OPERATION AND MAINTENANCE AGREEMENT
By and Between
COGEN TECHNOLOGIES LINDEN VENTURE, L.P.,
AS "OWNER"
AND
GENERAL ELECTRIC COMPANY,
AS "OPERATOR"
June 6, 1997
TABLE OF CONTENTS
Section Page
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I. DEFINITIONS................................................. 2
Actual kWh.................................................. 2
Affiliate................................................... 2
Agreement................................................... 2
Annual Fee Adjustment Amount or "AFAA"...................... 2
Annual Operating Plan....................................... 2
Applicable Adjustment Amount................................ 2
Approved Annual Operating Plan.............................. 2
Approved O&M Plan........................................... 2
Approved Operating Budget................................... 2
Backup Fuel Agreement....................................... 2
Base Index.................................................. 2
Bayonne Approved Operating Budget........................... 2
Bayonne Facility............................................ 2
Bayonne O&M Agreement....................................... 3
Bayway...................................................... 3
Camden Approved Operating Budget............................ 3
Camden Facility............................................. 3
Camden O&M Agreement........................................ 3
Capital Improvements........................................ 3
Cogen....................................................... 3
Con Ed...................................................... 3
Confidential Information.................................... 3
Constant Personnel.......................................... 3
Consumables................................................. 3
CPI Adjusted Payments....................................... 3
Defaulting Party............................................ 3
Default Rate................................................ 3
Dependable Maximum Net Capability (DMNC).................... 4
Direct Costs................................................ 4
DMNC Test................................................... 4
Effective Hourly Rate....................................... 4
Electricity................................................. 4
Equipment................................................... 4
Event of Default............................................ 4
Execution Date.............................................. 4
Existing O&M Agreement...................................... 4
Existing O&M Agreement Termination Date..................... 4
Section Page
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Exxon........................................................ 4
Facility..................................................... 4
Facility Data................................................ 4
Facility Manager............................................. 5
FERC......................................................... 5
FM kWh....................................................... 5
Force Majeure................................................ 5
Forced Outage................................................ 5
Fourth Year Termination Fee.................................. 5
Fuel......................................................... 5
Gas Service Agreement........................................ 5
GE........................................................... 5
GE Equipment................................................. 5
GE O&M Personnel............................................. 5
GE O&M Personnel Overhead.................................... 6
Ground Lease................................................. 6
Key Personnel................................................ 6
Key Regional Office Personnel................................ 6
kW........................................................... 6
kWh.......................................................... 6
Lender....................................................... 6
Linden Approved Operating Budget............................. 6
Major Overhauls.............................................. 6
Non-Defaulting Party......................................... 6
North American............................................... 6
O&M Fee...................................................... 6
O&M Plan..................................................... 6
Operating Budget............................................. 6
Operating Procedures......................................... 6
Operator..................................................... 6
Operator Confidential Information............................ 7
Operator Indemnitees......................................... 7
Operator Personnel........................................... 7
Operator Personnel Overhead.................................. 7
OSHA......................................................... 7
Overhead Percentage Rate..................................... 7
Owner........................................................ 7
Owner Confidential Information............................... 7
Owner Indemnitees............................................ 7
Parts........................................................ 7
Parts Discount............................................... 7
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Section Page
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Permitted Transferee........................................ 7
Plant Manager............................................... 7
POPI........................................................ 7
Power Purchase Agreement.................................... 7
Project Year................................................ 8
Prudent Utility Practices................................... 8
PSE&G....................................................... 8
Published Price............................................. 8
PURPA....................................................... 8
Qualifying Cogeneration Facility............................ 8
Regional Office............................................. 8
Reimbursable Costs.......................................... 9
Related Agreements.......................................... 9
Repairs..................................................... 9
Scheduled Outages........................................... 9
Security Deposit Agreement.................................. 9
Services.................................................... 9
Services Discount........................................... 9
Seventh Year Termination Fee................................ 9
Site........................................................ 9
Special Improvements........................................ 9
Steam Purchase Contracts.................................... 9
Steam Purchasers............................................ 10
Target DMNC................................................. 10
Termination Agreement....................................... 10
Test Plan................................................... 10
Transition Stage............................................ 10
Transition Stage Operating Budget........................... 10
Transition Stage Operating Plan............................. 10
Transition Stage Plan....................................... 10
Unscheduled Maintenance..................................... 10
W-2 Wages................................................... 10
Water Supply Agreement...................................... 10
Work........................................................ 10
II. RESPONSIBILITIES OF OPERATOR................................. 10
2.1 Services Generally.................................. 10
2.2 Compliance with Related Agreements.................. 16
2.3 QE Status........................................... 16
2.4 Annual Operating Plan............................... 16
2.5 Monthly Summary..................................... 17
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Section Page
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2.6 Emergencies............................................ 18
2.7 Inspections............................................ 18
2.8 Operating Procedures and Training...................... 19
2.9 Transition Stage....................................... 20
2.10 Limited Authority...................................... 21
III. RESPONSIBILITIES OF OWNER................................... 21
3.1 Services, Operation, Obligations....................... 22
3.2 Payments............................................... 22
3.3 Right to Perform Upon Operator's Default............... 22
IV. OPERATING COSTS AND EXPENSES................................ 22
4.1 Procedure for Incurring Costs.......................... 23
4.2 Procedure for Payment of Direct Costs.................. 23
4.3 Limitation on Ability to Incur Direct Costs............ 23
4.4 Payment for Special Improvements....................... 23
4.5 Payment for Unscheduled Maintenance.................... 24
4.6 Payment for Major Overhauls............................ 24
4.7 Payment for Capital Improvements....................... 24
4.8 GE Equipment........................................... 25
4.9 Wage Increases in Excess of CPI........................ 25
V. PAYMENTS TO OPERATOR........................................ 25
5.1 O&M Fee................................................ 26
5.2 Reimbursable Costs..................................... 29
5.3 CPI Adjustment......................................... 29
5.4 Procedure for Payment of Reimbursable Costs............ 29
5.5 Late Payments.......................................... 29
VI. FACILITY PERFORMANCE, LIQUIDATED DAMAGES AND
BONUS....................................................... 29
6.1 Annual Fee Adjustment Amount........................... 30
6.2 Quarterly Meetings..................................... 33
6.3 Partial Project Year................................... 33
6.4 Payment of Annual Fee Adjustment Amount................ 34
6.5 Application of CPI Adjustment.......................... 34
6.6 Change in Conditions or Circumstances.................. 34
6.7 First and Second Project Years......................... 34
6.8 Employee Bonuses....................................... 34
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Section Page
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VII. WARRANTY; CORRECTION OF DEFECTS............................. 34
7.1 Warranty............................................. 34
7.2 Consequence of Breach................................ 35
7.3 Vendor Warranties.................................... 35
VIII. TERM......................................................... 35
IX. TERMINATION.................................................. 36
9.1 Event of Default..................................... 36
9.2 Termination upon Breach.............................. 37
9.3 Termination for Insolvency........................... 37
9.4 Owner's Additional Remedies.......................... 38
9.5 Transfer of Operations Upon Termination.............. 38
9.6 Condition of Facility Upon Termination............... 38
9.7 Survival of Obligations.............................. 39
X. INSURANCE.................................................... 39
10.1 Operator Insurance Coverage.......................... 39
10.2 Owner Insurance Coverage............................. 40
10.3 Form and Content of Insurance........................ 41
10.4 Additional Requirements.............................. 42
XI. NOTIFICATIONS................................................ 43
XII. ASSIGNMENT; LENDER'S RIGHTS.................................. 45
12.1 Assignment........................................... 45
12.2 Lender's Rights...................................... 45
12.3 Estoppel Certificates................................ 47
12.4 Legal Opinion........................................ 47
XIII. INDEMNIFICATION.............................................. 47
13.1 Operator Indemnity................................... 47
13.2 Owner Indemnity...................................... 48
13.3 No Limitation........................................ 49
XIV. REPRESENTATIONS AND WARRANTIES............................... 49
14.1 Representations and Warranties of Owner.............. 49
14.2 Representations and Warranties of Operator........... 49
XV. BOOKS, RECORDS AND REPORTS................................... 50
15.1 Books and Records....................................... 50
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Section Page
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15.2 Reports............................................. 51
XVI. FORCE MAJEURE................................................ 51
16.1 Force Majeure....................................... 51
16.2 Effect of Force Majeure............................. 52
16.3 Extended Force Majeure.............................. 52
16.4 Payments to Operator During an Event of Force
Majeure............................................ 52
XVII. LIMITATION OF LIABILITY...................................... 52
17.1 Operator............................................ 52
17.2 Owner............................................... 53
XVIII. RESOLUTION OF DISPUTES....................................... 53
18.1 Resolution by Parties............................... 53
18.2 Mediation by Expert................................. 54
18.3 Arbitration......................................... 56
18.4 Selection of Arbitrators............................ 56
18.5 Notice.............................................. 56
18.6 Award............................................... 57
18.7 Survival............................................ 57
XIX. CONFIDENTIALITY AND INTELLECTUAL PROPERTY.................... 57
19.1 Confidential Information............................ 57
19.2 Return of Confidential Information.................. 58
19.3 Continuation of Confidentiality Obligations......... 58
19.4 Ownership of Confidentiality Information............ 58
19.5 Intellectual Property............................... 58
XX. MISCELLANEOUS................................................ 59
20.1 Governing Law....................................... 59
20.2 Severability........................................ 59
20.3 Entire Agreement.................................... 59
20.4 Amendments.......................................... 59
20.5 Waiver.............................................. 59
20.6 Original and Counterparts........................... 60
20.7 Independent Contractor.............................. 60
20.8 Limited Recourse.................................... 60
20.9 Captions............................................ 60
20.10 Exhibits............................................ 60
20.11 Effectiveness of Agreement.......................... 60
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Section Page
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Exhibit A Monthly O&M Report Format
Exhibit B Assignment
Exhibit C Consent and Agreement
Exhibit D Recognition Agreement
Exhibit B Schedule of Parts and Services for GE Equipment
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OPERATION AND MAINTENANCE AGREEMENT
-----------------------------------
This Agreement is entered into this 6th day of June, 1997 (the
"Execution Date"), by and between Cogen Technologies Linden Venture, L. P., a
Delaware limited partnership, doing business in New Jersey as Cogen Technologies
Linden Venture ("Owner"), and General Electric Company, a corporation organized
and existing under the laws of the State of New York ("Operator").
W I T N E S S E T H:
WHEREAS, Owner owns the Facility (as defined herein); and
WHEREAS, Owner and North American Energy Services Company ("North
American") entered into that certain Operation and Maintenance Agreement dated
effective as of December ____, 1991 (the "Existing O&M Agreement"), pursuant to
which North American operates and maintains the Facility for Owner in accordance
with the terms thereof; and
WHEREAS, Owner and North American entered into that certain Agreement
to Terminate Operation and Maintenance Agreement dated June 4th,1997 (the
"Termination Agreement"), pursuant to which Owner has the fight to terminate the
Existing O&M Agreement by delivery of written notice to North American in
accordance with the terms thereof; and
WHEREAS, Owner intends to terminate the Existing O&M Agreement
pursuant to the terms of the Termination Agreement; and
WHEREAS, Owner desires to engage the services of an entity qualified
and competent to operate and maintain the Facility after the Existing O&M
Agreement Termination Date; and
WHEREAS, Operator has represented that it is qualified and capable to
operate and maintain gas-fired, combined cycle cogeneration facilities such as
the Facility; and
WHEREAS, Owner desires to appoint Operator and Operator desires to
operate and maintain the Facility after the Existing O&M Agreement Termination
Date; and
WHEREAS, Owner and Operator desire to enter into this Agreement in
order to set forth their agreements relative to the operation and maintenance of
the Facility starting on the Existing O&M Agreement Termination Date;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
I.
DEFINITIONS
The following definitions shall apply to this Agreement:
Actual kWh shall have the meaning set forth in Section 6.1(a) hereof.
----------
Affiliate shall mean any person or corporation or other entity that,
---------
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, another person or corporation or
entity. The term "control" with respect to any entity means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise.
Agreement shall mean this Operation and Maintenance Agreement,
---------
including all Exhibits attached hereto, as the same may be amended from time to
time in accordance herewith.
Annual Fee Adjustment Amount or "AFAA" shall have the meaning set
-------------------------------------
forth in Section 6.1 hereof
Annual Operating Plan shall have the meaning set forth in Section
---------------------
2.4(a) hereof.
Applicable Adjustment Amount shall have the meaning set forth in
----------------------------
Section 5.3 hereof.
Approved Annual Operating Plan shall have the meaning set forth in
------------------------------
Section 2.4(a) hereof.
Approved O&M Plan shall have the meaning set forth in Section 2.4(a)
-----------------
hereof.
Approved Operating Budget shall have the meaning set forth in Section
-------------------------
2.4(a) hereof.
Backup Fuel Agreement shall mean that certain Backup Fuel Storage and
---------------------
Supply Agreement dated as of October 4, 1991, by and between Owner and Exxon, as
amended from time to time.
Base Index shall have the meaning set forth in Section 5.3 hereof
----------
Bayonne Approved Operating Budget shall mean an Approved Operating
---------------------------------
Budget for the Bayonne Facility as set forth in Section 2.4 of the Bayonne O&M
Agreement.
Bayonne Facility shall mean the cogeneration plant owned by Cogen
----------------
Technologies NJ Venture located in Bayonne, New Jersey.
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Bayonne O&M Agreement shall mean that certain Operation and
---------------------
Maintenance Agreement dated of even date herewith, by and between Cogen
Technologies NJ Venture, as "Owner," and Operator, as "Operator," relating to
the Bayonne Facility.
Bayway shall mean Bayway Refining Company, a Delaware corporation.
------
Camden Approved Operating Budget shall mean an Approved Operating
--------------------------------
Budget for the Facility as set forth in Section 2.4 hereof.
Camden facility shall mean the cogeneration plant owned by Camden
---------------
Xxxxx X.X. located in Camden, New Jersey.
Camden O&M Agreement shall mean that certain Operation and Maintenance
--------------------
Agreement dated of even date herewith, by and between Camden Xxxxx X.X., as
"Owner," and Operator, as "Operator," relating to the Camden Facility.
Capital Improvements shall have the meaning set forth in Section
--------------------
2.1(2) hereof
Cogen shall mean Cogen Technologies, Inc., a Texas corporation.
-----
Con Ed shall mean Consolidated Edison Company of New York,
------
Inc., a corporation organized under the Transportation Corporations Law of the
State of New York.
Confidential Information shall have the meaning set forth in Section
------------------------
19.1 hereof
Constant Personnel shall mean, at the time of determination, such
------------------
Operator Personnel and GE O&M Personnel as were employed on the first day of the
then current Project Year and are also scheduled to be employed in the same
positions on the first day of the next Project Year pursuant to the Approved
Annual Operating Plan for such next Project Year.
Consumables shall mean, collectively, all items consumed or needing
-----------
regular periodic replacement during operation and maintenance of the Facility,
including, but not limited to, spare parts, water treatment chemicals,
lubricants, office supplies, air filters, gaskets, hand tools, and all other
consumable materials and parts required for the normal operation of the
Facility, but not including Fuel and water.
CPI Adjusted Payments shall have the meaning set forth in Section 5.3
---------------------
hereof.
Defaulting Party shall have the meaning set forth in Section 9.2
----------------
hereof.
Default Rate shall mean the lesser of (i) the rate of interest
------------
announced by The Chase Manhattan Bank, N.A., from time to time, at its principal
office located at 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or any
successor financial institution), as its
-3-
prime commercial lending rate, plus 1% or (ii) the maximum lawful nonusurious
----
rate of interest that may be charged under applicable law.
Dependable Maximum Net Capability (DMNC) shall have the meaning
---------------------------------------
ascribed to such term in the Power Purchase Agreement.
Direct Costs shall mean those costs incurred by Operator for goods and
------------
services in connection with the operation and maintenance of the Facility which
are paid directly by Owner to the vendor of such goods and services.
DMNC Test shall have the meaning set forth in Section 6.1(b) hereof.
---------
Effective Hourly Rate shall mean, as of the date of determination, the
---------------------
sum of (i) the aggregate then current effective hourly rate for all salaried
Constant Personnel and (ii) the aggregate then current straight time hourly
rates for all hourly paid Constant Personnel.
Electricity shall have the meaning ascribed to such term in the Power
-----------
Purchase Agreement.
Equipment shall mean any and all materials, supplies, equipment and
---------
facilities, of whatever nature, intended to become or which are a part of the
Facility.
Event of Default shall have the meaning set forth in Section 9.1
----------------
hereof.
Execution Date shall have the meaning set forth in the preamble of
--------------
this Agreement.
Existing O&M Agreement shall have the meaning set forth in the
----------------------
preamble of this Agreement.
Existing O&M Agreement Termination Date shall mean the date, if ever,
---------------------------------------
on which Owner terminates the Existing O&M Agreement pursuant to the Termination
Agreement.
Exxon shall mean Exxon Corporation, a New Jersey corporation.
-----
Facility shall mean (i) the 715 megawatt (name plate) natural gas
--------
fired, combined cycle cogeneration plant owned by Owner located on the Site for
the export and sale of electric power and steam, including all buildings,
interconnections, utilities and Equipment located on the Site and other related
facilities furnished by Owner and located on the Site and (ii) the steam
pipelines connected to Steam Purchasers' facilities.
Facility Data shall mean all facility and equipment design data
-------------
pertaining to the Facility, including, without limitation, plant data manuals,
equipment user/maintenance manuals, facility drawings and system descriptions,
inspection reports and operating plans.
-4-
Facility Manager shall mean Operator's employee, who shall be present
----------------
on the Site during regular business hours on all business days to oversee the
operation, maintenance, inspection and repair of the Facility and all parts
thereof, and who shall be authorized to make decisions on behalf of Operator.
The Facility Manager shall serve as Operator's single point of contact for all
matters regarding the operation, maintenance, inspection and repair of the
Facility.
FERC shall mean the Federal Energy Regulatory Commission.
----
FM kWh shall have the meaning set forth in Section 6.1(a) hereof.
------
Force Majeure shall have the meaning set forth in Section 16.1 hereof.
-------------
Forced Outage shall mean an outage of the Facility which is not a
-------------
Scheduled Outage.
Fourth Year Termination Fee shall have the meaning set forth in
---------------------------
Article VIII hereof.
Fuel shall mean natural gas, butane or any other fuel suitable for
----
operating the Facility.
Gas Service Agreement shall mean that certain Gas Service Agreement
---------------------
dated as of July 13, 1990, between Owner and PSE&G and Elizabethtown Gas
Company, as amended from time to time.
GE shall mean General Electric Company, a New York corporation.
--
GE Equipment shall mean the gas and steam turbine generation equipment
------------
and associated electrical and control systems components, now existing or
hereafter installed or located at the Facility, and which were supplied by GE
prior to or during the term of this Agreement, including, without limitation,
steam turbines; gas turbines (including components supplied in connection with
uprate packages); generators; load gears; speedtronic controls; steam turbine
controls; admission/extraction valves; stop valves; control consoles;
datatronics; accessory system compartment containing heavy duty, multi-shaft,
accessory gear, electric motor starting system, combined lube and hydraulic oil
system and all terminal boxes, conduit and wiring; generator auxiliary
compartment which contains all static excitation equipment, metering and
relaying current and potential transformers, lightning arrestors and generator
neutral grounding system; and any future improvements and/or enhancements to any
of the foregoing.
GE O&M Personnel shall mean all employees of Operator involved in the
----------------
performance of the Work, including, without limitation, all employees located at
the Regional Office, but expressly excluding the Operator Personnel.
-5-
GE O&M Personnel Overhead shall have the meaning set forth in Section
-------------------------
5.2 hereof.
Ground Lease shall mean that certain Ground Lease dated August 1,
------------
1990; between Exxon, as "Lessor" therein, and Owner, as "Lessee" therein, as
amended from time to time.
Key Personnel shall mean the Key Regional Office Personnel, the
-------------
Facility Manager and all other personnel reporting directly to the Facility
Manager.
Key Regional Office Personnel shall mean the following personnel who
-----------------------------
will be located in the Regional Office: the general manager, the financial
analyst, the plant engineer, the environmental, health and safety engineer, the
sourcing specialist and such other personnel as Owner may designate.
kW shall mean kilowatt.
--
kWh shall mean kilowatt-hour.
---
Lender shall mean the entity or entities providing Owner with the
------
construction, term, permanent or other debt or equity financing for the Facility
and/or the operation thereof and/or any entity or entities providing a letter of
credit or other security in connection with the financing of the Facility and/or
the operation thereof.
Linden Approved Operating Budget shall mean an Approved Operating
--------------------------------
Budget for the Facility as set forth in Section 2.4 hereof
Major Overhauls shall have the meaning set forth in Section 2.1(2)
---------------
hereof.
Non-Defaulting Party shall have the meaning set forth in Section 9.2
--------------------
hereof.
North American shall have the meaning set forth in the preamble of
--------------
this Agreement.
O&M Fee shall have the meaning set forth in Section 5.1 hereof.
-------
O&M Plan shall have the meaning set forth in Section 2.4(a) hereof.
--------
Operating Budget shall have the meaning set forth in Section 2.4(a)
----------------
hereof.
Operating Procedures shall have the meaning set forth in Section
--------------------
2.8(a) hereof.
Operator shall have the meaning set forth in the preamble of this
--------
Agreement.
-6-
Operator Confidential Information shall have the meaning set forth in
---------------------------------
Section 19.1 hereof.
Operator Indemnitees shall have the meaning set forth in Section 13.2
--------------------
hereof.
Operator Personnel shall mean all employees of POPI involved in the
------------------
performance of the Work or, in the event that during the term of this Agreement
POPI ceases to provide personnel for performance of the Work, then such
personnel who perform the functions that were previously performed by the
employees of POPI.
Operator Personnel Overhead shall have the meaning set forth in
---------------------------
Section 5.2 hereof.
OSHA shall mean the Occupational Safety and Health Administration.
----
Overhead Percentage Rate shall have the meaning set forth in Section
------------------------
5.2 hereof.
Owner shall have the meaning set forth in the preamble of this
-----
Agreement.
Owner Confidential Information shall have the meaning set forth in
------------------------------
Section 19.1 hereof.
Owner Indemnitees shall have the meaning set forth in Section 13.1
-----------------
hereof.
Parts shall mean replacement parts and/or assemblies (either in kind
-----
or improved). to replace existing parts and/or assemblies which are removed from
service, and any future improvements and/or enhancements to any such parts
and/or assemblies.
Parts Discount shall have the meaning set forth in Section 4.8 hereof.
--------------
Permitted Transferee shall mean (i) any Affiliate of Lender or (ii)
--------------------
any other person or entity who succeeds to the rights and interests of Lender
under any mortgage.
Plant Manager shall mean the person designated by Owner, pursuant to
-------------
Section 3.1(4) hereof, to serve as Owner's administrative representative at the
Site.
POPI shall mean Plant Operating Personnel, Inc., a Delaware
----
corporation.
Power Generation Factor shall have the meaning set forth in Section
-----------------------
6.1(a) hereof.
Power Purchase Agreement shall mean that certain Power Purchase
------------------------
Agreement dated April 14, 1989, executed by and between Cogen and Con Ed (which
Power Purchase Agreement has been assigned by Cogen to Owner), providing for the
sale by Owner to Con Ed
-7-
of electric power generated by the Facility, as the same has heretofore been and
may hereafter be amended and supplemented from time to time.
Project Year shall mean any calendar year during the term of this
------------
Agreement, provided that the first Project Year shall be deemed to begin on the
Existing O&M Agreement Termination Date and extend through the next occurring
December 31.
Prudent Utility Practices shall mean those practices, methods, acts,
-------------------------
techniques, standards and equipment, as changed from time to time, that are then
generally accepted by the electric utility industry and commonly used in prudent
electric utility engineering and operations to operate and maintain equipment
lawfully, safely, dependably and economically, and as would have been (i)
expected to accomplish the desired result in a manner consistent with applicable
laws, applicable governmental permits, reliability, safety, environmental
protection, economy and expediency and (ii) implemented using that degree of
skill, diligence and foresight which would reasonably and ordinarily be expected
from a skilled and experienced operator complying with all applicable laws and
engaged in the same type of undertaking, including, without limitation, those
established by the North American Electric Reliability Council, as applicable to
units of the size and service of the Facility.
PSE&G shall mean Public Service Electric & Gas Company, a corporation
-----
organized under the laws of the State of New Jersey.
Published Price shall mean (i) with respect to Parts, the published
---------------
prices provided by Operator's or any of its Affiliates' parts centers and/or
available through Operator's or any of its Affiliates' computerized pricing
systems, or if at any time during the term of this Agreement Operator and its
Affiliates do not have such published prices for any Parts, then the normal and
customary charges that are paid by Operator's and its Affiliates' other
customers for such Parts in the United States and (ii) with respect to Services
and/or Repairs, the published prices or rates that Operator or any of its
Affiliates' charge for such Services and/or Repairs, or if at any time during
the term of this Agreement Operator and its Affiliates do not have published
prices or rates for any Services and/or Repairs, then the nonnal and customary
charges that are paid by Operator's and its Affiliates' other customers for such
Services and/or Repairs in the United States.
PURPA shall mean the Public Utility Regulatory Policies Act of 1978
-----
(U.S.C.A., Title 16, Section 824a-3, subsection (j))1 as amended, a law of the
United States of America.
Oualifying Cogeneration Facility shall have the meaning set forth in
--------------------------------
PURPA.
Regional Office shall mean the office established by Operator at a
---------------
location designated by Owner for the sole purpose (and no others) of
administering and performing its obligations under (i) this Agreement, (ii) the
Bayonne O&M Agreement and (iii) the Camden O&M Agreement.
-8-
Reimbursable Costs shall have the meaning set forth in Section 5.2
------------------
hereof.
Related Agreements shall mean and include the Power Purchase
------------------
Agreement, the Ground Lease all easements used in connection with the Facility,
the Steam Purchase Contracts, the Backup Fuel Agreement, the Gas Service
Agreement, the Water Supply Agreement, the Security Deposit Agreement and the
order of FERC granting the Facility status as a Qualifying Cogeneration
Facility.
Repairs shall mean services for assembly, disassembly and/or repair
-------
provided by GE Apparatus Service Department, or if at any time during the term
of this Agreement GE Apparatus Service Department does not provide such
services, then such successor entity or other division of GE providing such
services.
Scheduled Outages shall mean a planned outage of the Facility or any
-----------------
portion thereof necessary for regular inspection and maintenance.
Security Deposit Agreement shall mean the Amended and Restated
--------------------------
Security Deposit Agreement and Escrow Agreement dated September 17, 1992, by and
among Owner, Cogen Technologies Linden, Ltd., General Electric Power Funding
Corporation, and Midlantic National Bank.
Services shall mean services for assembly, disassembly, diagnosis
--------
and/or repair provided by GE Power Generation Services, or if at any time during
the term of this Agreement GE Power Generation Services does not provide such
services, then such successor entity or other division of GE providing such
services.
Services Discount shall have the meaning set forth in Section 4.8
-----------------
hereof.
Seventh Year Termination Fee shall have the meaning set forth in
----------------------------
Article VIII hereof.
Site shall mean the certain tract of land located at Railroad and
----
Chemico Streets at Bayway's Bayway Facility in Linden, New Jersey, upon which
the Facility is constructed, such tract being more particularly described in the
Ground Lease, together with easements appurtenant thereto or used in connection
therewith.
Special Improvements shall have the meaning set forth in Section 4.4
--------------------
hereof.
Steam Purchase Contracts shall mean (i) that certain Agreement for the
------------------------
Sale of Steam dated August 1, 1990, executed by and between Owner and Exxon, and
(ii) any other agreements which Owner may execute in the future for the sale of
steam produced at the Facility, as each of such agreements may be amended from
time to time.
-9-
Steam Purchasers shall mean Exxon, Bayway and any other future
----------------
purchasers of steam produced at the Facility.
Target DMNC shall have the meaning set forth in Section 6.1(b) hereof.
-----------
Termination Agreement shall have the meaning set forth in the preamble
---------------------
of this Agreement.
Test Plan shall have the meaning set forth in Section 6.1(b) hereof.
---------
Transition Stage shall have the meaning set forth in Section 2.9(a)
----------------
hereof.
Transition Stage Operating Budget shall have the meaning set forth in
---------------------------------
Section 2.9(d) hereof.
Transition Stage Operating Plan shall have the meaning set forth in
-------------------------------
Section 2.9(d) hereof.
Transition Stage Plan shall have the meaning set forth in Section
---------------------
2.9(d) hereof.
Unscheduled Maintenance shall mean all maintenance, repair and
-----------------------
replacement requirements of the Facility during each Project Year which are not
contemplated in the Approved Annual Operating Plan, or any approved revision
thereof, for each such Project Year.
W-2 Wages shall mean the amount listed in box 1 on Internal Revenue
---------
Service Form W-2, or if such form ceases to be used, then the sum of such
amounts as would have been included in the calculation of the number to be
inserted in such box 1 if such form were still in use.
Water Supply Agreement shall mean and refer to that certain letter
----------------------
dated February 19, 1990, from Elizabethtown Water Company to Owner, together
with the Tariff applicable thereto, and the Main Extension Agreement dated May
9,1991, between Elizabethtown Water Company and Owner.
Work shall mean all obligations, services, duties and responsibilities
----
assigned to or agreed to be undertaken by Operator and its subcontractors
pursuant to this Agreement.
II.
RESPONSIBILITIES OF OPERATOR
2.1 Services Generally. Operator hereby agrees to provide all
------------------
operations and maintenance services necessary or advisable in order to safely,
dependably and efficiently operate and maintain the Facility (as contemplated by
the Related Agreements). Without limiting the
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generality of the foregoing, Operator shall perform the following services on
behalf of Owner in connection with the operation and maintenance of the
Facility:
(1) Provide all services necessary or advisable to use, operate and
maintain the Facility's five (5) gas turbine units and associated waste heat
steam generators arranged in combined cycle with three (3) steam turbines in
good operating condition with the objective of maximizing output of steam
and electricity while minimizing Fuel consumption consistent with (i)
Prudent Utility Practices, (ii) the thermal and mechanical limits and other
requirements specified in the nameplates thereon or in vendor and
manufacturer warranty requirements or recommendations relating thereto so as
to maximize the residual value of the Facility, (iii) the applicable terms
of the Related Agreements and all easements related to the operation of the
Facility and the sale of steam and Electricity, (iv) all applicable federal,
state and local laws, regulations, orders, licenses, approvals, certificates
and permits, including all Qualifying Cogeneration Facility requirements,
(v) procedures established pursuant to the Facility Data and the Operating
Procedures as revised from time to time, (vi) the requirements of insurance
policies required hereunder and Owner's insurance carrier so as to maintain
insurance coverage in full force and effect with respect to the Facility or
any part thereof, (vil) the applicable Annual Operating Plan, and (viii) the
reasonable instructions of Owner;
(2) Maintain the Facility, including, without limitation, its
associated facilities, structures, buildings and offices, all
interconnections with Steam Purchasers' facilities, all interconnections
with Con Ed, all mechanical and electrical systems and controls, drainage
systems, air pollution control and water treatment facilities, access
roads, security fencing and all other Equipment, and (i) develop, implement
and maintain a maintenance management program which (a) meets all
applicable vendor and manufacturer warranty and preventive and predictive
maintenance requirements and specifications, (b) meets Prudent Utility
Practices, and (c) includes provisions for continuously improving such
program, (ii) develop, implement and maintain emergency preparedness
procedures that allow an immediate and appropriate response to events such
as fires, explosions, bomb threats, release of toxic chemicals, employee
illnesses and other accidents, (iii) perform or cause to be performed
routine and scheduled inspections and monitoring of the Facility and daily
maintenance work (such as cleaning the Equipment and maintaining levels of
liquids), (iv) perform or cause to be performed all necessary Unscheduled
Maintenance, subject to Owner's approval when required pursuant to Section
4.5 hereof, and (v) perform or cause to be performed such overhaul or
repair of major components of the Equipment (the "Major Overhauls") and
perform such replacement of major components of the Equipment (the "Capital
Improvements") as may be recommended or required by the manufacturer of any
such Equipment or requested by Owner or as may become, in Operator's
reasonable discretion, upon consultation with and approval from Owner,
otherwise necessary or appropriate;
(3) Establish and maintain an effective work force required for the
operation and maintenance of the Facility in accordance with the terms of
this Agreement and the
-11-
Related Agreements through proper hiring, training, supervising and
qualifying procedures, and administer all matters pertaining to labor
relations, salaries, wages, working conditions, hours of work, termination
of employment, employee benefits, safety and all related matters in
connection with these duties in accordance with applicable laws;
(4) Maintain or cause to be available a sufficient number of personnel
adequately trained in effective operation and maintenance such that the
Facility can be operated in accordance with the terms of this Agreement and
the Related Agreements in the event of a strike by or other labor problem
with Operator's normal work force;
(5) Maintain an inventory of spare parts, Consumables and items of
equipment as Owner requires or, subject to Owner's prior approval, as
Operator determines are necessary or advisable to perform the operation and
maintenance services required hereunder, provided that (i) Operator shall
surrender such inventory to Owner upon termination of this Agreement and
(ii) the cost of maintaining such inventory shall be a Reimbursable Cost to
Operator;
(6) Coordinate with Owner all deliveries and services under and
monitor the contracts with respect to Consumables, water, and Fuel; review
performance under such contracts and determine compliance therewith; and to
the extent not hereinafter undertaken by Owner, perform Owner's obligations
under such contracts;
(7) Maintain a spare parts and tools inventory control and reporting
system, which system shall include, without limitation, procedures for
receiving, storing, trending the history of and cataloging spare parts and
tools, (ii) the ability to access the inventory of spare parts and tools for
the Bayonne Facility and (iii) the ability to access the inventory of spare
parts and tools for the Camden Facility; and store spare parts and tools on
the Site and at a central location in conjunction with the storage of spare
parts and tools for the Bayonne Facility and the Camden Facility in a manner
reasonably calculated to assure their continued good condition, including
storage in accordance with vendors' and manufacturers' warranty requirements
and recommendations in order to insure them against risks reasonably
expected to occur during periods of such storage. The decision as to which
spare parts will be stored on Site and which spare parts will be stored at a
central location shall be mutually agreed upon by Owner and Operator;
(8) Schedule, hire, and supervise subcontractors and vendors as may be
necessary for the performance of the services required hereunder and
regularly provide Owner with an updated list of all such subcontractors and
vendors; provided that (i) Operator shall obtain Owner's prior written
approval of any subcontractor or vendor intended to be used for Major
Overhauls, Capital Improvements or operation of the Facility, (ii) Operator
shall remain fully liable for the management and satisfactory performance
of its subcontractors and vendors, (iii) Operator shall use reasonable
efforts to ensure that all contracts and sub-contracts can be freely
assigned to Owner or a successor operator on termination of this Agreement,
and (iv) Owner may, upon delivery
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of written notice to Operator, require that a subcontractor or vendor be
replaced in the event that Owner considers that such subcontractor's or
vendor's performance has been unsatisfactory;
(9) Assist Owner in maintaining good community relations;
(10) Maintain good labor relations and, to the extent the work force
at the Facility is or becomes affiliated with labor unions, use best efforts
to obtain a no strike clause in any collective bargaining agreement and
consult with and obtain approval from Owner before taking any action
inconsistent with any such collective bargaining agreement;
(11) On behalf of Owner, generate, maintain and store all operating
and maintenance logs (which shall include an up-to-date record of (i) real
and reactive power production for each clock hour, (ii) Fuel consumption,
(iii) steam output, (iv) emission outputs, (v) water consumption, (vi)
changes in operating status, Scheduled Outages and Forced Outages, (vii) all
OSHA reportable and lost time accidents, and (viii) any unusual conditions
found during inspections) relating to the use, operation and maintenance of
the Facility. All such information shall be considered proprietary and
confidential information and shall not be disclosed to any third party for
any reason without the prior written consent of Owner;
(12) Maintain current revisions of all Facility drawings and
specifications, technical documents, instruction books, equipment diagrams
and other information illustrating a material, product or system relating to
the Facility;
(13) Keep accurate cost ledgers regarding the Work pursuant to the
terms of Section 15.1 hereof and in accordance with generally accepted
accounting principles, consistently applied, in such forms as shall be
reasonably required by Owner;
(14) Maintain records and provide to Owner all data and/or reports
required of Owner and/or Operator to federal, state and local agencies
(excluding any reports to be filed for federal, state and local income tax
purposes);
(15) Assist Owner in the renewal and maintenance of all licenses,
approvals and permits required in connection with the operation and
maintenance of the Facility, as modified from time to time;
(16) Collect, handle, transport and dispose of all waste and refuse
from the Site in accordance with all applicable laws, provided that Owner
signs all manifests prior to waste leaving the Site;
-13-
(17) Provide reasonable access to the Facility and all records relating
to the operation and maintenance of the Facility to all agents,
representatives and inspectors of Owner, Lender and governmental
authorities;
(18) Monitor the sufficiency of the Fuel, water and backup electrical
power supplied to the Facility in terms of quality and quantity and advise
Owner of any deficiency thereof and any noncompliance of Fuel with the
appropriate specifications; work directly with suppliers of the Fuel, water
and backup electrical power to ensure adequate deliveries and likely future
requirements for the Facility; and verify invoices with respect thereto for
payment by Owner;
(19) Supply all tools, materials and services necessary or advisable
for the operation and maintenance of the Facility, including, but not
limited to, (i) all such materials, tools, equipment and services required
for the day to day operation and maintenance of the Facility and (ii) all
Consumables, including, without limitation, lubricating oils, chemicals,
filters and greases recommended by equipment manufacturers and suppliers or
as required to operate, maintain and protect the Facility;
(20) Take reasonable precautions for the safety of personnel performing
operations and maintenance services and comply with (i) all safety rules and
guidelines outlined in the Facility Data, (ii) all requirements under the
Ground Lease, including, without limitation, Bayway safety and security
regulations applicable to the Facility and (iii) all applicable federal,
state and local safety laws, regulations, orders, licenses, approvals,
certificates, permits, and other safety requirements (including, without
limitation, applicable requirements under OSHA) necessary or advisable to
prevent accidents or injury to persons or damage to property on, about or
adjacent to the Site, including erecting and properly maintaining guards and
barriers as needed for the protection of workers and the public and posting
danger signs warning against any hazards on the Site; and strive to
eliminate or xxxxx safety hazards created by or otherwise resulting from the
performance of its operations and maintenance services hereunder;
(21) Conduct; and allow Owner to participate in, the process of
interviewing, selecting and hiring individuals to fill the Key Personnel
positions and complete such process no later than the Existing O&M Agreement
Termination Date, all such individuals being subject to Owner's approval,
and in the event any such Key Personnel positions become vacated during the
term of this Agreement, Operator shall conduct, and allow Owner to
participate in, the process of interviewing, selecting and hiring
replacements to fill such vacancies, all such replacements being subject to
Owner's approval. Without the prior written approval of Owner, Operator
shall not remove any individual from a Key Personnel position prior to such
individual being in such position for a minimum of two (2) years; provided,
however, if Owner notifies Operator that the performance of an individual is
unsatisfactory, then Operator shall promptly replace such individual in
accordance with the terms hereof;
-14-
(22) Participate in and provide services during the Transition Stage,
as set forth in Section 2.9 hereof;
(23) Exercise Owner's rights under subcontractor and vendor warranties,
monitor and report to Owner concerning the remaining terms of all warranties
and, prior to the expiration of any such warranty, perform such inspections
as are reasonable to ensure that any final warranty work is not required;
provided, however, Operator shall not file suit to enforce any such warranty
without the prior written consent of Owner;
(24) Keep and maintain the Facility free and clear of all liens and
encumbrances resulting from performance of the Work by Operator or its
subcontractors;
(25) Keep Owner informed of the operating status of the Facility
through daily, weekly and monthly reports, as may be agreed on from time to
time, and through ongoing written and verbal communication;
(26) Determine and recommend to Owner for approval any necessary or
advisable Capital Improvements, modifications or alterations to the
Facility;
(27) Determine the need for any change, deletion or addition to the
obligations, services or duties performed by Operator pursuant to this
Section 2.1 and the change in cost attributable thereto, if any, where such
change, deletion or addition is caused by a reason outside of the control of
Operator, including, without limitation, a Capital Improvement or change in
Operating Procedures. Except as provided in Section 2.6 hereof, any change,
deletion or addition to the obligations, services or duties specifically
enumerated in this Section 2.1 shall be submitted to Owner for approval,
prior to implementation, as a modification to the Approved Annual Operating
Plan for the given Project Year;
(28) Work diligently to operate and maintain the Facility in a first-
class manner and provide all other work as is reasonably necessary or
advisable to perform Operator's operations and maintenance services pursuant
to this Agreement;
(29) Maintain all insurance coverage as required to be provided by
Operator under Article X hereof;
(30) Comply with the terms and conditions of each Approved Annual
Operating Plan, this Agreement and the related Agreements;
(31) Maintain a document control system for documents critical to
Facility operation and maintenance;
(32) Without any duty of inquiry, notify Owner if Operator becomes
aware of (i) a default by any of the parties to the Related Agreements, (ii)
any breach of any
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consents, licenses or permits which are required in connection with
operation of the Facility, (iii) any occurrence which constitutes a
violation of law or (iv) the occurrence of any event of force majeure under
the Related Agreements;
(33) Be responsible for payment in respect of fines and penalties
imposed on it or on Owner for breaches of applicable laws, permits or
licenses where such fines or penalties result from a failure by Operator to
comply with Prudent Utility Practices;
(34) Assist and cooperate with Owner in obtaining Owner status as a
"qualified business" under and complying with the New Jersey Urban
Enterprise Zones Act;
(35) As soon as reasonably practicable notify Owner and Con Ed of any
outage, whether or not such outage is scheduled; and
(36) Setup, staff, operate and maintain the Regional Office.
2.2 Compliance with Related Agreements. Operator (i) has reviewed the
----------------------------------
Related Agreements, (ii) shall abide by all of the terms thereof applicable to
the operation and maintenance of the Facility pursuant to the terms of this
Agreement and (iii) shall not operate and maintain the Facility in a manner
which would cause Owner to be in breach of any of the terms of the Related
Agreements. Owner shall provide Operator with written notice of any changes to
such terms that may affect Operator's provision of operation and maintenance
services hereunder, and such notice, unless otherwise agreed in writing by the
parties, shall modify Operator's obligation hereunder. This Section 2.2 shall
not be deemed to make Operator a party to any or all of the Related Agreements.
2.3 QF Status. Operator shall operate and maintain the Facility so as
---------
to maintain its status as a Qualifying Cogeneration Facility.
2.4 Annual Operating Plan. (a) Subject to the terms of the next
---------------------
succeeding sentence hereof, not later than one hundred twenty (120) days prior
to the first day of each Project Year, Operator shall prepare and submit to
Owner for approval a proposed operating and maintenance plan providing
information for each month during the upcoming Project Year (the "O&M Plan").
The O&M Plan for the first Project Year shall be submitted to Owner for approval
on the date on which this Agreement is executed unless previously submitted. The
O&M Plan shall describe, in detail acceptable to Owner and on a monthly basis;
anticipated maintenance and overhaul schedules, staffing plans, equipment
acquisitions and spare parts and Consumables inventories (including a breakdown
of capital items and expense items), schedules of subcontract services, plant
performance data regarding required environmental performance, projected Fuel
usage and such other matters as Owner may reasonably require. Any actions
proposed under the O&M Plan shall be consistent with the Facility Data, the
Operating Procedures, Prudent Utility Practices, the Related Agreements and this
Agreement. Contemporaneously with the delivery of the O&M Plan, Operator shall
submit to Owner a proposed budget for operating and maintaining the Facility
during the upcoming Project Year (the "Operating Budget"), which shall include
the
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estimated cost, based on time and materials and all fees contemplated in this
Agreement, for all anticipated operating and maintenance services to be provided
by Operator during each month of the upcoming Project Year in the account
structure and format provided by Owner (the Q&CM Plan and the Operating Budget
are hereinafter sometimes together called the "Annual Operating Plan"). When
approved pursuant to subparagraph (b) below, the Annual Operating Plan shall be
an "Approved Annual Operating Plan" and shall consist of an "Approved O&M Plan"
and an "Approved Operating Budget".
(b) Owner shall give its approval or disapproval of the Annual
Operating Plan no later than thirty (30) days after receipt thereof from
Operator. If Owner objects to all or any portion of the proposed Annual
Operating Plan, Owner shall furnish its objections in writing to Operator, and
Owner and Operator shall amend such Annual Operating Plan in order to
accommodate to Owner's satisfaction those items to which Owner objects.
(c) An Approved Annual Operating Plan shall constitute authorization
for Operator to operate and maintain the Facility in accordance with such
Approved Annual Operating Plan and the terms of this Agreement, it being
recognized and agreed that Operator shall operate and maintain the Facility in a
prudent and efficient manner so as to maximize both the current performance and
the residual value of the Facility and shall endeavor to ensure that the actual
costs of operating and maintaining the Facility are as low as reasonably
practicable and in any event do not exceed the Approved Operating Budget either
in total or, to the extent reasonably practicable, in any one budgetary
category. Operator shall notify Owner as soon as reasonably possible of any
significant deviations or discrepancies between the costs and expenses actually
incurred by Operator during each Project Year and the costs and expenses
projected to be incurred by Operator as set forth in the Approved Operating
Budget for each such Project Year.
(d) In the event Operator desires to request an adjustment to an
Approved Annual Operating Plan at any time during the Project Year, Operator
shall submit a proposed revised Annual Operating Plan for Owner's consideration,
which Owner shall approve or disapprove within fifteen (15) days after
submission thereof. If the proposed revised Annual Operating Plan is disapproved
by Owner within such fifteen (15) day period, Owner shall furnish Operator with
the reasons for such disapproval and shall immediately begin discussions with
Operator in an effort to reach a mutually agreeable revised Annual Operating
Plan. Upon such agreement, Operator shall revise the Annual Operating Plan with
respect thereto. Until the revised Annual Operating Plan is approved in writing
by Owner, Operator shall not, except in an emergency as described in Section 2.6
hereof, act outside of the Approved Annual Operating Plan for such Project Year
without the prior written consent of Owner. Once approved, Operator's authority
as to the revised, or any additionally revised, Annual Operating Plan shall be
the same as that authorized for the original Approved Annual Operating Plan.
2.5 Monthly Summary. Within two (2) business days after the end of
---------------
each calendar month of each Project Year, Operator shall submit to Owner, in a
form reasonably acceptable to Owner, a preliminary report containing operating
data, meter readings, and other billing documentation for such month sufficient
to generate monthly invoices for the sale of
-17-
Electricity and steam produced at the Facility. In addition, within ten (10)
days after the end 07. each month of each Project Year, Operator shall submit
to Owner, in a form similar to Exhibit A attached hereto and made a part hereof
for all purposes and otherwise acceptable to Owner, a monthly operating report
summarizing in reasonable detail all areas of operation and maintenance and all
activities performed by Operator during such month. Operator shall submit the
proposed forms of such reports to Owner for approval on or before thirty (30)
days after the date on which this Agreement is executed.
2.6 Emergencies. Immediately upon the occurrence or imminent
-----------
likelihood of an accident or emergency involving the Facility or adjoining
property and endangering the safety of any person or property, or materially
adversely affecting the performance of the Facility or the Facility's compliance
with applicable law, Operator shall, after consultation with the Plant Manager
if the circumstances allow, and without the necessity of obtaining any other
approvals which might otherwise be required hereunder and exercising reasonable
care without special instruction or authorization from Owner, take any
reasonable and necessary or advisable action deemed by Operator to be reasonably
necessary or advisable under the circumstances to prevent, avoid or mitigate
injury, damage or loss to persons or property or to avoid penalties, fines or
damages under applicable law. Operator shall not Owner thereof as soon as
practicable.
2.7 Inspections.
-----------
(a) In addition to its daily activities associated with the operation
and maintenance of the Facility, Operator shall conduct inspections of the
Facility at regular intervals, as required by vendors' or manufacturers'
recommendations and Prudent Utility Practices. Within ten (10) days after the
Execution Date for the first (1st) Project Year and no later than one hundred
twenty (120) days prior to each Project Year thereafter, Operator shall submit
to Owner for approval Operator's proposed inspection schedule (which inspection
schedule shall be included as part of each O&M Plan to be submitted to Owner)
and shall incorporate into the proposed inspection schedule any reasonable
amendments proposed by Owner. Any inspection conducted pursuant to this Section
2.7 shall be conducted in such a manner so as to minimize the impact on the
production of electricity and steam from the Facility.
(b) During such inspections, Operator shall make any necessary
decisions and promptly perform all Work as may be necessary to effect (after
Owner's approval, if necessary) the maintenance, repair or replacement of any
part of the Facility the necessity of which becomes apparent during such
inspection.
(c) Within twenty (20) business days after (i) each inspection and
(ii) the completion of any maintenance or repair work performed after such an
inspection, Operator shall prepare and deliver to Owner a report of the results
of such inspection or any Work completed after such inspection, as the case may
be, containing a summary of Operator's observations and recommendations relating
thereto. Operator shall arrange for its personnel to attend any meetings or
conferences with Owner's personnel as Owner may from time to time request to
review the results of Operator's inspections and maintenance work.
-18-
(d) Operator shall cooperate in connection with inspections of
the Facility by Owner, the Plant Manager, Lender and any other designees of
Owner. Such inspections may occur at any time, provided that they do not
unreasonably interfere with the performance of Operator's obligations hereunder,
and further provided that if Owner or Owner's designated representive desires
to conduct any such inspection after normal business hours, Owner shall give
Operator reasonable notice thereof. Operator agrees to correct, in accordance
with the terms of Section 7.2 hereof, any failure to comply with the obligations
and standards set forth in this Agreement for the operation and maintenance of
the Facility that is identified by Lender.
2.8 Operating Procedures and Training.
---------------------------------
(a) Owner and Operator shall use due diligence to obtain from any
Equipment vendor or manufacturer all instruction manuals and spare parts lists
not timely submitted by such Equipment vendor or manufacturer, it being
understood that Owner shall coordinate this effort with Operator's assistance
and Owner may pursue all appropriate rights and remedies available to Owner
under any equipment supply agreements. To the extent any supplementary materials
are required for Operator training that are not provided by Equipment vendors or
manufacturers, Operator shall provide such materials, at Operator's sole cost
and expense, except where such supplementary materials are required in
connection with a Reimbursable Cost. Operator shall review the operating
procedures in effect at the Facility as of the Execution Date (the "Operating
Procedures") and shall prepare and submit to Owner a complete set of revisions
to the Operating Procedures sufficient to ensure the continued safe and
efficient operation and maintenance of the Facility in accordance with vendors'
and manufacturers' warranty requirements and recommendations, Prudent Utility
Practices, the Related Agreements and this Agreement. The Operating Procedures
shall, among other things, include Facility specific preventive and predictive
maintenance procedures integrating (i) vendor and manufacturer recommendations
and warranty requirements, (ii) requirements of the Related Agreements, (iii)
Operator's experience, (iv) adequate safety and fire prevention, response and
reporting measures and procedures, (v) adequate security measures and
procedures, and (vi) the monitoring of the performance of the Facility. In
addition, the Operating Procedures shall include, without limitation, (i)
employee manuals outlining proper employee conduct and general expectations,
rules and procedures, (ii) safety manuals, (iii) emergency preparedness and
response manuals, and (iv) environmental compliance manuals. Within twenty (20)
days of Owner's receipt thereof, Owner shall review revisions to the Operating
Procedures, provide reasonable written comments and suggestions, and Operator
shall duly consider such comments and suggestions in revising the Operating
Procedures. Owner's review and approval of the Operating Procedures shall not
telieve Operator of its obligation to operate and maintain the Facility in
accordance with this Agreement. Operator shall, as often as necessary but not
less often than annually, review and, if necessary, revise and update the
Operating Procedures, but shall not implement any amendments thereto without
Owner's prior written consent.
(b) Operator shall provide training materials, instructional personnel
and management oversight as necessary to develop and implement a comprehensive
training program for operation of the Facility (including the auxiliary boiler
located in Camden Paperboard's plant).
-19-
Operator shall ensure that its personnel are fully trained and qualified to
operate and maintain the Facility in accordance with vendors' and manufacturers'
warranty requirements and recommendations, Prudent Utility Practices, the
Related Agreements and this Agreement.
2.9 Transition Stage.
-----------------
(a) As the Existing O&M Agreement Termination Date approaches, an
orderly transition from North American to Operator must occur. Operator shall
participate in an orderly process of transition from the operation and
maintenance of the Facility by North American to the operation and maintenance
of the Facility by Operator (the "Transition Stage"). For purposes of this
Agreement, the Transition Stage shall have commenced as of the Execution Date.
During the Transition Stage, Operator shall cooperate and coordinate with North
American and shall report to and be subject to the authority of Owner.
(b) During the Transition Stage, Operator shall (i) plan and prepare
for hiring of the personnel necessary for the operation and maintenance of the
Facility, (ii) establish the Annual Operating Plan for use during the first
(1st) Project Year and obtain approval of Owner thereon (iii) establish the
inspection schedule for the Facility (which inspection schedule shall be
included as part of the first (1st) Annual Operating Plan and shall be the same
for the first Project Year as the inspection schedule established for such
period of time pursuant to the terms of the Existing O&M Agreement unless Owner
or Operator recommends a change to such inspection schedule) and obtain approval
of Owner thereon, (iv) prepare a detailed monthly report format as described in
Section 2.5 hereof and obtain approval of Owner thereon, and (v) set up and
staff the Regional Office.
(c) At such time as Owner has given written notice to Operator to
commence Transition Stage operations, Operator shall make available, on a phase-
in basis, sufficient personnel experienced in the operation and maintenance of
cogeneration facilities such as the Facility. In addition, Operator shall
perform all such duties and obligations otherwise set forth in this Agreement to
the extent that such duties and obligations are not inconsistent with its
transition role.
(d) Using a format similar to that described in Section 2.4 hereof
for the development of the Annual Operating Plan, Operator shall prepare and
submit to Owner a "Transition Stage Operating Plan," comprised of the
"Transition Stage Plan" and the "Transition Stage Operating Budget." The
Transition Stage Operating Plan shall include expenditures and activities to
occur during the Transition Stage as described in this Section 2.9, and shall be
submitted to Owner for its review and comment on the Execution Date. If Owner
objects to all or any portion of the proposed Transition Stage Operating Plan,
Owner shall promptly furnish its objections to Operator, and Owner and Operator
shall work diligently to resolve such objections.
(e) During the Transition Stage, Operator shall review and report to
the Owner on the status of, and where appropriate, make written recommendations
to Owner with respect to (i) operation and maintenance facilities, tools,
equipment, supplies and spare parts inventories,
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(ii) reporting, accounting, maintenance management and communication systems
necessary for Operator to operate and maintain the Facility in accordance with
the terms of this Agreement, (iii) security and safety systems and plans,
including any necessary or desirable special clothing or safety gear for
operations and maintenance personnel, and (iv) such other facilities and systems
as shall be necessary or desirable to operate and maintain the Facility and to
fulfill Operator's ongoing responsibilities under this Agreement.
(f) Upon the Existing O&M Agreement Termination Date, care, custody
and control of the Facility will pass from North American to Owner under the
terms of the Existing O&M Agreement and from Owner to Operator under the terms
of this Agreement and the Transition Stage shall end. Operator shall thereafter
operate and maintain the Facility in accordance with this Agreement and provide
any and all technical and engineering support required for the safe and
efficient operation and maintenance of the Facility.
(g) During the Transition Stage, Operator or its authorized
representative shall, if reasonably requested by Owner, attend any and all
review meetings between North American and Owner. Operator shall, if reasonably
requested by Owner, review and comment upon plans, specifications, documents, or
other data generated by North American.
2.10 Limited Authority. Operator shall not have any authority to (i)
-----------------
negotiate any change to the tariff under the Power Purchase Agreement, (ii)
settle or compromise claims on behalf of Owner under any Related Agreement,
(iii) agree to any amendments to, or waivers, consents or approvals in
connection with, any Related Agreement, (iv) serve any notice of a breach under
any of the Related Agreements, or (v) transfer, dispose of, lease or create any
encumbrance on any assets of Owner.
III.
RESPONSIBILITIES OF OWNER
3.1 Services, Operation, Obligations. Except as otherwise provided
--------------------------------
in Section 3.1(3) hereof, Operator shall have no obligation to provide any of
the following services or perform any of the following work, which services and
work shall be provided and performed by Owner:
(1) Arrange for a supply of Fuel and water, at no cost to Operator,
in such quantities as are necessary for the performance by Operator of the
Work;
(2) Provide for the sale of steam and electricity generated by the
Facility and for the billing and collection of revenues therefrom;
(3) Obtain or cause to be obtained all governmental licenses,
permits and approvals necessary to operate the Facility, including
environmental licenses, permits and approvals; provided, however, that
Operator shall (i) provide to Owner such technical information and other
assistance as is required from time to time to obtain licenses, permits
-21-
or approvals or renewals or extensions thereof and (ii) keep such records
and provide such reports to appropriate governmental agencies as may be
required of Owner or Operator by any such licenses, permits and approvals;
(4) Designate and advise Operator of the Plant Manager (who shall act
and be designated as Owner's authorized representative);
(5) Provide and grant to Operator full access to the Facility and
such portions of the Site as are necessary to allow Operator to perform the
Work;
(6) Arrange for start-up power and back-up power in such quantities
as is necessary for the performance by Operator of the Work;
(7) Pay all applicable federal, state and local taxes (except for
sales taxes which are the responsibility of Operator) attributable to the
Facility and the sale of steam and electricity therefrom, including the
preparation of all tax returns and reports to be filed for federal, state
and local income tax purposes; and
(8) Maintain all insurance coverage as required to be provided by
Owner under Article X hereof.
3.2 Payments. Owner shall compensate Operator for the Work performed
--------
hereunder pursuant to the terms of Articles IV, V and VI hereof
3.3 Right to Perform Upon Operator's Default. If at any time Operator
----------------------------------------
fails to perform any obligation hereunder and such failure is likely to cause
injury to any person or damage to the Facility, to exceed or breach the terms or
conditions of any permit or easement, or to breach the terms of any Related
Agreement Owner, in addition to all other rights and remedies it has under this
Agreement, may, but shall have no duty to, perform or have performed by a third
party any such obligation not performed by Operator. Such performance by Owner
shall reduce any compensation payable to Operator hereunder during the
Transition Stage or in any Project Year by an amount equal to the cost to Owner
of effecting such performance.
IV.
OPERATING COSTS AND EXPENSES
----------------------------
4.1 Procedure for Incurring Costs. Owner, and not Operator, shall be
----------------------------
ultimately liable for all Reimbursable Costs and Direct Costs expended hereunder
in connection with the Facility and Operator shall receive payment for
Reimbursable Costs in accordance with the terms of Sections 5.2 and 5.4 hereof.
Operator shall submit a written requisition to Owner for any single item
requiring an expenditure in excess of Five Thousand and 00/100 Dollars
($5,000.00) or as otherwise may be required by Owner, and after receipt of
written approval from Owner, but not before, Operator shall be authorized to
prepare Operator's purchase order for such item. Operator shall (i) verify the
receipt at the Site of all materials and services to be delivered
-22-
to the Facility covered by Owner's and Operator's purchase orders, (ii) verify
the accuracy vendors' invoices in connection therewith, and (iii) forward
invoices for Direct Costs to Owner for approval, processing, and payment by
Owner in accordance with the terms of Section 4.2
hereof.
4.2 Procedure for Payment of Direct Costs. Operator shall
-------------------------------------
periodically, but not more often than once a week, deliver to Owner invoices
received by Operator from third parties for all Direct Costs, accompanied by a
summary of all such invoices which itemizes all such invoices by operating cost
account number. Such invoices shall also be accompanied by a statement from
Operator confirming that all such invoices are accurate, due and payable,
together with all relevant documentation reasonably necessary for Owner to
verify the accuracy thereof. Each invoice submitted to Owner shall be paid by
Owner directly to the payee of such invoice on or before the date such invoice
is due, provided that if Owner disputes any amount set forth in any such
invoice, Owner shall pay the undisputed portion on or before such due date, and
Owner, Operator and such payee shall attempt in good faith to resolve all
disputed items as soon as reasonably practicable.
4.3 Limitation on Ability to Incur Direct Costs. Operator shall
-------------------------------------------
prepare Operator's purchase order for costs and expenses incurred in connection
with the operation and maintenance of the Facility during each month of a
Project Year pursuant to the terms hereof, to the extent and only to the extent
such costs and expenses:
(i) are included within the Approved Operating Budget, and any
approved revision thereof, for the applicable Project Year;
(ii) are incurred in connection with the performance of any
Unscheduled Maintenance, Special Improvements or Capital
Improvements as approved in writing by Owner;
(iii) are incurred in connection with an emergency under Section 2.6
hereof; or
(iv) are otherwise approved by Owner in writing.
4.4 Payment for Special Improvements. The actual cost of any
--------------------------------
alterations, modifications, improvements or additions to the Facility which are
required by any governmental or regulatory agency or are otherwise required to
comply with applicable laws, regulations or requirements ("Special
Improvements") shall be the sole responsibility of Owner. If any such costs are
necessary or advisable and become known to Operator, Operator shall promptly so
inform Owner who shall promptly determine the most feasible manner in which to
pay for such costs. Operator shall not be authorized to incur any expenditure
in relation to any Special Improvements without the prior written consent of
Owner.
4.5 Payment for Unscheduled Maintenance. The actual cost of
-------------------------------------
Unscheduled Maintenance shall be the sole responsibility of Owner. Operator
shall not incur any expenditure
-23-
in relation to any Unscheduled Maintenance without the prior written consent of
Owner, except in the event of an emergency as described in Section 2.6 hereof.
4.6 Payment for Major Overhauls. The actual cost of Major Overhauls
---------------------------
shall be the sole responsibility of Owner. Operator shall not incur any
expenditure in relation to any Major Overhauls without the prior written consent
of Owner.
4.7 Payment for Capital Improvements. The actual cost of Capital
--------------------------------
Improvements shall be the sole responsibility of Owner. Operator shall not incur
any expenditure in relation to any Capital Improvements without the prior
written consent of Owner.
4.8 GE Equipment. Owner agrees to purchase from Operator, and
------------
Operator agrees to sell to Owner, (i) all Parts that Owner desires to purchase
during the term of this Agreement for GE Equipment, at a discount of thirty-five
percent (35%) less than the Published Price for such Parts (the "Parts
Discount"), (ii) all Services that Owner desires to purchase during the term of
this Agreement for (GE Equipment, at a discount of fifteen percent (15%) less
than the Published Price for such Services (the "Services Discount") and (iii)
all Repairs that Owner desires to purchase during the term of this Agreement for
GE Equipment, at a discount of fifteen percent (15%) less than the Published
Price for such Repairs. The parties anticipate that, over the term of this
Agreement, Operator will sell to Owner, and Owner will purchase from Operator,
Parts and Services for GE Equipment based on the schedule set forth on Exhibit E
attached hereto and made a part hereof for all purposes, which Parts and
Services have an estimated value of approximately Sixty Million and 00/100
Dollars ($60,000,000.00) based on current prices and including the Parts
Discount and Services Discount. The foregoing provisions of this Section 4.8 are
expressly made subject to the following:
(a) the foregoing shall not be construed as an obligation by Owner to
purchase from Operator any Parts, Services and/or Repairs for GE
Equipment during the term of this Agreement, but is only an
obligation by Owner that if Owner does in fact purchase any
Parts, Services and/or Repairs for GE Equipment during the term
of this Agreement, then Owner shall purchase such Parts, Services
and/or Repairs for GE Equipment from Operator;
(b) the decision whether to purchase Parts, Services and/or Repairs
for GE Equipment and the timing of any such purchases shall be
made by Owner in Owner's sole and absolute discretion;
(c) if at any time Operator is unable to provide Parts, Services
and/or Repairs for GE Equipment in a timely or cost effective
manner, then Owner shall have the right to obtain such Parts,
Services and/or Repairs that Operator is unable to provide in a
timely or cost effective manner from alternate sources;
-24-
(d) Owner shall evaluate Operator on its performance in managing
each Forced Outage and Scheduled Outage in a cost effective and
time efficient manner, and, subject to Owner's sole and complete
discretion, refund to Operator up to fifty percent (50%) of the
Services Discount attributable to the Services performed during
such outage; and
(e) upon the expiration or other termination of this Agreement, Owner
shall have no further obligation to purchase from Operator, and
Operator shall have no further obligation to sell to Owner,
Parts, Services and/or Repairs for GE Equipment.
Owner shall have the right to have a financial audit of Operator's books,
accounts and records conducted by a third party selected by Owner which is
reasonably acceptable to Operator for the sole purpose of verifying the accuracy
of the Published Prices, including, without limitation, the right to audit such
books, accounts and records to determine the prices and rates for Parts,
Services and/or Repairs for GE Equipment paid by Operator's and its Affiliates'
other customers; provided, however, the results of such audit and the books,
accounts and records reviewed in connection therewith shall be deemed to be
Operator Confidential Information. If such audit reveals errors in the
calculation of any amounts paid by Owner, Operator shall promptly reimburse
Owner for any amounts improperly paid by Owner. Furthermore, if such audit
reveals errors of more than two percent (2%) in the calculation of the Published
Prices, then Operator shall pay to Owner the cost of the audit.
4.9 Wage Increases in Excess of CPI. In the event that Operator finds
-------------------------------
it necessary to increase salaries and/or wages, then, without the prior written
consent of Owner, Operator shall not increase the Effective Hourly Rate from one
Project Year to the next Project Year by an amount which exceeds the percentage
increase in the Base Index from the beginning of such Project Year to the
beginning of such next Project Year; provided, however, there shall be no
obligation on behalf of Owner to approve any such increase in salaries and/or
wages.
V.
PAYMENTS TO OPERATOR
5.1 O&M Fee. As compensation for the performance of the Work by
-------
Operator, Owner shall pay to Operator an operations and maintenance fee in the
amount of Thirty-One Thousand Two Hundred Fifty and 00/100 Dollars ($31,250.00)
per month (the "O&M Fee"), beginning with the thirteenth (13th) full calendar
month after the month in which the Existing O&M Agreement Termination Date
occurs and continuing for each month thereafter throughout the term of this
Agreement. The O&M Fee shall be payable monthly, in arrears, with the first such
payment being due and payable on the last business day of the thirteenth (13th)
full calendar month after the month in which the Existing O&M Agreement
Termination Date occurs, and with a like payment on the last business day of
each month thereafter throughout the term of this Agreement. If the last day of
the term of this Agreement does not fall on the last day of a month, the O&M Fee
for such partial month shall be prorated. If during the term of this Agreement
-25-
conditions or circumstances change from those in effect on the Existing O&M
Agreement Termination Date such that there is either a material increase or
decrease in the responsibilities and obligations of Operator hereunder from
those responsibilities and obligations of Operator as of the. Existing O&M
Agreement Termination Date, then Owner and Operator shall meet and negotiate an
equitable adjustment to the O&M Fee.
5.2 Reimbursable Costs. To the extent not paid by Owner as Direct
------------------
Costs pursuant to Article IV hereof, Owner shall reimburse Operator for those
costs and expenses actually incurred by Operator in connection with the
operation and maintenance of the Facility during each month of a Project Year or
during the Transition Stage pursuant to the terms hereof, to the extent and only
to the extent such costs and expenses (collectively, the "Reimbursable Costs")
are:
(i) included within the approved Transition Operating Budget and any
approved revision thereof;
(ii) included within the Approved Operating Budget, and any approved
revision thereof, for the applicable Project Year;
(iii) incurred in connection with the performance of any Unscheduled
Maintenance as approved in writing by Owner;
(iv) incurred in connection with an emergency under Section 2.6
hereof;
(v) subject to the limitations set forth in Section 4.9 hereof, the
actual salaries, straight time hourly wages and overtime hourly
wages (including vacation and holiday pay for hourly personnel)
for all Operator Personnel (whether employed directly by
Operator or through a contractor) to the extent pertaining to
the Work, plus (a) the actual cost of associated payroll taxes,
unemployment and disability insurance, worker's compensation,
fringe benefits and other statutory compensation for all such
Operator Personnel to the extent pertaining to the Work and (b)
five percent (5%) of the W-2 Wages for all such Operator
Personnel to the extent pertaining to the Work ((a) and (b)
above collectively referred to herein as "Operator Personnel
Overhead"); provided, however, the amount of Operator Personnel
Overhead, other than such Overheaded that is required by law,
that is allowed to be included in Reimbursable Costs shall be
limited to (x) twenty-three and 05/100 percent (23.05%) of the
W-2 Wages for all such Operator Personnel per Project Year
during each of the first (1st) through fifth (5th) Project Years
and (y) twenty-four and 05/100 percent (24.05%) of the W-2 Wages
for all such Operator Personnel per Project Year during each of
the sixth (6th) through twelfth (12th) Project Years;
-26-
(vi) (a) subject to the limitations set forth in Section 4.9 hereof,
the actual salaries for all GE O&M Personnel to the extent
pertaining to the Work, plus (b) thirty-six percent (36%) of
the W-2 Wages for all such GE O&M Personnel to the extent
pertaining to the Work (the "Overhead Percentage Rate") to
offset Operator's actual cost of associated payroll taxes,
unemployment and disability insurance, Worker's compensation,
fringe benefits and other statutory compensation for all such
GE O&M Personnel to the extent pertaining to the Work (such
actual cost collectively referred to herein as "GE O&M
Personnel Overhead"), whether such actual costs are more or
less than such percentage; provided, however, if the amount of
GE O&M Personnel Overhead that is required by law increases or
decreases over that in effect as of the Existing O&M Agreement
Termination Date, then the Overhead Percentage Rate shall be
increased or decreased, as the case may be, to the extent of
any such increase or decrease in GE O&M Personnel Overhead that
is required by law; or
(vii) otherwise approved by Owner in writing.
Subject to the limitations imposed in the immediately preceding paragraph,
the term Reimbursable Costs shall include, but not be limited to, the following
costs incurred by Operator in its performance of the Work:
(viii) the actual delivered cost of supplies, Consumables, spare
parts and/or replacement components and all other items
Operator is required to provide and does provide for the
Facility under this Agreement;
(ix) special training costs conducted off-site or by non-Operator
personnel, as approved in advance and in writing by Owner;
(x) community and labor relations costs provided by non-Operator
personnel, as approved in advance and in writing by Owner;
(xi) relocation and recruitment costs of salaried employees and
recruitment costs (but not relocation costs) of non-salaried
employees;
(xii) the actual costs of suppliers, subcontractors, attorneys,
certified accountants and other third party advisors, as
approved in advance and in writing by Owner;
(xiii) upon Owner's request and subject to Owner's prior written
approval, the cost of services (other than the Work) at
mutually agreed upon prices, terms and conditions;
-27-
(xiv) the actual delivered cost for the purchase of certain
materials such as tools office equipment and office
supplies; and
(xv) a fraction of the actual costs incurred by Operator to staff,
operate and maintain the Regional Office, the numerator of
which fraction is the total of all costs and expenses set
forth in the Linden Approved Operating Budget for the Project
Year in question and the denominator of which fraction is the
total of all costs and expenses set forth in the Camden
Approved Operating Budget, the Bayonne Approved Operating
Budget and the Linden Approved Operating Budget for such
Project Year.
Unless Owner shall otherwise agree in writing, or unless otherwise included
in the approved Transition Stage Operating Budget or an Approved Operating
Budget, the term Reimbursable Costs shall not include and Operator shall not be
entitled to reimbursement for:
(xvi) salaries or other compensation of Operator's officers,
executives, general managers, estimators, auditors,
attorneys, labor consultants, risk managers, accountants,
purchasing and contracting agents and other employees at
Operator's principal office and branch offices, except
employees of Operator at the Facility and the Regional
Office;
(xvii) expenses of Operator's principal and branch offices other
than the field office at the Facility and the Regional
Office;
(xviii) any of Operator's general and administrative expenses of any
kind;
(xix) all costs of insurance paid by Operator and payments for
deductibles or self-insured retentions associated with such
insurance;
(xx) all costs and expenses incurred in connection with any
engineering services provided by Operator in connection with
the performance of the Work (e.g., maintaining Facility
drawings, specifications and technical documents up-to-date)
to the extent performed by Operator's employees other than
the Operator Personnel or the GE O&M Personnel;
(xxi) all costs and expenses incurred in connection with the
preparation of all reports required to be made by Operator
pursuant to the terms of this Agreement to the extent
performed by Operator's employees other than the Operator
Personnel or the GE O&M Personnel; and
(xxii) all employee bonuses paid by Operator to the Operator
Personnel and the GE O&M Personnel pursuant to Section 6.8
hereof
-28-
5.3 CPI Adjustment. The O&M Fee and the Annual Fee Adjustment
--------------
Amount (together, the "CPI Adjusted Payments") shall be adjusted on the first
day of each Project Year (except the first Project Year) throughout the term of
this Agreement and any extensions hereof. On each such date each of the CPI
Adjusted Payments shall be adjusted to a new CPI Adjusted Payment calculated in
accordance with the following equation:
New CPI Adjusted Payment = (Applicable Adjustment Amount)
multiplied by (A/B)
"Applicable Adjustment Amount" equals the original dollar amount set
forth in this Agreement for a given CPI Adjusted Payment.
"A" equals the average of the Consumer Price Index for all urban
consumers for the Xxx Xxxx/Xxx Xxxxxx xxxx (0000-00 = 100), published by
the Bureau of Labor Statistics, United States Department of labor (the
"Base Index") for the last three full calendar months prior to the
commencement of the Project Year for which the new CPI Adjusted Payments
are to be computed.
"B" equals the Base Index for the last calendar month prior to the
month in which the Existing O&M Agreement Termination Date occurs.
5.4 Procedure for Payment of Reimbursable Costs. On or before the
-------------------------------------------
tenth (10th) day of each month commencing after the Existing O&M Agreement
Termination Date, Operator shall tender an invoice to Owner for all Reimbursable
Costs, if any, paid by Operator during the preceding month. Such invoices shall
be accompanied by a certificate from Operator confirming that all such
Reimbursable Costs have been paid, together with all relevant documentation
necessary for Owner to verify the accuracy thereof, including all relevant
invoices for Consumables, spare parts and replacement components and labor costs
and benefits computations incurred by Operator for the relevant staff and
specialists. Each invoice submitted to Owner shall be paid by Owner by wire
transfer not later than the tenth (10th) day of the next calendar month after
the month in which such invoice was received, but in no event shall Owner be
required to pay an invoice earlier than thirty (30) days after receipt of such
invoice provided that if Owner disputes any amount set forth in any such
invoice, (i) Owner shall promptly notify Operator of such dispute, (ii) Owner
shall pay the undisputed portion to Operator within said period and (iii) Owner
and Operator shall attempt in good faith to resolve all disputed items as soon
as reasonably practicable.
5.5 Late Payments. All payments that are past due and are not
-------------
disputed, or disputed and subsequently demonstrated to be payable to Operator,
shall accrue interest from the date such payments are due until such payments
are made at a per annum rate equal to the Default Rate.
VI.
FACILITY PERFORMANCE, LIQUIDATED DAMAGES AND BONUS
-29-
6.1 Annual Fee Adjustment Amount. To provide incentive for Operator
----------------------------
to operate and maintain the Facility in such a way so as to maximize
profitability and efficiency of operation, achieve target operating levels of
performance, and protect the overall life and viability of the Facility, the O&M
Fee earned by Operator shall be subject to an annual adjustment. The amount of
such adjustment (the "Annual Fee Adjustment Amount" or "AFAA") shall be the sum
of bonuses earned by and/or liquidated damages assessed against Operator in each
of six (6) separate categories of evaluation. The six (6) categories of
evaluation are:
(1) Power Generation,
(ii) Change in DMNC,
(iii) Steam Delivery,
(iv) Net Plant Heat Rate,
(v) O&M Costs, and
(vi) Subjective Factors.
In each category the maximum bonus or liquidated damage will be limited to
a specific dollar amount. The AFAA shall be the sum of the bonuses earned and
liquidated damages assessed in each individual category and in any Project Year
shall never exceed Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00),
plus or minus, as the case may be.
(a) Power Generation. The maximum bonus or liquidated damages
----------------
capable of being earned by or assessed against Operator in the Power Generation
category of the AFAA in any Project Year shall be Fifty Thousand and 00/100
Dollars ($50,000.00). To determine the amount of bonus or liquidated damages
attributable to such category, a calculation will be made to determine the Power
Generation Factor (as defined hereinbelow) for a Project Year. Subject to the
Fifty Thousand and 00/100 Dollars ($50,000.00) limitation, if the Power
Generation Factor is greater than or equal to ninety-five percent (95%),
Operator shall be entitled to a bonus under the Power Generation category of the
AFAA calculated in accordance with the following formula:
Bonus = $25,000 + [(PGF - .95) x $833,333]
For a given Project Year, if the Power Generation Factor is less than
ninety-five percent (95%), but not less than ninety-two and one-half percent
(92.50%), the AFAA for the Power Generation category for such Project Year shall
be zero. Subject to the Fifty Thousand and 00/100 Dollars ($50,000.00)
limitation, if the Power Generation Factor is less than ninety-two and one-half
percent (92.50%), Operator shall be assessed liquidated damages under the Power
Generation category of the AFAA calculated in accordance with the following
formula:
Liquidated Damages = $25,000 + [(.925 - PGF) X $833,333)]
For purposes of the foregoing calculations, the following definitions shall
apply:
"Actual kWh' shall be equal to the amount of kWh actually generated
by the Facility in a Project Year, plus the amount of kWh actually
dispatched by Owner and/or
-30-
ConEd in such Project Year. The dispatched kWh shall be determined by
multiplying the number of hours of dispatch by the amount of kW capacity
actually dispatched, provided such dispatch capacity is immediately
available for full and continuous delivery.
"FM kWh" shall be equal to the applicable DMNC (as determined by the
most recent ConEd test) for that portion of the Facility that, as a result
of Force Majeure, either is unable to generate electricity or generates
electricity at a reduced capacity multiplied by the number of hours in the
Project Year that the Facility was affected by such event of Force Majeure.
Notwithstanding anything stated herein to the contrary, for purposes of
determining bonus, the FM kWh shall be expressly limited to that portion of
the FM kWh for which Owner actually received payment from ConEd pursuant to
Section 4.5 of the Power Purchase Agreement.
"Power Generation Factor ('PGF')" shall be equal to the sum of the
Actual kWh and the FM kWh divided by the product of the applicable DMNC (as
determined by the most recent ConEd test) and the total number of hours in
the Project Year. The Power Generation Factor shall be expressed as a
decimal, rounded to the nearest one-thousandth.
(b) Change in DMNC. The maximum bonus or liquidated damages
--------------
capable of being earned by or assessed against Operator in the Change in DMNC
category of the AFAA in any Project Year shall be Twenty-Five Thousand and
00/100 Dollars ($25,000.00). As incentive to attain the level of DMNC required
by Owner, Operator shall be entitled to receive a bonus or, alternatively, be
assessed liquidated damages in the Change in DMNC category of the AFAA based on
the results of the semi-annual DMNC Test compared with the results of the semi-
annual DMNC Test conducted during the corresponding period in the immediately
preceding Project Year (the "Target DMNC"); provided, however, if either Owner
or Operator desires not to use the results of the semi-annual DMNC Test
conducted during the corresponding period in the immediately preceding Project
Year as the Target DMNC, then the Target DMNC shall be mutually agreed to by
Owner and Operator, but if Owner and Operator can not agree prior to the running
of such test, then the Target DMNC for such test shall be the DMNC as
demonstrated by the semi-annual DMNC Test conducted during the corresponding
period in the immediately preceding Project Year. By no later than forty-five
(45) days prior to each semi-annual DMNC Test, Operator shall prepare and submit
for Owner's approval a plan for such DMNC Test (the "Test Plan") which shall
clearly identify the measures to be taken by Operator to meet the Target DMNC.
The Test Plan shall be subject to Owner approval, provided, however, in the
event that Owner objects to all or any portion of the Test Plan, Owner shall
notify Operator in writing and Owner and Operator shall promptly meet to resolve
any differences in order to establish an approved Test Plan by no later than
twenty (20) days prior to the semi-annual DMNC Test.
For each DMNC Test conducted during a Project Year, Owner shall evaluate
Operator on its ability to achieve the Target DMNC, and, subject to Owner's
sole and complete discretion, award Operator a bonus of up to Twelve Thousand
Five Hundred and 00/100 Dollars ($12,500.00) or assess Operator with liquidated
damages of up to Twelve Thousand Five Hundred and 00/100 Dollars ($12,500.00) in
the Change in DMNC category of the AFAA.
-31-
If an event of Force Majeure prevents or disrupts the running of a scheduled
DMNC Test, Operator shall neither be assessed liquidated damages nor receive a
bonus under such test. The sole effect of Force Majeure under this Section
6.1(b) shall be to cause a rescheduling of such DMNC Test. After conducting four
(4) DMNC Tests, and paying bonuses and/or liquidated damages in accordance with
this Section 6.1(b), in the first two (2) Project Years, Owner and Operator
shall meet and, in consideration of actual Facility operation, actual DMNC Test
results and the amounts of bonuses paid and/or liquidated damages assessed,
reevaluate the method used in determining the Change in DMNC category of the
AFAA.
For purposes of this Section 6.1(b), "DMNC Test" shall mean a semi-annual
test conducted, in accordance with the Test Plan, to determine the DMNC of the
Facility. Each DMNC Test shall be conducted on the date determined by Owner, but
no later than June 30th for the first such test during a Project Year and no
later than December 31st for the second such test during a Project Year.
(c) Steam Delivery. The maximum bonus or liquidated damages
--------------
capable of being earned by or assessed against Operator in the Steam Delivery
category of the AFAA in any Project Year shall be Twenty-Five Thousand and
00/100 Dollars ($25,000.00). If, over the course of a Project Year, fewer than
two (2) interruptions occur in the delivery of steam to Steam Purchasers, then
Operator shall receive a bonus in the amount of Twenty-Five Thousand and 00/100
Dollars ($25,000.00) under the Steam Delivery category of the AFAA for such
Project Year. If two (2) or three (3) interruptions occur in the delivery of
steam to Steam Purchasers during a Project Year, then the AFAA for the Steam
Delivery category of the AFAA for such Project Year shall be zero. If more than
three (3) interruptions occur in the delivery of steam to Steam Purchasers
during a Project Year, Operator shall be assessed liquidated damages in the
amount of Twenty-Five Thousand and 00/100 Dollars ($25,000.00) under the Steam
Delivery category of the AFAA for such Project Year. In no event shall the
amount of bonus earned or liquidated damages assessed in the Steam Delivery
category of the AFAA exceed Twenty-Five Thousand and 00/100 Dollars ($25,000.00)
in any Project Year.
(d) Net Plant Heat Rate. The maximum bonus or liquidated damages
-------------------
capable of being earned by or assessed against Operator in the Net Plant Heat
Rate category of the AFAA in any Project Year shall be Thirty-Seven Thousand
Five Hundred and 00/100 Dollars ($37,500.00). Over the course of a Project Year,
operation of the Facility at the optimum net plant heat rate increases
profitability. Owner shall evaluate Operator on its ability to achieve the
optimum net plant heat rate, and, subject to Owner's sole and complete
discretion, award Operator a bonus of up to Thirty-Seven Thousand Five Hundred
and 00/100 Dollars ($37,500.00) or assess Operator with liquidated damages of
up to Thirty-Seven Thousand Five Hundred and 00/100 Dollars ($37,500.00) in the
Net Plant Heat Rate category of the AFAA. The initial net plant heat rate shall
be determined pursuant to a performance test conducted within sixty (60) days
after the Existing O&M Agreement Termination Date.
(e) O&M Costs. The maximum bonus or liquidated damages capable of
---------
being earned by or assessed against Operator in the O&M Costs category of the
AFAA shall be Fifty
-32-
Thousand and 00/100 Dollars ($50,000.00). During each Project Year, this
Agreement contemplates the existence of an Approved Operating Budget. Developing
reliable budgets based on obtainable forecasts and realistic expectations, and
receiving such budgets and any revisions thereof in a timely manner, are
essential elements of Owner's ability to monitor its investment in the
Facility. Owner shall evaluate and compare the Approved Operating Budget for a
given Project Year against the costs and expenses actually incurred and, subject
to Owner's sole and complete discretion, award Operator a bonus of up to Fifty
Thousand and 00/100 Dollars ($50,000.00) or assess Operator with liquidated
damages of up to Fifty Thousand and 00/100 Dollars ($50,000.00) in the O&M Costs
category of the AFAA.
(f) Subjective Factors. The maximum bonus or liquidated damages
------------------
capable of being earned by or assessed against Operator in the Subjective
Factors category of the AFAA in any Project Year shall be Sixty-Two Thousand
Five Hundred and 00/100 Dollars ($62,500.00). The Subjective Factors category of
the AFAA depends solely upon Owner's subjective evaluation of Operator's overall
performance of its obligations and services rendered hereunder. Subject to
Owner's sole and complete discretion, Owner shall evaluate Operator's
performance with respect to various qualitative factors, which, for illustrative
purposes only and not by way of limitation, may include: frequency of insurance
claims and increases in related insurance costs, community and public relations,
compliance with permits and easements, safety and environmental records, turn-
over of personnel, development of apprentice programs, personnel management
relevant to Urban Enterprise Zone criteria, timeliness of response to and
handling of events of Force Majeure, working relationship with Owner and
Lender, professionalism, profitability of the Facility and overall handling and
care of the Facility. Periodically but no more often than every three (3) months
during each Project Year, Owner shall deliver to Operator a list of the various
qualitative factors to be used by Owner in its subjective evaluation of
Operator's performance for the remainder of such Project Year. Based on Owner's
subjective evaluation of Operator's performance during a Project Year, Owner
shall, in Owner's sole and complete discretion, either award Operator a bonus of
up to Sixty-Two Thousand Five Hundred and 00/100 Dollars ($62,500.00) or assess
Operator liquidated damages of up to Sixty-Two Thousand Five Hundred and 00/100
Dollars ($62,500.00) under the Subjective Factors category of the AFAA for such.
Project Year.
6.2 Quarterly Meetings. Owner and Operator shall schedule and attend
------------------
regular quarterly meetings to discuss Operator's performance of the Work and
Owner's evaluation thereof and, when necessary, to review and revise the list of
qualitative factors described in Section 6.1(f) above.
6.3 Partial Project Year. In any partial Project Year, the amounts
--------------------
attributable to each category of the AFAA and the overall limitation placed on
the AFAA itself shall be prorated based on the number of calendar days in such
partial Project Year divided by 365 or 366, as the case may be.
6.4 Payment of Annual Fee Adjustment Amount. Not later than thirty
---------------------------------------
(30) days after the end of each Project Year, Owner shall render a statement to
Operator, with all necessary
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and appropriate supporting documentation, calculating the amount of bonus
payments due Operator and/or the amount of liquidated damages due to Owner
under each category of the AFAA. If the AFAA results in an amount payable by
Operator to Owner, such amount shall be set off against that portion of the O&M
Fee for such Project Year that has not yet been advanced to Operator, and the
balance, if any, shall be paid by Operator to Owner within thirty (30) days
after Owner delivers the statement therefor to Operator. If the AFAA results in
an amount payable by Owner to Operator, such amount shall be paid by Owner
within thirty (30) days after Owner delivers the statement therefor to Operator.
A party's obligation to pay the AFAA to the other party shall survive the
termination of this Agreement, even though such AFAA may not be capable of being
calculated until after the termination of this Agreement.
6.5 Application of CPI Adjustment. Each of the dollar amounts
-----------------------------
indicated in Section 6.1 above shall be adjusted in accordance with the
provisions of Section 5.3 hereof.
6.6 Change in Conditions or Circumstances. If during the term of this
-------------------------------------
Agreement conditions or circumstances change from those in effect on the
Existing O&M Agreement Termination Date such that there is either a material
increase or decrease in the responsibilities and obligations of Operator
hereunder from those responsibilities and obligations of Operator as of the
Existing O&M Agreement Termination Date, then Owner and Operator shall meet and
negotiate an equitable adjustment to the manner in which the AFAA is determined,
including, without limitation, revisions to the categories of evaluation used in
determining the AFAA, the relative weightings thereof and the overall limit on
the AFAA, if necessary.
6.7 Second Project Year. Notwithstanding anything to the contrary
-------------------
herein contained, for purposes of the calculation of the AFAA for the second
(2nd) Project Year, each of the dollar amounts indicated in Section 6.1 above
shall be reduced by fifty percent (50%), subject, however, to proration in
accordance with Section 6.3 hereof
6.8 Employee Bonuses. Beginning with the second (2nd) Project Year and
----------------
for each Project Year thereafter, Operator shall pay to the Operator Personnel
and the GE O&M Personnel as bonuses in the aggregate not less than twenty-five
percent (25%) of the AFAA for each such Project Year; provided, however, Owner
may pay, in Owner's sole discretion, additional bonuses to the Operator
Personnel and the GE O&M Personnel during any Project Year.
VII.
WARRANTY; CORRECTION OF DEFECTS
7.1 Warranty. Operator warrants that (i) the Work hereunder shall be
--------
performed in a first-class, competent, cost-conscious manner by appropriately
qualified personnel, (ii) the Work shall be performed in accordance with the
terms and conditions of this Agreement, including all standards set forth
herein, and (iii) all aspects of such Work shall be suitable for their required
purposes.
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7.2 Consequence of Breach. In the event Operator breaches any
---------------------
warranty described in Section 7.1 above, Operator shall re-perform any defective
service, replace any unfit or unqualified personnel and train new personnel, and
repair or replace any components of the Facility damaged as a consequence of
such breach. Any such re-performance, training, repair or replacement by
Operator pursuant to this Section 7.2 shall be at Operator's sole cost and
expense.
7.3 Vendor Warranties. Operator shall use its best efforts to
-----------------
obtain not less than one-year vendor warranties for all spare parts and
replacement parts, other than parts having a useful life of less than one year
and parts supplied by Owner pursuant to Article III. Any warranties obtained by
Operator from outside vendors or subcontractors shall be assignable and passed
through to Owner, but, during the term of this Agreement, Operator shall
maintain, administer and enforce such warranties for the benefit of Owner;
provided, however, Operator shall not file suit to enforce any such warranty
without the prior written consent of Owner.
VIII.
TERM
Unless sooner terminated as provided herein, the term of this
Agreement shall begin on the Execution Date and shall extend for an initial term
expiring at the end of the twelfth (12th) Project Year; provided, however, Owner
shall have the right, in Owner's sole discretion, to (i) terminate this
Agreement for convenience effective as of the end of the fourth (4th) Project
Year by delivering to Operator written notice of such termination on or before
one hundred eighty (180) days prior to the end of the fourth (4th) Project Year
and payment of the Fourth Year Termination Fee (as defined hereinbelow) in
accordance with the terms hereof, (ii) terminate this Agreement for convenience
effective as of the end of the seventh (7th) Project Year by delivering to
Operator written notice of such termination on or before one hundred eighty
(180) days prior to the end of the seventh (7th) Project Year and payment of the
Seventh Year Termination Fee (as defined hereinbelow) in accordance with the
terms hereof, and (iii) terminate this Agreement for convenience, at no cost to
Owner, effective as of the end of the tenth (10th) Project Year by delivering to
Operator written notice of such termination on or before one hundred eighty
(180) days prior to the end of the tenth (10th) Project Year.
The "Fourth Year Termination Fee" shall be due and payable as follows:
(i) Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), which
shall be due and payable by Owner to Operator within thirty (30) days
after the termination of this Agreement, plus
(ii) the reasonable costs actually incurred by Operator in transferring,
relocating and/or terminating Operator's personnel at the Facility and
terminating subcontracts pertaining to the Facility up to a maximum of
One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00), which
shall be due and payable by Owner to Operator within thirty (30) days
after receipt by Owner from Operator of an
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invoice accompanied by all relevant documentation reasonably necessary
for Owner to verify the accuracy thereof, plus
(iii) an amount equal to ten percent (10%) of the Published Price (as
determined at the time of acquisition) of the Parts for GE Equipment
actually purchased by Owner from Operator during the term of this
Agreement, which amount shall be due and payable within thirty (30)
days after receipt by Owner from Operator of an invoice accompanied by
all relevant documentation reasonably necessary for Owner to verify
the accuracy thereof, but in no event earlier than thirty (30) days
after the termination of this Agreement.
The "Seventh Year Termination Fee" shall be due and payable as follows:
(i) Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), which
shall be due and payable by Owner to Operator within thirty (30) days
after the termination of this Agreement, plus
(ii) the reasonable costs actually incurred by Operator in transferring,
relocating and/or terminating Operator's personnel at the Facility and
terminating subcontracts pertaining to the Facility up to a maximum of
One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00), which
shall be due and payable by Owner to Operator within thirty (30) days
after receipt by Owner from Operator of an invoice accompanied by all
relevant documentation reasonably necessary for Owner to verify the
accuracy thereof, plus
(iii) an amount equal to five percent (5%) of the Published Price (as
determined at the time of acquisition) of the Parts for GE Equipment
actually purchased by Owner from Operator during the term of this
Agreement, which amount shall be due and payable within thirty (30)
days after receipt by Owner from Operator of an invoice accompanied by
all relevant documentation reasonably necessary for Owner to verify
the accuracy thereof, but in no event earlier than thirty (30) days
after the termination of this Agreement.
IX.
TERMINATION
9.1. Event of Default. Should any of the following events or
----------------
conditions occur, the same shall constitute an event of default under this
Agreement (herein called an "Event of Default"):
(a) Operator breaches any of its material obligations under this
Agreement.
(b) Owner breaches any of its material obligations under this
Agreement.
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(c) If any representation or warranty of Operator or Owner under
Article XIV hereof shall prove untrue in any material respect.
(d) If, in any two (2) successive Project Years, Operator incurs the
maximum liquidated damages possible under Article VI hereof for each such
successive Project Year, then such occurrence shall be an Event of Default
by Operator.
(e) If Operator's aggregate limit of liability over the term of this
Agreement as set forth in Section 17.1 hereof is reached, then such
occurrence shall be an Event of Default by Operator.
9.2 Termination upon Breach. If either party commits an Event of
-----------------------
Default, the other party (hereinafter the "Non-Defaulting Party") may give such
party in default (the "Defaulting Party") a written notice describing such
default in reasonable detail and demanding that the Defaulting Party cure such
default; provided, however, Operator shall have no right to cure the Events of
Default set forth in Sections 9.1(d) and (e) above. If the Defaulting Party does
not cure its default within twenty (20) days after its receipt of such notice,
or if the default is such that it cannot be cured within such period of time and
the Defaulting Party does not promptly commence action within such twenty (20)
day period which is calculated to cure such default and thereafter diligently
pursue such action to completion, the Non-Defaulting Party shall have the right
to terminate this Agreement by written notice to the Defaulting Party, without
prejudice to any remedies at Law or in equity which are available to the Non-
Defaulting Party by reason of the Defaulting Party's default. Provided Operator
is performing all of its obligations under this Agreement in accordance with the
terms and conditions hereof, it shall not constitute an Event of Default if
Operator fails to earn a bonus for any Project Year, so long as Operator shall
pay Owner when due any associated liquidated damages required to be paid under
Article VI hereof and promptly makes all corrections to the Facility as may be
required hereunder. Notwithstanding anything stated herein, a good faith dispute
with respect to the payment of any amount claimed to be due hereunder, for so
long as such dispute remains unresolved and contested in good faith, shall not
be considered an Event of Default.
9.3 Termination for Insolvency. Subject to Article XII hereof, either
--------------------------
party may terminate this Agreement by written notice to the other party if the
other party (i) commences a proceeding under Federal or state bankruptcy,
insolvency or reorganization law, or (ii) has such a proceeding filed against it
and fails to have such proceeding stayed or vacated within sixty (60) days or
upon the end of any such stay, fails to have such involuntary prciceeding
vacated within sixty (60) days thereafter, or (iii) admits the material
allegations of any petition in bankruptcy filed against it, or (iv) is adjudged
bankrupt, or (v) makes a general assignment for the benefit of its creditors, or
(vi) has a receiver appointed for all or a substantial portion of such party's
assets which receiver is not discharged within sixty (60) days after his
appointment. Any termination of this Agreement pursuant to this Section 9.3
shall be considered to be by reason of anticipatory breach of contract, and such
termination shall be without prejudice to any rights the terminating party may
have by reason of such anticipatory breach.
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9.4 Owner's Additional Remedies. After termination of this Agreement
---------------------------
by Owner by written notice pursuant to Section 9.2 or 9.3 hereof, Owner may, in
addition to its other rights hereunder, take possession of and utilize any
materials, tools, equipment, manuals, records and other property of any kind
furnished by Operator, paid for by Owner, and necessary or intended to be used
to operate the Facility. Operator shall not be entitled to receive any further
payments under this Agreement except for payments for services provided prior to
termination of this Agreement. Operator and Owner shall continue to be bound by
such provisions of this Agreement that shall survive the termination hereof. In
addition, Operator shall remain liable for all liquidated damages hereunder
which have accrued but have not yet been paid at the time of such termination.
9.5 Transfer of Operations Upon Termination. Upon termination of this
---------------------------------------
Agreement for any reason, Operator shall fully cooperate with Owner in the
transfer of the performance of Operator's obligations hereunder to Owner or a
third party designated by Owner. Without limiting the foregoing, Operator shall
provide Owner and such third party with such information as may be reasonably
necessary for the safe and proper operation and maintenance of the Facility. The
parties acknowledge Owner's interest that the Facility be operated and
maintained during the final Project Year of this Agreement or portion thereof,
whether or not commensurate with the term hereof, to the same standards as it is
operated and maintained throughout the term of this Agreement and that personnel
of Owner have an opportunity to gain experience in the operation and maintenance
of the Facility during such final Project Year. Accordingly, Operator agrees
that Owner may send its personnel to the Facility during the final Project Year
for the purposes of monitoring Operator's performance under the terms of this
Agreement and gaining experience in operation and maintenance of the Facility,
without charge to Owner (except for the cost of Owner's personnel), provided
that Owner's personnel do not interfere with the continuing operation and
maintenance of the Facility by Operator pursuant to the terms hereof. Owner,
however, shall remain fully liable for the actions and inactions of its
employees during such time period. Upon termination of this Agreement, Operator,
to the extent permitted by law, shall assign to Owner any existing warranties
obtained by Operator on the Facility or any portion thereof and shall promptly
deliver to Owner all copies of the Facility Data, drawings, books and originals
or certified copies of all records relating to the operation and maintenance of
the Facility that are required to be maintained by Operator hereunder as of the
date of such termination.
9.6 Condition of Facility Upon Termination. Upon expiration or
--------------------------------------
termination of this Agreement, Operator shall leave the Facility in as good
condition as on the Existing O&M Agreement Termination Date, normal wear and
tear excepted, and with the equivalent supply of Consumables (other than spare
parts) and other operating items as were provided by Owner to Operator. All
special tools, improvements, inventory of supplies, spare parts, safety
equipment (as provided to or obtained by or provided by Operator during the term
of this Agreement) and any other items furnished by Operator hereunder will be
left at the Facility and will become or remain the property of Owner without
additional charge.
-38-
9.7 Survival of Obligations. Termination of this Agreement for any
-----------------------
reason shall not relieve Owner or Operator of any obligation accrued or accruing
prior to such termination. Without limiting the generality of the foregoing,
Owner and Operator shall continue to be bound by Section 6.4, Article VII,
Sections 9.4, 9.5, 9.6 and 9.7, Article XIII, Article XVII, Article XVIII,
Article XIX, Article XX, and such provisions shall survive the termination of
this Agreement.
X.
INSURANCE
10.1 Operator Insurance Coverage. Operator shall secure and maintain
---------------------------
as a minimum during the term of this Agreement the following insurance:
(a) Worker's Compensation, subject to statutory limits.
(b) Employer's Liability, with limits as follows:
(i) Bodily Injury by Accident - $1,000,000 per accident;
(ii) Bodily Injury by Disease - $1,000,000 policy limit; and
(iii) Bodily Injury by Disease - $1,000,000 per each employee.
(c) Comprehensive (Business) Automobile Liability including
automobile contractual liability endorsement, in an amount equal to a
"combined single limit" coverage for bodily injury and property damage
limit of One Million and 00/100 Dollars ($1,000,000.00) per accident, in
comprehensive form and covering hired, owned and non-owned vehicles,
including, without limitation, vehicles leased by Operator from Owner. Such
insurance shall name Owner and Lender as Additional Insureds.
(d) Comprehensive (Commercial) General Liability Insurance in an
amount equal to at least One Million and 00/100 Dollars ($1,000,000.00) per
occurrence, "combined single limit" coverage. Such insurance shall contain
such coverages as Operator normally maintains for its own protection to
include Premises/Operations, Explosion, Collapse and Underground Hazards,
Broad Form Contractual, Independent Contractors, Products/Completed
Operations, Broad Form Property Damage (excluding care, custody and
control), Personal Injury, Cross Liability including a Broad Form
Contractual endorsement to meet the liability assumed in Section 13.1
hereof Such insurance shall twine Owner and Lender as Additional Insureds.
(e) Excess (or Umbrella) Liability insurance providing total or
excess limits for, and following the form of, the policies referred to in
Section 10.1 (b) (c) and (d) so as to bring the total of each up to Twenty-
Five Million and 00/100 Dollars ($25,000,000.00) per occurrence, and in the
annual aggregate where applicable. Such insurance Xxxxx name Owner and
Lender as Additional Insureds.
-39-
(f) Aircraft and Marine insurance should any aircraft or watercraft
be used in the Work. Such insurance shall be at limits at least equal to
those specified in Section 10.1(e) above. Such insurance shall name Owner
and Lender as Additional Insureds.
10.2 Owner Insurance Coverage. Owner shall secure and maintain during
------------------------
the term of this Agreement the following insurance:
(a) Worker's Compensation, subject to statutory limits.
(b) Employer's Liability, with limits as follows:
(i) Bodily Injury by Accident - $1,000,000 per accident;
(ii) Bodily Injury by Disease - $1,000,000 policy limit; and
(iii) Bodily Injury by Disease - $1,000,000 per each employee.
(c) Commercial General Liability Insurance covering legal liability
of the insured for damage to property of third parties or bodily injury to
third parties arising out of the ownership, operation and maintenance of
the Facility, in an amount equal to One Million and 00/100 Dollars
($1,000,000.00) per occurrence, "combined single limit" property
damage/bodily injury coverage. Such insurance policy shall be endorsed
naming Lender as an Additional Insured and Operator as an Additional
Insured in connection with claims arising out of or relating in any way to
Operator's presence on the Site or for the Work to be performed pursuant to
this Agreement only, and shall include Premises/Operations, Explosion,
Collapse and Underground Hazards, Broad Form Contractual, Independent
Contractors, Products/Completed Operations, Broad Form Property Damage,
Personal Injury, Cross Liability (Insured vs. Insured) and a Broad Form
Named Insured endorsement; provided, however, if a claim is made under such
insurance and the claim is not based upon the negligence or willful
misconduct of Operator, then Operator acknowledges it shall have no right
TO any recovery with respect to such claim and, in furtherance thereof,
Operator shall execute and deliver to Owner the appropriate waiver forms
necessary for a check to be issued by the insurer solely in the name of
Owner.
(d) Excess (or Umbrella) Liability insurance providing total or
excess limits for, and following the form of, the policies referred to in
Section 10.2 (b) and (e) so as to bring the total of each up to Twenty-Five
Million and 00/100 Dollars ($25,000,000.00) per occurrence, and in the
annual aggregate where applicable. Such insurance policy shall be endorsed
naming Lender as an Additional Insured and Operator as an Additional
Insured in connection with claims arising out of or relating in any way to
Operator's presence on the Site or for the Work to be performed pursuant to
this Agreement only; provided, however, if a claim is made under such
insurance and the claim is not based upon the negligence or willful
misconduct of Operator, then Operator acknowledges it shall have no right
to any recovery with respect to such claim and, in furtherance thereof,
-40-
Operator shall execute and deliver to Owner the appropriate waiver forms
necessary for a check to be issued by the insurer solely in the name of
Owner.
(e) Property Insurance on an "All Risk" basis covering physical
damage or loss to all real and personal property of Owner located at the
Site and to off-premises electrical, gas, and steam transmission lines and
facilities, and other equipment for which Owner has an insurable interest
and in an amount not less than one hundred percent (100%) of the full
replacement value of such property. Such coverage shall meet all
requirements for property insurance set forth in the Related Agreements,
shall name Lender as an Additional Named Insured and shall name Operator as
an Additional Insured.
(f) Boiler and Machinery Insurance on the Facility for all insurable
objects, including but not limited to pressure vessels, turbines and
equipment, electrical generators, motors, air tanks, boilers, machinery,
pressure piping or similar apparatus, on a comprehensive form in an amount
not less than one hundred percent (100%) of the full replacement value of
such property. Such insurance policy shall cover objects at all locations
required to be insured under Section 10.2(e) above and shall name Lender
and Operator as Additional Insureds. Owner shall have the right at any
time, and from time to time, at Owner's sole option, to combine the
Property Insurance and the Boiler and Machinery Insurance into a single
policy. Owner shall be relieved of the obligation to renew the business
interruption coverage under said Property Insurance and Boiler and
Machinery Insurance in the event such business interruption coverage cannot
be purchased at commercially reasonable rates.
10.3 Form and Content of Insurance. All policies, and binders with
-----------------------------
respect to insurance provided pursuant to this Article X shall be as follows:
(a) Form of Policies. All insurance provided for hereunder shall be
----------------
placed on forms reasonably acceptable to Owner, Operator, and Lender.
(b) Insurance Companies. All insurance required hereunder shall be
-------------------
issued by and binding upon insurance companies reasonably acceptable to
Owner, Operator and Lender that are licensed or authorized to do business
in the State of New Jersey.
(c) Additional Insureds shall include the officers, directors and
-------------------
employees of each entity so named as its interests may appear.
(d) Severability. All liability insurance shall contain a
------------
severability of interest provision providing that, except with respect to
the total limits of liability, the insurance shall apply to each Insured or
Additional Insured in the same manner as if separate policies had been
issued to each.
-41-
(e) Non-Recourse. All insurance shall provide that there will be no
------------
recourse against the Additional Insureds for the payment of premiums or
commissions or (if such policies provide for the payment thereof) additional
premiums or assessments.
(f) Waiver of Subrogation. All insurance maintained by Operator and
---------------------
Owner hereunder except for the insurance required pursuant to Section
10.1(b) and (c) and Section 10.2(b) hereof shall provide for the waiver of
any right of subrogation by the insurers thereunder against Owner, Operator
and Lender and the officers, directors and employees, agents and
representatives of each of them, and any right of the insurers to any setoff
or counterclaim or any other deduction, whether by attachment or otherwise,
in respect of any liability of any such person insured under such policy.
(g) Notice of Cancellation. All insurance shall provide that it may
----------------------
not be canceled or materially changed without giving Owner, Operator, and
Lender thirty (30) days prior written notification thereof, except in cases
of non-payment of premium for which ten (10) days prior written notice shall
be provided (unless a longer notice period for non-payment is agreed to by
the relevant insurer).
(h) Breach of Warranty. The interest of any Insured or Additional
------------------
Insured shall not be invalidated by any action or inaction of any of the
other parties so named.
10.4 Additional Requirements.
-----------------------
(a) Certificates; Proof of Loss. Prior to the performance of any Work
---------------------------
by Operator hereunder, each party shall furnish certificates of insurance to
the other party evidencing the insurance required of such party pursuant to
this Agreement. The party maintaining each policy hereunder shall make all
proofs of loss under each such policy, and shall take all other action
reasonably required to ensure collection from insurers for any loss under
any such policy, except that Owner may require Operator to provide such
proof of loss and take such other action on behalf of Owner in the case of
the insurance maintained by Owner pursuant to Section 10.2(c), (d), (e) and
(f). Operator shall provide Owner with copies of insurance policies obtained
by it promptly upon Owner's request.
(b) Insurance Report. Concurrently with the furnishing of the
----------------
certification referred to in Section 10.4(a), Operator shall furnish Owner
and Lender with an opinion of each insurance broker stating that all
premiums then due have been paid and that, in the opinion of such broker,
the insurance then carried and maintained with respect to the facility is in
accordance with the terms of this Article. Furthermore, Operator shall cause
each insurer or such broker to advise Owner and Lender in writing of any
default in the payment of any premiums or any other act or omission on the
part of Operator which might invalidate or render unenforceable, in whole or
in part, any insurance provided hereunder. Owner may at its sole option
obtain such insurance if not provided by Operator and, in such event,
Operator shall reimburse Owner upon demand for the cost thereof.
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(c) Payment of Deductibles and Self-Insured Retention Amounts. Owner
---------------------------------------------------------
shall be responsible for deductibles or self-insured retention under all of
the insurance policies required to be carried by Owner pursuant to Section
10.2 hereof, except in the event of loss or damage due to the negligence or
willful misconduct of Operator, in which case Operator shall be liable
proportionately to the extent of Operator's negligence or willful
misconduct, for the deductibles and/or self-insured retention applicable to
such insurance up to but not exceeding Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) per occurrence. In addition, Operator shall be
responsible for all deductibles and self-insured retention under other
policies maintained by Operator. Owner may, in its sole discretion, change
the deductibles or self-insured retention under any of the insurance
policies that it is required to carry pursuant to Section 10.2 hereof and
shall promptly give Operator written notice of any such change; provided,
however, that Operator shall not be responsible for any deductibles or self-
insured retention in excess of Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) per occurrence.
(d) Subcontractor Insurance. Operator shall require all subcontractors
-----------------------
and suppliers to obtain, maintain, and keep in force, prior to entry on the Site
and during the time in which they are engaged in performing services to be
furnished by Operator adequate coverage in accordance with Operator's normal
practice and shall provide Owner with current certificates of insurance
evidencing such coverage.
(e) Notification. Operator agrees to advise Owner as soon as
------------
practicable in writing of any notice of claim to which insurance pursuant to
this Article X applies.
(f) Owner's and Lender's Rights. Should Operator fail to provide or
---------------------------
maintain any of the insurance policies required of it, Owner and/or Lender
shall have the right to provide and/or maintain such coverage at Operator's
expense once Operator has had a reasonable time to cure.
(g) Capitalized Terms. Capitalized terms used in this Article X and
-----------------
not otherwise defined in this Agreement shall have the meanings generally
ascribed to them in the commercial insurance industry in the United States of
America.
(h) Disclosure. Operator agrees to make full disclosure to insurers of
----------
all material facts and circumstances as required by the terms of any insurance
policy under which Operator is named as an Additional Insured.
XI.
NOTIFICATIONS
Any notice to either party required or permitted hereunder shall be in
writing and shall be given by (i) personal delivery, (ii) commercial courier
(iii) registered or certified U.S. mail, return receipt requested, postage
Prepaid, or (iv) telecopy if also given by personal delivery,
-43-
commercial courier or registered or certified U.S. mail, return receipt
requested, postage prepaid within three (3) days after the telecopied
transmission, all such notices to be addressed as follows:
If to Owner:
Cogen Technologies Linden Venture, L.P.
c/o Cogen Technologies, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier Number: (000) 000-0000
Attention: Vice President and Chief Financial Officer
Cogen Technologies Linden Venture, L.P.
c/o Cogen Technologies, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier Number: (000) 000-0000
Attention: Senior Vice President and Chief Operating
Officer
with copy to:
Cogen Technologies Linden Venture, L.P.
Railroad & Chemico Streets
at Bayway's Bayway Facility
Xxxxxx, Xxx Xxxxxx 00000
Telecopier Number: (000) 000-0000
Attention: Plant Manager
If to Operator:
GE Global O&M Services
Xxx Xxxxx Xxxx, Xxxxxxxx 00-0X
Xxxxxxxxxxx, Xxx Xxxx 00000
Telecopier Number: (000) 000-0000
Attention: Manager of Global O&M Services
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If to Lender:
General Electric Power Funding Corporation
Xxx Xxxxx Xxxx
Xxxxxxxx 0, Xxxx 000
Xxxxxxxxxxx, Xxx Xxxx 00000
Telecopier Number: (000) 000-0000
Attention: Vice President--Investments
with copy to:
General Electric Capital Corporation
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Telecopier Number: (000) 000-0000 or 6970
Attention: Vice President Energy Project Operations--
Transportation and Industrial
Financing Division
Notice by personal delivery shall be effective when made and notice by
commercial courier or by mail shall be deemed effective upon receipt. A copy of
each such notice shall, to the extent reasonably practicable, also be forwarded
by telecopier.
XII.
ASSIGNMENT; LENDER'S RIGHTS
12.1 Assignment. Neither Owner nor Operator may assign all or any
----------
part of their interests in this Agreement without the prior written consent of
the other, which consent shall not be unreasonably withheld, delayed or
conditioned; provided, however, Owner may assign its rights under this Agreement
as security for the payment of any indebtedness payable or to become payable to
Lender. In connection therewith, if requested by Lender, Operator will execute
an appropriate consent to any such assignment. Moreover, if requested by Lender,
Owner and Operator will execute the Recognition Agreement with Lender
substantially in the form shown in Exhibit D attached hereto and made a part
hereof for all purposes. This Agreement shall be binding on and shall inure to
the benefit of the parties and their respective successors and assigns to the
extent that assignment is permitted under this Agreement.
12.2 Lender's Rights. (a) Operator agrees that so long as any such
---------------
assignment to Lender or Recognition Agreement with Lender shall remain in effect
or until written notice of satisfaction is given to Operator by Lender, the
following provisions will apply:
-45-
(1) except for the natural expiration of the term of this Agreement
(after giving effect to any renewal terms), there shall be no modification
of this Agreement without the prior written consent of Lender which consent
shall not be unreasonably withheld;
(2) Operator will not terminate, cancel or surrender this Agreement
by reason of Owner's default without giving Lender the same notice and
right to cure such default as Owner may have (plus an additional thirty
(30) days); provided, that if the default is a non-monetary default and (i)
is of such nature that it cannot be cured without first taking possession
of the Facility or (ii) is of such nature that it is not susceptible of
being cured by Lender, then Operator shall have no right to terminate this
Agreement by reason of such default if and so long as Lender shall proceed
diligently to attempt to obtain possession of the Facility or exercise its
remedies pursuant to the financing agreements including possession by a
receiver and upon obtaining such possession, Lender shall proceed
diligently to cure such default if such default is susceptible of being
cured by Lender;
(3) Operator will not terminate this Agreement by reason of Owner's
default under Section 9.3 if Lender has cured any monetary default and has
diligently commenced and is diligently continuing to exercise its remedies
under any of the financing agreements;
(4) Operator will deliver to Lender a copy of each notice of default
and notice of termination, extension or renewal at the same time that any
such notice is delivered to Owner;
(5) upon instructions from Lender, Operator will make any payments
due to Owner hereunder in accordance with such instructions;
(6) if Lender or a Permitted Transferee shall acquire title to or
possession of the Facility or shall appoint a new managing general partner
of Owner, then Operator shall accept performance from Lender or such
Permitted Transferee so long as Lender or such Permitted Transferee shall
have paid to Operator all costs and fees herein provided for, and then due
and payable, and shall comply or cause Owner to comply with the other
provisions of this Agreement. Upon acquiring title to or possession of the
Facility, Lender shall have the same rights as Owner with respect to the
availability and review of books and records of the Facility; and
(7) if Lender shall give notice to the Operator that a Special Event
under the Owner's Amended and Restated Agreement of Limited Partnership has
occurred and is continuing and Lender so elects, then all rights of the
Owner hereunder shall vest in Lender.
(b) Lender, as such, shall not be deemed to assume the performance of
any of the terms, covenants or conditions on the part of Owner to be performed
hereunder, but the purchaser, assignee or transferee of this Agreement under any
instrument of sale, assignment or
-46-
transfer pursuant to or in connection with any proceedings for the foreclosure
of any leasehold mortgage affecting the Facility shall be deemed to be an
assignee or transferee within the meaning of this Agreement, and shall be deemed
to have agreed to perform all of the terms, covenants and conditions on the part
of Owner to be performed hereunder from and after the date of such purchase and
assignment, but only for so long as such purchaser or assignee is the owner of
such leasehold estate.
(c) Notwithstanding any other provisions of this Agreement, any
sale, transfer, or assignment of this Agreement to Lender or a Permitted
Transferee pursuant to or in connection with (1) any proceedings for the
foreclosure of any leasehold mortgage affecting the Facility or (2) the exercise
by Lender of any other remedies under any of the financing agreements shall be
deemed to be a permitted sale, transfer or assignment of this Agreement.
(d) Any Lender or any Permitted Transferee may sell, assign or
transfer this Agreement to a Permitted Transferee; provided, however, that such
Lender or Permitted Transferee shall remain liable hereunder for the
obligations, if any, incurred by it prior to the sale, assignment or transfer.
12.3 Estoppel Certificates. Operator shall, without charge, at any
---------------------
time and from time to time hereafter, but not more frequently than twice in any
one-year period (or more frequently if such request is made in connection with
any sale or mortgaging of Owner's leasehold interest), within thirty (30) days
after written request of Owner, certify by written instrument duly executed and
acknowledged to any Lender or Permitted Transferee or any other person, firm or
corporation specified in such request: (a) as to whether this Agreement has been
supplemented or amended, and if so, the substance of such supplement or
amendment; (b) as to the validity and force and effect of this Agreement; (c) as
to the existence of any Event of Default hereunder; (d) as to the existence of
any offsets, counterclaims or defenses hereto on the part of Owner; and (e) as
to any other matters as may be reasonably so requested. Any such certificate may
be relied upon by Owner and any other person, firm or corporation to whom the
same may be exhibited or delivered, and the contents of such certificate shall
be binding on Operator.
12.4 Legal Opinion. Incident to the execution of this Agreement, if
--------------
requested by Owner, Operator shall furnish to Owner and any Lender or Permitted
Transferee an opinion of counsel to Operator with respect to the enforceability
of this Agreement against Operator and covering such other matters as may be
reasonably requested by Owner.
XIII.
INDEMNIFICATION
13.1 Operator Indemnity. Operator shall indemnify, defend and hold
------------------
harmless Owner, Lender, Exxon, Bayway and their respective Affiliates, and
partners, joint venturers, officers, agents, employees, successors and assigns
(collectively, the "Owner Indemnitees") from and against any and all suits,
actions, legal or administrative proceedings, claims, demands, penalties, costs
and expenses (including attorneys' fees, court costs and all costs or expenses
-47-
related to environmental clean-up, containment, remediation or removal of
hazardous waste or pollution to property of third parties) of any nature for
personal injury or death or physical damage to property of any third party
(including employees of Operator and its subcontractors) arising out of or
resulting from the performance or non-performance of the Work or any other
activities on or about the Site or other locations where the Work is performed
to the extent that the same is caused by any negligent act or negligent omission
of, or willful misconduct or intentional act by, Operator or its subcontractors
or suppliers, or anyone employed by any of them or anyone for whose acts any of
them may be liable, unless solely caused by the negligence of any of the Owner
Indemnitees. In the event that such damage or injury is caused by the joint or
concurrent negligence of Owner, its employees, subcontractors (other than
subcontractors of Operator) or agents, the loss shall be borne by Operator and
Owner proportionately to their degree of fault. In the event Operator shall be
liable for any loss, costs and expenses pursuant to this Section 13.1, the
proceeds of the insurance policies referred to in Section 10.2(c) and (d) shall
first apply, other than as stipulated therein, to the loss, costs and expenses.
If such proceeds axe insufficient to cover all such loss, costs and expenses,
Operator shall be liable for and shall pay for all sums in excess of such
insurance proceeds; provided, however, in the event that such loss, costs and
expenses are caused by the joint or concurrent negligence of Owner, its
employees, subcontractors (other than subcontractors of Operator) or agents, the
loss, costs and expenses shall be borne by Operator and Owner proportionately to
their degree of fault. Notwithstanding anything herein to the contrary, in the
event of loss or damage due to the negligence or willful misconduct of Operator,
Operator shall be liable, proportionately to the extent of Operator's negligence
or willful misconduct, for the deductibles, self-insured retention and waiting
period deductibles applicable to the insurance policies required to be carried
by Owner pursuant to Section 10.2 hereof.
13.2 Owner Indemnity. Owner shall indemnify, defend and hold harmless
---------------
Operator and its Affiliates and partners, joint venturers, officers, agents,
employees, successors and assigns (collectively, the "Operator Indemnitees")
from and against any and all suits, actions, legal or administrative
proceedings, claims, demands, penalties, costs, and expenses (including
attorneys' fees, court costs and all costs or expenses related to environmental
clean-up, containment, remediation or removal of hazardous waste or pollution to
property of third parties) of any nature for personal injury or death or
physical damage to property of any third party (including employees of Owner and
its subcontractors) arising out of or resulting from the performance or non-
performance of Owner of its obligations hereunder or any of Owner's activities
on or about the Site or other location where Owner is to perform its obligations
hereunder to the extent that the same is caused by any negligent act or
negligent omission of, or willful misconduct or intentional act by, Owner, its
subcontractors (other than subcontractors of Operator) or suppliers (other than
suppliers of Operator), or anyone employed by any of them, or anyone for whose
acts any of them may be liable, unless solely caused by the negligence of any of
the Operator Indemnitees. In the event that such damage or injury is caused by
the joint or concurrent negligence of Operator or its employees, contractors,
subcontractors or agents, the loss shall be borne by Operator and Owner
proportionately to their degree of fault.
-48-
13.3 No Limitation. In any and all claims against any of the Owner
-------------
Indemnitees by any employee of Operator, any of Operator's subcontractors or
suppliers, or anyone directly or indirectly employed by any of them or anyone
for whose acts any of them may be liable, the indemnification obligation under
Section 13.1 shall not be limited in any way by any limitation on the amount or
type of damages, compensation or benefits payable by or for Operator or any of
its subcontractors or suppliers under workers' or workmen's compensation acts,
disability benefit acts or other employee benefits acts, nor by the provision by
Operator of any insurance required to be provided under this Agreement.
XIV.
REPRESENTATIONS AND WARRANTIES
------------------------------
14.1 Representations and Warranties of Owner. Owner hereby represents
---------------------------------------
and warrants to Operator as follows:
(a) Owner is a limited partnership duly organized and existing in
good standing under the laws of the State of Delaware and is qualified to
do business in the State of New Jersey.
(b) Owner possesses all requisite power and authority to enter into
and perform this Agreement and to carry out the transactions contemplated
herein.
(c) Owner's execution, delivery, and performance of this Agreement
have been duly authorized, and this Agreement has been duly executed and
delivered and constitutes Owner's legal, valid, and binding obligation,
enforceable against Owner in accordance with its terms, except as may be
limited by bankruptcy, insolvency and other legal principles pertaining to
creditor's rights.
(d) No suit, action or arbitration, or legal, administrative or
other' proceeding is pending or, to Owner's knowledge, threatened against
Owner that would affect the validity or enforceability of this Agreement or
the ability of Owner to fulfill its obligations and commitments hereunder.
14.2 Representations and Warranties of Operator. Operator hereby
------------------------------------------
represents and warrants to Owner as follows:
(a) Operator is a corporation duly organized and existing in good
standing under the laws of the State of New York and is qualified to do
business in the State Of New Jersey.
(b) Operator possesses all requisite power and authority to enter
into and perform this Agreement and to carry out the transactions
contemplated herein.
-49-
(c) Operator's execution, delivery, and performance of this
Agreement have been duly authorized, and this Agreement has been duly
executed and delivered and constitutes Operator's legal, valid, and binding
obligation, enforceable against Operator m accordance with its terms,
except as may be United by bankruptcy, insolvency and other legal
principles pertaining to creditors' rights.
(d) No suit, action or arbitration, or legal, administrative or
other proceeding is pending or, to Operator's knowledge, threatened against
Operator that would affect the validity or enforceability of this Agreement
or the ability of Operator to fulfill its obligations and commitments
hereunder.
(e) No material consents or approvals are required in connection
with the execution, delivery and performance by Operator of this Agreement,
(f) The execution, delivery and performance by Operator of this
Agreement will not (i) violate any law, rule or regulation applicable to
Operator, (ii) result in any breach of, or constitute any default under,
any contractual obligation of Operator, or (iii) result in, or require, the
creation or imposition of any lien or other encumbrance on any of the
properties or revenues of Owner.
XV.
HOOKS, RECORDS AND REPORTS
15.1 Books and Records. Operator shall maintain books and records at
-----------------
the Site reflecting solely transactions arising from the operation and
maintenance of the Facility pursuant to the terms of this Agreement, including,
without limitation, accounting, bookkeeping and administrative reports relating
to Facility performance data, the accrual and payment of items constituting
operating expenses and Reimbursable Costs, and the payment of all O&M Fees and
other moines to Operator. Such books and records shall (a) reflect only
transactions in connection with the Facility, (B) be kept physically apart from
any other books and records maintained by Operator for whatever purpose, and (c)
be available to Owner upon Owner's request for examination or copying during the
normal business hours of Operator. Operator shall cooperate with Owner's
accountant in the event Owner requests such accountant to conduct a financial
audit of the services provided by Operator hereunder, If such audit reveals
errors in the calculation of any amounts paid by. Owner, Operator shall promptly
reimburse Owner for any amounts improperly paid by Owner or Owner shall promptly
reimburse Operator for any amounts not paid by Owner, as the case may be.
Furthermore, if such audit reveals errors of more than two percent (2%) in the
calculation of Reimbursable Costs during any given month, then Operator shall
pay to Owner the cost of the audit. At the termination of this Agreement,
Operator shall furnish to Owner one copy of each report previously delivered to
Owner pursuant to Section 15.2 hereof, and one copy of such other books and
records which (i) relate to the Facility, and (ii) Operator maintains at the
time of such termination in the normal course of its record keeping under this
Article XV.
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15.2 Reports. In addition to any other report required to be made by
-------
Operator pursuant to the terms of this Agreement, Operator shall furnish to
Owner all such reports concerning the operation and maintenance of the Facility,
including any reports which may be required under the Related Agreements and as
may be required by the Lender. Operator shall provide such reports in the manner
and at the times as may be required under the Related Agreements or by the
Lender.
XVI.
FORCE MAJEURE
16.1 Force Majeure. Neither party shall be responsible or liable for
-------------
or deemed in breach hereof because of any delay in the performance of their
respective obligations hereunder due to circumstances beyond the reasonable
control of the party experiencing such delay, including but not limited to acts
of God; unusually severe weather conditions; strikes or other labor difficulties
(except that Operator's performance shall not be excused by strikes by persons
employed directly by Operator at the Site or by strikes limited to the Site);
war; riots; requirements, actions or failures to act on the part of governmental
authorities preventing performance; inability despite due diligence to obtain
required licenses, permits or governmental approvals; accidents; fire; damage to
or breakdown of necessary facilities; transportation delays or accidents;
failure or refusal of Con Ed to accept deliveries of Electricity under the Power
Purchase Agreement; failure or refusal of Exxon, Bayway or other Steam
Purchasers to accept deliveries of steam under the Steam Purchase Contracts; or
unavailability of Fuel (such causes hereinafter called "Force Majeure");
provided that the non-performing party is materially and adversely affected by
the event of Force Majeure and:
(a) The non-performing party gives the other party, as soon as
reasonably practicable tut in any event within forty-eight (48) hours of
such Force Majeure occurrence, written notice describing the particulars of
the occurrence;
(b) The suspension of performance is of no greater scope and of no
longer duration than is required by the Force Majeure;
(c) The non-performing party uses its best efforts to mitigate the
effects of the Force Majeure and remedy its inability to perform;
(d) When the non-performing party is able to resume performance of
its obligations under this Agreement, that party shall give the other party
written notice to that effect; and
(e) The Force Majeure was not caused by or connected with any
negligent or intentional acts, errors, or omissions, or failure by the non-
performing party to comply with any law, nile, regulation, order, or
ordinance or for any breach or default of this Agreement.
-51-
The term Force Majeure does not include changes in market conditions or
governmental action that affect the cost of Owner's supply of Fuel or any
alternative supplies of Fuel or the demand for Owner's products.
16.2 Effect of Force Majeure. If after an event of Force Majeure that
-----------------------
has caused Operator to suspend or delay performance of the Work hereunder,
Operator has failed to take such action as Operator could lawfully and
reasonably initiate to remove or relieve either such event of Force Majeure or
its direct or indirect effects, Owner may, in its sole discretion, at Operator's
expense, initiate such reasonable measures as will be designed to remove or
relieve such event of Force Majeure or its direct or indirect effects and
thereafter require Operator to resume full or partial performance of the Work
hereunder.
16.3 Extended Force Majeure. In the event an event of Force Majeure
----------------------
hereunder or under any of the Related Agreements continues for thirty (30) days
or more, then Owner shall have the fight, upon delivery of thirty (30) days
advance written notice to Operator, to cause Operator to de-mobilized, and
effective thirty (30) days after Operator's receipt of such notice, Owner shall
be permanently relieved of the obligation to make payment of the O&M Fee to
Operator for those months during such extended event of Force Majeure that
Operator is de-mobilized. Owner shall pay all costs and expenses incurred in
connection with de-mobilization and re-mobilization to the extent such costs and
expenses are approved in writing by Owner. In addition, if such de-mobilization
continues for a period of one hundred eighty (180) or more consecutive days,
then Owner may terminate this Agreement by delivering written notice of
termination to Operator, such termination to be effective no earlier than thirty
(30) days after Operators receipt of such notice.
16.4 Payments to Operator During an Event of Force Majeure. During
-----------------------------------------------------
the continuance of an event of Force Majeure, Owner's obligation to make
payments to Operator for the O&M Fee and the AFAA shall be limited to the net
income (including insurance proceeds) derived from the Facility; provided,
however, (i) after the event of Force Majeure terminates, Owner shall bring
current the payment of all O&M Fees and AFAA (which are unpaid and accrued
during the event of Force Majeure) to Operator at such time as there is
sufficient net income from the Facility to make such payments and (ii) any such
delayed payments of the O&M Fee and the AFAA shall accrue interest at the rate
of interest announced by The Chase Manhattan Bank, N.A., from time to time, at
its principal office located at I Chase Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (or any successor financial institution), as its prime commercial lending
rate; provided, however, Operator shall not be entitled to any O&M Fees for
those periods in which Operator was de-mobilized pursuant to Section 16.3
hereof. Owner's obligations under this Section 16.4 shall survive the
termination or expiration of this Agreement.
XVII.
LIMITATION OF LIABILITY
17.1 Operator. In no event, whether in tort, negligence, strict
--------
liability, breach of contract, warranty or otherwise, shall Operator's total
liability hereunder to Owner exceed (a)
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in any Project Year, Four Million and 00/100 Dollars ($4,000,000.00) and (b)
over the term of this Agreement, a total aggregate amount of Twelve Million
and 00/100 Dollars ($12,O00,000.00); provided, however, that the foregoing
limitation on liability shall not apply to any liability of Operator to Owner
(i) resulting from willful misconduct or intentional acts by Operator or (ii)
otherwise covered by the insurance policies required to be maintained by
Operator pursuant to Section 10.1 hereof up to the minimum amounts therein
stated, Notwithstanding anything contained herein to the contrary, in no event,
whether in tort, negligence, strict liability, breach of contract, warranty,
indemnity or otherwise, shall Operator be liable to Owner for special,
incidental, exemplary or consequential damages, including but not limited to,
loss of profits or revenues.
17.2 Owner. In no event, whether in tort, negligence, strict liability,
-----
breach of contract, warranty or otherwise, shall Owners total liability
hereunder to Operator exceed (a) in any Project Year, Four Million and 00/100
Dollars ($4,000,000.00) and (b) over the term of this Agreement, a total
aggregate amount of Twelve Million and 00/100 Dollars ($12,000,000.00);
provided, however, that the foregoing limitation on liability shall not apply to
any liability of Owner to Operator (i) resulting from willful misconduct or
intentional acts by Owner, or (ii) otherwise covered by the insurance policies
required to be maintained by Owner pursuant to Section 10.2 hereof up to the
minimum amounts therein stated. Notwithstanding anything contained herein to the
contrary, in no event, whether in tort, negligence, strict liability, breach of
contract, warranty, indemnity or otherwise, shall Owner be liable to Operator
for special, incidental, exemplary or consequential damages, including but not
limited to, loss of profits or revenues, except Owner shall indemnify Operator
against claims from Owner's customers for special, incidental, exemplary or
consequential damages up to, but not in excess of, a total aggregate amount of
Three Minion and 00(100 Dollars ($3,000,000.00) over the term of this Agreement.
XVIII.
RESOLUTION OF DISPUTES
18.1 Resolution by Parties.
---------------------
(a) In the event that a dispute rises hereunder between the patties,
the parties shall attempt in good faith to settle such dispute by mutual
discussions within thirty (30) days after the date that a party gives written
notice of the dispute to the other party; provided, however, that if the dispute
involves the amount of an invoice and after ten (10) days of mutual discussion
either party believes in good faith that further discussion will not resolve the
dispute TO its satisfaction, such party may immediately refer the matter to the
expert for consideration pursuant to Section 18.2 hereof.
(b) In the event that the dispute is not resolved in accordance with
Section 18.1(a) hereof, either party may refer the dispute to the chief
executive officers or chief operating officers of the respective parties for
further consideration. In the event that such individuals are
-53-
unable to reach agreement within fifteen (15) days, or such longer period as
they may agree, then either party may refer the matter to an expert in
accordance with Section 18.2 hereof.
18.2 Mediation by Expert.
-------------------
(a) In the event that the parties are unable to resolve a dispute in
accordance with Section 18.1 hereof, then either party, in accordance with this
Section 18.2, may refer the dispute to an expert for consideration of the
dispute and to obtain a recommendation from the expert as to the resolution of
the dispute; provided, however, that with respect to disputes that involve the
-------- -------
amount of an invoice, either party may before any such dispute arises require
that an expert be appointed in accordance with the provisions of Section 18.2(b)
hereof and shall nominate a person it proposes to be the expert. Such an expert
shall have responsibility for considering all disputes that involve the amount
of invoices until replaced in accordance with the provisions of Section 18.2(b)
hereof
(b) The party initiating submission of the dispute to the expert
shall provide the other party with a notice stating that it is submitting the
dispute to an expert and nominating the person it proposes to be the expert. The
other party shall, within fifteen (15) days of receiving such notice, notify the
initiating party whether such person is acceptable. If the party receiving such
notice fails to respond or notifies the initiating party that the person is not
acceptable, the parties shall meet and discuss in good faith for a period of ten
(10) days to agree upon a person to be the expert. If the pates are unable to
agree, the responding party shall by the end of such ten (10) day period
nominate a person to be an expert, whereupon the two nominated experts shall
meet and agree upon a third person who shall be the expert. Should an expert
die, resign, refuse to act or become incapable of performing his or her
functions, the vacancy shall be filled by the method by which the expert was
originally appointed.
(c) (i) Consideration of the dispute by an expert shall be initiated
by the party who is seeking consideration of the dispute by the expert
submitting to both the expert and the other party written materials setting
forth:
(A) a description of the dispute;
(B) a statement of the party's position; and
(C) copies of records supporting the party's position.
(ii) Within ten (10) days of the date that a party has submitted
the materials described in Section 18.2(c)(i) hereof, the other party may submit
to the expert
(A) a description of the dispute;
(B) a statement of the party's position; and
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(C) copies of any records supporting the party's position.
The expert shall consider any such information submitted by the
responding party within the period provided in Section 18.2(c)(ii) hereof and,
in the expert's discretion, may consider any additional information submitted by
either party at a later date.
(d) The parties shall not be entitled to apply for discovery of
documents, but shall be entitled to have access to the other party's relevant
records and to receive copies of the records submitted by the other party.
(e) Each party shall designate one person knowledgeable about the
issues in dispute who shall be available to the expert to answer questions and
provide any additional information requested by the expert. Except for such
person, a party shall not be required to, but may, provide oral statements or
presentations to the expert or make any particular individuals available to the
expert.
(f) Except as provided in Section 18.2(h) hereof with respect to the
payment of costs, the proceedings shall be without prejudice to any party and
any evidence given or statements made in the course of this process may not be
used against a party in any other proceedings. The process shall not be regarded
as an arbitration and the laws relating to commercial arbitration shall not
apply. Unless the parties agree in writing signed by both parties at the time
the expert is selected that the decision of the expert will be binding, the
determination of the expert shall not be binding.
(g) When consideration of the dispute by an expert is initiated, the
expert shall be requested to provide a recommendation within fifteen (15) days
after the ten (10) day response period provided in Section 18.2(c)(ii) above has
run. If the expert's recommendation is given within such fifteen (15) day
period, or if the expert's recommendation is given at a later time and neither
party has at such time initiated any other proceeding concerning the dispute,
the parties shall review and discuss the recommendation with each other in good
faith for a period of ten (10) days following delivery of the recommendation
before proceeding with any other actions.
(h) If a party does not accept the recommendation of the expert with
respect to the dispute, it may initiate arbitration proceedings in accordance
with Section 18.3 hereof, provided, however, that prior to initiating the
-------- -------
arbitration proceedings it shall have paid all costs of the expert (including
the reimbursement of any costs paid to the expert by the other party) and all
out-of-pocket costs of the other party. Similarly if the expert has not
submitted its recommendation within the time period provided in Section 18.2(g)
hereof, a party may initiate arbitration proceedings in accordance with Section
18.3 hereof, provided that prior to initiating the arbitration proceedings it
--------
shall have paid all costs of the expert (including the reimbursement of any
costs paid to the expert by the other party).
-55-
(i) Except as provided in Section 18.2(h) hereof, the costs of
engaging an expert shall be borne equally by the parties and each party shall
bear its own costs in preparing materials for, and making presentations to, the
expert.
(j) Without prejudice to the parties' rights to initiate arbitration
proceedings following the recommendation of the expert in accordance with
Section 18.2(h), the parties shall act in accordance with the recommendation of
the expert until resolution of the dispute by arbitration.
18.3 Arbitration. In the event a dispute arises between Owner and
-----------
Operator which is not resolved pursuant to Section 18.1 or 18.2 hereof, as
applicable, each party, as its sole remedy, other than mediation pursuant to the
terms of Section 18.2 hereof, for resolution of such dispute, shall have the
right to pursue arbitration pursuant to the terms hereof. All claims disputes,
and other matters in question arising out of or relating to this Agreement or
the breach thereof and which are resolved by arbitration shall be decided by
arbitrators selected as hereinafter provided and shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then obtaining, unless the parties mutually agree otherwise. The
resolution of such disputes shall not delay Operator's performance of its
undisputed obligations under the terms of this Agreement nor Owner's payment to
Operator for such Work. The arbitration shall be held in New York, New York, and
any arbitration demand must be filed with the American Arbitration Association
office located closest to New York, New York. If the claim or defense of either
party was without merit, the arbitrators may require that the party at fault pay
or reimburse the other party for (i) fees and expenses, including, attorneys and
expert fees and expenses, and (ii) reasonable out of pocket expenses incurred by
the other party in connection with the arbitration proceedings.
18.4 Selection of Arbitrators. Each dispute shall be submitted to
------------------------
three (3) arbitrators, one (1) arbitrator being selected by Owner, one (1)
arbitrator being selected by Operator, and the third arbitrator being selected
by the two (2) so selected. The party initiating the arbitration shall include
in its notification under Section 18.5 below the designation of its selected
arbitrator and the party receiving such notification shall designate its
arbitrator within fifteen (15) days thereafter and notify the initiating party
and its arbitrator of the selection. If the arbitrators selected by Owner and
Operator cannot agree on a third arbitrator within fifteen (15) days after the
second arbitrator is selected, the third arbitrator shall be selected by the
American Arbitration Association. In the event the party receiving notification
of a demand for arbitration shall not have selected its arbitrator and given
notice thereof to the other party and its arbitrator within fifteen (15) days
after receiving such notification, such arbitrator shall be selected by the
American Arbitration Association. Should a vacancy arise because any arbitrator
dies, resigns, refuses to act or in the opinion of his fellow arbitrators
becomes incapable of performing his or her functions, the vacancy shall be
filled by the method by which that arbitrator was originally appointed.
18.5 Notice. Notice of demand for arbitration shall be filed in
------
writing with the other party to this Agreement and with the American Arbitration
Association. The demand shall
-56-
be made within a reasonable time after the claim, dispute or other matter in
question has arisen. In no event shall the demand for arbitration be made after
the date when the applicable statute of limitations world bar institution of a
legal or equitable proceeding based on such claim, dispute, or other matter in
question; provided, however, any claims asserted by Owner with respect to a
breach of the warranty set forth in Section 7.1 hereof shall be made within one
(1) year after the termination of this Agreement.
18.6 Award. This agreement to arbitrate shall be specifically
-----
enforceable under the prevailing arbitration law. The award rendered by the
arbitrators shall be final and judgment may be entered upon it in accordance
with applicable law in any court having jurisdiction thereof.
18.7 Survival. This Article XVIII shall survive termination of this
--------
Agreement.
XIX.
CONFIDENTIALITY AND INTELLECTUAL PROPERTY
19.1 Confidential Information. Operator agrees to keep confidential
------------------------
and not to disclose to any person for use for any purpose other than the
performance of the Work any written or other tangible information which is
marked or designated by Owner as confidential or proprietary (including
documents, computer records, specifications, formulae, evaluations, methods,
processes, technical descriptions, reports and other data, records and
information) provided to or created or acquired by Operator solely in the course
of the performance of the Work (collectively, "0wner Confidential Information").
Owner agrees to keep confidential and not to disclose to any person for use for
any purpose other than in connection with Owner's ownership of the Facility any
written or other tangible information which is marked or designated by Operator
as confidential or proprietary (including documents, computer records,
specifications, formulae, evaluations, methods, processes, technical
descriptions, reports and other data, records and information) provided to it by
Operator, but not provided to or created or acquired by Operator solely in the
course of the performance of the Work (collectively, "Operator Confidential
Information", and together with the Owner Confidential Information, the
"Confidential Information"). Notwithstanding the foregoing, Operator and Owner
shall be entitled to disclose Owner Confidential Information or Operator
Confidential Information, as the case may be:
(i) to its respective directors, officers, employees, subcontractors,
agents or professional advisors to the extent necessary for
performance of its obligations under this Agreement or to its auditors
for the purposes of any audit of its accounts, provided that it first
obtains from any such person or entity to whom the disclosure is to be
made an agreement of confidentiality in favor of the other party with
respect to the Confidential Information in question substantially on
the terms of this Article XIX; provided, however, in the case of
employees, the party desiring to disclose Confidential Information
need not obtain a confidentiality agreement from such employees, but
shall make such employees aware of, and require that such employees
comply with, the confidentiality obligations contained herein;
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(ii) when required to do so by law or by or pursuant to the rules of any
order having the force of law of any court, association or agency of
competent jurisdiction or any governmental, agency, provided that the
party seeking to disclose Confidential Information first informs the
other party of its intent to disclose such Confidential Information
so that such other party can seek a protective order or other
equitable relief to prevent disclosure of such Confidential
Information;
(iii) to the extent that the Confidential Information has, except as a
result of breach of confidentiality by a party, become publicly
available or generally known to the public at the time of such
disclosure;
(iv) to the extent that a party has acquired the Confidential Information
from a third party who is not in breach of any obligation as to
confidentiality;
(v) to the extent that the Confidential Information has been
independently developed by employees who have not had access to the
Confidential Information of the other party; or
(vi) to any person with the prior written consent of the other party.
19.2 Return of Confidential Information. Upon termination of this
----------------------------------
Agreement, Operator shall return to Owner the Owner Confidential Information
(including all, copies thereof) within its possession or control and Owner shall
return to Operator the Operator Confidential Information (including all copies
thereof) within its possession or control.
19.3 Continuation of Confidentiality Obligations. The obligations
-------------------------------------------
under this Article XIX shall continue for a period of three (3) years following
the termination of this Agreement.
19.4 Ownership of Confidentiality Information. All Owner
----------------------------------------
Confidential Information shall be and shall remain the property of Owner and all
Operator Confidential Information shall be and shall remain the property of
Operator.
19.5 Intellectual Property.
---------------------
(a) All of Owner's intellectual property rights shall remain the
property of Owner, but Owner hereby grants to Operator an irrevocable, non-
exclusive, royalty-free, non-transferable License to use such intellectual
property to the extent that Operator requires use of such intellectual property
in connection with the performance of the Work during the term of this
Agreement.
(b) Operator hereby grants to Owner an irrevocable, non-exclusive,
royalty-free license to use any intellectual property rights owned by Operator
and required in connection with
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the Facility. Such license shall be non-transferrable and limited for the use
and benefit of the Facility, except that Owner may assign the benefit of such
license to Lender.
(c) Before entering into an agreement with a third party relating to
the supply of materials specifically created by such third party for the
Facility, Operator shall request that such third party grant licenses to
Operator and Owner (with rights to Owner to assign or sub-license to any person
appointed operator of the Facility) to use all intellectual property rights
which arise in connection with such materials. In addition, Operator shall use
reasonable efforts to procure that intellectual property rights owned or
developed by third parties and used by Operator in connection with the Facility
be licensed either (i) to both Operator and Owner or (ii) to Operator solely,
but with rights to sub-license such intellectual property rights to Owner.
(d) Owner shall have the right either to (i) assign all sub-licenses
of intellectual property rights granted to it or (ii) grant sub-licenses to any
new operator of the Facility in respect of intellectual property in respect of
which a sub-license has been granted to Owner; provided, however, any such sub-
licenses shall limit the use of intellectual property for the benefit of the
Facility.
XX.
MISCELLANEOUS
20.1 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New Jersey, without giving effect to
the conflict of laws principles thereof.
20.2 Severability. Every provision of this Agreement is intended to
------------
be severable such that if any term or provision hereof is illegal or invalid for
any reason, such provision shall be severed from this Agreement and shall not
affect the validity of the reminder of this Agreement.
20.3 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between Owner and Operator relating to the subject matter hereof and
supersedes and replaces all prior and contemporaneous agreements and
understandings not incorporated herein by reference thereto, whether written or
oral, and sets forth all the representations, covenants and warranties upon
which Owner and Operator rely in entering into this Agreement.
20.4 Amendments. No amendment or modification hereof shall be valid
----------
or binding upon the parties hereto unless evidenced in writing and signed by a
duly authorized representative of Owner and Operator and consented to by Lender.
20.5 Waiver. No failure by Owner to insist upon the strict
------
performance of any term, covenant or condition of this Agreement, or to exercise
any right or remedy upon breach of any provision, and no acceptance of payment
or performance during the continuation of any
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such breach, shall constitute a waiver of any term, covenant or condition herein
or a waiver of any subsequent breach or default in the performance of any term,
covenant or condition herein.
20.6 Original and Counterparts. This Agreement may be executed in
-------------------------
multiple counterparts, each of which shall be deemed an original for all
purposes, but all of which shall constitute one and the same instrument.
20.7 Independent Contractor. Operator shall perform its duties and
----------------------
obligations hereunder as an independent contractor, and nothing contained herein
shall be deemed to create a relationship of employer/employee, master/servant,
agency (except as otherwise expressly set forth herein), partnership or joint
venture.
20.2 Limited Recourse. Any claim against Owner that may arise under
----------------
this Agreement shall be made only against, and shall be limited to the assets
of, Owner, and no judgment, order or execution entered in any suit, action or
proceeding thereon shall be obtained or enforced against any partner or joint
venturer of Owner or the assets of such partner or joint venturer or any
incorporator, shareholder or other equity holder, employee, officer 'or director
thereof, whether acting individually or in a representative capacity hereunder
or in connection with the ownership, operation or maintenance of the Facility
(or, in the case of such partners or joint venturers that are partnerships, of
any partner thereof), or against any direct or indirect parent corporation or
affiliate or any incorporator, shareholder or other equity holdcr, employee,
officer or director of any thereof, whether acting individually or in a
representative capacity hereunder or in connection with the ownership, operation
or maintenance of the Facility, for the purpose of obtaining satisfaction of any
payment of any amount owing under this Agreement.
20.9 Captions. The captions contained in this Agreement are for
--------
convenience and reference only and in no way define, describe, extend or limit
the scope or intent of this Agreement or the intent of any provision contained
herein.
20.10 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.
20.11 Effectiveness of Agreement. This Agreement shall only become
--------------------------
effective upon the termination of the Existing O&M Agreement by Owner pursuant
to the terms of the Termination Agreement. If Owner does not elect to terminate
the Existing O&M Agreement pursuant to the Termination Agreement, then this
Agreement shall be null and void and of no force or effect.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date and year first above written.
COGEN TECHNOLOGIES LINDEN VENTURE, L.P., d/b/a
Cogen Technologies Linden Venture, Limited
Partnership
By: Cogen Technologies Linden, Ltd.,
its Sole General Partner
By: Cogen Technologies, Inc., its Sole
General Partner
By: /s/ X.X. Xxxxxxxxx
------------------------------
Name: X.X. XXXXXXXXX
-----------------------------
Title: SR. VP/COO
----------------------------
"OWNER"
GENERAL ELECTRIC COMPANY
By: /s/ X.X Xxxxx
----------------------------------------
Name: X.X. XXXXX
---------------------------------------
Title: GEN. MGR-GLOBAL O&M SERVICES
"OPERATOR"
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