in accordance with the terms of
this Agreement, or otherwise materially violates any provision of this
Agreement, then, if Subcontractor fails to substantially cure such condition
within thirty (30) days after receipt of notice of such condition from
Contractor, or, if such condition is not susceptible of being cured within
such thirty (30) day period, to diligently commence through the exercise of
best efforts to cure such condition within thirty (30) days after receipt of
such notice. Contractor may, without prejudice to any right or remedy and
after giving Subcontractor seven (7) days' notice thereof, terminate this
Agreement.
(c) CONTRACTOR'S RIGHTS. In the event that Contractor elects
to terminate this Agreement pursuant to Section 16.1(a) or 16.1(b) hereof.
Subcontractor shall provide Contractor (and any successor or replacement
contractor or sub-subcontractor), at Subcontractor's expense, the right to
continue to use any and all patented and/or proprietary information
Contractor deems necessary to complete the Subsystem, subject to reasonable
proprietary restrictions, which shall include the execution by all third
parties using such patented and/or proprietary information of a
confidentiality agreement with Subcontractor. Furthermore, Contractor shall
have the right to take possession without compensation of all System
Equipment on the date of such termination for the purpose of completing the
Work and may employ any other person, firm or corporation (sometimes referred
to herein as "replacement contractor") to finish the Work (subject to all
obligations under any and all
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subcontracts as may be assigned to such replacement contractor pursuant to
Section 16.1(d)(ii) hereof) by whatever method that Contractor may deem
expedient. Contractor shall use reasonable efforts to mitigate the cost for
completion of such Work, but may make such expenditures as in Contractor's
sole judgment will best accomplish the timely completion of the Subsystem;
provided that Contractor shall not be required to mitigate any such costs by
terminating, repudiating or renegotiating any agreement entered into between
Subcontractor and any Sub-subcontractor. Subcontractor shall not be entitled
to receive any further payments under this Agreement, except for payments for
Work performed in accordance with the terms of this Agreement prior to such
termination. However, Subcontractor shall nonetheless continue to be bound by
such provisions of this Agreement which survive Final Acceptance, as if there
was Final Acceptance (applicable to any Work performed) as of the effective
date of such termination.
(d) GENERAL OBLIGATIONS. If Contractor elects to terminate
this Agreement pursuant to Section 16.1(a) or 16.1(b) hereof, Subcontractor
shall, at Contractor's request and at Subcontractor's expense, perform the
following services relative to the Work so affected: (i) assist Contractor in
preparing an inventory of all Equipment; (ii) assign to Contractor, or to any
replacement contractor designated by Contractor, all subcontracts and other
contractual agreements as may be designated by Contractor, all of which
subcontracts and contractual agreements shall be so assignable, and make
available all issued approvals, certificates, permits and licenses then held
by Subcontractor pertaining to the prototype unit deliverable as the
Subsystem; (iii) deliver to Contractor all design and other information as
may be reasonably requested by Contractor for the completion of said
prototype unit; and (iv) supply any proprietary elements needed for the
completion of said prototype unit, in accordance with the terms of the
Non-Disclosure Agreement between the Parties dated January 7, 1997.
(e) PAYMENT OBLIGATIONS. If Contractor terminates this
Agreement pursuant to Section 16.1(a) or 16.1(b) hereof, after the final
completion and testing of the System, Contractor shall determine the total
expense incurred and accrued in completing the Work including, without
limitation, all amounts charged by any replacement contractor to finish the
Work based on the obligations such replacement contractor assumes under this
Agreement and under any of Subcontractor's subcontracts or other contractual
agreements that Contractor elects to have assigned to such replacement
contractor pursuant to Section 16.1(d)(ii) hereof, and additional overhead
and legal expenses incurred and accrued by Contractor to effect such takeover
and to complete the Work. If the total expense incurred by Contractor in
completing the Subsystem exceeds the balance of the Contract Price unpaid at
the time of Subcontractor's default, then Subcontractor shall be liable for
and shall pay to Contractor the amount of such excess within ten (10) days
following receipt of Contractor's demand for such payment, but only to the
extent of the cumulative HBT Cost Share under the Funding Schedule for the
most recently completely milestone prior to said termination. Subcontractor
shall have the right to audit the expenses incurred by Contractor in
completing
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the System if Contractor claims that the total expenses to complete the
System exceed the balance of the Contract Price unpaid at the time of
Subcontractor's default.
(f) INDEMNIFICATION. If any event or condition specified in
Section 16.1(a) or 16.1(b) hereof occurs, Subcontractor agrees to indemnify
and hold Contractor harmless from any and all liability, except that caused
by Contractor's gross negligence or willful misconduct, including, but not
limited to, judgments, costs, fines or penalties of whatever nature arising
from or related to any such event or condition.
16.2 OPTIONAL TERMINATION BY CONTRACTOR:
(a) RIGHTS. Contractor may terminate this Agreement in whole or
in part at any time by written notice thereof to Subcontractor. Upon receipt
of any such notice, Subcontractor shall, unless the notice directs otherwise:
(i) immediately discontinue the Work on the date and to the extent specified
in such notice; (ii) place no further orders or subcontracts for Equipment or
labor except as may be necessary for completion of such portion of the Work
as is not discontinued; (iii) promptly make every reasonable effort to
procure cancellation upon terms satisfactory to Contractor of all orders,
subcontracts and rental agreements to the extent they relate to the
performance of the Work that is discontinued; and (d) thereafter perform only
that portion of the Work as may be necessary to preserve and protect Work
already in progress.
(b) REMEDIES. Subcontractor waives any claims for damages,
including loss of anticipated profits for uncompleted Work, on account of a
termination by Contractor pursuant to this Section 16.2 and shall accept as
its sole remedy the following, provided that Subcontractor shall have
properly performed services or purchased, prepared, or fabricated any
Equipment for subsequent installation in the Subsystem:
(i) If, at the date of such termination, Subcontractor
delivers such Equipment or that portion of Equipment so prepared or
fabricated to such place as Contractor shall reasonably direct, Subcontractor
shall be paid a sum equal to the aggregate of: (a) the Net Payment for the
last completed milestone under the Funding Schedule, (b) actual costs
incurred subsequent to (a) above and not yet paid to date of such
termination, (c) all costs of termination, including but not limited to,
substantiated vendor cancellation charges, and (d) reimbursement of the
entire HBT Cost Share actually contributed prior to such termination.
(ii) If, at the date of such termination, Contractor does
not accept delivery of such Equipment or portion thereof, Subcontractor shall
be paid an amount equal to: (a) the Net Payment for the last completed
milestone under the Funding Schedule, (b) actual costs not paid to date of
such termination, (c) all costs of termination, including but not limited to,
substantiated vendor cancellation charges, and (d) a termination premium
equal to 3% of
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all payments due under the Payment Schedule prior to termination.
Subcontractor shall also be released from any obligation for any HBT Cost
Share due subsequent to the date of such termination.
Payments under this Section 16.2 shall be due Subcontractor within sixty
(60) days of Contractor's receipt of invoices therefor (together with
supporting documentation).
ARTICLE 17
INDEMNITIES
17.1 GENERAL INDEMNITY. To the extent not caused by SMUD or
Contractor, Subcontractor covenants and agrees to indemnify and hold harmless
SMUD, Contractor, each of their affiliated corporations and each stockholder,
member, partner, employee, agent, representative, successor and assignee
thereof, or any such affiliated corporation (collectively, the
"Indemnitees"), from any and all damages, costs, expenses, claims,
liabilities or obligations (including, without limitation, any attorneys fees
or expenses) arising from (a) any breach of any representation, warranty,
covenant or agreement set forth in this Agreement or (b) any third-party
suit, action, or other claims (including, without limitation, any suit,
action or claim of any Sub-subcontractor) in the case of this clause (b)
caused by or resulting from, in whole or in part, any act or omission by
Subcontractor, any Sub-subcontractor or any stockholder, member, partner,
employee, agent or representative of Subcontractor or any Sub-subcontractor
and relating to, arising out of or in connection with the Work, the System,
the Subsystem or this Agreement. The indemnity provisions expressed in this
Section 17.1 shall in no manner amend, abridge, modify or restrict any other
of Subcontractor's obligations expressed elsewhere in this Agreement.
17.2 PATENT INDEMNIFICATION. Without limiting the generality of
Section 17.1, Subcontractor expressly agrees that it shall indemnify, defend
and hold harmless each Indemnitee from and against any and all suits, actions
or claims whatsoever arising from or in any manner related to an infringement
of patents or the improper use of other proprietary rights which may occur in
connection with Subcontractor's or any Sub-subcontractor's performance of the
Work pursuant to this Agreement, unless, however, the infringement arises
because of the use of such merchandise in an infringing process or
combination and such infringement would not arise from the use of such
merchandise alone. This indemnification is conditioned upon the Indemnitee's
giving Subcontractor (i) reasonable notice of, and the right to defend and
settle (provided such settlement does not adversely affect SMUD, the
Contractor or the Project) any such claim or suit, and (ii) upon prior
approval from Contractor, the right to modify such products so as to make
them non-infringing without materially departing from the Contractor's
Subsystem requirements. Should any such claim materially impair
Subcontractor's or any Sub-subcontractor's performance of the Work or
continued operations, then Subcontractor shall, at its own expense, promptly
procure the right to continue its
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performance of the Work so as not to materially impair the Subsystem Schedule
or continuity of operation.
17.3 NOTICE. Contractor shall notify Subcontractor in
writing as soon as Contractor shall receive notice of any claims of
infringement of patents or other proprietary rights occurring in connection
with Subcontractor's performance of the Work. In turn, Subcontractor shall
promptly notify Contractor in writing of any claims which Subcontractor or
any Sub-subcontractor may receive alleging infringement of patents or other
proprietary rights which may affect Subcontractor's or any
Sub-subcontractor's performance of the Work under this Agreement.
17.4 SURVIVAL. The indemnification provided in this Article
17 and in Section 16.1.b shall survive the termination of the Project or the
Subsystem, whether by cancellation of Final Acceptance or otherwise.
17.5 PARTIAL LIMITATION OF LIABILITY. In no event shall
Subcontractor be held liable for damages related to lost profit (unless
related to existing business or obligations) or loss of potential business.
ARTICLE 18
DISPUTE RESOLUTION
18.1 PROCEDURE. In the event a dispute arises between
Contractor and Subcontractor regarding the application or interpretation of
any provision of this Agreement, the aggrieved party shall promptly notify
the other party to this Agreement of the dispute within ten (10) days after
such dispute arises. If the parties shall have failed to resolve the dispute
within ten (10) days after delivery of such notice, each party shall, within
five (5) business days thereafter, nominate a senior officer of its
management to meet for at least ten (10) business days, if necessary, or at
any mutually agreed location, to attempt to resolve in good faith the dispute.
18.2 CONTINUATION OF WORK. Pending final resolution of any
dispute, Contractor and Subcontractor shall continue to fulfill their
respective obligations hereunder.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and commitments with respect thereto. There
are no other agreements, understandings, terms or
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conditions and neither party has relied upon any representation or warranty,
express or implied, not contained in this Agreement.
19.2 AMENDMENTS. No change, amendment or modification of
this Agreement shall be valid or binding upon the parties hereto unless such
change, amendment or modification shall be in writing and duly executed by
both parties hereto.
19.3 JOINT EFFORT. Preparation of this Agreement has been
a joint effort of the parties and the resulting document shall not be
construed more strictly against one of the parties than against the other.
19.4 CAPTIONS. The captions contained in this Agreement
as for convenience and reference only and in no way define, describe, extend
or limit the scope or intent of this Agreement or of any provision contained
herein.
19.5 NOTICE. Any notice, offer or demand, required or
permitted to be given or made pursuant to this Agreement shall be in writing
signed by the party giving or making such notice, offer or demand, and shall
be hand delivered or sent by registered letter, telefax, or telex to the
other parties at such address as set forth below:
(a) If delivered to Contractor:
H Power Corporation
60 Montgomery Street
Belleville, New Jersey 07109
Attn: Dr. Arthur Kauffman
With copy to:
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross
1 Riverfront Plaza
Newark, New Jersey 07102
Attn: Ira A. Rosenberg, Esq.
(b) If delivered to Subcontractor:
Hydrogen Burner Technology
3925 Vernon Street
Long Beach, California 90815
Attn: Mr. John Cuzens
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Each party shall have the right to change the place to which such notice,
offer or demand shall be sent or delivered by a notice delivered or sent in
like manner to the other party. The effective date of such notice, offer or
demand shall be as of the addressee's receipt thereof.
19.6 SEVERABILITY. The invalidity of one or more phrases, sentences,
clauses, Sections or Articles contained in this Agreement shall not affect
the validity of the remaining portions of the Agreement so long as the
material purposes of this Agreement can be determined and effectuated.
19.7 ASSIGNMENT. This Agreement or any right or obligation contained
herein may not be assigned by Subcontractor without the prior written express
consent of Contractor; any other assignment by Subcontractor shall be void
and without force or effect.
19.8 WORK STOPPAGE. Contractor shall have the right to stop the Work,
without terminating this Agreement, at any time Subcontractor is performing
any Work other than in accordance with the terms of this Agreement.
Contractor shall be required to give written notice to Subcontractor, at any
time the Work is ordered to be stopped, describing the reason(s) for such
order, and in the event Contractor stops the Work on the basis of any such
order and thereafter it is determined that Subcontractor was performing all
Work in accordance with the terms of this Agreement as of the time such order
was given, there shall be an appropriate adjustment to the Subsystem Schedule
and the Contract Price for any delay or additional costs caused by such
wrongful Work stoppage.
19.9 NO WAIVER. Any failure of either party to enforce any of the
provisions of this Agreement or to require compliance with any of its terms
at any time during the term of this Agreement shall in no way affect the
validity of this Agreement, or any part hereof, and shall not be deemed a
waiver of the right of such party thereafter to enforce any such provision.
19.10 APPLICABLE LAW. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of California, and the
parties agree that any litigation relating to this Agreement shall be brought
exclusively in the State of California. Contractor and Subcontractor hereby
(i) consent to be subject to the personal jurisdiction of the federal courts
in and the state courts of the State of California in any proceeding, whether
by way of indemnification or otherwise, relating to, arising out of or in
connection with this Agreement, (ii) agree that, in any such proceeding,
service of process or notice that is in writing and sent by certified or
registered mail, return receipt requested, shall have the same force and
effect as if process or notice were personally served upon such party and
(iii) agree that any such proceeding shall be litigated exclusively in the
California state or federal courts.
19.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto, their successors and permitted assigns.
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19.12 EXHIBITS. All exhibits referenced in this Agreement shall be
incorporated into this Agreement by such reference and shall be deemed to be
an integral part of this Agreement. Where any term, condition or other
provision of an Exhibit, or a schedule or other attachment thereto, conflicts
with a provision of this Agreement, the provision of this Agreement shall
control.
19.13 OBLIGATIONS. Nothing contained in this Agreement shall be
construed as constituting a joint venture or partnership between
Subcontractor and Contractor, and neither party shall have any power or
authority to bind or obligate the other party hereto, except to the extent
expressly provided herein.
19.14 WAIVER OF LIENS. As a condition precedent to the making of any
payment hereunder, Subcontractor shall obtain from each of its
Sub-subcontractors a certificate and/or waiver of liens and security
interests to the extent of such payment in a form reasonably acceptable to
Contractor, duly executed and acknowledged by Subcontractor and such
Sub-subcontractors and, in the case of such certificate, stating that all
amounts that were due and payable to the certifying party in connection with
the Work as of the date of the last advance have been paid in full.
19.15 FURTHER ASSURANCES. Subcontractor and Contractor agree to
provide such information, execute and deliver any instruments and documents
and to take such other actions (which are not inconsistent with the provisions
of this Agreement and which do not involve the assumption of obligations
other than those provided for in this Agreement), as may be necessary or
reasonably requested by the other party in order to give full effect to this
Agreement and to carry out the intent of this Agreement.
19.16 COUNTERPARTS. This Agreement may be signed in any number of
counterparts and each counterpart shall represent a fully executed agreement
as if signed by both parties.
19.17 AUTHORIZED PERSONS. Contractor and Subcontractor shall each
designate by written notice to the other party hereto a person or persons who
are authorized to supervise the Subsystem on its behalf, make determinations
with respect to the Subsystem, the Work and the interpretation and
application of this Agreement, and to give notices and execute and deliver
Change Orders and other documents required or permitted to be delivered
hereunder.
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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
as of this 9 day of October, 1998.
H POWER CORPORATION
11/16/98
BY: /s/ Arthur Kaufman
------------------------
TITLE: Vice President
---------------------
HYDROGEN BURNER TECHNOLOGY
BY: /s/ David Moard
------------------------
TITLE: CEO
---------------------
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