Exhibit 10.24
PRELIMINARY ENGINEERING AGREEMENT
THIS PRELIMINARY ENGINEERING AGREEMENT, entered into as of the 21st day of
March, 2002, by and between
SOUTHERN STATES POWER COMPANY, INC.
0000 Xxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxx, XX 00000-0000
(hereinafter called "OWNER")
and LURGI PSI, INC.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
(hereinafter called "CONTRACTOR")
WITNESSETH THAT:
WHEREAS, OWNER desires CONTRACTOR to furnish certain preliminary engineering for
a BioDiesel production facility with a design capacity of 30 million gallons per
year (equivalent to 100,000 metric tons per year) to be located in Riverside,
California and a BioDiesel production facility with a design capacity of up to 5
million gallons per year plus a refining process with a design capacity of up to
9 million gallons per year to be located in Long Beach, California
(collectively, the "Plants"); and
WHEREAS, CONTRACTOR desires to perform such preliminary engineering upon the
terms and conditions set forth below; and
WHEREAS, OWNER and CONTRACTOR have entered into a Memorandum of Understanding
executed by the parties as of January 25, 2002 (the "MOU"), and intend to, but
are no way obligated to, enter into an Engineering, Procurement and Construction
Agreement (hereinafter referred to as the "EPC Agreement") for the supply of
engineering, procurement and construction services for the Plants, which EPC
Agreement will become effective only upon its execution by both parties and
fulfillment of certain conditions and requirements still outstanding; and
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS
1.1 Unless otherwise noted, capitalized terms used in this Preliminary
Engineering Agreement shall have the same meaning as assigned to them in
the MOU.
1.2 The services to be performed by CONTRACTOR under this Preliminary
Engineering Agreement are referred to herein as the "Preliminary
Engineering".
2. OBJECT OF THIS AGREEMENT
2.1 OWNER herewith authorizes and instructs CONTRACTOR, and CONTRACTOR
agrees, to start with the design, engineering and related services for
the Plants in accordance with the terms and conditions specified in this
Preliminary Engineering Agreement.
2.2 The scope of the Preliminary Engineering to be performed by CONTRACTOR
under this Preliminary Engineering Agreement is described in Exhibit A
attached to and made a part hereof.
3. PERFORMANCE OF PRELIMINARY ENGINEERING BY CONTRACTOR
3.1 CONTRACTOR shall commence the Preliminary Engineering on or before April
1, 2002.
3.2 All Preliminary Engineering shall be performed by CONTRACTOR in such a
manner that it shall become part of the engineering intended to be
performed by CONTRACTOR under the EPC Agreement once the EPC Agreement
shall come into full force and effect.
3.3 CONTRACTOR shall perform the Preliminary Engineering with that degree of
care, skill and judgment that is normally exercised by professional
engineering firms of national reputation in performing like services.
3.4 Title to all technical data furnished by OWNER to CONTRACTOR under this
Preliminary Engineering Agreement shall remain with OWNER, and title to
all technical data furnished by CONTRACTOR to OWNER under this
Preliminary Engineering Agreement shall remain with CONTRACTOR.
3.5 OWNER shall have the right to use the engineering drawings and other
documents prepared by CONTRACTOR under this Preliminary Engineering
Agreement and delivered to OWNER only for purposes relating to the
design, engineering and construction of the Plants in cooperation with
CONTRACTOR. Should for any reason the EPC Agreement not become effective,
OWNER shall have no right to use such documents, or any information
contained therein or deduced therefrom for the design, construction,
erection, installation, operation or maintenance of any plant or for any
other purpose whatsoever.
3.6 It is anticipated, without any obligations to do so, that this
Preliminary Engineering Agreement will be converted to a full engineering
only or an EPC Agreement on or before July 15, 2002. If it shall be
established that the EPC Agreement will definitely not become effective,
or once the latest date for the EPC Agreement to be established as per
the MOU has expired, unless such latest date shall have been extended by
mutual agreement, OWNER shall return to CONTRACTOR all documents received
from CONTRACTOR under this Preliminary Engineering Agreement together
with all copies, if any, made thereof by OWNER. OWNER shall indemnify and
hold harmless CONTRACTOR from any liability, loss, cost or expense
(including reasonable attorney's fees) resulting from any use of such
documents in violation of this Article.
4. PRELIMINARY ENGINEERING PRICE
4.1 OWNER agrees to compensate CONTRACTOR for the Preliminary Engineering on
a time and material basis, with a not-to-exceed price of $795,000 ("T&M
Price") in accordance with Exhibit B, Manhour Rate and Reimbursable Cost
Schedule, which is attached to and made a part hereof.
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4.2 CONTRACTOR shall submit monthly an itemized invoice to OWNER showing
costs incurred, but not billed during the prior billing period. The
monthly invoices shall not exceed the amounts listed below:
May 1, 2002 = $150,000
June 1, 2002 = $200,000
July 1, 2002 = $200, 000
August 1, 2002 = $245,000
4.3 OWNER shall pay CONTRACTOR's monthly invoices within 10 days of the
invoice date. Late payments will incur interest charges of 1-1/2% per
month. To avoid the late charge, any disputed charges should be
subtracted from the invoice and the remainder paid within the ten (10)
day period. The remit to address shall be: Lurgi PSI, Inc., 0000 Xxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000.
5. LIMITATION OF LIABILITY
5.1 Except as provided in Article 5.2, all warranties, guarantees and
liabilities of CONTRACTOR with respect to or in connection with the
Preliminary Engineering provided by CONTRACTOR under this Preliminary
Engineering Agreement shall only come into existence upon the EPC
Agreement or the detailed engineering agreement having become effective
and then shall be limited as agreed therein, and nothing in this
Preliminary Engineering Agreement shall be construed as expressing or
implying the contrary.
5.2 ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY
OF MERCHANTABILITY OR FITNESS FOR USE FOR THE PURPOSE INTENDED, ARE
EXPRESSLY EXCLUDED. THE LIABILITY OF CONTRACTOR UNDER AND IN CONNECTION
WITH THE PRELIMINARY ENGINEERING IS LIMITED TO THE CORRECTION OF ANY
DEFECTS IN THE ENGINEERING SERVICES OR DOCUMENTS DELIVERED TO OWNER UNDER
THIS PRELIMINARY ENGINEERING AGREEMENT, PROVIDED NOTICE OF ANY DEFECTS IS
GIVEN TO CONTRACTOR WITHIN 180 DAYS FROM PERFORMANCE OF SUCH SERVICES OR
DELIVERY OF SUCH DOCUMENTS.
5.3 CONTRACTOR's total cumulative liability to OWNER under or relating to
this Preliminary Engineering Agreement shall in no event exceed the total
amount of insurance proceeds obtained under the insurance policies
required under Article 6 of this Preliminary Engineering Agreement,
exclusive of CONTRACTOR's obligations under Article 5.2.
5.4 Notwithstanding any other provision of this Agreement, neither OWNER nor
CONTRACTOR shall have any liability whatsoever for loss of production,
loss of income, loss of profit, loss caused by plant shutdown, delayed
opening, business interruption or other delay or for any other special,
indirect, incidental or consequential loss or damage, or for any
exemplary or punitive damages.
5.5 The limitations on and exclusions of damages set forth in this Article 5
shall apply under any theory of law including breach of contract or
warranty, tort (including negligence of any nature, whether sole or
concurrent), strict liability or otherwise.
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5.6 Any set-off against CONTRACTOR's claims for payment of the T&M Price
under Article 4.1 is excluded. OWNER waives any right of retention of any
portion of the T&M Price payable hereunder.
6. INSURANCE
6.1 CONTRACTOR shall furnish Xxxxxxx'x Compensation Insurance as required by
law; Comprehensive General Liability Insurance at limits of $500,000 per
occurrence; Automobile Liability coverage at limits of $100,000 each
accident for property damage; and Professional Liability Insurance in an
amount not less than the T&M Price payable under this Preliminary
Engineering Agreement.
7. ARBITRATION AND GOVERNING LAW
7.1 In case of any dispute or controversy arising between the parties hereto
under or relating to this Preliminary Engineering Agreement or
CONTRACTOR's performance or nonperformance of its obligations hereunder
("Dispute"), the parties shall endeavor to settle any such Dispute in an
amicable way.
7.2 If a Dispute cannot be settled amicably, then the Dispute shall be
finally decided by arbitration under the Commercial Arbitration Rules of
the American Arbitration Association by three (3) arbitrators appointed
in accordance with such Rules. Arbitration shall take place in Riverside,
California.
7.3 This Preliminary Engineering Agreement shall be governed by, and
interpreted in accordance with, the substantive law of California,
exclusive of its choice of laws principles.
8. GENERAL CONDITIONS
8.1 This Preliminary Engineering Agreement shall become binding and effective
upon its having been signed by both parties hereto.
8.2 This Preliminary Engineering Agreement represents the entire agreement of
the parties as to the subject matter hereof, and all oral and written
statements, documents, letters or other communications between OWNER and
CONTRACTOR and any representations and warranties made in connection with
the subject matter of this Preliminary Engineering Agreement prior to its
execution are superseded and shall become null and void upon execution of
this Agreement.
8.3 Any modifications or supplements to this Preliminary Engineering
Agreement must be executed in writing and signed by both parties. Any
verbal agreement must be confirmed by both parties in writing in order to
be valid.
8.4 Should any provision of this Preliminary Engineering Agreement be or
become invalid or unenforceable or prohibit by law or otherwise all other
provisions of this Agreement shall be unaffected thereby and shall
nevertheless remain effective. Any invalid or unenforceable provision of
this Preliminary Engineering Agreement shall be replaced by a valid and
enforceable provision to be agreed upon between the partied hereto
approaching as close as possible to that which both parties would have
intended had they known of such invalidity or unenforceability when
entering into this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Preliminary Engineering
Agreement to be executed and signed as follows on the day and the date first
above written.
For and on behalf of For and on behalf of
SOUTHERN STATES POWER COMPANY, INC. LURGI PSI, INC.
/S/ Xxxxxxxx XxXxx /S/ [ILLEGIBLE SIGNATURE]
----------------------------------- ------------------------------------
/S/ Chairman/CEO /S/ CEO
----------------------------------- ------------------------------------
Title Title
5
PRELIMINARY ENGINEERING AGREEMENT
EXHIBIT A
SCOPE OF SERVICES
-----------------
1.0 Preliminary Engineering Design Services.
Preliminary engineering services are intended to advance the development of the
Plants (the "Project") the project from concept to preliminary design, including
basic process design, Project scope development, develop site plan drawings,
identification and basic description of process equipment, development of basic
process flow diagrams and material balances for the various process sections,
development of preliminary P&ID's, and preliminary arrangement of process
equipment.
o Lurgi PSI will begin work immediately on a T&M basis to develop scope
of modifications or additions to the Long Beach site required to
commence production of biodiesel as soon as possible. Targeted
capacity is 4 million gallons per year crude biodiesel plus the
required glycerin / water processing work up.
o Lurgi PSI will provide preliminary process engineering for a portable
process facility at the Long Beach site, to produce up to 5 million
gallons per year of biodiesel from refined soy bean oil plus a
glycerin/water refining process for up to 9 million gallons per year
biodiesel.
o Lurgi PSI will provide preliminary process engineering for a new
continuous fixed production facility at the Riverside location to
produce approximately 30 million gallons per year (equivalent to
100,000 metric tons per year) of biodiesel using Lurgi's continuous
process for partially refined soy bean oil.
Basic Process Engineering.
LurgiPSI will develop the basic process design for the two Project sites working
in cooperation with Lurgi Life Science to apply Lurgi's technology to the
Project. Basic process design development will include the development of the
following:
o Process Flow Diagrams.
o Process Description.
o Support of Permitting Requirements.
o Preliminary Plant Design Services.
o Develop Site Map Drawings.
o Piping and Instrument Diagrams.
o General Arrangement Drawing for Process Equipment.
o Preliminary Equipment Engineering.
EXHIBIT A-1
o Preliminary equipment list.
o Equipment design information including code requirements.
o Preliminary equipment data sheets.
o Typical fabricated and special equipment guide drawings.
o Nozzle and opening schedule.
o Insulation requirements for equipment.
o Preliminary Piping Specifications.
o Piping line list.
o Identify insulated piping.
o Preliminary Instrument and Control Engineering.
o Instrument list based on P&ID's.
o Preliminary instrument data sheets.
o Identify critical process interlocks.
o DCS Input/Output signal count and list.
o DCS hardware system requirements.
o Definition of software operating systems.
o Electrical and Power Engineering.
o Motor and power user list.
o Process and future load requirements.
o Identify motor control load center hardware needs.
PRELIMINARY ENGINEERING SCHEDULE
Preliminary engineering is expected to take approximately 12 to 14 weeks.
2.0 Engineering Deliverables.
The primary deliverables for this Project are a basic preliminary design package
for each production facility consisting of the preliminary engineering
documents, which may include:
o Develop scope and rough cost estimate for modifications to Long Beach
existing process equipment to begin production of biodiesel as soon
as possible.
EXHIBIT A-2
o Translation of process flow diagrams and material balances from
metric to U.S. units.
o Development preliminary P&ID's for the process sections and systems.
o Develop an equipment list.
o Develop an instrument list.
o Develop a motor and electrical users list.
o Develop a piping line list.
o Develop preliminary equipment data sheets.
o Resize equipment as necessary.
o Develop preliminary piping specifications.
o Identify equipment and piping that require insulation.
o Develop civil foundation and structural design criteria for the
specific locations.
o Develop preliminary equipment layout arrangement for each site or
process section.
o Xxxx up the equipment guide drawings to meet design requirements for
domestic manufacture.
o Identify the electrical hardware and motor control requirements for
each site or facility.
o Specify the control system hardware, software, and programming
requirements to control the process.
o Assist with preparation and support of Project permit applications.
o Identify infrastructure for Plants and utility requirements.
3.0 Exclusions and Clarifications.
Preliminary Engineering does not provide "Detailed Engineering Design" for the
Plants or any other facilities. Detailed design would be included in the EPC
Agreement and would be provided based on the scope definition developed during
the preliminary engineering work and subject to subsequent agreement between
LPSI and SSPC for these services.
Other specific exclusions and clarifications are:
o Railroads, roadways, fencing, landscaping, underground sewers, water
or gas mains, storm drainage, general site grading and general site
improvements are excluded from the preliminary engineering work.
o Detailed engineering is excluded, including but not limited to,
civil, structural, foundation, building, architectural, site,
equipment, piping, instrument, electrical, insulation, wiring,
EXHIBIT A-3
utility system or similar detailed design requirements (this proposal
is for basic and preliminary design services).
o Control building, MCC, warehouse or lab building are excluded at the
Long Beach site. (This proposal assumes use of existing site
buildings for the Long Beach site).
o HVAC, Plumbing packages and architectural finish packages are
excluded (part of detailed design).
o Equipment layouts and arrangements will be conceptual only with
equipment outlines (no details).
o Storage tanks are excluded at Long Beach ( the estimate assumes that
sufficient storage tank capacity exists at this site to be assigned
for project use).
o Utility systems (including steam, hot oil, cooling water, plant air,
instrument air, nitrogen, etc) are excluded from the Long Beach site
project. Project assumes adequate utilities supplies exist at battery
limits.
o Long Beach site battery limits consist of the new process facilities
and end at the pipe rack connecting new facilities to existing plant
utilities and existing pipe rack.
o Projects assume a Rosemount Delta V DCS control system will be
utilized at both locations to minimize duplication of hardware and
program development.
o De-centralized or skid mounted outdoor MCC cabinets will be utilized
at Long Beach. Riverside site will have a MCC / Control room
building.
o Skid mounted equipment will be pre-piped and pre-wired between
components on each skid where possible.
o Environmental engineering and control system design is excluded other
than process vent scrubbers included in equipment list and permitting
support described in scope of services.
o Design of fire protection systems is excluded.
o Power system studies or protective relaying studies are excluded.
o Process modeling or 3D design modeling is excluded. Proposal assumes
2D AutoCad design will be used.
o All site specific civil design requirements are excluded.
o Field and construction support are excluded and may be supplied later
based on subsequent agreement between the parties for these services.
o Operating, and IOM manuals are excluded (these are part of detailed
engineering scope).
EXHIBIT A-4
o Preparation of EPC Design/Build proposals are excluded. o Equipment
procurement, tracking, expediting are excluded.
o DCS programming is excluded.
o Process hazards analysis and PSM requirements are excluded.
EXHIBIT A-5
PRELIMINARY ENGINEERING AGREEMENT
EXHIBIT B
MANHOUR RATE AND REIMBURSABLE COST SCHEDULE
Lurgi PSI, Inc. executes its contract work for construction and engineering
services under a standard reimbursement schedule for manhour expenditures,
direct expenses, and in-house services. We invoice all projects in accordance
with a standard invoice procedure which includes a separate listing of manhour
expenditures, direct expenses, and scheduled expense items. Lurgi PSI, Inc.
keeps full and detailed accounts and records in accordance with established
accounting procedures. Our records are available to our clients at any time for
audit and review.
1. PERSONNEL COST REIMBURSEMENT SCHEDULE
All personnel are charged to a project on an hourly basis for actual time
spent in direct support of the project. Overtime hours required by Lurgi
PSI, Inc. to support a project schedule are invoiced at standard rates
without any premium time for overtime. All classifications will be invoiced
listing the individuals who have worked on the project and number of hours
worked.
2. COSTS REIMBURSABLE AS DIRECT EXPENSES
The following items are reimbursed at Lurgi PSI's direct cost without any
additional charges for overhead or profit:
2.1 Travel expense.
2.2 Living expenses away from our office for any of our personnel.
2.3 Long distance or toll telephone calls.
2.4 Telegrams, teletype, express mail, and postage.
2.5 Any special forms of printing and office supplies.
2.6 Car mileage at 34 cents per mile.
2.7 Special client requested legal services.
2.8 Rent of offices other than Lurgi PSI, Inc. home office.
2.9 Outside reproduction, blueprint, photographic supplies or services.
2.10 Additional professional liability insurance beyond that provided in
Section 7.
2.11 Broad Form Endorsement CGL insurance for construction activities.
2.12 Additional Umbrella Liability insurance and specialized insurance.
2.13 Losses not covered by insurance maintained to jointly protect Owner and
Lurgi PSI, Inc.
2.14 Permits, licenses, inspections, and other fees.
2.15 Replacement of work not covered by project insurance.
2.16 Additional automobile liability insurance.
2.17 Field personnel costs including:
o Transportation and travel expenses for husband and wife relocation
trips to evaluate housing.
o Moving expense per field employee for relocation to the job site
based on three competitive quotes.
EXHIBIT B-1
o Per diem expenses for each day of assignment beginning with two weeks
from date of relocation and terminating upon end of assignment. Per
diem rates will be calculated in accordance with federal guidelines
Publication 1542, Per Diem Rates for Travel within the Continental
United States. Should field employees be required for a duration in
excess of 12 months a taxable allowance will be negotiated.
o Moving expenses per field employee for relocation from the job site.
3. COSTS REIMBURSABLE AS A SCHEDULED EXPENSE ITEM
The following items are internally produced and billed at the approximate cost
per unit (square foot, copy, hour, etc.) to Lurgi PSI, Inc. including materials
and machine time utilized:
3.1 DRAWING REPRODUCTION COSTS
3.1.1 Bond $ .17 per sq. ft.
3.1.2 Vellum $1.00 per sq. ft.
3.1.3 Mylar $1.75 per sq. ft.
3.2 PHOTOCOPIES $ .10 per copy
3.3 CD CREATION $10.00 each CD
3.4 FACSIMILE $2.00 per minute
3.5 VIDEO CONFERENCING $2.00 per minute ($120 per hour)
4. COSTS REIMBURSABLE AS DIRECT EXPENSES PLUS A FEE
The following items are expenses which are to be reimbursed at cost plus a fixed
fee:
4.1 Owner Requested Subcontracts
4.2 Purchased Equipment
4.3 Rental Equipment
5. INVOICING
Normal invoicing procedures call for manhours completed on the project and
reimbursable expenses to be billed monthly. The invoice will list all manhour
charges and reimbursable expenses against the project to date, both billed and
current. Standard invoices will detail the charges to the project and will not
contain copies of any receipts or documentation. Sample invoices are available
upon request. Documentation for all billable items will be included with
standard invoices for a fee of $2.00 per 8 1/2 x 11 sheet.
EXHIBIT B-2
6. SCHEDULE REVISIONS
The rate schedule is subject to yearly revisions during the first billing period
containing the first day of September. These adjustments will reflect increased
costs due to promotions, merit increases, etc. Any other changes in the Rate
Schedule are subject to approval of the Owner.
7. COSTS ASSOCIATED WITH INSURANCE
Lurgi PSI, Inc. provides the following level of insurance as standard on all
projects without any additional reimbursement under our Standard Agreement for
Professional Services:
7.1 Xxxxxxx'x Compensation Insurance as required by law.
7.2 Comprehensive General Liability Insurance at limits of $500,000 per
occurrence for bodily injury and property damage with a broad form
endorsement for property damage, products, completed operations, premises,
blanket contractual, independent construction and XCU.
7.3 Comprehensive Automobile Liability Insurance covering all owned,
non-owned, and hired vehicles at limits of $100,000 each person; $300,000
each accident for bodily injuries and $100,000 each accident for property
damage.
7.4 Umbrella Liability is provided to cover any legal liability that may
exceed the underlying limits of insurance coverages. The aggregate limit
of the Umbrella liability policy shall be $1 million.
7.5 Professional liability insurance is provided through self-insurance by
Lurgi PSI, Inc. for $100,000 or up to the full value of Lurgi PSI's fee
for services to a maximum of $1,000,000, as a standard part of our
Professional Services Agreement. Any additional Professional Liability
Insurance requested by the Owner will be furnished as a direct
reimbursable expense per paragraph 2.0 above.
7.6 Project Professional Liability, Wrap-up Insurance, or any other
additional insurance requested by Owner will be furnished as a direct
reimbursable expense per paragraph 2.0 above.
EXHIBIT B-3
8. RATE SCHEDULE BY CLASSIFICATION
Consolidated Rate Schedule, effective September 17, 2001:
SENIOR PROJECT ENGINEER/SPECIALIST AND ABOVE $105
PROJECT ENGINEER/SPECIALIST $99
PROJECT/AREA COORDINATOR $88
ESTIMATOR $82
SENIOR ENGINEER/SPECIALIST $78
PROJECT SUPERINTENDENT $78
SENIOR DESIGNER $76
COST CONTROL $76
SUPERINTENDENT $76
SAFETY COORDINATOR $76
QA/QC COORDINATOR $76
EQUIP/TOOLS SUPERINTENDENT $76
PURCHASING AGENT/EXPEDITOR $68
ENGINEER/SPECIALIST $68
STEEL DETAILING $68
DESIGNER $61
CADD SPECIALIST $53
ADMINISTRATIVE COORDINATOR $53
ACCOUNTING $53
SUPPORT $45
EXHIBIT B-4
