HEINZ FACILITY LEASE
This Facility Lease Agreement ("Agreement") is made and entered into
this 22nd day of January, 1997 by and between Heinz USA, a Division of X.X.
Xxxxx Company, a Pennsylvania corporation having its principal place of business
at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 ("Heinz") and Allegheny
Development Corporation, a Pennsylvania corporation having its principal place
of business at Xxxxxxxxxxx Corporate Center, 000 Xxxxxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000 ("ADC").
W I T N E S S E T H :
WHEREAS, Heinz currently owns and operates an inside-the- fence energy
facility that provides energy in the form of steam, electricity and compressed
air to its Pittsburgh, Pennsylvania manufacturing plant; and
WHEREAS, Heinz and ADC desire to enter in to a contractual arrangement
pursuant to which ADC would (i) be granted a license to use the Real Property
associated with the Energy Facility and (ii) lease certain equipment and assets
associated with the Energy Facility;
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants, agreements and conditions set forth herein, Heinz and ADC, intending
to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise requires, the following terms shall have
the following meanings for the purposes of this Agreement, and shall include the
plural as well as the singular form:
"Agreement" shall have the meaning set forth in the first paragraph of
this Agreement.
"Base Rent" shall have the meaning set forth in Section 3.03 hereof.
"Base Shift Premium" shall mean the shift premium established for each
job classification covering members of the O&M Staff under the UFCW Local 325
Collective Bargaining Agreement, as in effect on the Lease Commencement Date and
set forth on Exhibit D hereto.
"Base Wage Rate" shall mean the hourly wage rates established for each
job classification covering members of the O&M Staff under the UFCW Local 325
Collective Bargaining Agreement, as in effect on the Lease Commencement Date and
set forth on Exhibit D hereto.
"Business Day" shall mean any day on which commercial banks are not
authorized or required to close in Pennsylvania.
"Calendar Year" means any twelve-month period commencing on January 1
and ending the following December 31.
"Current Capacity" means with respect to (i) electric energy, the
maximum steady state full load capacity of two turbine generators (2 times
3,000kw); and (ii) compressed air, the maximum capacity of the Energy Facility's
installed compressed air system (5,300 cfm) as of the Lease Commencement Date.
Current Capacity with respect to steam means the maximum steady state full load
capacity of the operating coal/natural gas fired boilers at the Energy Facility
(operating coal/natural gas fired boilers for this purpose means boilers 1,2,3
and 4). Current Capacity for steam shall be equal to 160,000 lbs of coal fired
steam per hour during the Initial Capacity Measuring Period. Should an opacity
excursion occur preventing the Energy Facility from achieving 160,000 lbs of
coal fired steam per hour as required herein, Current Capacity for steam shall
be reduced to 150,000 lbs of coal fired steam per hour. After the conclusion of
the Initial Capacity Measuring Period and for the remainder of the Term, Current
Capacity for steam shall be equal to the greater of (i) 170,000 lbs of coal
fired steam per hour or (ii) actual steady state full load capacity, except as
required under Section 5.01(b) hereof.
"Emergency" means any circumstance that may arise and constitute a
serious hazard to the safety of, or a material interference with, the safe,
economical or environmentally sound operation of the Energy Facility or the
Manufacturing Facility and which requires immediate action.
"Energy Facility" means all personal property and fixtures that are
now or hereafter used in any capacity whatsoever (including, without limitation,
all machinery, equipment, spare parts, tools, materials, supplies and
maintenance equipment) in connection with the production of electricity, steam
energy and compressed air and the delivery thereof. For the purposes of this
Agreement, the Energy Facility assets shall not be deemed to include the Real
Property, the Manufacturing Facility or any component thereof. Exhibit A hereto
provides a list of the primary Energy Facility assets in existence on the date
of this Agreement and includes a diagram of the battery limits of the Energy
Facility for the purpose of defining the maintenance responsibilities of the
Parties. Heinz shall retain and the Energy Facility shall not include the
Retained Assets.
"Energy Facility Improvements" means the proposed initial capital
improvements, modifications and upgrades to the Energy Facility to be
implemented by ADC under the terms of this Agreement, all as generally
identified on Exhibit B hereto.
"Energy Facility O&M Documentation" means Standing Orders, Operating
and Emergency Procedures, CMM System and Safety and Health Accident Reduction
Plan (SHARP) and other applicable Energy Facility record-keeping requirements.
"Event of Loss" means the following events with respect to the Energy
Facility: (i) loss of all or substantially all of the Energy Facility or the use
thereof due to destruction, damage beyond economical repair or rendition of the
Energy Facility permanently unfit for normal use for any reason whatsoever; (ii)
anything that results in an insurance settlement with respect to the Energy
Facility on the basis of total loss or constructive total loss; and (iii) the
condemnation or taking, or requisition of title to or use by any governmental
authority, of either all or substantially all of the Energy Facility or all or
such substantial portion of the Energy Facility such that the remainder is not
sufficient to permit operation on a commercially feasible basis.
"Fiscal Year" means Heinz's fiscal year ending on the Wednesday
falling closest to April 30th in each year during the Term.
"Force Majeure" shall mean, but not be limited to, acts of God,
storms, war, official strikes or industrial disputes beyond the control of the
parties (provided each party shall use every reasonable effort in good faith to
resolve any such strike or dispute), acts of the public enemy, quarantine,
epidemic, blockade, civil disturbance, riots, insurrection, fire, rules or
regulations of any governmental authority having or claiming jurisdiction,
compliance with which is beyond a party's reasonable control and which makes
continuance of operations impossible, or any other cause beyond the reasonable
control of such party, whether or not similar to the causes specified herein. An
Event of Loss shall constitute Force Majeure. Inability of either party to
secure funds, arrange bank loans or other financing, or to obtain credit shall
not be regarded as Force Majeure.
"Hazardous Materials" shall mean any substance or material that is
regulated by any state, federal or local governmental authority having
jurisdiction over the Energy Facility and Real Property, including all those
materials and substances designated as hazardous or toxic by any such
governmental authority . Without limiting the generality of the foregoing, the
term "Hazardous Materials" shall include asbestos or asbestos containing
material, polychlorinated biphenyls, all petroleum products and petroleum
hydrocarbons, including, without limitation, petroleum products, used oil, waste
oil and petroleum hydrocarbons that have escaped from any tanks or other storage
units, whether such tanks are located above or below ground level, hazardous
waste identified in accordance with Section 3001 of the Federal Resource
Conservation and Recovery Act of 1976, as amended, substances defined as
"hazardous substances", "toxic substances" or "hazardous waste" in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Sec. 9061, et, seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. Sec. 1802; and the Resource Conservation and Recovery Act, 42
U.S.C. Sec. 6901 et seq., pollutants, contaminants or any other materials
requiring remediation under applicable federal, state or local statutes,
ordinances, regulations or policies.
"Initial Capacity Measuring Period" means the period prior to the time
that the steam capacity related Energy Facility Improvements are completed
(which for the purposes of this definition shall in any event not extend beyond
the last day of the eighteenth (18th) calendar month commencing after the Lease
Commencement Date).
"Lease Commencement Date" means the first Business Day after this
Agreement has been executed and delivered by each of Heinz and ADC.
"Manufacturing Facility" means all of the real, personal and
intangible property now hereafter used in any capacity whatsoever in connection
with the manufacturing plant that is owned and operated by Heinz and located at
0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000. For the purposes of this Agreement,
the Manufacturing Facility shall not be deemed to include the Energy Facility or
the Real Property.
"O&M Labor Costs" means the costs (including straight time, overtime,
shift premium, training related and grievance related man-hours and employee
benefits) incurred or accrued by Heinz relative to the O&M Staff during any
period. Grievance related man-hours for this purpose shall not include man-hours
incurred in connection with a grievance resulting from ADC's exercise of its
contractual rights under Section 6.02 hereof.
"O&M Staff" means the Heinz employees assigned to the Energy Facility
as defined under Section 6.02 hereof. At no time will the O&M Staff be deemed to
be employees of ADC under this Agreement.
"Operations Commencement Date" means the first day on which ADC
assumes operational control of the Energy Facility immediately following the end
of the Phase-In- Period.
"Party" means Heinz or ADC, severally, and "Parties" means Heinz and
ADC, collectively.
"Phase-In-Period" means the thirty (30) day period commencing on the
Lease Commencement Date and ending on the Operations Commencement Date as more
fully described under Section 6.01 hereof.
"Real Property" shall mean the real property housing the Energy
Facility but shall not include the Energy Facility. Building systems, piping,
fixtures or property of any nature whatsoever that is not used in connection
with the production of electricity, steam energy and compressed air and the
delivery thereof (e.g., building fire protection) shall constitute Real Property
for the purposes of this Agreement.
"Retained Assets" means certain personal property listed on Exhibit
A-1 hereto that is used in connection with the production of electricity, steam
energy and compressed air and the delivery thereof, but that is also used in
some capacity at the Manufacturing Facility.
"ROI" shall mean return on investment derived by dividing (i)
cumulative operating income over the Term to date by (ii) the sum to date of
ADC's year-end investment balances. For this purpose, the terms: (x) "operating
income" shall mean income generated by the operation of the Energy Facility
before income taxes and interest expense on capital improvements and (y)
"year-end investment balances" shall equal the sum of the following capital
items: (1) Energy Facility Improvements and any further or additional capital
improvements, upgrades, overhauls or replacements made by ADC under Section
5.01(b) hereof; (2) the cost of major overhauls and equipment replacements made
by ADC under Section 6.04 hereof; (3) the cost of capital improvements made by
ADC under Section 7.02; and (4) the initial rent payment made by ADC under
Section 3.02 hereof. The calculation period contemplated herein will commence on
the first day of the first calendar month following the Lease Commencement Date.
"Regulatory Requirements" shall have the meaning set forth in Section
7.02 hereof.
"Stipulated Loss Value" means for any rent payment date specified
under Section 3.03 hereof, the amount stated for each month during the Term on
Exhibit F hereto.
"Term" shall have the meaning set forth in Section 3.01 hereof. The
Term shall be deemed to include any Renewal Term as defined in Section 12.01.
"UFCW Local 325" means the United Food and Commercial Workers Union
Local 325.
ARTICLE II
REAL PROPERTY LICENSE/LEASE OF THE ENERGY FACILITY
2.01 License Grant. Subject to the terms and conditions of this
Agreement, and for the purposes of enabling ADC to take possession of and use
the Energy Facility as contemplated herein, Heinz grants to ADC, for the Term, a
non-exclusive, non- transferable, royalty-free license to enter upon and use the
Real Property and the Retained Assets. In addition to the foregoing license, ADC
shall be granted such licenses, rights of way or leases of Heinz-owned land or
property associated with the Manufacturing Facility as are necessary for the (i)
operation and maintenance of the Energy Facility; (ii) construction of the
Energy Facility Improvements; and (iii) construction of the steam export
pipeline in accordance with Article XIV hereof. Without limiting the generality
of the foregoing, ADC is hereby granted (i) a right to access the Energy
Facility through Xxxx Xx. 0 xxx Xxxxx Xxxxxx and (ii) a license to use the truck
scales located on River Road in connection with coal deliveries and ash removal.
The parties shall from time to time agree upon the extent and duration of such
licenses, rights of way or leases in order to minimize any disruption of the
operation of the Manufacturing Facility. Such licenses shall be subject to the
security, safety and confidentiality rules and regulations, and other reasonable
restrictions, generally applicable to visitors to the Manufacturing Facility.
Heinz shall have no obligation to replace any Retained Assets; however, to the
extent Heinz does replace Retained Assets, the same shall be subject to the
licenses granted by this Section 2.01.
2.02 Energy Facility Lease. Effective as of the Lease Commencement
Date, Heinz hereby leases to ADC, and ADC hereby leases from Heinz, the Energy
Facility and any and all improvements or additions to the Energy Facility after
the Lease Commencement Date for the duration of the Term.
ARTICLE III
TERM AND RENT
3.01 Term. Except as otherwise provided herein, the term of this
Agreement (the "Term") shall commence on the Lease Commencement Date and shall
terminate on the 15th anniversary of the Lease Commencement Date.
3.02 Initial Rent Payable for the Lease of Energy Facility. On the
date of execution of this Agreement, ADC shall pay to Heinz $1,000,000 in
immediately available funds as an initial rent payment associated with the lease
of the Energy Facility hereunder.
3.03 Base Rent Payable for Lease of Energy Facility. Commencing on the
first day of the first calendar month following the Lease Commencement Date and
thereafter on the first day of each calendar month during the Term, ADC shall
pay to Heinz, in arrears, base rent for the previous month for the Energy
Facility in an amount equal to $70,922.44 (the "Base Rent"). The Base Rent shall
be paid within twenty (20) days after the last day of each full calendar month
during the Term.
3.04 Contingent Rent/Benchmark ROI. If, upon termination of this
Agreement, ADC's cumulative ROI over the Term has exceeded 18.8% (the "Benchmark
ROI"), ADC shall pay to Heinz a contingent rent payment (the "Contingent Rent
Payment") equal to fifty (50%) percent of the amount by which the ROI received
by ADC over the Term exceeded the Benchmark ROI. The Contingent Rent Payment
shall be paid to Heinz in immediately available funds within thirty (30) days
following the end of the Term.
3.05 Taxes. ADC shall pay all taxes and assessments of any nature
whatsoever levied on the Energy Facility and all improvements made to the Energy
Facility.
3.06 Utilities and Services. Heinz shall be responsible for and pay
all charges related to (i) city water; (ii) well water; (iii) sewage; (iv)
electrical energy; and (v) steam associated with the production of energy for
the Manufacturing Facility. ADC shall be responsible for and pay all charges
related to (i) city water; (ii) well water; (iii) sewage; (iv) electrical
energy; and (v) steam associated with the production of energy for all other
purposes. The then current utilities and services rates payable by Heinz for
water will apply in calculating the payment amount.
ARTICLE IV
USE
4.01 Use. At all times during the Term, ADC shall permit the Energy
Facility and each component part thereof to be used only for the purposes for
which it was designed and intended and in accordance with the terms of this
Agreement. ADC will operate and maintain or cause the Energy Facility to be
operated and maintained in accordance with:
(i) such written operating standards as shall be required to enforce
warranty claims for any material parts or equipment associated with the
Energy Facility;
(ii) the terms and conditions of all insurance policies (whether
maintained by Heinz or ADC) in effect at any time with respect to the
Energy Facility or any component part thereof;
(iii) all applicable requirements of law and any governmental body
having jurisdiction;
(iv) Energy Facility O&M Documentation (as defined in Section
6.01(b)(i), (c) and (d) hereof);
(v) the same operating and maintenance practices as companies of
established reputation operating similar energy facilities observe in
operating such facilities;
(vi) ADC shall not, without prior written approval of Heinz, bring any
Hazardous Materials (excluding any materials customarily used in the
operation of the Energy Facility, in the quantities required for such use)
into the Manufacturing Facility, the Real Property or the Energy Facility,
and shall not install in the Energy Facility any tanks (underground or
otherwise) containing Hazardous Materials; and
(vii) the actions of ADC and its contractors shall conform to the
security, safety and confidentiality rules and regulations, and other
reasonable restrictions, generally applicable to visitors to the
Manufacturing Facility.
ARTICLE V
CAPITAL IMPROVEMENTS
5.01 Upgrade and Modernization of the Energy Facility.
(a) ADC shall supply the capital, project management and technical
support services necessary to implement certain capital improvements,
modifications and upgrades to the Energy Facility (the "Energy Facility
Improvements"). It is currently proposed that (i) the Energy Facility
Improvements shall consist of the improvements set forth on Exhibit B hereto,
with the understanding that the Parties can mutually agree to such changes as
they deem appropriate or advisable and (ii) the capital investment in the Energy
Facility Improvements shall not be less than $2,500,000. If steam export is
undertaken under Article XIV hereof, it is contemplated that certain additional
Export Improvements set forth on Exhibit B-1 hereto will be implemented by ADC.
The total amount to be spent on the Energy Facility Improvements will depend on
factors such as final operating criteria (including export), detailed equipment
and material assessments and final design. The Energy Facility Improvements are
expected to be completed and fully operational within approximately eighteen
(18) months after the Operations Commencement Date, but in no event more than
twenty-four (24) months thereafter (except with respect to components (such as
boiler grates) scheduled for replacement whose useful life will continue beyond
such 24 month period). ADC shall be responsible for taking, or causing to be
taken by independent contractors to be retained by ADC, all actions necessary to
complete the Energy Facility Improvements in a good, workmanlike and expeditious
manner. Without limiting the generality of the foregoing, it is understood that
material capital purchases shall be subject to competitive bids with the
exception of certain vendor guaranteed technologies (such as micronized coal).
ADC, in its sole and absolute discretion, shall contract for engineering
services required in connection with the design of the Energy Facility
Improvements. Engineering services shall not exceed 10% of the cost of project
capital unless otherwise agreed by the parties. When possible, ADC shall invite
union contractors to participate in any bidding process.
(b) As soon as practicable after the completion of the steam capacity
related Energy Facility Improvements but not later than the conclusion of the
Initial Capacity Measuring Period, ADC, with the prior approval and in the
presence of a Heinz representative, shall conduct steady state boiler testing to
measure the Current Capacity of steam produced at the Energy Facility. If such
testing indicates that Current Capacity is less than 180,000 lbs of coal fired
steam per hour (the "Target Steam Capacity"), ADC shall make such capital
improvements, upgrades, overhauls, modifications or replacements at the Energy
Facility as ADC deems to be necessary or appropriate in order to meet the Target
Steam Capacity, provided, however, that under no circumstance shall ADC be
required to invest more than $500,000 (in addition to the $2,500,000 capital
investment in Energy Facility Improvements contemplated under Section 5.01(a))
in such endeavor. ADC shall use best efforts to complete the steam capacity
related Energy Facility Improvements prior to December 31, 1997.
(c) ADC shall make any further or additional capital improvements,
upgrades, overhauls, modifications or replacements at the Energy Facility as are
necessary from time to time to: (i) maintain Current Capacity; (ii) operate the
Energy Facility in accordance with Regulatory Requirements (subject to Section
7.05 hereof); and (iii) maintain the reliable and efficient operation of the
Energy Facility.
(d) Any alterations, upgrades, modifications, additions or
improvements made to the Energy Facility by or on behalf of ADC, whether
identified on Exhibit B or otherwise, shall be built or made strictly in
accordance with the following terms and conditions:
(i) before the commencement of such work, preliminary and final
detailed plans and specifications shall be submitted to and subject to the
approval of Heinz;
(ii) such work shall be done subject to and in accordance with the
requirements of law and applicable regulations of all governmental
departments or authorities having jurisdiction thereover;
(iii) such work shall be performed in a skilled workmanlike manner and
in accordance with the plans and specifications reviewed by Heinz and by
contractors reasonably satisfactory to Heinz; and
(iv) such work shall conform to the then current General Conditions of
Heinz for contractors and subcontractors; set forth on Exhibit E hereto is
a copy of the General Conditions in effect on the date hereof.
(e) ADC shall cause each contractor with whom it contracts to execute
and file in the Office of the Prothonotary of the Court of Common Pleas of
Allegheny County, a waiver of the right to file a mechanic's lien which shall be
effective against claims by contractor and all subcontractors, materialmen,
workmen arising out of any work done by ADC or by ADC' contractors or
subcontractors. If any such liens shall arise, ADC shall promptly cause such
liens to be removed. ADC will indemnify, hold harmless, and defend Heinz from
any and all claims, liens, or charges of any nature whatsoever arising out of
any work done by ADC or ADC's contractors or subcontractors.
(f) Heinz may direct ADC to implement, at Heinz's expense,
improvements to increase Current Capacity.
ARTICLE VI
GENERAL OPERATING AND
MAINTENANCE RESPONSIBILITIES
6.01 Phase-In-Period.
(a) In order to ensure a professional and orderly transition in
operating responsibility at the Energy Facility, the parties have agreed to
establish a thirty (30) day phase-in period (the "Phase-In-Period"), which shall
begin to run on the Lease Commencement Date and end on the Operations
Commencement Date. During this period ADC personnel (including, without
limitation, the Energy Facility Supervisor referenced under Section 6.02(a)
below) will work with the Heinz staff in order to become familiar with current
Energy Facility operations and develop the operating procedures, quality
control, safety and business management systems that will control and direct the
operation of the Energy Facility after the Operations Commencement Date. Without
limiting the generality of the foregoing, Heinz shall be in control of and
responsible for the day-to-day operation of the Energy Facility at all times
prior to the Operations Commencement Date.
(b) Prior to the end of the Phase-In-Period, ADC shall complete the
following for review and approval by Heinz:
(i) become familiar with all significant abnormal conditions existing
in the Energy Facility and prepare Standing Orders for operators and
maintenance personnel regarding these abnormal conditions. The purpose of
these Standing Orders is to ensure that plant personnel are aware of, on a
day to day basis, these conditions and the operating and maintenance
protocols required until these conditions are corrected. Standing Orders
shall be continually updated as additional significant abnormal conditions
are identified. Once an abnormal condition is corrected, the related
Standing Order shall be deleted.
(ii) identify and describe Energy Facility record keeping
requirements.
(iii) establish an Employee Training Plan ("ETP") and a Safety and
Health Accident Reduction Plan ("SHARP"). ETP shall include an annual
review and employee demonstration of complete understanding of Energy
Facility O&M Documentation and safety requirements. ADC shall maintain a
matrix of O&M Staff training status by O&M Staff employee. As a minimum,
the matrix shall include the status of O&M Staff Energy Facility O&M
Documentation training by area (e.g., boiler operation ) by O&M Staff
employee.
(iv) identify all Energy Facility operating routines requiring
documented procedures.
(v) identify all known Energy Facility emergency conditions requiring
documented procedures.
(c) Because the development and maintenance of Energy Facility O&M
Documentation is considered significant to the efficient operation of the Energy
Facility, within three months following the Operations Commencement Date, ADC
shall:
A.
B.
(i) develop and implement an Energy Facility O&M Documentation control
system. All Energy Facility O&M Documentation shall be professionally
formatted, neatly typed, identified by a reference number, recorded on a
master reference listing, properly maintained and available to Heinz for
review during the Term.
C.
(i) complete written basic Operating Procedures for the operating
routines identified in (b)(iv) above.
(ii) complete written Emergency Procedures for the emergency
conditions identified in (b)(v) above. These procedures shall include the
identification of personnel at both ADC and Heinz who should be notified.
(iii) complete a CMM System implementation plan.
(iv) submit the above plans and procedures to Heinz for review and
approval prior to implementation.
(d) Within six months following the Operations Commencement Date, ADC
shall develop written procedures for all Energy Facility alarms. These
procedures shall include a condition (set-point) description, a level of
urgency, and a bullet-point summary of appropriate operator actions, and shall
be submitted to Heinz for review and approval prior to implementation.
6.02 Staffing.
(a) Prior to the Operations Commencement Date, ADC shall assign and
dedicate to the Energy Facility, on a full time basis, a qualified individual
employed by ADC or an affiliate of ADC with appropriate training, experience and
interpersonal skills who shall fill the position of Energy Facility Supervisor.
Unless (i) required under Section 6.02(g) hereof or (ii) otherwise requested by
Heinz, all other members of the operating and maintenance staff associated with
the Energy Facility during the Term (the "O&M Staff") shall be (i) employees of
Heinz that are leased to ADC under the terms of this Section 6.02 and (ii)
represented by the UFCW Local 325. During the absence (e.g., vacations) of the
Energy Facility Supervisor, ADC shall provide coverage, either at the Energy
Facility, or on call from its Pittsburgh office, by a senior energy engineer.
(b) During the 3-month period immediately following the Operations
Commencement Date, ADC shall prepare an assessment of the staffing at the Energy
Facility, which shall include an evaluation of the manpower and skill sets
required in connection with the efficient operation of the Energy Facility.
Through the Term of this Agreement, if ADC proposes changes in skill
requirements, ADC shall prepare relevant job descriptions and implement staffing
changes in accordance with the then effective Collective Bargaining Agreement.
ADC shall coordinate with Heinz's Human Resources Department in these matters.
(c) At the commencement of each subsequent Calendar Year during the
Term, ADC shall determine the number and composition of the O&M Staff required
in order to optimize the efficiency of the Energy Facility. In connection with
this assessment, the parties shall establish a budget covering costs (including,
base salary, overtime and employee benefits) expected to be incurred or accrued
relative to the O&M Staff during the Fiscal Year. At ADC's request, the parties
may review any annual assessment on a quarterly basis and make such adjustments
to the number and composition of the O&M Staff as ADC deems necessary or
desirable.
(d) In accordance with good supervisory practices, ADC shall document
employee performance problems and, if necessary, ensure that employee discipline
is appropriately administered. The administration of employee performance
problems shall be conducted in accordance with the then effective Collective
Bargaining Agreement. ADC shall coordinate with Heinz's Human Resources
Department in these matters.
(e) For each full or partial month beginning with the first day of the
first calendar month following the Lease Commencement Date, ADC shall pay to
Heinz an amount determined by:
A.
(i) applying the following formula to each O&M Staff employee:
(straight-time man-hours worked+ premium-time man-hours worked) x the
applicable Base Wage Rate + (shift hours worked x the applicable Base Shift
Premium)
(ii) totaling the sums derived for each O&M Staff employee;
(iii) multiplying the total by one (1) plus the Base Burden Rate of
58%; and
(iv) Adding the costs associated with grievance related man-hours and
applicable benefits incurred in connection with grievances as contemplated
under the definition of "O&M Labor Costs" (see Article I hereof).
On or before the 15th day of each calendar month, Heinz shall submit
to ADC an invoice for O&M Labor Costs for the preceding month itemizing for each
member of the O&M Staff each category of O&M Labor Costs and the Base Wage Rate
or Base Shift Premium applicable thereto. Such invoice shall be due and payable
by ADC within twenty (20) days after receipt by ADC. If the aggregate O&M Labor
Costs calculated utilizing the methodology set forth above during any Heinz
Fiscal Year exceed $936,000 (the "Base Labor Cost"), ADC shall pay to Heinz an
additional amount equal to the excess of the O&M Labor Costs over the Base Labor
Cost within 30 days after the end of the Fiscal Year.
(f) ADC shall review and approve daily records of the O& M Staff to
verify hours worked in support of the Energy Facility.
(g) Without limiting the generality of the foregoing, in the event
that Heinz is unable to supply ADC with a sufficient number of qualified
operators (as determined in Section 6.02(c)) to maintain the safe and efficient
operation of the Energy Facility, ADC shall have the right to temporarily staff
the Energy Facility with non-Heinz employees. This right is conditional upon ADC
having (i) fully attempted to arrange for qualified operators in accordance with
the then effective Collective Bargaining Agreement and (ii) provided thirty (30)
days prior notice of deficiency to Heinz. The requirement for thirty (30) day
prior notice of the deficiency shall not be required in the event of a labor
strike at the Manufacturing Facility. ADC shall coordinate with Heinz's Human
Resources Department in these matters.
(h) Each Party hereby agrees to protect, defend, indemnify and hold
harmless the other Party from and against any claim or liability for
compensation under the Xxxxxxx'x Compensation Act arising out of injuries
sustained by any employees of the other Party. Provided, however, that in the
event an injury or occupational sickness occurs with respect to an O&M Staff
employee, Heinz shall be responsible for any claim or liability for compensation
therefor under the Xxxxxxx'x Compensation Act. Provided further, however, that
in the event an injury or occupational sickness occurs with respect to an O&M
Staff employee acting, pursuant to instructions from ADC, not in accordance with
the ETP and SHARP procedures instituted by ADC, ADC shall be responsible for any
claim or liability for compensation therefor under the Xxxxxxx'x Compensation
Act.
(i) All members of the O&M Staff shall be provided with the
opportunity to participate in any training programs offered by Heinz to its
employees during the Term.
(j) ADC shall perform all acts under this Article VI in accordance
with the then current Heinz Collective Bargaining Agreement with its employees.
(k) Without limiting the generality of Article VI hereof, ADC shall
indemnify, defend, and hold harmless Heinz and its officers, directors, and
employees as indemnitees from and against any and all losses, liabilities,
damages, demands, claims, actions, judgments, or causes of action, assessments,
costs, and expenses (including, without limitation, interests, penalties, and
reasonable attorneys' and accountants' fees) asserted against, resulting to,
imposed upon, or incurred or suffered by any such indemnitee as a result of,
based upon, or arising from, any claim by any member of the O&M Staff of
employment discrimination, retaliation, or wrongful termination suffered as a
proximate result of any action or direction of ADC or its employees. Heinz shall
make available to ADC the internal resources it provides to its affiliates in
defending any claims or actions by Heinz employees alleging employment
discrimination, retaliation, or wrongful discharge. The provisions of Article
XIII shall control the defense of any action contemplated under this Section
6.02(k), provided, however, that Heinz shall not be entitled to settle any
claim, suit, demand or proceeding contemplated under this Section 6.02(k)
without the prior written consent of ADC, which shall not be unreasonably
withheld.
6.03 Operating Responsibility.
(a) Effective on the Operations Commencement Date, ADC shall assume
control of and be responsible for the day-to-day operation of the Energy
Facility. In this capacity, ADC shall supervise and direct the activities of the
O&M Staff so as to operate and maintain the Energy Facility in compliance with
all applicable laws, ordinances, rules, regulations and permit conditions, as
well as all standards set forth in this Agreement and in a manner consistent
with industry standards.
(b) At the beginning of each Calendar Year during the Term, ADC shall
prepare and submit to Heinz for its review and approval an ETP and a SHARP (as
each such term is defined in Section 6.01(b)(iii) hereof).
(c) ADC shall be responsible for the monitoring of Energy Facility O&M
Documentation to ensure such is in accordance with accepted operating and
maintenance practices followed by companies of established reputation in its
industry. Amendments to Energy Facility O&M Documentation shall be issued in the
form of a bulletin. Each bulletin shall be reviewed and initialed by all O&M
Staff and forwarded to Heinz for review. Within thirty (30) days, the amendments
contemplated by the bulletin shall be incorporated into all copies of related
Energy Facility O&M Documentation.
6.04 Maintenance and Repair Responsibility.
(a) ADC shall be responsible for the care, custody and control of all
Energy Facility equipment/plant systems, including but not limited to pressure
vessel inspections, housekeeping and the maintenance of a computerized
maintenance management system ("CMM System"). ADC shall be responsible for
managing and completing all periodic, routine/preventive maintenance and
inspections and all major overhauls and equipment replacements; all such
activities shall be conducted at ADC's expense unless a provision of this
Agreement expressly provides to the contrary.
(i) Periodic, Routine/Preventive Maintenance and Inspection. ADC shall
take, or cause to be taken, such actions as are required to keep and
maintain the Energy Facility, and the component parts thereof, in good
working order and repair, subject to ordinary wear and tear, in accordance
with the standards set forth in subsections (i) through (v) of Article IV.
In connection with these activities, the O&M Staff shall be expected to
utilize spare parts, tools and supplies in existence and associated with
the Energy Facility on or after the Lease Commencement Date. ADC shall be
responsible for purchasing at ADC's cost the materials and any additional
spare parts, tools or supplies required to perform its obligations under
this Section 6.04(a)(i).
(ii) Major Overhauls/Equipment Replacements. Major overhauls and
equipment replacements required from time to time during the Term will be
scheduled, managed and documented by ADC.
(iii) CMM System. Within the first year following the Operations
Commencement Date, ADC shall implement the CMM System for scheduling and
record keeping activities associated with the maintenance responsibilities
under this Section 6.04, which, at a minimum, will automate the following
functions: (1) work order generation and tracking; (2) preventive
maintenance scheduling and record keeping; (3) corrective maintenance
scheduling and record keeping; (4) instrument calibration; (5) spare parts
inventory and control; and (6) vendor and equipment lists. The CMM System
may be a new system or an enhancement/upgrade as provided by ADC to the
existing system.
(b) Without limiting the generality of the foregoing, ADC shall
conduct boiler maintenance and routine turbine maintenance on a rotating basis.
ADC shall coordinate its maintenance activities with the Manufacturing Facility
production schedule.
(c) If at any time Heinz has reason to believe that inadequate care,
custody, control, operation or maintenance of the Energy Facility may exist due
to a breach by ADC of its obligations under this Agreement, in addition to any
other remedies available to Heinz in law or equity, Heinz may arrange for an
assessment of the overall or equipment specific condition and repair of the
Energy Facility to be conducted by a firm or person selected by the Parties who
customarily makes such evaluations and is independent of each of Heinz and ADC
(the "O&M Consultant"). At the conclusion of such evaluation, the O&M Consultant
shall deliver to each of Heinz and ADC a written report setting forth the
results of his or its investigation and assessment. The parties may agree to
amend the O&M Consultant's recommendations. ADC shall correct any deficiencies
identified in current operations, maintenance and repair procedures or practices
and shall use best efforts to do so within thirty (30) days. Each of Heinz and
ADC will be responsible for 50% of all professional fees and expenses of the O&M
Consultant (the "Assessment Costs and Expenses") . In no event shall Assessment
Costs & Expenses associated with any assessment exceed $10,000 (as adjusted
during the term for inflation based upon the Consumer Price Index).
(d) Heinz shall be solely and absolutely responsible for all normal
and periodic maintenance, repair and upgrade of the Real Property. Repairs to
the Real Property which are necessary due to the activities of ADC shall be the
responsibility of ADC.
(e) Costs and expenses associated with equipment malfunction,
breakdown or replacement incurred as a direct result of sabotage or reckless or
willful disregard by members of the O&M Staff of written or verbal directives of
ADC management shall constitute an event triggering Heinz's indemnification
obligations under Section 13.01.
(f) ADC shall comply with all recommendations of any qualified boiler
and machinery inspection firm that Heinz has retained to inspect such boilers
and machinery periodically, unless Heinz agrees in writing that ADC is not
required to comply with a particular recommendation with which ADC disagrees.
Any such agreement by Heinz shall not otherwise affect ADC's obligations
concerning maintenance of the Energy Facility set forth in this Agreement.
6.05 Manufacturing Facility Maintenance Schedule. Heinz, in its sole
and absolute discretion, shall schedule downtime associated with routine
maintenance of the Manufacturing Facility. Where possible, Heinz shall give ADC
five (5) days' prior written notice of any scheduled downtime that is expected
to materially affect the Energy Facility. Heinz agrees to use all reasonable
efforts to coordinate with ADC so that scheduled downtime for the Manufacturing
Facility and maintenance activities for the Energy Facility can be made to
coincide with each other to the maximum extent possible. In the event that
routine maintenance of the Manufacturing Facility requires the isolation of
steam, electricity, water or compressed air, ADC shall assist Heinz in
coordinating of such.
6.06 Certain Stand-By Equipment Awaiting Repair. The Parties
acknowledge that certain stand-by equipment that is intended to be included as
part of the Energy Facility is in need of repair or replacement. Heinz (itself
or through its contractor) shall repair or replace such equipment at its sole
cost. If the foregoing can be accomplished prior to the Lease Commencement Date
and the repair or replacement is capitalized by Heinz, the equipment shall be
itemized on Exhibit A hereto. Equipment (i) not repaired or replaced prior to
the Lease Commencement Date or (ii) repaired or replaced prior to the Lease
Commencement Date, but not reflected on Exhibit A, shall be identified on
Exhibit A-2 hereto and delivered to ADC for installation as soon as practicable
after its repair or replacement. Upon delivery, Exhibit A shall be amended to
include a reference to such equipment.
6.07 Entry. Heinz shall have the right to enter onto the Energy
Facility from time to time to inspect the Energy Facility for compliance with
this Agreement provided such entry and inspection does not interfere with the
ordinary operations of the Energy Facility. Heinz may in connection with such
inspection take environmental samples from the Energy Facility. Heinz shall
notify ADC of such entry and inspection at the time the same commences, or if
such entry and inspection occurs after 5:00 p.m., shall notify the Energy
Facility Supervisor by 9:00 a.m. the following day.
ARTICLE VII
PERMITS AND REGULATORY COMPLIANCE
7.01 Permits to be held by Heinz. Heinz shall hold, and be responsible
for the maintenance of, all of the governmental permits, approvals,
certifications and authorizations listed on Exhibit C hereto, as the same may be
modified from time to time and all governmental permits, approvals,
certifications, and authorizations that come into effect during the term of this
Agreement as the same may be modified from time to time (the "Heinz Permits").
Commencing immediately upon the Lease Commencement Date, Heinz shall use all
reasonable efforts to obtain and maintain any and all permits necessary for the
construction of the Energy Facility Improvements and the ongoing operation of
the Energy Facility as contemplated by this Agreement. ADC shall be responsible
for all costs associated with obtaining and maintaining any and all permits
necessary for (i) the construction and continued operation of the Energy
Facility Improvements or (ii) the export of steam. ADC agrees to cooperate fully
with Heinz in its efforts to obtain and maintain the Heinz Permits, and may, at
Heinz's option and expense, except as provided in the immediately preceding
sentence, participate in any applications or proceedings necessary therefor.
Heinz shall have the exclusive right to negotiate the terms and conditions of
any Heinz Permit and shall have sole discretion regarding regulatory decisions
or appeals during any permitting process.
7.02 Regulatory Compliance. Subject to Section 7.05 hereof, ADC shall
operate and maintain the Energy Facility so as to be in compliance with all (i)
legal and regulatory requirements and (ii) the Heinz Permits as the same may be
modified from time to time (collectively, the "Regulatory Requirements"). ADC
shall pay all costs for and implement any capital improvements, upgrades,
overhauls, modifications, replacements or permits required in order to achieve
compliance with Regulatory Requirements in effect as of the Lease Commencement
Date or arising after the Lease Commencement Date that become applicable solely
as a result of (i) the implementation of the Energy Facility Improvements or
(ii) the export of steam by ADC. Where changes in Regulatory Requirements (or in
the regulatory agency methodology used to determine compliance) which become
applicable after the Lease Commencement Date, regardless of the implementation
of (A) the Energy Facility Improvements or (B) the export of steam by ADC,
require action to achieve compliance, Heinz, at its option, shall (i) implement
any capital improvements, upgrades, overhauls, modifications or replacements
required in order to achieve compliance with such changes or (ii) direct ADC
(itself or through subcontractors to be retained by ADC) to do so.
7.03 Compliance Testing. With the exception of compliance testing
required in connection with interim compliance matters under Section 7.05, ADC
shall be responsible for and perform at ADC's expense all compliance testing
required in connection with the Heinz Permits. Heinz shall cooperate with ADC so
as to facilitate such compliance testing.
7.04 Transfer to ADC. Upon any transfer of title to the Energy
Facility to ADC under this Agreement, then ADC may request in writing, and Heinz
shall to the extent permitted by law, use its reasonable efforts to effect a
transfer to ADC of each of the Heinz Permits as are necessary to operate the
Energy Facility. ADC shall assume all liabilities under the transferred Heinz
Permits arising subsequent to the time of transfer. All costs to transfer or
re-permit the Energy Facility related Heinz Permits to ADC shall be the
responsibility of ADC.
7.05 Interim Compliance Matters. Heinz shall be responsible for and
pay all costs associated with (i) increased operation and maintenance costs and
expenses mutually determined by the parties incurred in connection with attempts
to remediate noncompliance , if any , with Regulatory Requirements concerning
air quality and emissions existing on the Lease Commencement Date and continuing
until the Energy Facility Improvements are completed (including, without
limitation, costs associated with cleaning and refurbishing multiclones,
emissions testing and co-firing the Energy Facility with natural gas) and (ii)
fines or other penalties imposed by regulatory authorities as a result of such
noncompliance. Costs associated with subsection (i) above shall be recovered by
ADC through an off-set to the Base Rent payable by ADC under Section 3.03.
Regulatory fines and penalties imposed upon Heinz or ADC shall be paid by Heinz
by the date on which the payment is due. Notwithstanding the foregoing, Heinz
may, if it has a good faith basis, contest or appeal any such fine or penalty
and shall not be obligated to pay such fines or penalties until such contests or
appeals are exhausted. This Section shall terminate and be void and of no effect
if Heinz receives confirmation from appropriate regulatory authorities that is
reasonably acceptable to ADC that air emissions compliance tests conducted by
Heinz during the final weeks of December 1996 demonstrate that the Energy
Facility is in compliance with current air emissions standards.
7.06 Notices-Environmental. ADC shall immediately notify Heinz of any
release or threatened release of any Hazardous Material from the Energy Facility
or boiler stacks (i) onto the Real Property, (ii) onto the Manufacturing
Facility, (iii) off the premises of Heinz or (iv) into the environment,
regardless of whether such release is reportable under regulatory law. ADC shall
also immediately notify Heinz of any stack emissions exceeding Regulatory
Requirements. Where notification to a regulatory agency is required, ADC shall
complete such actions, including without limitation the completion of written
reports, investigations or communications under the supervision of Heinz and at
the expense of ADC.
7.07 Reports. ADC shall submit to Heinz any and all information and
data required for the preparation and submission by Heinz of regulatory reports
regarding the Energy Facility or its operations. Such information and data shall
be submitted on a timely basis to permit submission of such reports by Heinz
within the timeframes required by applicable law.
7.08 Communications. ADC shall immediately notify Heinz about any and
all substantive communications with a regulatory agency or third party regarding
regulatory matters, or communications that may cause communication with a
regulatory agency or third party regarding regulatory matters. During any period
in which Heinz maintains the Permits and where possible, ADC shall obtain the
approval of Heinz prior to entering into such communications.
7.09 Investigations and Inspections. ADC shall notify Heinz of any and
all regulatory investigations or inspections. Such notice shall define the scope
of the investigation or inspection and identify all potential involved parties.
Heinz approval shall be necessary before commencing any part of such
investigation or inspection. Heinz shall have the right to inspect the Energy
Facility or Real Property at any time for regulatory compliance. Heinz's right
to inspect shall be subject to the notice and non-interference provisions set
forth in Section 6.07.
7.10 Cleanup, Fines or Penalties. Where (A) the release of any
Hazardous Material from the Energy Facility or boiler stacks (i) onto the Real
Property, (ii) onto the Manufacturing Facility, (iii) off the premises of Heinz
or (iv) into the environment, or (B) any violation of Regulatory Requirements,
requires (a) investigation or cleanup or (b) results in a fine or penalty, ADC
shall be responsible for any and all costs, expenses, fines or penalties;
provided, however, that Heinz shall be responsible for any costs, expenses,
fines or penalties resulting from such a release or violation of Regulatory
Requirements caused by Heinz personnel (other than the O&M Staff). ADC and Heinz
shall agree upon the appropriate cleanup standard. Where the parties cannot
reach agreement, they shall select a firm or person who customarily makes such
evaluations and is independent of each of Heinz and ADC to determine the
appropriate cleanup standard. Such determination shall be binding on the
parties. The evaluation and determination of the appropriate cleanup standard
shall be considered a cost of the cleanup.
7.11 Health and Safety-Notices. ADC shall immediately notify Heinz of
any O&M Staff employee injury or occupational sickness, or any employee injury
within the Energy Facility or Real Property. Where notification to a regulatory
agency is required, ADC shall complete such actions, including without
limitation the completion of written reports, investigations or communications
that would normally be the responsibility of the Energy Facility Supervisor,
under the supervision of Heinz and at the expense of ADC.
7.12 Waste Disposal. ADC shall have title to all solid waste that the
Energy Facility generates during the Term. All shipping documents and regulatory
reports regarding such solid waste shall identify ADC as the generator of such
waste. ADC shall, at the option of Heinz, either file, or cooperate with Heinz
in the filing of, any regulatory reports regarding such waste.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.01 Representations and Warranties of Heinz. Heinz represents and
warrants to ADC that the following statements are true and correct as of the
date hereof and covenants that they shall be true as of the Lease Commencement
Date:
(i) Heinz is a division of a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, and has all requisite corporate power and authority to own
and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and enter into and carry out the terms of
this Agreement.
(ii) The execution, delivery and performance by Heinz of this
Agreement have been duly authorized by all necessary corporate action on
the part of Heinz, and none of such execution, delivery or performance
shall violate any law, governmental rule, regulation or order binding on
Heinz or the articles of incorporation of by-laws of Heinz or contravene
the provisions of, or constitute a default under any mortgage, loan
agreement, deed of trust, or other agreement or contract to which Heinz is
a party by which it or its properties may be bound.
(iii) This Agreement has been duly executed and delivered by the duly
authorized officers of Heinz and constitutes the valid and legally binding
obligation of Heinz.
(iv) No consent, approval or authorization of, or declaration or
filing with, any governmental authority on the part of Heinz is required as
a condition to the valid execution, delivery or performance of this
Agreement by Heinz.
(v) There is not outstanding and in effect any option to purchase, or
right of first refusal, or any lease or option to enter into any lease, any
mortgage or security agreement, or any other obligation granting any
license, easement or other right with respect to the Real Property or the
Energy Facility, which would preclude or restrict, diminish or otherwise
impair the exercise or enjoyment of ADC's rights under this Agreement.
8.02 Representations and Warranties of ADC. ADC represents and
warrants to Heinz that the following statements are true and correct as of the
date hereof and covenants that they shall be true as of the Lease Commencement
Date:
(i) ADC is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania and has all
requisite corporate power and authority to own and operate its properties
and to carry on its business as now conducted and as proposed to be
conducted and enter into and carry out the terms of this Agreement.
(ii) The execution, delivery and performance by ADC of this Agreement
have been duly authorized by all necessary corporate action on the part of
ADC, and none of such execution, delivery or performance shall violate any
law, governmental rule, regulation or order binding on ADC or the articles
of incorporation of by-laws of ADC or contravene the provisions of, or
constitute a default under any mortgage, loan agreement, deed of trust, or
other agreement or contract to which ADC is a party by which it or its
properties may be bound.
(iii) This Agreement has been duly executed and delivered by the duly
authorized officers of ADC and constitutes the valid and legally binding
obligation of ADC.
(iv) No consent, approval or authorization of, or declaration or
filing with, any governmental authority on the part of ADC is required as a
condition to the valid execution, delivery or performance of this Agreement
by ADC.
ARTICLE IX
DEFAULT; FORCE MAJEURE
9.01 Events of Default.
(a) The following events shall be deemed to be an act of default by
ADC under this Agreement (an "ADC Event of Default") regardless of the pendency
of any bankruptcy, reorganization, receivership, insolvency or other proceeding
which has or might have the effect of preventing ADC from complying with the
terms of this Agreement:
(i) Failure to pay any sums to be paid hereunder within thirty (30)
days after the date the payment is due, provided that the sum shall have
remained unpaid for (20) days after written notice of such failure has been
given to ADC.
(ii) Failure to comply with any term, provision, representation,
warranty or covenant of this Agreement, other than the payment of money
required to be paid hereunder, if such failure (x) reasonably can be cured
and is not cured within ninety (90) days after written notice thereof or
(y) reasonably cannot be cured within ninety (90) days after written notice
thereof and ADC has not commenced to cure such failure within such period
and thereafter proceeded with reasonable diligence and good faith to
accomplish a cure; provided, however, all violations of federal, state and
local environmental and/or safety laws and regulations that may have a
materially adverse effect on the operations of the Energy Facility or the
Manufacturing Facility or result in the imposition of material monetary
penalties on Heinz must be cured in accordance with the requirements and
within the timeframes of the applicable governmental law, regulations or
agency.
(iii) Filing, or consent to the filing of a petition for relief or
reorganization or arrangement or any other petition in bankruptcy by ADC,
for liquidation or to take advantage of any bankruptcy or insolvency law of
any jurisdiction; or ADC shall make an assignment for the benefit of
creditors; or ADC shall consent to the appointment of a custodian,
receiver, trustee, or other officer with similar powers, for substantially
all of ADC's property or be adjudicated insolvent; or an order for relief
shall be entered against ADC in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding
upon liquidation of all or any part of a ADC's property; or any petition
for any such relief shall be filed against ADC and shall not be dismissed
within sixty (60) days.
(b) It shall be an act of default by Heinz (a "Heinz Event of
Default") if at any time Heinz fails to (i) provide ADC with access to the Real
Property or the Energy Facility or (ii) grant or comply with the licenses
contemplated under Section 2.01 hereof, if such failure (x) reasonably can be
cured and is not cured within ninety (90) days after written notice thereof or
(y) reasonably cannot be cured within ninety (90) days after written notice
thereof and the Heinz has not commenced to cure such failure within such period
and thereafter proceeded with reasonable diligence and good faith to accomplish
a cure.
9.02 Remedies.
(a) Upon the occurrence of any ADC Event of Default and at any time
thereafter so long as the same shall be continuing, Heinz may declare this
Agreement to be in default. At any time thereafter, so long as ADC shall have
not remedied all outstanding ADC Events of Default, Heinz may do one or more of
the following with respect to any and all of the Real Property and the Energy
Facility and the component parts thereof as Heinz in its sole discretion may
elect to:
(i) Proceed by appropriate court action or actions, either at law or
in equity, to enforce performance by ADC of the applicable covenants and
terms of this Agreement or to recover damages for the breach thereof;
(ii) By notice in writing to ADC, terminate this Agreement, whereupon
all rights of ADC under Section 2.01 and 2.02 shall absolutely cease and
terminate as though this Agreement had never been made, and Heinz may
demand that ADC, and ADC shall upon written demand of Heinz, return sole
and exclusive custody and use of the Real Property and the Energy Facility
promptly to Heinz; or Heinz, at its option may enter upon the premises and
take immediate possession of the same by summary proceedings or otherwise,
all without liability to ADC for or by reason of such entry or taking of
possession, whether for the restoration of damage to property caused by
such taking or otherwise.
In addition, ADC shall be liable, except as otherwise provided above, for
any and all unpaid Base Rent or Contingent Rent due hereunder before or
during the exercise of any of the foregoing remedies and for all legal fees
an other costs and expenses incurred by reason of the occurrence of any ADC
Event of Default or the exercise of Heinz's remedies with respect thereto,
including all costs and expenses incurred in connection with the return of
the Real Property and the Energy Facility.
(b) If Heinz shall have not have cured or commenced to cure any
outstanding Heinz Event of Default within the time periods set forth in Section
9.01(b), ADC shall declare this Agreement to be in default and, by notice in
writing to Heinz, terminate this Agreement, whereupon all obligations of ADC
under this Agreement shall absolutely cease and terminate as though this
Agreement had never been made. In connection with such termination, ADC shall
pay to Heinz the Stipulated Loss Value applicable on the date of termination.
Nothing in this Section 9.02(b) shall be deemed to preclude ADC from also
proceeding by appropriate court action or actions to recover Damages incurred in
connection with a Heinz Event of Default.
The parties acknowledge that a Heinz Event of Default shall preclude
ADC from bringing normal coal deliveries onto the Energy Facility for use in its
operations. During the period from the occurrence of the Heinz Event of Default
until a cure is completed or this Agreement is terminated, as the case may be,
Heinz shall reimburse ADC for all additional costs and expenses ADC incurs by
using natural gas instead of coal in its operation of the Energy Facility.
Notwithstanding the foregoing, to the extent the Heinz Event of Default is cured
within 72 hours of its initial occurrence, Heinz shall not be responsible for
reimbursing ADC for that portion of its additional costs and expenses incurred
by using natural gas instead of coal with respect to the production of steam
under Steam Export Agreement. This right of ADC to reimbursement shall be in
addition to the remedies listed in (i) and (ii) above.
9.03 Force Majeure.
(a) Effect. In the event that either party is rendered unable, by
reason of an event of Force Majeure, to perform, wholly or in part, any
obligation or commitment set forth in this Agreement, then, provided such party
gives prompt written notice describing the particulars of such event, including,
but not limited to, the nature of the occurrence and its expected duration, and
continues to furnish monthly reports with respect thereto during the period of
the Force Majeure, the obligations of both parties, except for obligations to
pay money (including, without limitation, the Base Rent), shall be suspended to
the extent and for the period of such Force Majeure condition; provided,
however, that (a) the suspension of performance is of no greater scope and no
longer duration than is required by the Force Majeure and (b) the party whose
performance is being excused shall use its reasonable efforts to perform its
obligations hereunder and remedy its inability to perform.
(b) Termination for Force Majeure. If a Force Majeure continues which
prevents either party from performing an obligation hereunder for more than six
(6) consecutive months, either party may terminate this Agreement upon thirty
(30) days prior written notice. Upon any such termination, ADC shall pay to
Heinz the Stipulated Loss Value established for the termination date.
ARTICLE X
INSURANCE
10.01 Insurance.
(a) ADC shall maintain the following insurance with respect to the
Energy Facility and ADC's performance under this Agreement:
(i) Statutory Workers' Compensation Insurance covering ADC employees
in full compliance with the Pennsylvania Workers' Compensation Act.
(ii) Commercial General Liability Insurance including contractual
liability and products/completed operations liability coverage with a
combined single limit of $5,000,000 per occurrence.
(iii) Automobile Liability Insurance covering all owned, hired and
non-owned vehicles with a combined single limit of $5,000,000 per
occurrence.
ADC shall maintain all such insurance with insurers acceptable to
Heinz. All such insurance shall contain a waiver of subrogation. The insurance
described in subsection (a)(ii) and (iii) shall name Heinz as an additional
insured. All deductibles shall be for the account of, and shall be payable by,
ADC. Coverage under ADC's policy shall be deemed primary over any valid and
collectible insurance that Heinz maintains. At the commencement of the Term and
from time to time thereafter upon the expiration of any such certificate of
insurance, ADC shall furnish Heinz with certificates of insurance evidencing the
above coverages. Each such certificate shall contain a clause for notification
of Heinz thirty (30) days before cancellation, reduction or change in coverage.
(b) Heinz shall maintain the following insurance:
(i) Statutory Workers' Compensation Insurance covering Heinz employees
in full compliance with the Pennsylvania Workers' Compensation Act.
(ii) All Risk Property and Boiler and Machinery Insurance covering the
building and equipment of the Energy Facility on a replacement cost basis.
Such insurance shall list ADC as an additional insured and Loss Payee (As
Their Interest May Appear) and contain a Waiver of Subrogation.
Heinz shall provide ADC with a Certificate of Insurance evidencing
said insurance. For so long as the foregoing insurance is maintained by Heinz,
ADC shall pay to Heinz $10,000 per annum in order to reimburse Heinz for its
costs. Such amount shall be payable commencing on the Lease Commencement and
thereafter on each anniversary thereof during the Term.
(c) Application of Proceeds. The proceeds of any insurance received by
Heinz on account of or for any loss or casualty in respect of the Energy
Facility shall be applied as follows:
(i) except as provided in Section 11.02, if the Energy Facility or
component part thereof has been repaired, restored or replaced by ADC, such
proceeds (or a portion thereof in the case of progress payments) shall be
paid to ADC or at the direction of ADC, upon a written application signed
by any authorized officer of ADC for the payment of, or to reimburse ADC
for the payment of, or to pay for, the reasonable cost of repairing,
restoring or replacing the Energy Facility or component part thereof so
long as the restoration, replacement and repair parts become immediately
subject to all of the terms and conditions of this Agreement. Heinz shall
be entitled to any such proceeds exceeding the costs of such repair,
replacement or restoration; or
(ii) if this Agreement is terminated as a result of an Event of Loss,
such proceeds shall be applied in accordance with Article XI.
ARTICLE XI
EVENT OF LOSS
11.01 Event of Loss. If any Event of Loss with respect to the Energy
Facility shall occur during the Term, ADC shall give to Heinz written notice
(herein called a "Loss Notice") within one (1) business day after the occurrence
thereof, which Loss Notice shall specify the circumstances resulting in such
Event of Loss. ADC shall pay to Heinz, on the rent payment date on or next
succeeding the date on which such Event of Loss occurred, in addition to the
payment of the Base Rent or Contingent Rent otherwise due under Sections 3.03
and 3.04, the Stipulated Loss Value established for such rent payment date under
Exhibit F hereto." Upon (and not until) payment of such Stipulated Loss Value
and the payment of Base Rent and Contingent Rent then due, this Agreement shall
terminate and no further Base Rent or Contingent Rent shall be payable for or in
respect of the Energy Facility.
11.02 Insurance Payments. Heinz shall be entitled to receive any
proceeds of any claims for damage, property insurance or award received as a
result of an Event of Loss.
11.03 Application of Payments from Governmental Authorities for
Requisition of Title. Heinz shall be entitled to receive any payments received
by Heinz or ADC from any governmental authority or instrumentality or agency
with respect to an Event of Loss.
ARTICLE XII
RENEWAL ELECTION/PASSAGE OF TITLE
12.01 Renewal Election. Not later than 90 days prior to the end of the
initial Term, Heinz may deliver to ADC written notice of its election to renew
this Agreement for a period of fourteen (14) years or less (the "Renewal Term")
commencing upon expiration of the Term and subject to substantially the terms
and conditions applicable to the initial Term, except that the Base Rent and
Contingent Rent for the Renewal Term shall be established by negotiation of the
Parties and the Stipulated Loss Value during the Renewal Term shall be zero. The
Parties will then commence good faith negotiations to resolve any outstanding
issues and renew this Agreement.
12.02 Title on Termination. Upon expiration of this Agreement or any
extension hereof for any reason whatsoever other than (x) Heinz's exercise of
its rights under Section 9.02(a)(ii) or ADC's exercise of its rights under
9.02(b), (y) termination for Force Majeure under Section 9.03(b) or (z) the
occurrence of an Event of Loss within the meaning of Section 11.01, all right,
title and interest in and to the Energy Facility shall vest in ADC.
12.03 Prepayment of Rent Obligations by ADC. At any time during the
Term or any Renewal Term provided that termination of this Agreement is
subsequent to, the termination of any and all contractual arrangements between
Heinz and ADC relating to the Manufacturing Facility, ADC shall have the right
to prepay its rent obligations under and terminate this Agreement upon (i)
delivery of thirty (30) days prior written notice to Heinz, which notice shall
state a date on which the termination is to become effective (the "Termination
Date") and (ii) payment of the Stipulated Loss Value and any Base Rent or
Contingent Rent payable as of the Termination Date. The Termination Date shall
occur no less than 30 days after delivery of the foregoing notice to Heinz and
payment of the amounts due under subsection (ii) above shall be made in
immediately available funds on the Termination Date. Upon such payment, title to
the Energy Facility will pass under Section 12.02.
ARTICLE XIII
INDEMNIFICATION
13.01 Reciprocal General Indemnification.
(a) Each Party, respectively, as indemnitor, will indemnify, defend
and hold harmless the other Party and its officers, directors, employees,
affiliates, agents and assigns, as indemnitees, from and against any and all
losses, liabilities, damages, demands, claims, actions, judgments or causes of
action, assessments, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' and accountants' fees, but
excluding amounts described in Section 15.15 hereof (collectively, the "Losses")
asserted against, resulting to, imposed upon or incurred or suffered by any such
indemnitee as a result of, based upon or arising from, the failure by the
indemnitor or its respective agents or employees to comply with any applicable
law, rule, or regulation of any authority having proper jurisdiction, or the
breach or nonfulfillment of any of the representations, covenants or agreements
made by the indemnitor pursuant to this Agreement, excepting only such Losses as
may be caused by the negligence or misconduct of any indemnitee or its
respective agents or employees.
(b) Notwithstanding any provision to the contrary set forth in this
Agreement, in no event shall any party's liability for any and all Losses exceed
the lesser of (i) all amounts paid by Heinz to ADC hereunder; or (ii) $2,500,000
(as adjusted during the Term for inflation based on the consumer price index),
regardless of the form of action or legal theory under which liability may be
asserted.
13.02 Reciprocal Environmental Indemnification. Heinz and ADC,
respectively, as indemnitor, will indemnify the other as indemnitee, and hold
it, its officers, directors, employees, affiliates, agents and assigns as
indemnitees, harmless from and against any and all investigation and remediation
costs, losses, damages, fines, penalties, or expenses (excluding amounts
described in Section 15.15 hereof), and liability suffered or paid as a result
of any and all claims, demands, suits, causes of action, proceedings, judgments
and liabilities, including, without limitation, reasonable attorney's fees,
incurred or sustained by or against any such party with respect to or resulting
from spill, discharge, emission, or release of any Hazardous Materials, if the
spill, discharge, emission, or release is caused by indemnitor, its agents,
employees, representatives, contractors or other person under the supervision of
the indemnitor during the Term of this Agreement, or from any non-compliance
with regulatory requirements for which a party was responsible under this
Agreement. Notwithstanding any other provision of this Agreement to the
contrary, Heinz shall further indemnify ADC and hold it, its officers,
directors, employees, affiliates, agents and assigns harmless, from and against
any and all investigations and remediation costs, and all losses, damages or
expenses (excluding amounts described in Section 15.15 hereof), and liability
suffered or paid as a result of any and all claims, demands, suits, causes of
action, proceedings, judgments and liabilities, including, without limitation,
reasonable attorneys' fees, incurred or sustained by or against ADC, its
officers, directors, employees, affiliates, agents and assigns, with respect to
or resulting from, spill, discharge, emission, or release or any Hazardous
Materials, to, at, from, over, on, under, or above the Real Property and the
Energy Facility if the spill, discharge, emission, or release occurs or results
from acts or omissions (including failure to comply with applicable law) of
Heinz, its agents, contractors, employees, representatives or other persons
acting under the supervision of Heinz, occurring prior to the Lease Commencement
Date. Regarding the matters that this Section 13.02 covers, the indemnification
set forth in this Section 13.02 shall be the exclusive remedy. The
indemnification provisions of Section 13.01 shall have no application to such
matters.
13.03 Duty to Defend.
(a) Indemnitor, at its sole cost and expense, shall defend with
counsel reasonably satisfactory to indemnitee, any claim, demand, suit, cause of
action or proceeding covered by the indemnities set forth in Section 13.01 or
13.02. Indemnitor shall have the right to control the defense of any claim,
demand, suit, cause of action or proceeding, provided that the indemnitor shall
first confirm in writing to indemnitee that such claim is within the scope of
the indemnities contained herein and that indemnitor shall pay all amounts
required to be paid in respect of such claim, demand, suit, cause of action or
proceeding. The indemnitee shall have the right, but not the obligation, at its
sole cost and expense, to participate in the defense of any such claim, demand,
suit, cause of action or proceeding. Indemnitee shall have the right at any
time, by notice to indemnitor, to assume exclusive control of the defense of any
claim, demand, suit, cause of action or proceeding at the sole cost and expense
of indemnitor, if (a) indemnitor fails to diligently defend such claim, demand,
suit cause of action or proceeding, (b) there is a conflict in the interests of
indemnitor and indemnitee with respect to such claim, demand, suit, cause of
action or proceeding or (c) at any time during the pendency of such claim,
demand, suit, cause of action or proceeding, indemnitor shall disaffirm its
responsibility for the claim involved. If the indemnitee assumes exclusive
control of the defense of any claim, demand, suit, cause of action, or
proceeding as set forth in the preceding sentence, the indemnitor shall pay all
costs that may be incurred by the indemnitee in such defense. In addition, the
indemnitor shall pay all costs that the indemnitee may incur in enforcing this
indemnity, including without limitation reasonable attorneys' fees, within ten
(10) days after the request therefor.
(b) Indemnitor shall have the right to settle any claim, demand, suit,
cause of action, or proceeding which results only in the payment of money,
Indemnitor shall have no right, without the prior written consent of indemnitee,
to settle any claim, demand, suit, cause of action, or proceeding or settlement
thereof, involves non-monetary obligations of indemnitee.
(c) Notwithstanding the foregoing, in any case where the
indemnification under Section 13.02 involves the remediation of the presence of
Hazardous Materials, (i) if ADC is the Indemnitor, ADC and Heinz jointly shall
decide upon the proper method of remediation of the Hazardous Materials, (ii) if
Heinz is the indemnitor, Heinz shall solely decide upon the proper method of
remediation of the Hazardous Material. If the indemnification involves an
alleged violation of a Heinz Permit, regardless of the provisions of this
Section 13.03, Heinz in all cases shall control the defense of such alleged
violation. In addition, ADC, as indemnitor, shall not be entitled to settle any
environmental claim, demand, suit, causes of action, or proceeding in which a
violation of environmental law or permit may be admitted or implied without the
written consent of Heinz to such settlement.
13.04 Survival. The provisions of this Article XIII shall survive the
Term.
ARTICLE XIV
EXPORT STEAM SALES
14.01 Pittsburgh Thermal Steam Sales. Pittsburgh Thermal, L.P.
("Pittsburgh Thermal") owns and operates a district heating and cooling system
that provides steam, chilled water and hot water service to customers in the
21st and 22nd Wards of the City of Pittsburgh. Pittsburgh Thermal's production
plant is located approximately one-mile from the Manufacturing Facility. Given
the proximity of the Manufacturing Facility and Pittsburgh Thermal plant, the
Parties desire to exploit the business opportunity presented by a contractual
arrangement under which ADC would agree to supply and Pittsburgh Thermal would
agree to purchase certain quantities of steam that are available for export by
the Energy Facility. Concurrently with the execution of this Agreement, ADC and
Pittsburgh Thermal are proposing to enter into a certain agreement for the
export and purchase of steam (the "Steam Export Agreement"). Execution and
delivery of the Steam Export Agreement shall not be a condition precedent to the
effectiveness of this Agreement.
14.02 Construction of Export Pipeline. The steam to be purchased and
sold under the Steam Export Agreement would be supplied to Pittsburgh Thermal by
way of a newly-constructed pipeline (the "Export Pipeline") running from the
Energy Facility to the Heinz property line in accordance with the plans to be
developed by ADC and approved by Heinz. Provided that the Steam Export Agreement
is executed and delivered as contemplated under Section 14.01, ADC (or, in ADC's
discretion, Pittsburgh Thermal) shall undertake and pay all costs associated
with the engineering, construction and all other work or approvals necessary in
connection with the construction of the Export Pipeline. Heinz shall provide a
staging area and all reasonable assistance, at ADC's expense, to facilitate such
construction. ADC or its contractors shall perform the construction in a manner
that will not disrupt the operations at the Manufacturing Facility.
14.03 Energy Facility Modifications. Provided that the Steam Export
Agreement is executed and delivered as contemplated under Section 14.01, ADC
shall supply the capital and take, or cause to be taken by independent
contractors retained by ADC, all actions related to plant modifications and
upgrades that are required to export steam as contemplated by this Article XIV.
14.04 Heinz Energy Requirements. The energy requirements of the
Manufacturing Facility shall at all times be given priority by ADC when making
commitments to supply export steam to Pittsburgh Thermal, and the Steam Export
Agreement shall so provide. ADC shall maintain a high level of awareness of and
coordinate plant operations with Heinz's service/schedule requirements.
14.05 Assignment and Assumption of Steam Export Agreement. After a
definitive Steam Export Agreement has been finalized and prior to the execution
thereof, ADC shall deliver a copy of such document to Heinz for its review and
comment. Provided that the terms and conditions of the Steam Export Agreement
are reasonably acceptable to Heinz, the Parties shall enter into an agreement
stating that upon any termination of this Agreement prior to the end of the Term
(other than any termination caused by Force Majeure or an ADC Event of Default),
ADC shall assign and Heinz shall assume all of ADC's rights and obligations
under the Steam Export Agreement. In connection therewith, Heinz shall
indemnify, hold harmless, and defend ADC from any and all claims, liens or
charges of any nature whatsoever that arise out of a breach or nonfulfillment by
Heinz of any of its representations, covenants, agreements or obligations under
the Steam Export Agreement, and ADC shall indemnify, hold harmless and defend
Heinz from any and all claims, liens or charges of any nature whatsoever that
arise out of a breach or nonfulfillment by ADC prior to such assignment of any
of its representations, covenants, agreements or obligations under the Steam
Export Agreement.
14.06 Export Steam Expenses. ADC shall be responsible for any and all
expenses associated with the production, distribution or administration of
export steam, including but not limited to emission fees, fuel, parasitic loads,
maintenance and repair of the Export Pipeline.
ARTICLE XV
MISCELLANEOUS
15.01 Governmental Notices. If either Party shall receive any notice
from any governmental authority regarding the operation of the Energy Facility,
it shall as soon as practicable deliver a copy of such notice to the other
Party.
15.02 Compliance with Law. Except as otherwise specified herein, each
Party shall, at its own cost and expense, obey and comply with all laws,
ordinances, rules, requirements, regulations and orders of the federal, state,
county and city governments, or any of them, and of any and all of their
departments and bureaus, or of any other competent authority, as they may
pertain to the Energy Facility, to the protection and maintenance thereof, to
the business operated therein, or the sanitary conditions thereof, or otherwise
to the performance of either Party under this Agreement.
15.03 No Partnership or Joint Venture. Nothing in this Agreement shall
be construed as creating a partnership or joint venture between the Parties, or
making either Party an agent or employee of the other Party. No employee of
Heinz or ADC who renders any service hereunder shall be construed or deemed to
be an employee of the other Party as a result thereof. Neither party shall have
any authority, or represent that it has any authority, to bind the other party
contractually.
15.04 Emergency Response. If an Emergency arises with respect to the
Real Property and/or Energy Facility, Heinz and ADC shall each have the right to
take reasonable action to respond to it without first advising the other,
provided that it advises the other Party of such action as soon thereafter as
practicable.
15.05 Severability. If, pursuant to a final, non-appealable judgment
by a court of competent jurisdiction, any provision of this Agreement is found
to be illegal, invalid or otherwise enforceable, such provision shall be
construed to be deleted from this Agreement and the remainder of it shall remain
in full force and effect as though such provision had not been included herein.
15.06 Entire Agreement. This Agreement and all exhibits thereto
constitute the entire and sole understanding of the Parties with respect to the
matters covered hereby or by any transactions contemplated herein, and
supersedes and cancels any and all oral or written prior agreements,
understandings, statements and representations between the Parties with respect
to the management and conduct of the Energy Facility.
15.07 Waivers and Amendments. No waiver, modification or amendment of
a term, condition or provision of this Agreement shall be valid or of any effect
unless made in writing specifying with particularity the manner and extent of
such waiver, modification or amendment, signed by the Party to be bound or its
duly authorized representative. Any waiver by any Party of any default of the
other shall not affect or impair any right arising from any subsequent default.
15.08 Governing Law. This Agreement and the legal relations between
the Parties shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Pennsylvania, without regard to conflict of law
principles.
15.09 Section Headings. Section headings are inserted herein for
convenience only and are not to be construed as a part of this Agreement or as a
limitation of the scope of the particular sections to which they refer.
15.10 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the respective Parties hereto, their respective successors and
assigns.
15.11 Estoppel Certificates. Each Party shall, from time to time, upon
twenty (20) days prior written request by the other Party, execute, acknowledge
and deliver to the other Party, or any other person, firm or corporation
specified by such Party, a certificate signed by its authorized representative
stating that (i) this Agreement is unmodified and in full force and effect, or
if there have been modifications, that this Agreement is in full force and
effect as modified, and setting forth such modifications; (ii) the dates to
which any payments which are due hereunder have been made, (iii) stating that to
the knowledge of the signer of such certificate no default exists hereunder or
specifying each default of which the signer has knowledge, and (iv) stating that
to the knowledge of the signer of such certificate that other Party has observed
and performed all of the terms, covenants and conditions on its part to be
performed, and if not, specifying the same.
15.12 No Merger. There shall be no merger of this Agreement with any
other estate in the Manufacturing Facility, the Real Property or Energy Facility
by reason of the fact that the same person acquires or holds, directly or
indirectly, this Agreement as well as any other estate in the facilities.
15.13 Cooperation. The Parties hereto will cooperate with each other
in every way carrying out the transactions contemplated by this Agreement, in
obtaining any and all required approvals, consents, permits and authorizations,
in filing the notification and reports, if any, which may be required, and in
executing and delivering all documents, instruments and copies thereof as shall
be reasonably agreed upon or as other Party may reasonably request for the
purpose of carrying out the terms and conditions of this Agreement.
15.14 Attorneys' Fees. In the event of any arbitration or judicial
proceedings relating to this Agreement or the breach thereof, the prevailing
Party shall be entitled to recover from the losing Party its reasonable costs,
expenses and attorneys' fees.
15.15 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE FOR ANY
LOST REVENUE, LOST PROFITS, OR OTHER INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES,
EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING OUT OF ANY BREACH OF
THIS AGREEMENT OR FAILURE TO PERFORM ITS OBLIGATIONS HEREUNDER.
15.16 Notices. All notices, forms of approval and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person by telegram, telex or other
standard form of telecommunications and by certified mail, postage prepaid
return receipt requested, addressed as follows:
(a)
If to Heinz to:
Xxxxx Xxxxxx
Pittsburgh Factory Manager
Heinz USA
X.X. Xxx 00
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
With copies to:
Xxx X. Xxxxxxxx
General Manager Manufacturing
Services
Heinz USA
X.X. Xxx 00
Xxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Senior Vice President
General Counsel
X. X. Xxxxx Company
X.X. Xxx 00
Xxxxxxxxxx, XX 00000
Fax: ( 000) 000-0000
(b) If to ADC to:
Xxxxxx Xxxxxxxxx, President
DQE Energy Services
Xxx XxxxxXxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxxx, Esquire
DQE, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as one party may have furnished to the other in
writing.
15.17 Assignments. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either Party without the
prior written consent of the other, provided, however, that upon receipt of (i)
an appropriate order from the Securities and Exchange Commission under Section
9(a)(2) of the Public Utility Holding Company Act of 1935, as amended or (ii)
written confirmation reasonably acceptable to Heinz that such an order is not
required, ADC shall assign this Agreement to a special purpose subsidiary of DQE
Energy Services, Inc. that has been formed solely for the purpose of
facilitating this transaction and any subsequent transactions with Heinz and its
affiliates (the "Special Purpose Subsidiary"). After assignment, all such
references to ADC herein shall be deemed to refer to the Special Purpose
Subsidiary. Nothing contained herein, express or implied, is intended to confer
on any person other than the Parties hereto and their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement. Notwithstanding the foregoing, Heinz may assign this
Agreement to any subsidiary, parent company, or corporate affiliate of Heinz, or
to any person or entity that (i) acquires the Manufacturing Facility; (ii) is
reasonably acceptable to Energy Services or the Special Purpose Subsidiary; and
(iii) agrees to assume all of Heinz's rights and obligations under this
Agreement.
15.18 Executive Review. Either Heinz or ADC shall have the right at
any time after good faith efforts have failed to resolve a dispute under this
Agreement related to a material matter effecting the parties rights and
obligations hereunder, to request review of such matter by the Executive Vice
President of HNA Operations and the Chief Executive Officer of ADC. Heinz or ADC
shall exercise its right to request executive review by providing a written
notice to the other Party. The above-referenced executives shall meet within 30
days of date of such notice is delivered to the other Party, and shall engage in
good faith efforts to resolve the deadlock. Within 30 days of such meeting, the
executives shall provide notice to the Parties stating whether they have been
able to resolve the deadlock and the nature of their decision if they have
resolved the deadlock. Any such decision shall be binding on the Parties.
15.19 Mediation. If a disagreement exists between the Parties
concerning this Agreement, or a breach thereof, executive review under Section
15.18 is unsuccessful, and the continued failure to settle such disagreement is
likely to have material adverse effect on any Party's rights and obligations
under this Agreement, either Party may elect to submit the matter to mediation
under the Commercial Mediation Rules of the American Arbitration Association. If
either Party so elects, the other Party shall submit to mediation. The mediator
shall not have the authority to impose a settlement on the Parties.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
ATTEST: HEINZ USA
By: By:
Title: Title:
ATTEST: ALLEGHENY DEVELOPMENT
CORPORATION
By: By:
Title: Title:
EXHIBIT A
ENERGY FACILITY ASSETS
[December 31 Asset List]
EXHIBIT A-1
RETAINED ASSETS
Machine Shop, Pipe Shop, and Tin Shop equipment and services.
Examples: Drill Press, Spot Welded, Sewer Snake, Lathe, Shear and
Brake Work, Fire Line Repairs, etc.
Building Maintenance equipment and services.
Examples: Power Hand Tools, Pressure Washers, Vacuum Cleaners, Snow
Removal, etc.
Other equipment.
Examples: Scissor Lift, Bucket Lift, Hand Trucks, Xxxxxx Filter Cart,
Welders, Plasma Cutters, Pipe Xxxxxx/Threader, Instrument & Electrical
Diagnostic/Calibration Equipment, Portable Pumps, Scaffolding, Picks &
Ladders, etc.
EXHIBIT A-2
STAND-BY EQUIPMENT TO BE REPAIRED OR REPLACED
Equipment DescriptionProjected Cost
1. Heat recovery pump set
$
10,426
2. Turbine room sub-station
batteries $
11,450
3. Hotwell pump
$
7,500
4. Ash tumbler
$
17,500
5. Feedwater pump
$
26,000
6. Turbine room 4160 feeder
$
9,788
7. Boiler #1 grate
$
21,648
8. Turbine/Generator #2
bearing $
18,572
9. Case unloader
$
28,600
Total $151,484
EXHIBIT B
ENERGY FACILITY IMPROVEMENTS
Specific Improvement Estimated
Cost
1. Rebuild underside of boilers. $ 400,000
2. Modify material handling system. $ 200,000
3. Boiler and turbine control system $ 665,000
retrofit.
4. Air Emissions Control System. $1,200,000
5. Balance of plant and demolition. $ 200,000
6. Rebuild Turbine/Generator. $ 300,000
7. Contingency. $ 145,000
8. Engineering and Construction $ 240,000
Management. -----------
TOTAL ESTIMATE $ 3,350,000
EXHIBIT B-1
EXPORT IMPROVEMENTS
Specific Improvement
Estimated Cost
9. Convert Boilers #1 and #2 to spreader stokers. $ 300,000
10. Upgrade material handling system. $ 200,000
11. Export reducing, desuperheating, and metering station. $ 50,000
12.Contingency. $ 30,000
00.Xxxxxxxxxxx and Construction Management. $ 70,000
TOTAL ESTIMATE $ 650,000
EXHIBIT C
UTILITIES DEPARTMENT PERMITS-CERTIFICATES
BOILERS
OPERATING PERMITS
Pa. CERTIFICATES
SERIAL #
#1 C.E. -3033609-000-00801
25101B
#2 C.E. -3033609-000-00801
25102B
#3 B&W -3033609-000-00802
25119B
#4 B&W -3033609-000-00802
25120B
#5 B&W -3033609-000-00802
25121B
#7 B&W -3033609-000-00802
25122B
#8 Xxxx -3033609-000-00802
186561B
TITLE V PERMIT (application)
NITROGEN OXIDE EMISSIONS AGREEMENT NO. 211
Allegheny County
STORAGE TANK REGISTRATION
Pa.
DIESEL TANK
NALCO CHEMICAL TANK
PRESSURE VESSEL CERTIFICATES
Serial #
Air tank
499535
Feedwater Heater
214254
Condensate Tank
079037
Air Tank
219090
Flash Tank
450860
After cooler
499592
Air Tank
519510
Deaerator
499530
Air compressor
499404
PITTSBURGH FACTORY PERMITS
CLEAR WATER DISCHARGE Pa.
ALCOSAN INDUSTRIAL DISCHARGE PERMIT
Allegheny County
VOC EMISSIONS AGREEMENT NO. 247
Allegheny County
EXHIBIT D
BASE WAGE RATE/BASE SHIFT PREMIUM
Job Grade Rate (per hour)
1 $11.585
2 $11.765
3 $11.945
4 $12.125
5 $12.305
6 $12.485
7 $12.665
8 $12.845
9 $13.025
10 $13.205
11 $13.385
12 $13.565
13 $13.745
14 $13.925
15 $14.105
16 $14.285
17 $14.465
18 $14.645
19 $14.825
20 $15.005
21 $15.185
22 $15.365
Starting rate for new hires: $7.75
Shift Premiums and Overtime Premiums utilized for the purposes of this Agreement
shall be those stated in the 1994 Collective Bargaining Agreement as in effect
on the Lease Commencement Date.
EXHIBIT F
STIPULATED LOSS VALUE
