Exhibit 10.27
AG-024D
Xonon(TM) Module Supply Agreement
This Agreement is made as of this 13th day of December, 2000, by and between
Kawasaki Heavy Industries, Ltd. (hereinafter referred to as "KHI"), a Japanese
corporation and having its principal place of business at 0-0 Xxxxxxx-Xxxxxxxx-
xxx 0-xxxxx, Xxxx-xx, Xxxx, Xxxxx; Kawasaki Motors Corp., U.S.A. (hereinafter
referred to as "KMC"), a Delaware corporation and having its principal place of
business at 0000 00xx Xxxxxx X.X. Xxxxx Xxxxxx, Xxxxxxxx, X.X.X. and Catalytica
Energy Systems, Incorporated (hereinafter referred to as "CESI"), a Delaware
corporation and having its principal place of business at 000 Xxxxxxxx Xxxxx,
Xxxxxxxx Xxxx, Xxxxxxxxxx, U.S.A., any or all of which shall also be hereinafter
referred to as a "party", and together as the "parties", respectively.
Whereas KHI and CESI entered into Technical Development and Transfer Agreement
dated as of 13th day of December, 2000 (hereinafter referred to as "TDTA"), and
agree to execute the Supply Agreement separately under Article 5.0 of the TDTA;
and
Whereas KHI and KMC are desirous to procure the XONON Module(s) from CESI, to be
incorporated into the Adapted M1A-13A and/or the Adapted Kawasaki Gas Turbines
or to be used as replacement of such XONON Module(s) , under the terms and
conditions as set forth in the Supply Agreement. CESI is also desirous to
supply KHI and KMC with the XONON Module(s) , to be incorporated into the
Adapted M1A-13A and/or the Adapted Kawasaki Gas Turbines or to be used as
replacement of such XONON Module(s), under the terms and conditions as set forth
in the Supply Agreement.
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants herein contained, the parties agree as follows:
1. Definitions
-----------
Unless otherwise as specifically defined in this Agreement, the capitalized
words used in this Agreement shall have the same meanings as defined in the
TDTA.
2. Customer Use / Rights
---------------------
CESI furnishes each XONON Module to KHI/KMC under the terms of a License with
the KHI/KMC having rights to sub-license the XONON Module to the operator of the
gas turbine (hereinafter the End User) only for installation in a gas turbine
combustion system designed specifically for such use by KHI/KMC licensed by CESI
pursuant to a written License. The XONON Module consists of the container and
its internal components including the catalytically active elements. The term
of License to the End User is for the period of time during which the XONON
Module is capable of combusting the specified range of fuel within the limits
set forth by CESI for emissions of NOx and other products of combustion.
KHI/KMC or its End User shall recover and return to CESI, freight prepaid, the
spent XONON Module immediately after it is removed from service in the gas
turbine. This license does not confer on KHI/KMC or the End User any rights of
ownership of such XONON Module or in any underlying technology rights, of any
type, embodied or used therein. The license to the End User is not transferable
to any other person, user, supplier, or customer; nor does it extend
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AG-024D
beyond the duty life of the XONON Module. No warranty of CESI extends to any
non-CESI provided XONON Module nor to the operation of any turbine not using a
CESI provided XONON Module.
If any returned XONON Module, which on inspection by CESI is substantiated by
CESI by reasonable proof with the consent of KHI/KMC to have been damaged,
altered, misused, tampered with or disassembled, in whole or in part, result in
forfeiture of the core charge for that module XONON Module.
All Licenses KHI/KMC enters with End Users shall include such terms, and KHI/KMC
shall enforce the terms of its Licenses with End Users.
3. Acceptance
----------
The issuance of a purchase order document by KHI/KMC under and with reference to
this Agreement shall constitute a definitive contract of sale (herein
"Order"),subject to acknowledgement by CESI to the said purchase order within
seven (7) calendar days after the issuance thereof. Provisions contained in
purchase order documents issued under and with reference to this Agreement
which materially add to or subtract from the provisions of this Agreement shall
not be a part of the Order unless specifically agreed to in CESI's written
acknowledgement.
4. Modifications/Changes.
----------------------
Requests by KHI/KMC for any modifications or changes to the Order, including but
not limited to changes in specifications, quantities, delivery obligations and
terms of payment, must be made in writing. All such requests are subject to
CESI's written acceptance (such acceptance shall not be unreasonably withheld by
CESI) and may result in adjustments to price and / or delivery schedules.
5. Prices and Payments
-------------------
The License for the XONON Module has two price components.
The Core Charge is a charge levied on being granted the License for each XONON
Module and is subject to refund or credit to the account of KHI/KMC on return of
the spent XONON Module in good condition, reasonable wear and tear excepted, and
on the condition that the terms of the License have not been violated. The Use
Charge is levied on procurement by KHI/KMC of each XONON Module and is not
refundable.
Unless otherwise specifically stated in CESI's offer, all prices are in U.S.
dollars and are valid for a period of ninety (90) days from the date of the
offer.
Prices of the XONON Module offered by CESI do not include sales, use or excise
taxes, import or export duties, special financing fees, value added taxes,
income or royalty taxes imposed outside the United States, consular fees,
special permits or licenses or similar charges. KHI/KMC shall either pay any
and all such taxes and charges or provide CESI with acceptable exemption
certificates. All the prices are based on delivery EXWORKS factory (as defined
by Incoterms 1990), and do not include any charges for services such as
preservation packaging,
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AG-024D
insurance, brokerage fees, marine survey, load out and tie down, site
installation, or equipment start-up.
Invoices shall be submitted to KHI/KMC according to the payment schedule stated
in the offer, otherwise, invoices shall be submitted to KHI/KMC upon readiness
of modules for shipment. If payment originates in the United States, invoices
shall be due and payable NET 30 DAYS from date of the invoice without regard to
delays for inspection or transportation. If payment originates outside the
United States, KHI/KMC must establish an irrevocable letter of credit in a form
and with a bank acceptable to CESI. Unless otherwise specifically stated in the
offer, all payments shall be in U.S. dollars. Should KHI/KMC's financial
responsibility become unsatisfactory to CESI, cash payment or other security may
be required. If KHI/KMC fails to meet these requirements CESI may discontinue
manufacture and treat such failure as reasonable grounds for repudiation of the
Order. In such event, cancellation charges set forth in this Agreement shall be
due CESI. Past due invoices shall be subject to interest charges at the maximum
lawful rate of interest. (1.5% per month)
The breakdown of the Core charge and the Use charge, and payment terms thereof
shall be stipulated on EXHIBIT "A" attached hereto.
6. Escalation.
-----------
The Core charge and the Use charge shall be adjusted in accordance with the
formula as set forth in EXHIBIT "B" attached hereto.
7. Risk of Loss.
-------------
CESI warrants that the License and any sub-license to End Users granted
hereunder to KHI/KMC is rightful and free from any security interest or other
lien or encumbrance of third parties. Unless otherwise expressly agreed in
writing by CESI, risk of loss of the XONON Module shall pass to KHI/KMC upon
delivery of the XONON Module EX-WORKS factory. Claims for damages or shortages
attributable to CESI must be in writing and received by CESI within thirty (30)
days after receipt of XONON Module or within thirty (30) days after notice of
loss, whichever shall occur first, and must be accompanied by CESI's packing
slip and full particulars of any such claim. Prior to returning any XONON
Module for any reason, except the return of spent XONON Module in the normal
course of business, KHI/KMC must obtain a Return Material Authorization (RMA)
from the CESI sales department.
8. Alternative Product Source
--------------------------
In case that CESI is unable to consistently meet KHI/KMC's requirement for XONON
Module(s) from a quality or delivery standpoint, CESI shall promptly establish a
second source of supply (as a vendor to CESI) with a Third Party manufacturer
designated by CESI and approved by KHI (which approval shall not be unreasonably
withheld), solely for the purpose of satisfying CESI's obligations to supply
XONON Module(s) to KHI/KMC.
9. Warranty
--------
CESI warrants the XONON Module to be free from defects in design, workmanship
and
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AG-024D
material used in their manufacture. This warranty will cover , each XONON
Module on a unit-by-unit basis, only for claims for such defects made during the
first expiration of that period (the "Warranty Period") (i) which begins upon
the first firing of a gas turbine containing the XONON Module and ends after an
aggregate [*] of fired operation of the gas turbine containing the XONON Module,
or (ii) which begins on the date of the first firing of the gas turbine
containing the XONON Module and ends [*] thereafter, whichever occurs first.
This warranty is conditioned on:
a. The XONON Module being installed and used in accordance with CESI's
recommended procedures and good industry practice, not altered, disassembled,
misused, tampered with or otherwise subjected to conditions outside the
environmental envelope specified; and,
b. Any defective XONON Modules are returned to CESI's facility without undue
delay within the Warranty Period in accordance with CESI's standard warranty
claim instructions, transportation charges prepaid; and,
c. Examination of such module(s) by CESI confirms the existence of such a
defect.
CESI's obligations under this warranty are limited to repair or replacement
including freight of such defective XONON Module(s) (as CESI elects ), free of
charge at CESI's place of business. Should multiple removal and reinstallation
during a single warranty period be required CESI will reimburse KHI/KMC for
reasonable costs of the second and subsequent installations. All replacement
XONON Module and repaired XONON Module are, warranted through, but not beyond,
the original Warranty Period. CESI's sole liability and responsibility, and
KHI/KMCs sole and exclusive remedy, with respect to this warranty shall be
limited to the remedies set forth above.
This warranty shall not apply to or include (i) Normal maintenance services or
adjustments, or (ii) the removal or reinstallation of warranted modules except
as stated above (iii) any XONON Module which have been repaired or altered by
others, or (iv) the effects of corrosion, erosion or wear and tear or failure
occasioned by operation or condition of service more severe than specified.
CESI warrants that the XONON Module will conform only to such national, federal,
state or local laws, ordinances, regulations, codes and standards, as stated in
the Purchase Order applicable to the XONON Module supplied by CESI hereunder.
THIS WARRANTY IS IN LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION, WARRANTIES OF MECHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. All other representations to KHI/KMC and all other obligations or
liabilities do not constitute a warranty. Liability for incidental or
consequential damages is specifically disclaimed. No person is authorized to
give any other warranties or to assume any other liability on CESI's behalf
unless agreed to in writing by CESI.
10. Force Majeure
--------------
CESI shall not be liable for any delay in performance, any nonperformance, or
any other deviation in performance of CESI's obligations, nor for any loss or
damage to the XONON Module supplied hereunder, when occasioned directly or
indirectly by any cause or causes
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AG-024D
beyond the reasonable control of CESI or its subcontractors or suppliers,
including, but not limited to, acts of God, acts of criminals or of the public
enemy; war, riot; official or unofficial acts, orders, regulations or
restrictions of any governmental authorities, or failure, shortage or delay in
CESI's usual sources of labor or material supply caused by such reasons as
described in the proceeding of this sentence. CESI shall have a reasonable
extension of the time for performance when delayed by any such cause.
11. Suspension of Order/Delay By KHI/KMC
------------------------------------
KHI/KMC's request for suspension of the Order or a delay in shipment must be
delivered in writing to CESI, and shall be valid if dispatched by facsimile or
e-mail with confirmation by registered mail. Such suspensions or delays may
result in adjustments to prices, payments and delivery schedules and are subject
to the provisions of the agreement licensing Xonon technology to the KHI/KMC.
The time required for subsequent completion of the Order may exceed the number
of days of suspension or delay due to CESI's scheduling constraints. If a
suspension is more that sixty (60) days in duration, KHI/KMC will pay CESI pro
rata for the portion of the Order completed. In the event that production-
fabrication has proceeded to the point that XXXX xxxxx it cannot reasonably
reschedule completion or the request for suspension is received less then sixty
(60) days prior to scheduled shipment, the Order shall be completed, invoiced,
and the XONON Module placed in storage at KHI/KMC's expense. CESI shall retain
ownership and a security interest therein until payment of the total Order price
is received. In the event CESI is otherwise unable to deliver the XONON Module
when ready due to the action or inaction of KHI/KMC, CESI shall so notify
KHI/KMC. Such inability to deliver shall also be subject to the above
provisions.
12. Term and Termination
--------------------
12.1 The term of this Agreement is five (5) years, and shall be automatically
renewed for an indeterminate number of consecutive one year periods
unless either party shall serve the other with a notice of the
termination in writing at least 60 days prior to the next renewal date.
Such termination is effective at the close the business on next
anniversary date.
12.2 Either party may terminate this Agreement for cause upon the occurrence
of any of the following:
A) The other party shall (a) seek the liquidation, reorganization,
dissolution or winding up of itself (other than dissolution or winding up
for the purposes of reconstruction or amalgamation) or the composition or
readjustment of all or substantially all of its debts, (b) apply for or
consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or substantially all
of its assets, (c) make a general assignment for the benefit of its
creditors, (d) commence a voluntary case under the Bankruptcy Code, (e)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
readjustment of debts, or (f) adopt any resolution of its Board of
Directors or stockholders for the purpose of effecting any of the
foregoing; or
B) A proceeding or case shall be commenced without the application or
consent of the other party and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of
the following shall be entered and
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AG-024D
continue unstayed in effect, for a period of ninety (90) days from and
after the date service of process is effected upon the other party,
seeking (a) its liquidation, reorganization, dissolution or winding up,
or the composition or readjustment of all or substantially all of its
debts, (b) the appointment of a trustee, receiver, custodian, liquidator
or the like of itself or of all or substantially all of its assets, or
(c) similar relief under any law relating to bankruptcy, insolvency,
reorganization, winding up or composition or readjustment of debts; or
C) Upon or after the breach of any material provision of this Agreement,
if the breaching party has not cured such breach within ninety (90) days
after notice thereof from the non-breaching party, this Agreement shall
terminate for cause, at the option of the non-breaching party, upon the
expiration of such ninety (90) day cure period.
12.3 In case of termination of this Agreement by KHI/KMC in accordance with
Article 12.2 due to the causes attributable to CESI, CESI agrees that
(i)CESI shall supply KHI/KMC with the XONON Module(s) to be incorporated
into Kawasaki Gas Turbines for the project of which order KHI/KMC has
already received from its customers; and (ii) KHI/KMC shall have the
rights as granted under the Article 10 of the TDTA to continue to
purchase Xonon Modules during the remainder of the term if the Agreement
had not been terminated by KHI/KMC.
13. Patent Infringement.
--------------------
CESI warrants that the XONON Module shall be delivered free of rightful claim of
any third party by way of infringement of any patent, trademark and other
intellectual property rights. Subject to the limitation of liability as set
forth Article 16 hereof, CESI shall reimburse the damages incurred by KHI/KMC
due to any rightful claim raised by a third party alleging infringement and,
CESI will defend, indemnify and hold KHI/KMC harmless from any such claim for
infringement provided prompt notice and opportunity to defend is given by
KHI/KMC to CESI. This warranty constitutes CESI's sole responsibility for
infringement claims.
14. Assignments.
------------
Neither of the parties hereto may assign the whole or any part of this Agreement
and any rights or obligations under the Order to any third party without prior
written consent of the other party thereto, provided, however, that such consent
shall not be unreasonably withheld by such other party.
15. Independent Contractor.
-----------------------
At all times while performing the Order, CESI shall be deemed to be an
independent contractor and not an employee or agent of KHI/KMC. Equipment
operators and other KHI/KMC employees, agents, subcontractors, or servants
assigned to assist CESI may receive temporary instructions, directions, or
control from CESI but shall, at all times be considered the employees, agents,
subcontractors, or servants of KHI/KMC and not of CESI.
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AG-024D
16. Limitation of Liability.
------------------------
Neither KHI/KMC nor CESI or their Affiliates, subcontractors, agents and/or
employees shall be liable for any incidental or consequential damages
whatsoever, including but not limited to, loss of product, loss of profit
(except profit of CESI from the Order), loss of use of the power generation,
pumping or compression system or any auxiliary system, losses resulting from or
related to downtime of the modules or the cost of replacement power or
compression, heating, cooling or pumping, howsoever caused, and whether based on
warranty, contract, tort (including negligence) strict liability or otherwise.
The total liability of CESI, its affiliates, subcontractors, agents and
employees arising out of the performance or nonperformance of the Order or its
obligations in connection with the design, manufacture, sale, delivery, storage,
installation or use of modules or the rendering of any work or services in
connection therewith, whether based on warranty, contract, tort, (including
negligence), strict liability or otherwise, shall not exceed in the aggregate a
sum equal to the Order price. The limitation of liability set forth in this
article shall prevail over any conflicting or inconsistent provisions contained
in any document comprising the Order.
Solely in case of the Jamaica Plain Project,
CESI shall pay as Liquidated Damages, up to [*] of Liquidated Damages actually
paid by KHI/KMC which are solely attributable to a breach of the warranty
provided in this Agreement for the Xonon Modules initially furnished to the
Project during the first [*] of commercial operation of the Adapted Kawasaki Gas
Turbines. KHI/KMC shall have a duty to minimize and mitigate any Liquidated
Damages due under its Agreement with Enron and CESI shall only be liable for
Liquidated Damages provided KHI/KMC has taken all reasonable actions to mitigate
CESI's Liquidated Damages exposure.
17. Regulatory Compliance.
----------------------
KHI/KMC shall not use or operate the XONON Module in a manner other than that
intended in CESI's offering without CESI's prior written consent. The XONON
Module shall not be exported or transshipped contrary to U.S. law. As KHI/KMC
is the exporter of record (XONON Module sold EX-WORKS), it is the responsibility
of KHI/KMC to acquire any required export license. CESI will assist in the
supply of information required in the application process
18. Disputes/applicable law.
-------------------------
KHI/KMC and CESI shall use their best efforts to resolve any dispute or claim
which may arise under the Order and/or this Agreement in an amicable manner. In
the event CESI is in breach of or noncompliance with any of the provisions of
the Order and/or this Agreement, KHI/KMC shall notify CESI in writing and CESI
shall take reasonable measures to remedy such breach or noncompliance within
fourteen (14) days after receipt of notice. Any dispute or claim arising out of
or in relation to the Order and/or this Agreement which is not settled by
agreement of the parties shall be submitted to arbitration before a single,
qualified, technically trained, arbitrator selected by mutual consent of the
parties in accordance with the Rules of the American Arbitration Association,
(but the auspices, at CESI election, need not be used) and judgment upon the
arbitrators award may be entered in any court having jurisdiction. The rules of
commercial arbitration of AAA shall apply in any arbitration and the laws of the
state of California shall govern. The request for arbitration shall be made
within a reasonable time after
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AG-024D
the dispute or claim arises, and in no event after it would be barred by any
applicable statute of limitations. The cost of such arbitration shall be borne
as determined by the arbitrator. Unless otherwise mutually agreed, arbitration
hearings shall be held in Los Angeles, California, U.S.A. Should any provision
of the Order and/or this Agreement be declared invalid, such declaration shall
not invalidate or void the remaining provisions of the Order and/or this
Agreement except that such invalidated provisions are indispensable to such
Order and/or this Agreement.
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AG-024D
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
AGREED FOR AND ON BEHALF OF AGREED FOR AND ON BEHALF OF
KAWASAKI HEAVY INDUSTRIES, LTD. CATALYTICA ENERGY SYSTEMS, INC.
GAS TURBINE DIVISION
By: By:
------------------------------------------- -------------------------------------------
Name: Xxxxx Xxxxxxxxx Name: Xxxxxxx X. Xxxxxx
------------------------------------------- -------------------------------------------
Title: Director and General Manager of Title: Senior Vice President
Gas Turbine Division
------------------------------------------- -------------------------------------------
AGREED FOR AND ON BEHALF OF
Kawasaki Motors Corp, U.S.A.
GAS TURBINE DIVISION
By :
----------------------------------------
Name: Xxxx Xxxxxxxxx
----------------------------------------
Title: General Manager
----------------------------------------
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AG-024D
EXHIBIT "A"
Prices of Xonon Modules:
------------------------
1. Per Section 5 of this Agreement the price of Xonon modules for the Kawasaki
M1A-13X shall consist of the following two components:
. Core Charge. US$[*] plus applicable price adjustment as
calculated per EXHIBIT "B" to this Agreement. Base date for price
adjustment shall be July, 2000.
. Use Charge. The use charge shall be calculated by multiplying the
CESI guaranteed operating hour life of the module by the KMC guaranteed
kW output of the gas turbine generator package by the CESI `mil factor'
and rounding the result to the nearest dollar.
A. For modules to be installed in the first [*] gas turbine
units sold with Xonon the CESI `mil factor' shall be US$[*]
B. For modules to be installed in all subsequent gas turbine
units sold the CESI `mil factor' shall be US$[*].
C. For modules to be used for development and testing, including
testing of commercial engines, the use charge shall be $US[*].
These modules may not be used in commercial service and while they
shall be manufactured to the same specification as commercial
modules shall carry no warranty of longevity.
. Use charge example: [*]X [*] X $[*] = $[*] which is rounded to
$[*].
. The use charge shall be price adjusted as calculated per EXHIBIT
"B" to this Agreement. Base date for price adjustment shall be July,
2000.
2. Prices herein , as adjusted, shall be effective for the term of this
Agreement.
3. Prices shall apply to all Xonon Modules ordered for shipment in standard
lead time. CESI may from time to time advise KMC of changes to its standard
lead time, giving at least thirty (30) calendar days advance notice of
effectiveness of such changes. CESI's standard lead time shall not be less
than 90 calendar days. Shipments of modules requested in less than the
standard lead time then in effect shall be subject to availability of
materials and resources and may be subject to reasonable premiums
reflecting the additional costs resulting from the request for accelerated
shipment.
4. Refunds for core charges for returned spent modules shall be made by CESI
within thirty (30) days of receipt of the returned module provided the
module meets the criteria set forth in Section 5 of this Agreement. Should
a module not meet such criteria CESI shall so notify KMC within the same
thirty day period stating the specific reasons why the refund is not being
made.
5. The core charge for a replacement module shall be the escalated core charge
in effect at the time the replacement module is shipped. The refund of the
core charge for the returned spent module shall be the escalated core
charge for new modules then in effect when the spent module is received by
CESI. Provided that the replacement module has been ordered from CESI prior
to the receipt of the spent module and the spent module is received by CESI
within sixty (60) days of the shipment of the replacement module then CESI
will make the spent module core charge refund amount equal to the
replacement module core charge amount regardless of any changes to the
price adjustment amount that may occur subsequent to the establishment of
the replacement module core charge. Therefore, KMC is protected from the
changes in the price of precious metal for replacement modules provided
that replacement modules are ordered in a timely fashion as described
herein and
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AG-024D
the spent modules are returned within the sixty day window
specified.
. In the event no order has been received by CESI before the spent
module is returned to CESI then, subject to the criteria set forth for
refund of core charges in Section 5 being met, the core charge refund
for the spent module shall be an amount equal to the price adjusted
core charge in effect on the day the returned module is received by
CESI.
. In the event of a module having been timely ordered but KMC shall
fail to return the spent module within the sixty day window but shall
return it sometime in the future than CESI shall refund the price
adjusted core charge then in effect for new modules.
6. The term "price adjustment" shall mean price adjustments, whether
increases or decreases, arrived at by means of the formulas contained in
EXHIBIT "B" to this Agreement.
7. For the purposes of determining which new module is a replacement for a
particular spent module the KHI turbine serial number in which the spent
module operated shall be specified on Orders for every module. Should
modules be purchased as either spares or for test purposes they shall be so
identified in Orders and designated sequentially as "spare #1", "spare#2",
"test #1"etc. When replacements for these modules are ordered they shall be
identified in the Order as "replacement for spare #X", as appropriate.
8. Title to, and risk of loss therefor, for spent modules returned for credit
shall pass to CESI on receipt, freight prepaid, at CESI's designated
facility.
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AG-024D
EXHIBIT "B"
Price adjustment
----------------
1. Quarterly adjustment of Core Charge. The core charge shall be adjusted on
the first business day of every calendar quarter in accordance with the
following formula:
Current core charge = [the initial core charge] x [Pd/c/ / Pd/o/]
in which
Pd/c/ = The London PM Fix Price (US$) of Palladium (Pd) as published by the
London Exchange for the first British business day of the quarter
during which shipment is scheduled in the Order for the module(s).
Pd/o/ = The London PM Fix Price (US$) of Palladium (Pd) as published by the
London Exchange for July 3, 2000. (US$638.00)
In the case where this index is no longer reported or becomes non-
representative of the costs of the product against which it is
applied, then a new, mutually-agreed index will be substituted.
2. Quarterly adjustment of Use Charge. The use charge shall be adjusted on
the first business day of every calendar quarter in accordance with the
following formula:
Current use charge = [the initial use charge] x [W/c/] / [W/o/]
in which
W/c/ = The most recently reported US CPI for Urban Wage Earners and Clerical
Workers (CPI-W) 1982-84=100 (Unadjusted), as tracked and reported by
the Bureau of Labor Statistics Data (BLS), as of the first US business
day of the quarter in which shipment is scheduled in the Order for the
modules.
W/o/ = The most recently reported US CPI for Urban Wage Earners and Clerical
Workers (CPI-W) 1982-84=100 (Unadjusted), as tracked and reported by
the Bureau of Labor Statistics Data (BLS), as of July 1, 2000. This was
the CPI-W for May, 2000, its value was 126.7.
In the case where this index is no longer reported or becomes non-
representative of the costs of the product against which it is applied, then a
new, mutually-agreed index will be substituted.
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