Exhibit 10.4
*PORTIONS OF THIS STEAM SERVICE CONTRACT HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
STEAM SERVICE COlNTRACT
This STEAM SERVICE CONTRACT ("Contract") is made this 22nd day of January
2007, by and between MidAmerican Energy Company, 000 Xxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxxxx, Xxxx, 00000, an Iowa corporation, herein called the "Company" and
Southwest Iowa Renewable Energy, LLC, an Iowa limited liability corporation,
herein called the "Customer." The Company and Customer are sometimes hereinafter
collectively referred to as the "Parties" or individually as a "Party."
It is mutually understood and agreed by the Parties that Company is a
public utility obligated first to the furnishing of electrical energy to its
customers. In order for Company to provide steam service to Customer located in
Council Bluffs, Iowa, Company and Customer for themselves and for their
successors and assigns hereby agree as follows:
I. SERVICE TO BE FURNISHED
1. Except as herein otherwise provided, Company agrees to furnish to
Customer, and Customer agrees to take from Company, under and in accordance with
the terms hereof, steam required by Customer for use on the premises of
Customer's ethanol production facility located in Council Bluffs, Iowa. Company
shall furnish to Customer, in accordance with this Contract, steam in the amount
required by Customer up to 475,000 pounds per hour, and Customer shall return
condensate to Company as prescribed in this Contract. Nothing in this Contract
will
obligate Company to make any capital investments, except as required in Article
VIII. Section 1 of this Contract.
2. The steam service provided will be non-interruptible except for
interruptions due to: force majeure (as described in Article XIV); Planned
Outages, Forced Outages (Immediate, Delayed, or Postponed), Maintenance Outages
(all are defined in Exhibit A); or regulatory/legal (state, local or federal) or
reliability council (e.g., GADS Data Reporting Instructions, XXXX, NERC, etc.)
requirements. The steam service will also be interruptible if the Company
experiences low on-site coal inventory, defined as less than 15 days' reserve
for the Council Bluffs Energy Center ("CBEC") at 90% capacity factor and a
target coal reserve of 45 days. The Company will calculate, consistent with
prudent utility practice, the estimated on site coal inventory. If the Company's
target coal reserve changes, the threshold for low inventory will change by the
same proportion. For example, if the Company chooses to target 30 days of coal
reserve instead of 45 days, the threshold for interruptible service will become
10 days' reserve. Company will provide Customer a weekly written notice if coal
reserve is 30 days or below and a daily written notice if coal reserve is 20
days or below. Company shall employ reasonable efforts toward supplying steam
pressure of 460 pounds per square inch gauge pressure and 1000 degrees
Fahrenheit at Company's 14" double block and bleed valve as set forth in Exhibit
B, but will not always be able to achieve such pressure and temperature. For
example, there will be situations where the Company's electrical system demand
is reduced and Company will only be generating to meet 70% of its maximum load.
In that case, the steam pressure would in turn be reduced to approximately 70%
of 460 pounds per square inch.
3. If the primary steam source is unavailable, Company will use reasonable
efforts to provide the steam service referenced above by utilization of the
Council Bluffs Energy Center
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Unit 4 ("CBEC-4") auxiliary natural gas boiler, which has CBEC tag number
64-ABA-BLR-401, provided the said CBEC-4 auxiliary boiler is not needed (as
determined by the Company) for the operation of CBEC-4. In such a case, the
Customer shall pay for all fuel costs for the running of the CBEC-4 auxiliary
boiler plus $*/mmBtu, in lieu of the $*/mmBtu described in Article II, "Net
Energy Rate." It is understood by the Parties that Company has obtained
regulatory permit authority to operate the CBEC-4 auxiliary boiler 876 hours
annually. If Customer utilizes the CBEC-4 auxiliary boiler, as set forth herein,
then Customer would be responsible for purchasing and installing Continuous
Emission Monitors (CEMS) reasonably prescribed by Company, any other upgrades
reasonably prescribed by the Company and related to Customer's use of the CBEC-4
auxiliary boiler, and obtaining the necessary permit authority from the
pertinent governmental authorities necessary to operate the said auxiliary
boiler above 876 hours annually. Customer further understands that the CBEC-4
auxiliary boiler is only sized to produce a maximum of 220,000 pounds per hour
of steam at 218 pounds per square inch and at 572 degrees Fahrenheit, and
Customer agrees to this limitation of auxiliary boiler service. While the CBEC-4
auxiliary boiler is being used, the demand charge shall be reduced by a prorated
amount based on the mass flow of steam usage relative to 475,000 pounds per
hour. * OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
II. ENERGY CHARGE
Each month, Customer shall pay to Company, in accordance with the payment
terms and other provisions set forth herein, a Net Energy Rate which is $* per
million Btu (net), as hereinafter defined and adjusted (See Article III, below),
for all steam service provided under this Contract. The Customer's Energy Charge
will be the product of Net Energy Rate and Net Energy Delivered, as illustrated
in Exhibit D, (unless such amounts are adjusted pursuant to the
3
terms of this Contract). In addition to the Energy Charge, Customer shall also
pay a monthly Demand Charge of $*.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
In case Company shall at any time during any month be prevented from
furnishing Customer steam due to causes enumerated in Article I, Section 2, the
Demand Charge to be paid by Customer shall be reduced by an amount proportionate
to the amount of days in which such failure occurs relative to the total number
of days in such month.
III. NET ENERGY RATE ADJUSTMENT PROVISIONS
The Net Energy Rate charged to Customer shall be fixed for the first three
years, then adjusted each year starting on the 3rd anniversary date of the First
Grind, but shall be adjusted no later than January 1, 2012. "First Grind" is
defined as the date on which Customer's ethanol facility, after initial testing
and start up, commences its first continuous grind of corn for ethanol
production for a five (5) consecutive day period. After the first three years of
steam service, the Net Energy Rate charged to Customer shall be calculated as $*
per million Btu (net) multiplied times an Escalation Factor as set forth below.
The Escalation Factor shall be calculated by averaging the change in the * from
the base year (*) with the change in the * from the base year (*). The * is
defined as the * and (b) *. The * is defined as the *, if available. In the
event * is no longer prescribed *, changes are made to the * that materially
affect the economics of this Contract to either Party, or in the event * indices
are not available, then the parties shall endeavor, in good faith negotiations,
to replace the Net Energy Rate adjustment process described above with an
alternative process, the economic effect of which shall be substantially
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the same as that of the process in effect immediately prior to its
discontinuance or the material change. The formula for calculating the Net
Energy Rate is shown below:
Net Energy Rate = $* per million Btu (net) x Escalation Factorv
Where:
---------------------------- ------------------------ -------------------------- ----------------------- ---------------------
Contract Year * * Average of Two Escalation
Indexes (AI) Factor
---------------------------- ------------------------ -------------------------- ----------------------- ---------------------
1-3 * * * *
---------------------------- ------------------------ -------------------------- ----------------------- ---------------------
4-10 * * * *
---------------------------- ------------------------ -------------------------- ----------------------- ---------------------
*
*
*
*
Year = Year steam usage occurred
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
IV. DETERMINATION OF NET ENERGY DELIVERED
The Customer's monthly xxxx shall reflect, among other things prescribed in
the Contract, the actual amount of net energy delivered ("Net Energy Delivered")
to Customer for any given billing period . The Net Energy Delivered for each
calendar month shall be determined from readings taken by the Customer's
instrumentation on the steam and condensate systems.
The actual amount of Net Energy Delivered in any given time period shall be
determined by subtracting the amount of energy returned to the Company at
"Battery Limit B" ("Energy Returned") from the amount of the Energy Delivered to
the Customer at "Battery Limit A", as measured by the Customer's instrumentation
on the steam supply and condensate return systems.
5
See Exhibit B for an example of how this calculation is to be performed and for
the location of battery limits. The measurement will be taken every fifteen (15)
minutes to determine the Net Energy Delivered in the previous fifteen (15)
minutes.
V. CHARGES FOR CONDENSATE NOT RETURNED
The actual amount of condensate not returned ("Condensate Not Returned") in
any given time period shall be determined by subtracting the amount of
condensate returned ("Condensate Returned") to the Company at Battery Limit B
from the amount of the steam delivered to the Customer at Battery Limit A
("Steam Delivered"), as measured by the Customer's instrumentation on the steam
supply and condensate return systems. See Exhibit B for an example calculation.
The measurement will be taken every fifteen (15) minutes to determine the
Condensate Not Returned in the previous fifteen (15) minutes.
If circumstances reasonably require it, an allowance of as much as 60
minutes may be made for the time lag between measurements of Steam Delivered and
Condensate Not Returned in the same fifteen (15) minute period.
Customer shall incur a charge, as shown below, per thousand gallons, or
fractional part thereof, for any Condensate Not Returned. Customer shall not
incur any charges if the Company's rejection of condensate is based upon
impurities introduced into the steam by Company.
------------------------------------------ ------------------------------------
Condensate Not Returned, gpm Charge per thousand gallons
------------------------------------------ ------------------------------------
1-35 $*
------------------------------------------ ------------------------------------
36-100 $*
------------------------------------------ ------------------------------------
Greater than 100 Steam supply will be curtailed to
limit condensate
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not returned to
less than 100 gpm.
------------------------------------------ ------------------------------------
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
VI. STEAM AND CONDENSATE MEASUREMENTS
All steam to be delivered by Company under this Contract will be delivered
to Customer to a terminal location designated as Battery Limit A on Exhibit B.
All condensate that the Customer may return under this Contract will be
delivered to Company at a terminal location designated as Battery Limit B on
Exhibit B. All measurements for Steam Delivered and Energy Delivered for the
purpose of billing hereunder, shall be made by Customer meters installed at
Battery Limit A. All measurements made for Condensate Returned and Energy
Returned for the purpose of billing hereunder shall be made by Customer meters
installed at Battery Limit B. All of said meters are to be furnished, installed,
operated and maintained by Customer. Billing to the Customer is based on the
metered flow rate with no adjustment for instrument accuracy. If a meter fails
to register correctly, the amount of flow shall be determined either by means of
(i) checking any meter or meters in operation at the time, or (ii) the flow
amount shall be estimated on the basis of consumption in a representative
period, as Company and Customer may reasonably agree. The Parties will mutually
agree upon an accredited third party to perform calibration tests for the
recording testing equipment shown in Exhibit B, specifically XXX, XXX, XXX, XX0,
XX0, and FT2. Such testing will occur no less than 12 times per year with the
cost of such testing being divided equally between the two Parties. The
calibration tests for the flow meters shall ensure that the meters are within an
accuracy of plus/minus 1%.
VII. SPECIFICATIONS FOR CONDENSATE RETURNED
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Customer shall return condensate to Company at a temperature of 210 degrees
Xxxxxxxxxx (x/- 00 xxxxxxx Xxxxxxxxxx) and at a pressure of 150 pounds per
square inch gauge pressure (+/- 15 psig). If condensate cannot be returned at
the pressure and temperature indicated above, Company may either require, at
Customer's option: (i) Customer to make certain changes to Customer's or
Company's condensate system at Customer's cost, or (ii) modify the Net Energy
Rate to account for the economic effect to Company of Condensate Returned at a
different temperature. The foregoing shall not apply if the Company is the cause
of the failure to return condensate at the criteria stated above.
It is understood and agreed by the Parties that (i) the condensate returned
by Customer shall be from a closed, copper-free system and (ii) that steam
delivered by the Company and condensate delivered to the Company will not have
direct contact with the Customer's products being processed. Both Parties will
use reasonable efforts to maintain, but will not guarantee, the primary side
(Company's side) of all processes at a higher pressure than the secondary side
(Customer's side), and that the secondary side of all equipment will only
contain condensate or steam. Customer will use reasonable efforts to return
condensate at a uniform rate and in a state that does not include exhaust steam
from any apparatus or other source which will contaminate the condensate with
oil, organic materials, or other impurities.
Any impurities in the condensate returned by Customer will be determined by
continuous recording testing equipment installed by Customer, at its cost and on
its property, which will measure the specific conductivity, cation conductivity,
silica, and pH of samples of condensate, and transmit these measurements to the
Company's property at its location of choice. Any impurities in the steam
supplied to Customer will be determined by Company's continuous recording
testing equipment and transmitted to the Customer's property, at its cost and on
its
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property, which will measure the specific conductivity, cation conductivity,
silica, and pH of samples of steam. Company, at its expense, will perform bench
tests periodically to determine the iron content of Condensate Returned and will
share testing results with Customer. If the testing shows the iron limit is
exceeded, Company will notify Customer and provide Customer two (2) hours to
perform its own test for the iron content and to correct the sub-standard
condensate. If, in Company's sole discretion, operational considerations permit
the Company to grant Customer additional time to correct the sub-standard
condensate, then Company will notify Customer that it has such added time as
Company deems reasonable in the circumstances. In the event of a dispute or
disagreement as to the iron content, the Parties agree to mutually retain an
independent certified third party to perform an independent test, with the costs
to be evenly divided, and the Parties will abide by that third party testing
result.
Condensate returned to Company by the Customer shall be within the
following limits:
Condensate Conductivity: Not to exceed 10 uS/cm
Condensate Ph: Range of 9.3-9.6
Condensate Silica Not to exceed 10 ug/l
Cation Conductivity Not to exceed 10 uS/cm
Iron Not to exceed 10 ppb
If the Condensate Returned, as hereinafter defined, is not in accordance
with any one or more of the above standards and, Customer fails after two (2)
hours time (or such added time as Company deems reasonable pursuant to the
provision for that above) to correct the sub-standard condensate, Company may
reasonably restrict the delivery of steam in a reasonable manner until the
Customer has taken action as necessary so Condensate Returned meets the required
criteria of this Article VII. If Customer's continuous monitoring equipment is
not
9
functioning properly and the Condensate Returned is not in accordance with
the above standards (as determined by the Company's existing plant condensate
monitoring equipment) Company may reasonably restrict the delivery of steam
until the Customer has taken action as necessary so Condensate Returned meets
the required criteria of this Article VII. The Parties recognize that if steam
provided by Company is not within the limits set forth above, the Condensate
Returned to Company will, in turn, be outside the above limits by a
proportionate amount. If the steam delivered by the Company is outside the
limits stated above due to the Company's own operations and the Company
continues to operate, Company shall continue to deliver steam to Customer.
Provided, however, that if Customer's operations are causing such Condensate
Returned to worsen beyond what is attributable to Company's operations and such
worsening is caused by an effect introduced by Customer, an effect that is
outside of what is normally (based on history) attributable to Customer's
operations, then Company will not continue to deliver steam to Customer under
the provisions of the preceding sentence. Nothing in this Article VII should be
construed to limit the rights of the Company to interrupt service under the
provisions of Article I, Section 2 of this Contract.
VIII. STEAM FEEDER AND CONDENSATE RETURN PIPING
1. Company will furnish one 14-inch, double block and bleed steam source
isolation system and one 8-inch, double block and bleed condensate return
isolation system. The Company's only required capital investment, under this
Contract, is the purchase of these valves.
2. Customer, at its expense, will furnish all other steam transmission
lines, condensate lines, and equipment necessary to connect with the Company's
double block and bleed systems. In accomplishing this, there will be situations
where Company is required to
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secure contracts at Customer's expense. In such situations, the Company will not
enter into any such contracts without the Customer's prior written approval, and
prior to Customer providing the funds required to the Company. Any and all
installation will be performed pursuant to standards that are consistent with
prudent utility practice. Customer agrees to design and purchase the following
equipment (shown on Exhibit B):
a. All steam piping downstream of Company's 14-inch, double
block and bleed valves. Pursuant to Customer's
specifications, at its expense and with Customer's
materials, Company shall install all piping between
Company's 14-inch, double block and bleed valves and
desuperheater inlet mentioned below. Customer shall
install all piping downstream of the desuperheater inlet.
b. All condensate return piping upstream of Company's 8-inch,
double block and bleed condensate return valves. Pursuant
to Customer's specifications, at its expense and with
Customer's materials, Company shall install all piping
between Company's 8-inch, double block and bleed valves
and desuperheater supply line tee. Customer shall install
all piping upstream of the desuperheater supply line tee.
c. A non-condensing steam turbine-generator system,
approximately 6 MW in capacity, including steam turbine,
generator, transformer, building, and all associated
equipment. Customer shall be responsible for the
installation of these items. Ownership of the steam
turbine will transfer to the Company after its
installation. Company shall own all electricity generated
by this
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turbine on or after installation, and is entitled
to all revenues from the sale of this electricity.
d. Pursuant to Customer's specifications, at its expense and
with Customer's materials, Company shall install all
controls and electrical interconnections between steam
turbine-generator mentioned above and Company's existing
facilities.
e. Customer is responsible for installation of the
desuperheating stations and supply lines. Installation
will be performed pursuant to standards that are
consistent with prudent utility practice.
3. Each Party shall operate and maintain the equipment located on that
Party's side of Battery Limits A & B set forth in Exhibit B.
4. The Parties acknowledge the critical nature of the steam transmission
and condensate return lines to providing reliable steam and condensate to both
Parties and each agrees to conduct inspections, operation, and maintenance of
the lines (on their respective side of Battery Limit A and Battery Limit B)
consistent with prudent utility practice, and at its own cost. In the event the
turbine, mentioned in Article VIII, Subsection 2(c) above, is unable to be
operated, Company will make the necessary repairs and service consistent with
prudent utility practice to place the turbine back in service as soon as
possible.
5. Customer will commission the steam and condensate piping in accordance
with prudent utility practice, and to a cleanliness that meets the
Company-provided standard (see Exhibit C). Company agrees that Customer may
dispose of condensate used during pipe cleanliness flushing in Company's ash
ponds; such condensate shall be transported to the ponds
12
at Customer's expense and in a manner which is approved by both Parties, in a
reasonable exercise of each Party's discretion.
6. Customer may request reasonable additions and/or improvements, which are
not required to comply with this Contract, be made by Company to the steam
source and condensate return double block and bleed isolation systems beyond the
maintenance and repairs Company is otherwise obligated to perform under this
Contract. Company will be required to install such additions and/or improvements
provided (i) Customer pays all costs for such additions or improvements, (ii)
such additions and/or improvements do not increase the operating and/or
maintenance costs of the Company, alter the nature or extent of the service
contemplated by this Contract, or alter the operation or maintenance of
Company's facilities, and (iii) such additions/improvements, in the sole
reasonable judgment of Company, will not interfere with or hamper Company's
economic and efficient operation and is consistent with prudent utility
practices. The Parties hereby express their intent that this Article VIII,
Subsection 6 is not intended to change or alter the nature or extent of the
service originally agreed upon by the Parties to this Contract.
IX. MONTHLY BILLING AND PERFORMANCE ASSURANCE
1. Bills shall be rendered monthly for service hereunder. Except as
otherwise noted, the term "month" shall mean a calendar month. Each xxxx
submitted to Customer shall include (i) the $* Demand Charge, (ii) the Energy
Charge, and (iii) the charge for Condensate Not Returned, if any, for the
previous month. Attached hereto as Exhibit D which illustrates the Energy Charge
is the product of the Net Energy Rate and the Net Energy Delivered and is a form
of xxxx that shall
13
be followed, in all material respects, in the calculation and processing of the
monthly xxxx to Customer.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2. Prior to Customer's First Grind, but in no case later than December 31,
2008, the Customer must provide a Letter of Credit to the Company in the amount
of $* million. If Company fails to receive payment under the Contract in the
time period set forth for payment, Company may, upon five (5) days written
notice, draw on the Letter of Credit to recover the full amount owing to Company
plus any late payment charge due. Company may also draw the full amount
available for drawing under the Letter of Credit if, at any time (i) Customer's
requirement to provide a Letter of Credit is continuing, (ii) twenty (20) or
fewer days remain until such Letter of Credit is set to expire, and (iii)
Customer has not provided a replacement Letter of Credit or other financial
security reasonably acceptable to Company. Customer shall, at its own expense,
restore the amount available for drawing under the Letter of Credit to $*
million within five (5) business days following any such drawing under the
Letter of Credit by Company.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
"Letter of Credit" as used herein means an irrevocable standby letter of
credit issued by a U.S. commercial bank or thrift institution acceptable to
Company in its sole, reasonable discretion and in a form, and of a content,
acceptable to Company in its sole, reasonable discretion.
3. Customer's requirement to provide a Letter of Credit shall have an
initial term of two (2) years from First Grind (or from December 31, 2008,
depending on the point of initiation for the Letter of Credit) and shall be
extended (or reinstated and extended, within five (5) days, if
14
applicable) for a period of two (2) years immediately upon the occurrence of any
one of the following:
a) Company draws on the Letter of Credit due to non-payment by
Customer;
b) A default, event of default or other similar condition or event with
respect to Customer has occurred or is continuing under one or more agreements
or instruments relating to indebtedness for borrowed money, which results in
such indebtedness becoming, or becoming capable at such time of being declared,
immediately due and payable;
c) With respect to any quarterly or annual reporting period beginning
with the quarter ending September 30, 2009, Customer is out of compliance with
loan covenants established by the Customer's senior lender for (i) minimum
working capital; (ii) minimum tangible net worth; or (iii) fixed charge coverage
ratio. Customer acknowledges that its compliance requirement with respect to
such covenants shall continue throughout the term of this Contract, and all
extensions thereof, and Customer acknowledges that the term of the Contract will
extend beyond the duration of Customer's obligations to its senior lender. Thus,
Customer shall continue to provide certifications to Company of the same kind
and content as were previously provided to the senior lender;
d) Customer fails to provide Company with a copy of its quarterly,
annual, or other periodic certification to Customer's senior lender regarding
the loan covenants described in the preceding paragraph within two (2) business
days of providing such certification to its senior lender, or within two (2)
business days of the date such certification would have been required to be
provided to its senior lender in any reporting period after expiration of
Customer's obligation to provide such certification to its senior lender;
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e) Customer fails to provide Company with a copy of its quarterly and
annual financial statements within two (2) business days of the time such
statements are due to the Customer's senior lender.
With respect to any reporting period after expiration of Customer's
obligation to provide such statements to its senior lender, Customer shall
provide Company (i) within 120 days following the end of each fiscal year, a
copy of Customer's audited consolidated financial statements for such fiscal
year together with Customer's calculations of working capital, tangible net
worth, and fixed charge coverage ratio (as such three terms were defined in the
former loan covenants established by the Customer's former senior lender); and
(ii) within 60 days after the end of each of its first three fiscal quarters of
each fiscal year, a copy of Customer's un-audited consolidated financial
statements for such fiscal quarter together with Customer's calculations of
working capital, tangible net worth, and fixed charge coverage ratio (as such
three terms were defined in the former loan covenants established by the
Customer's former senior lender), with reasonable support for such calculations.
If after a cessation, pursuant to the terms of this Contract, of Customer's
Letter of Credit requirement, Customer fails to make payment as required by this
Contract or an occurrence takes place of any of the events ("b" through and
including "e") listed in Article IX, Section 3, above, Customer's requirement to
provide a Letter of Credit shall resume and Customer shall provide the required
Letter of Credit within five (5) business days of such occurrence, and said
Letter of Credit shall contain such terms and conditions as Company reasonably
requires, and shall be for such an amount as will equal the Customer's two
largest monthly bills in the past two (2) year period.
X. LATE PAYMENT CHARGE
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In xxxxxxxx to Customer, if payment is not made by Customer within fifteen
(15) days from the receipt of the monthly billing, an added charge calculated at
a rate equal to twelve (12) percent per annum, will be added to the amount of
the xxxx under the above rates, or minimum charge when applicable, and the
amount so added will constitute a late payment charge. In the event of a dispute
between the Parties as to the amount of any xxxx, Customer may withhold any
amount in dispute, but, if the disputed amount is determined to be due and
owing, must thereafter make payment, plus interest (if any) due to Company
within seven (7) days from the settlement of the dispute by the Parties or by a
final decision of a court from which no appeal may be taken by reason of the
expiration of the time for appeal or otherwise. If Customer fails to pay the
undisputed portion of the xxxx within thirty (30) days from receipt of the xxxx,
Company may restrict or suspend the delivery of steam until the full amount of
the xxxx is paid. If Customer fails to pay the undisputed portion of the xxxx
within sixty (60) days from receipt of the xxxx, Company may terminate this
contract without further notice. Nothing in this Article X shall be construed to
limit Company's ability to draw-down on the above-mentioned Letter of Credit if
Customer fails to make payment within the above-mentioned fifteen (15) days
after receipt of the monthly billing.
XI. TERM OF CONTRACT
This Contract shall become effective upon execution and shall continue for
a term of ten (10) years from the date of Customer's First Grind (but no later
than ten years from January 1, 2009, unless extended by agreement of the
Parties, due to a Force Majeure event at the Customer's facility served under
this Contract), or unless earlier terminated in accordance with the terms of
this Contact. The Parties may, but are not obligated to extend the term of this
17
Contract. If the Parties agree to extend the term of this Contract, the document
they execute to accomplish the extension shall also state the period of the
extension. The Parties agree that any such extension shall provide for a two (2)
year period of notice to Customer prior to any termination of the extension
period agreement, unless the Parties agree to an extension period that is
shorter than two (2) years in which case the Parties shall agree upon an
appropriate notification period.
Company will provide Customer sufficient steam service prior to First Grind
for Customer's plant testing and start-up. Such steam service shall be provided
to Customer at the Net Energy Rate established herein, and under the terms and
conditions of this Contract.
XII. TERMINATION OF CONTRACT
1. If Customer shall fail in any material respect to comply with or perform
any of the conditions or obligations imposed upon Customer by this Contract
(except in the case of nonpayment of xxxx, in which case the Contract
termination provisions of Section X of this Contract shall apply), and if, after
such failure and reasonable opportunity to promptly cure, Company shall deliver
to Customer a written notice of its intention to discontinue the supply of steam
on account of such failure then Company shall have the right to terminate this
Contract as hereafter provided. Company shall then have the right to discontinue
supply at the expiration of one hundred eighty (180) days after the giving of
said notice (such one hundred eighty (180) days being deemed "due notice" for
the purposes hereof as well as sufficient opportunity to cure), unless within
such one hundred eighty (180) days Customer shall remedy such failure.
Discontinuing supply of steam for any such cause shall terminate this Contract,
but such termination shall not release Customer from any direct damages suffered
by Company nor will it
18
release Customer from its obligation to make payments for service previously
rendered hereunder by Company.
2. If Company shall fail in any material respect to comply with or to
perform any of the conditions or obligations imposed upon Company by this
Contract and if, after such failure as well as sufficient opportunity to cure,
Customer shall deliver to the Company a written notice of its intention to
terminate this Contract on account of such failure then Customer shall have the
right to terminate this Contract as hereafter provided. This Contract shall then
terminate at the expiration of one hundred eighty (180) days after the giving of
said notice (one hundred eighty (180) days being deemed "due notice" for the
purposes hereof and reasonable opportunity to cure), unless within such one
hundred eighty (180) days Company shall remedy such failure. Such termination
shall not release Company from any direct damages incurred by Customer as a
result of such termination. The termination shall not release Customer from its
obligation to make payments for service previously rendered hereunder by
Company, but is shall release Customer from any further obligation to pay all
charges, including but not limited to, Demand Charges for the unexpired portion
of the remaining Contract Term.
3. Upon termination of this Contract, ownership of equipment listed in
Article VIII, Section 2 of this Contract shall be transferred back to the
Customer, and removed from the Company's premises at Customer's expense and in
coordination with the Company.
4. During the initial ten year (10) year term of this Contract, the
Customer may terminate the Contract, without cause, on 180 days written notice
to Company.
XIII. NO GUARANTEE/WARRANTY, DAMAGES AND LIMITATION OF LIABILITY
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ALTHOUGH COMPANY SHALL EMPLOY REASONABLE EFFORTS TO SUPPLY STEAM IN
ACCORDANCE WITH THE TERMS OF THIS CONTRACT, COMPANY IN NO WAY OFFERS ANY
GUARANTEE OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, REGARDING THE SUPPLY OR
QUALITY OF THE STEAM TO BE SUPPLIED, EXCEPT AS EXPLICITLY PROVIDED IN THIS
CONTRACT. CUSTOMER ACCEPTS SUCH STEAM ON AN "AS IS" BASIS. NOTHING IN THIS
ARTICLE XIII SHALL BE CONSTRUED TO ELIMINATE CUSTOMER'S ABILITY TO PURSUE
CLAIMS, AS PROVIDED FOR IN ARTICLE XIII, SECTION 1, FOR DIRECT DAMAGES CAUSED BY
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF COMPANY.
IN NO EVENT SHALL EITHER COMPANY OR CUSTOMER HAVE ANY LIABILITY TO THE
OTHER, REGARDLESS OF THE FORM OF ACTION, UNDER OR RELATED TO THIS CONTRACT FOR
ANY SPECIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES,
HOWSOEVER ARISING, INCLUDING BUT NOT LIMITED TO LOST PROFITS, LOSS OF
PRODUCTION, AND LOSS OF REVENUES.
CUSTOMER'S AND COMPANY'S LIABILITY ON ALL CLAIMS OF ANY KIND (EXCLUDING
CLAIMS FOR DEATH AND BODILY INJURY) WHETHER BASED ON CONTRACT, INDEMNITY, TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY, EXTRA-CONTRACT CAUSES, OR OTHERWISE,
FOR ALL LOSSES OR DAMAGE (INCLUDNG LIQUIDATED DAMAGES) ARISING OUT OF, CONNECTED
WITH, OR RESULTING FROM THE CONTRACT, OR FROM THE PERFORMANCE OR BREACH THEREOF,
OR OTHERWISE, SHALL IN NO CASE EXCEED $* MILLION OVER THE LIFE OF THE CONTRACT.
20
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
THE PARTIES HEREBY AGREE THAT CUSTOMER'S DIRECT DAMAGES (THE ONLY DAMAGES
FOR WHICH COMPANY IS RESPONSIBLE TO CUSTOMER) IN THE EVENT OF WILLFUL MISCONDUCT
LEADING TO AN INTERRUPTION OF THE STEAM SUPPLY TO CUSTOMER (I.E., THE SCENARIOS
SET FORTH IN "a" AND "b" OF ARTICLE XIII, SECTION 1, BELOW), FOR ANY PART OF A
DAY, SHALL BE EQUAL TO $* PER DAY OF SUCH INTERRUPTION. IN THE EVENT OF SUCH
WILLFUL MISCONDUCT, THE PARTIES AGREE THAT SUCH DAMAGES SHALL BE PAID TO
CUSTOMER AS LIQUIDATED DAMAGES AND NOT AS A PENALTY. SUCH LIQUIDATED DAMAGES AND
CUSTOMER'S RIGHT TO SEEK INJUNCTIVE RELIEF SHALL BE CUSTOMER'S SOLE AND
EXCLUSIVE REMEDIES IN THE EVENT OF AN INTERRUPTION OF THE STEAM SERVICE OF THE
TYPE CONTEMPLATED BY ARTICLE XIII, SECTION 1, EXCEPT THAT CUSTOMER SHALL BE
ENTITLED TO TERMINATE THIS CONTRACT UNDER THE PROVISIONS OF ARTICLE XII, SECTION
2, IN THE EVENT OF REPEATED INTERRUPTIONS CAUSED BY COMPANY'S WILLFUL
MISCONDUCT. IN THE LATTER CASE, CUSTOMER MAY SEEK RECOVERY OF ITS DIRECT DAMAGES
AND INJUNCTIVE RELIEF (I.E., INJUNCTIVE RELIEF TO SECURE SERVICE DURING THE
180-DAY PERIOD MENTIONED IN ARTICLE XII, SECTION 2), SUBJECT TO THE $* MILLION
LIMIT ESTABLISHED IN THIS ARTICLE XIII. IN THAT EVENT, THE $* LIQUIDATED DAMAGES
PROVISION OF THIS ARTICLE XIII SHALL NOT APPLY.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
21
1. Neither Customer nor Company shall be responsible for damages to the
other Party, its directors, officers, employees, partners, co-venturers, agents,
representatives, customers, suppliers, or any third party, for any failure to
supply steam or return condensate, for interruptions of steam supply or return
condensate, or for any alleged shortfalls in the quality of the steam supply or
return condensate, unless such failure, interruption or shortfall is due to
gross negligence or willful misconduct. Nothing in the foregoing sentence shall
be construed to impact Parties' rights as set forth in Articles V, VI and VII
hereof, and related Contract provisions. For purposes of this Contract, "willful
misconduct" shall be defined as follows: an intentional act aimed at achieving a
wrongful purpose knowingly without legal or factual justification and in
disregard of the obvious harm such act will impose. The Parties agree that it
shall be considered "willful misconduct" for:
(a) Company to interrupt (on a short- or long-term basis) the steam
supply to Customer solely on the basis of Company's preferring to sell its
energy in another, more or equally profitable transaction;
(b) Company to refuse to provide steam service to Customer, unless
consistent with the provisions of this Contract, when the primary steam source
is operating at more than 600 MW of generating capacity, as measured by
Company's standard procedures; (In the event of a dispute concerning whether the
primary steam source was operating at more than 600 MW at the time of an
interruption Customer reasonably deems to be the result of willful misconduct,
Company will provide Customer access to its records pertaining to the plant's
capacity level at the time in question, provided Customer agrees to execute a
reasonable confidentiality agreement pertaining to said records); or
(c) either Party to commit an act that satisfies the definition above.
22
In the event of willful misconduct of the type addressed in "a," "b" or "c"
above, each Party recognizes that the other Party may request, and is not
precluded by this Contract from requesting, an injunction to bring an end to the
willful misconduct and that Party may also file a claim for direct damages as
specified in this Contract.
XIV. FORCE MAJEURE
1. In case Company shall at any time during any month be prevented from
furnishing Customer steam hereunder due to causes beyond its reasonable control,
which may include but not be limited to strike, fire, labor disturbances,
explosion, breakage of machinery or equipment, injunctions, restraining orders,
and acts of God, and affecting Company's ability to furnish such steam or
services, the Demand Charge to be paid by Customer shall be reduced by an amount
proportionate to the amount of days in which such failure occurs relative to the
total number of days in such month.
2. In case Customer shall at any time during any month be prevented from
receiving and/or consuming steam hereunder due to causes beyond its reasonable
control, which may include but not be limited to fire, strike, labor
disturbance, explosion, breakage of machinery or equipment, injunctions,
restraining orders, and acts of God, which affect the premises served under this
Contract, Customer shall be excused from performance under this Contract to the
extent that such inability persists. The fixed term of this Contract may be
extended for a period equal to the duration of such Force Majeure event. Such an
extension shall only occur if both Parties are in agreement on the extension. If
the likely duration of such Force Majeure event will cause undue harm to
Company, then Company, in the reasonable exercise of its discretion, shall have
the right to terminate the Contract upon one hundred eighty
23
(180) days written notice unless during such one hundred eighty (180) days
Customer agrees to resume service or to compensate Company for such harm.
XV. TERMS AND CONDITIONS OF SERVICE
1. The properly authorized agents of each Party shall have access at all
reasonable times to the other's premises for the purpose of installing,
inspecting, repairing, or removing such Party's property located on the other
Party's premises. If it becomes necessary for a Party's agents or employees to
enter upon the premises or property of the other in order to install, inspect,
maintain, or remove such Party's facilities, such Party agrees to provide and
use reasonable precautions, safeguards, and protection against accidents or
damages to persons or property during the progress of such work, and to
indemnify and save harmless the other Party from any or all loss or damage and
all claims or causes of action arising out of accidents, injuries, or damages
caused by the negligence or willful misconduct on the part of said Party, its
agents or employees, during the progress of such work except that nothing herein
will require the Party to indemnify the other Party for the latter's own
negligence.
2. In the event the conditions of service or charges prescribed by this
Contract are changed under authority of any public body having jurisdiction
hereof, such changes shall apply to service hereunder beginning with the
effective date established by such public body.
3. No agent of either Customer or Company has the power to amend, modify,
or alter this Contract or waive any of its conditions, or to bind Company or
Customer by making any promise or representation not contained herein.
24
4. The pricing included in this Contract is based on Company's continued
use of coal as the primary fuel for steam production consistent with historical
operating practice. In the event that coal is not used as the primary fuel
consistent with historical operating practice, Customer, at its option, shall
have the right to terminate this Contract upon thirty (30) days written notice.
5. With the exception of Company's notices regarding curtailment of Steam
Delivered, (which curtailment notices shall be provided to Customer on a
reasonable basis and on a schedule that is reasonable given the circumstances)
pursuant to the provisions of this Contract, all notices delivered pursuant to
this Contract shall be in writing and shall be delivered by personal in-hand
delivery, or sent by registered or certified U.S. mail, postage prepaid, or sent
by recognized national overnight delivery service, addressed to the other party
as follows:
If to Customer:
Southwest Iowa Renewable Energy, LLC
0000 X. 00xx Xxx.
Xxxxxxx Xxxxxx, XX 00000
Attn: General Manager
Fax: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
To Company: MidAmerican Energy Company
Council Bluffs Energy Center
Attn: General Manager
0000 Xxxxxx Xx.
Xxxxxxx Xxxxxx, Xxxx 00000
(000) 000-0000
(000) 000-0000 Facsimile
25
Such notices shall be deemed to have been given when delivered in the case of
delivery in-hand, five (5) days after mailing in the case of registered or
certified mailing, and one day following mailing in the case of delivery by
overnight delivery service. Either Party may modify its address for notices by
notice to the other Party.
All work performed by Customer on Company's property shall be completed in
accordance with the Company's reasonable terms and conditions, and such work
will be performed in a manner and to a condition that is consistent with prudent
utility practices. For such work, Customer must maintain insurance in the manner
and as described in Exhibit E. In addition, Customer also agrees, during the
term of this Contract and any extensions thereof, to maintain such insurance as
is prescribed in the insurance provisions found in Exhibit E, and in the manner
prescribed therein, to cover all such liabilities as are addressed by the said
insurance provisions of Exhibit E and that are due to or arise out of
Customer's, and those for whom Customer is responsible, activities.
XVI. ASSIGNMENT
1. The benefits and obligations of this Contract shall inure to and are
binding upon the Parties hereto and their respective successors and permitted
assigns, provided that no assignment hereof shall be made by either Party
without first obtaining the written consent of the other, which consent shall
not be unreasonably withheld or delayed.
2. Notwithstanding the foregoing, either Party may, without the consent
from the other Party, transfer or assign this Contract to any person or entity
succeeding to all or substantially all of the assets of such Party; and Company
may, without the consent of Customer,
26
transfer or assign this Contract to any person or entity succeeding to all
or substantially all of the assets of Council Bluffs Energy Center Unit 3. The
assigning Party shall give written notice to the other Party of the effective
date of the assignment or transfer. To the extent consistent with standard
industry practices utilized for the financing of projects like Customer's
project, Company agrees that Customer may collaterally assign this Contract to
Customer's lender provided such lender agrees to assume all of Customer's
obligations due to or arising out of, or under, the Contract, and provided
further that any assumption of this contract is to occur as a result of the
exercise by the lender of its remedies under its agreement(s) with Customer. In
such case, both Parties agree to execute such reasonable consents,
acknowledgements, or other documents reflecting such assignment as are
reasonably required by the Customer or its lender at the time of the assumption.
3. Company shall provide notice to Customer of its intent to transfer this
Contract without the consent of Customer, if such transfer is to be effected
pursuant to the preceding Article XVI, Section 2 of this Contract. In the event
Company notifies Customer of its intent to so transfer this Contract, Customer
may, within one hundred eighty (180) days after receiving such notification,
elect to terminate this Contract by providing notice of its intent to terminate
this Contract within one hundred eighty (180) days of the date of receipt of
Company's notice to Customer. Customer shall establish the effective date of
termination and shall have no payment obligations other than for service
received through said date of termination. The effective date of termination
shall be no later than two (2) years from the date of Customer's notice to
Company of its intent to terminate.
XVII. MISCELLANEOUS
27
1. Confidentiality. Neither Party shall disclose the terms of this Contract
to any third party (other than such Party's officers, directors, employees,
lenders, counsel, accountants consultants or other advisors) except in order to
comply with any applicable law, order, discovery request, regulatory or exchange
rule. Each Party shall notify the other Party of any proceeding of which it is
aware that may result in disclosure and shall use reasonable efforts to prevent
or limit such disclosure.
2. Entire Agreement. This Contract and the Exhibits hereto constitute the
entire agreement between the Parties relating to the subject matter hereof and
supersedes any other agreements, written or oral, between the Parties concerning
such subject matter.
3. No Waiver. No waiver by either Party of any default by the other under
this Contract shall operate as a waiver of any future default, whether of a like
or different character or nature. Either Party's payment of money, waiver of any
breach, or failure to enforce any of the terms, covenants, conditions or other
provisions of this Contract at any time shall not in any way affect, limit,
modify or waive that Party's right thereafter to enforce or compel strict
compliance with every term, covenant, condition or other provision hereof, any
course of dealing or custom of the trade notwithstanding.
4. Amendments. No amendment of the terms and provisions of this Contract
shall be or become effective except by written amendment executed by the
Parties.
5. Severability. Should any provision of this Contract for any reason be
declared invalid or unenforceable by final and applicable order of any court or
regulatory body having jurisdiction, such decision shall not affect the validity
of the remaining portions, and the remaining portions shall remain in effect as
if this Contract had been executed without the
28
invalid portion. In the event any provision of this Contract is declared
invalid, the Parties shall promptly renegotiate, in good faith, to restore this
Contract as near as possible to its original intent and effect.
6. Survival. The provisions of this Contract shall survive the termination
of this Contract for so long as is necessary to complete all business
transactions, payment obligations or indemnification obligations outstanding
between the Parties and related to this Contract. Confidentiality provisions
shall survive the termination of this Contract for a period of one (1) year
after the date of termination.
7. Governing Law. This Contract shall be governed by the laws of the state
of Iowa.
29
IN WITNESS WHEREOF, the Company and the Customer have executed this
Contract in duplicate the day and year first above written.
MIDAMERICAN ENERGY COMPANY
By: /s/ Xxxx X. Xxxx
---------------------------------
Name: Xxxx X. Xxxx
Title: President
SOUTHWEST IOWA RENEWABLE ENERGY LLC
By: /s/ Xxxxx Xxxx
---------------------------------
Name: Xxxxx Xxxx
Title: Chairman
30
EXHIBIT A - DEFINITIONS
An outage exists whenever a unit is not synchronized to the grid system and not
in a Reserve Shutdown state. An outage starts when the unit is either
desynchronized from the grid or when it moves from one unit state to another
(for example, goes from a Reserve Shutdown to a Maintenance Outage.) The outage
ends when the unit is synchronized to the grid or moves to another unit state.
The outage definitions for this Contract are the following:
RS - Reserve Shutdown
An event that exists whenever a unit is available for load but is not
synchronized due to lack of demand. This type of event is sometimes
referred to as an economy outage or economy shutdown. If a unit is shut
down due to any equipment-related problems, whether or not the unit was
needed by the system, it is categorized as an Unplanned (Forced)
Outage, Maintenance Outage, or Planned Outage, not a Reserve Shutdown.
A Reserve Shutdown is not considered an outage state and does not, in
itself, permit the interruption of steam service under Article I,
Section 2.
PO - Planned Outage
An outage that is scheduled well in advance and is of a predetermined
duration, lasts for several weeks, and occurs only once or twice a
year. Turbine and boiler overhauls or inspections and testing are
typical Planned Outages.
MO - Maintenance Outage
An outage that can be deferred beyond the end of the next weekend, but
requires that the unit be removed from service, another outage state,
or Reserve Shutdown state before the next Planned Outage (PO).
Characteristically, a MO can occur anytime during the year, has a
flexible start date, may or may not have a predetermined duration, and
is usually much shorter than a PO.
U1 - Unplanned (Forced) Outage - Immediate
An outage that requires immediate removal of a unit from service,
another outage state, or a Reserve Shutdown state. This type of outage
usually results from immediate mechanical/electrical/hydraulic control
systems trips and operator-initiated trips in response to unit alarms.
U2 - Unplanned (Forced) Outage - Delayed
An outage that does not required immediate removal of a unit from the
in-service state but requires removal within six hours. This type of
outage can only occur while the unit is in service.
U3 - Unplanned (Forced) Outage - Postponed
An outage that can be postponed beyond six hours but requires that a
unit be removed from the in-service state before the end of the next
weekend. This type of outage can only occur while the unit is in
service.
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EXHIBIT B
* THIS ENTIRETY OF THIS EXHIBIT B HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT WHICH HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
32
Exhibit C - Interfacing Piping Cleanliness
Customer shall be responsible for cleaning all piping systems interfacing with
Company. This shall include furnishing all supervisory services, labor,
temporary piping and specialties, special equipment, and consumables required
for cleaning and waste disposal. Waste disposal shall be in compliance with
Company's environmental policies for activities conducted on Company's property.
Customer may dispose of condensate used during pipe cleanliness flushing in
Company's ash pits at Customer's expense and in a manner which is approved by
both Parties.
These systems shall have all sand, rust, mill scale, greases, oils, dirt and
other foreign materials removed prior to being placed in service. All
modifications and repairs involving cutting, grinding, and welding shall be
completed prior to final cleaning of the respective system, including the final
interface between Customer and Company. Customer shall design sufficient
connections in the piping systems to facilitate final cleaning so that
additional cutting, grinding, or welding will not be necessary to restore the
systems to normal operating configuration. Customer shall submit detailed
cleaning procedures for those systems interfacing with Company, for Company
review and approval, at an appropriate time prior to cleaning activities. Final
cleanliness shall be demonstrated by Customer and approved by Company before the
systems will be allowed to be placed in service.
For steam systems, piping should undergo either a steam blow process or chemical
clean process to remove sand, rust, mill scale, greases, oils, dirt and other
foreign materials. If steam blow method is used it should be designed with a
Cleaning Force Ratio (CFR) corresponding to cleaning forces in excess of the
forces experienced during maximum operating conditions. This will ensure that
objects not removed during the steam blow can be expected to remain in the
system during normal operating conditions. System cleanliness should be
demonstrated by targeting steam on a polished impingement plate.
For condensate systems, to ensure that condensate quality is not compromised by
debris and materials typically found in newly erected systems, the piping should
be flushed and chemically cleaned in accordance with the following steps:
o Cold water flushing to remove loose and readily soluble matter.
o Preboiling with an alkaline solution to remove dirt, preservatives, oily
matter, and grease.
o Chelant cleaning to remove mill scale and iron oxides.
o Rinsing with demineralized water to thoroughly remove chemical residue.
o Wet layup, as required, to protect the systems until initial operation.
o Neutralization of all chemical cleaning wastes for final disposal.
In lieu of chemical cleaning, this pipe could be blast cleaned in the shop,
blast cleaned on site, hydro-blasted on site, pigged, or a combination of all.
Chemical cleaning is typically performed in a plant, however given the distance
of this pipeline there may be a more optimal method. Ultimately the goal will be
to have Customer ensure all sand, rust, mill scale, greases, oils, dirt and
other foreign materials have been removed. The best way we can ensure this is to
have review/approval of the cleaning procedure and witness/approval of the final
cleanliness step.
33
EXHIBIT D: SAMPLE MONTHLY XXXX
* THIS ENTIRETY OF THIS EXHIBIT D HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT WHICH HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
34
EXHIBIT E - CUSTOMER INSURANCE REQUIREMENTS
1.1 CUSTOMERS INSURANCE
1.1.1 Prior to the commencement of on-site construction on Company's premises,
and at all times during the term of the Contract, including extensions, the
Customer shall purchase, at its own expense, and maintain with insurance
companies in good standing and acceptable to the Company, such insurance as will
protect the Customer from liability and claims for injuries and damages which
may arise out of or result from the Customer's operations under the Contract and
for which the Customer may be legally liable, whether such operations are by the
Customer or by a Customer contractor or by anyone directly or indirectly
employed by any of them, or by anyone for whose acts any of them may be liable.
1.1.2 The Company intends that this Contract shall also be one of indemnity, and
that such indemnification shall be covered by insurance. For the further
protection of the Customer and the Company, but without restricting or waiving
any obligations of the Customer herein contained, the Customer shall insure the
risks associated with this Contract with minimum coverages and limits as set
forth below:
A. Workers' Compensation Insurance and Occupational Disease Insurance in
accordance with statutory requirements of the state and/or Federal Regulations
(FELA, USL&H, Xxxxx Act) and Employers' Liability Insurance with limits of not
less than:
Bodily Injury by Accident $500,000 Each Accident
Bodily Injury by Disease $500,000 Policy Limit
Bodily Injury by Disease $500,000 Each Employee
covering location of all work places involved in this Contract.
B. The most recently approved ISO Commercial General Liability Insurance
policy, or its equivalent, written on an Occurrence Basis, with limits not less
than $1,000,000 per occurrence/ $2,000,000 general aggregate (on a per location
and/or per job basis) Bodily Injury and Property Damage, including the following
coverages.
a. Premises and Operations Coverage
b. Independent Customer's Coverage
c. Contractual Liability
d. Products and Completed Operations Coverage
e. Coverage for explosion, collapse, and underground property damage
f. Broad Form Property Damage Liability
g. Personal Injury Liability, with the contractual exclusion removed
C. The most recently approved ISO Business Automobile Liability Insurance
policy, or its equivalent, covering owned, hired and non-owned vehicles with
limits not less than $1,000,000 each accident Bodily Injury and Property Damage
combined.
35
D. Umbrella Liability Insurance with a minimum limit of $4,000,000 each
occurrence/ aggregate where applicable to be excess of the coverages and limits
required in A (employer's liability only), B and C above. Customer shall notify
Company, if at any time their full umbrella limit is not available during the
term of this Contract, and will purchase additional limits, if requested by
Company.
1.1.3 The Customer shall, within fifteen (15) days of execution of this
Contract, deliver to the Company certificates of insurance evidencing valid
coverage in effect as specified by this Exhibit E. All Workers' Compensation,
Commercial General Liability and Umbrella Liability policies shall contain
provisions that the insurance companies will have no right of recovery or
subrogation against the Company, its parent, divisions, affiliates, subsidiary
companies, co-lessees, or co-venturers, agents, directors, officers, employees,
servants, and insurers, it being the intention of the parties that the insurance
as effected shall protect all parties. The Commercial General Liability policy
waiver of subrogation endorsement shall be ISO Form CG 24 04 or its equivalent.
All required insurance policies shall provide that the policy is primary and
will not contribute with any policy carried by Company.
1.1.4 MidAmerican Energy Company, its parent, divisions, affiliates, subsidiary
companies, co-lessees, or co-venturers, agents, directors, officers, employees,
and servants shall be named as an additional insured in each of Customer's
insurance policies, except statutory Workers' Compensation. The Commercial
General Liability additional insured endorsement shall be ISO Form CG 20 10 or
its equivalent.
1.1.5 Any and all deductibles in the above-described insurance policies or
inadequacy of limits shall be assumed by, for the account of and at Customer's
sole risk.
1.1.6 No cancellation or material reductions of coverage in the policies shall
become effective except on thirty (30) days' written notice thereof to
MidAmerican Energy Company's plant manager at Council Bluffs Energy Center. For
those insurance coverages whereby Company is required to be named as an
additional insured, the Customer shall at any time requested by the Company
prior to or during the term of the Work or this Contract, deliver to the Company
certified copies of any and all insurance policies so requested. Further, should
a loss arise during the term of this Contract that may give rise to a claim
against the Customer, and/or the Company as additional insured, the Customer
shall deliver to the Company, or shall cause its insurers or agents to deliver,
certified copies of the policies maintained during the term of the Contract,
including extensions, if so requested by the Company.
1.1.7 Should the Customer or its contractor(s) fail to provide or maintain any
of the insurance coverages referred to in this Exhibit E, the Company shall have
the right, but no obligation, to provide or maintain such coverage, or coverage
affording equivalent protection, at the Customer's expense, either by direct
charge or set-off.
1.1.8 Company does not represent that the insurance coverages specified herein,
whether in scope of coverage or amounts of coverage, are adequate to protect the
obligations of the Customer, and the Customer shall be solely responsible for
any deficiencies thereof.
1.2 CUSTOMER'S CONTRACTOR'S INSURANCE
1.2.1 Should the Company permit the Customer to allow its contractor(s) on
Company property to perform work related to Customer's obligations under the
Contract, the Customer
36
shall, before permitting its contractor(s) to perform any work at the site,
require each to carry insurance with terms and limits similar to that specified
in Section 11.1.2, or provide evidence that such contractor(s) are covered as
Named Insureds under the Customer's insurance coverages as required in Section
11.1.2. Prior to the commencement of work by any contractor(s), the Customer
shall provide to the Company Certificates of Insurance evidencing that each
contractor carries insurance as required by Section 11.1.2, or evidencing that
such contractor(s) are named insureds under the Customer's insurance coverages.
As with the Customer's insurance coverage, the Company, its parent, divisions,
affiliates, subsidiary companies, co-lessees, or co-venturers, agents,
directors, officers, employees and servants shall be named as an additional
insured on any contractor(s) insurance required by this section.
