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EXHIBIT 10.19 (C)
AMENDMENT NO. 2
THIS AMENDMENT NO. 2, to the Service Agreement dated the 9th day of June
1988, (hereinafter "Service Agreement"), as previously amended by:
(i) Hot Gas Path Parts Addendum (hereinafter "HGPP Addendum")
dated 31st day of December 1993;
(ii) Amendment No. 1 to the HGPP Addendum (hereinafter "HGPP
Amendment No. 1") dated the 18th day of July 1994; and
(iii) Amendment No. 1 to the Service Agreement (hereinafter
"Agreement Amendment No. 1") dated 1st day of April 1995;
(all collectively hereinafter identified as the "Contract"), is made and
entered into as of the 15th day of January, 1998, by and between ABB Power
Generation Inc. ("ABB"), a Delaware Corporation, successor in interest to ABB
Energy Services Inc. and Midland Cogeneration Venture Limited Partnership
("MCV"), a Michigan limited partnership, referenced jointly herein as the
"Parties" or singularly as the "Party".
W I T N E S S E T H:
WHEREAS, MCV and ABB entered into the Contract for the provision of
inspections, maintenance, repair and spare parts by ABB for MCV gas turbines
and their auxiliary systems;
WHEREAS, MCV desires to enter into an arrangement specifically for the
supply and installation of 11NM GT Parts ("11NM Parts") for an additional
eleven (11) 11N GT units;
WHEREAS, ABB, as consideration for supply and installation of 11NM Parts,
desires to extend the entire term of the Contract covering the provision of
inspections, maintenance, repair and spare parts by ABB for MCV gas turbines
(including the Hot Gas Path ("HGP") Parts for all twelve 11NM or 11N gas
turbines, as the case may be) (hereinafter the "Plan") and their auxiliary
systems; and
WHEREAS, the Parties desire to describe this new long-term arrangement in
this Amendment No. 2, to the Contract;
NOW THEREFORE, in consideration of the mutual promises contained herein,
the Parties hereby agree as follows:
GENERAL
This Amendment No. 2, modifies certain portions of the Contract including the
(i) Service Agreement; (ii) Agreement Amendment No. 1; (iii) HGPP Addendum; and
(iv) HGPP Amendment No. 1, all of which relate to performance of the Plan and
the supply and service of HGP Parts, 11N parts, and the provision of
inspections, maintenance, repair and spare parts by ABB for MCV gas turbines
and their auxiliary systems. Except where expressly modified by this Amendment
No. 2, all provisions of the Contract shall remain in full force and effect.
In case of conflict, the provisions of this Amendment No. 2, shall prevail with
respect to the supply of HGP Parts under the Plan and the provision of
inspections, maintenance, repair and spare parts by ABB for MCV gas turbines
and their auxiliary systems.
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MODIFICATIONS AND ADDITIONS:
1.ARTICLE 1 - DEFINITIONS:
Add the following new definitions:
1.33 11NM Parts shall consist of the following elements, which shall
replace their 11N equivalents under the Plan for those units converted
to 11NM:
(i) Blade Rows 1 - 5, including 11NM hardware;
(ii) Vane Rows 1 - 5, including 11NM hardware;
(iii) Heatshields (Vane Carrier), including 11NM hardware;
(iv) Heatshields (Rotor), including 11NM hardware;
(v) Inlet C Segments, including 11NM hardware;
(vi) Vane Carrier; and
(vii) Exhaust Gas Housing.
1.34 Variable Inlet Guide Vanes ("VIGVs") shall mean hardware excluding
wiring, installation and commissioning. (Note: VIGVs shall be provided
only if unit is not already equipped, and are not included as spare
parts to be provided under the Plan.)
1.35 The Installation Outage ("Outage") during which the 11NM Parts are
installed is defined as occurring during the Scheduled 72,000 EOH "C"
Inspection. The Outage associated with the initial installation of 11NM
Parts will be counted as fulfillment of ABB's contractual outage
obligation for "C" inspections under the Contract for the unit into
which the 11NM Parts are installed.
1.36 An 11NM "Emergency Set" is defined as a set of:
(i) Row 1, 2, 3, 4 and 5 blades, including 11NM hardware;
(ii) Row 1, 2, 3, 4 and 5 vanes, including 11NM hardware;
(iii) Vane Carrier heat xxxxxxx, including 11NM hardware; and
(iv) Inlet C Segments, including 11NM hardware; and
(v) Vane carrier.
1.37 GT Rotor is defined as HTCT 001540R0001 including:
(i) Labyrinth seals and overspeed trip device
(ii) Initial run out
(iii) Installation of compressor blades and turbine blades (compressor
blades supplied by MCV)
(iv) High speed balancing
(v) Final run out and inspection
(vi) Transport fully bladed GT Rotor to MCV site
(vii) Rotor will installed during one of the scheduled 72,000
EOH "C" Inspections during which time the 11NM parts are installed
during Fall 1999.
2.ARTICLE 2 - OBLIGATIONS OF THE PARTIES
Delete and replace existing paragraphs 2.13 and 2.17 of the Contract and add
new paragraphs as follows:
2.13 During the term of this Amendment Xx. 0, XXX agrees to perform the
Plan and to supply, in a timely manner, all HGP Parts required for the
normal, efficient operation of the Equipment, whether required as a
result of a scheduled or an unscheduled inspection; provided however
that HGP Parts which are replaced by reason of Excluded Events are
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not covered by the Plan, this Amendment No. 2; the HGPP Addendum, or
HGPP Amendment No. 1, but will be provided by ABB pursuant to Article
5.5(a) of the Service Agreement and upon receipt of a Purchase Order.
2.17 MCV shall own and maintain one (1) set of 11N HGP Parts at MCV
Facility site ("Emergency Parts"). Title to the Emergency Parts shall
be held by MCV. ABB may, with the consent of MCV, use the Emergency
Parts in the Equipment. If so used, ABB shall replace the Emergency
Parts with new or reconditioned parts within a reasonable amount of
time. ABB may at any time replace new parts with reconditioned ones.
Upon conversion of the last 11N to 11NM the following 11N Emergency
Parts shall become the property of ABB:
(i) Row 1, 2, 3, 4 and 5 blades including 11N hardware;
(ii) Row 1, 2, 3, 4 and 5 vanes including 11N hardware;
(iii) Vane Carrier;
(iv) Vane Carrier heat xxxxxxx, including 11N hardware; and
(v) Inlet C segments, including 11N hardware.
2.25 With respect to 11NM Parts provided under this Amendment No. 2,
delivery, for purposes of title passage, shall be deemed to have
occurred when the 11NM Parts are removed from ABB's on-site storage for
installation into the Equipment. Upon completion of the 11NM upgrade,
all 11N Parts removed from the unit become the property of ABB.
2.26 During the remaining term of the Plan ABB agrees to supply, for
future outages on the upgraded 11NM GT units and 11N GT Units, provided
that such 11N GT Unit has not exceeded 96,000 EOH, HGP Parts in a timely
manner required for fulfillment of the obligations under the Plan. ABB,
at its discretion, may supply either new or reconditioned HGP Parts
under the Plan, provided that reconditioned parts meet prevailing ABB
quality standards.
2.27 ABB shall arrange and pay for the transportation of the new 11NM
Parts to MCV Facility.
2.28 MCV is responsible for re-certification of the upgraded 11NM GT
unit's emissions and associated permits upon completion of the 11NM
upgrade.
2.29 ABB will upon completion of the last 144,000 EOH "C" inspection
provide MCV with one (1) new or reconditioned 11NM Emergency Set.
2.30 ABB shall timely support scheduled HGP Parts rotation under the Plan
by making available up to two (2) sets of 11NM Parts, including those
11N HGP Parts required.
2.31 ABB will make base load adjustments to the 11NM units (immediately
following conversion). MCV will provide and set up instrumentation
required to gather and process data necessary to make the base load
adjustments.
2.32 MCV will operate and maintain their 11N and 11NM GT units in
accordance with ABB's recommendations and written Operating Instruction
Manuals for the MCV Units unless MCV determines that such operation may
be detrimental to the Equipment (e.g. MCV may operate the Equipment
below ABB's recommended firing temperature but may not operate Equipment
above ABB's recommend firing temperature or modify the logic that is
used to define and measure such limit).
2.33 ABB and MCV agree to negotiate an equitable agreement for the
implementation of improvements in availability and performance, in
accordance with ABB recommendations, on the 11N or NM units at MCV.
These improvements are not included in the scope of work contained
herein and will be priced separately.
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3.ARTICLE 4 - TERM OF AGREEMENT
This paragraph modifies the Term of the Contract as follows:
"The Term of the Contract and this Amendment No. 2 shall expire upon the
completion of the sixth "C" Inspection for the Equipment except that in no
event shall the Term extend beyond December 31, 2009. If by the end of 2008
all "C" Inspections are not complete, the Parties agree to negotiate in good
faith a mutually acceptable reconciliation of each Party's obligations.
ABB's responsibility under the Contract shall expire progressively as each
"C" Inspection on the Equipment is concluded at or about 144,000 EOH."
4.ARTICLE 5 - FEES AND PAYMENTS
Delete and replace existing paragraphs 5.3(a) and 5.5(d) and (e) of the
Contract and add new paragraph 5.5(f) as follows:
INSPECTION FEE:
5.3 (a)
(1) The Inspection Fee shall be payable in monthly installments on the
first day of each calendar month after the Commencement Date. The first
payment shall be due on the Commencement Date.
(2) The Inspection Fee ("IF") for the performance of ABB's obligations is
Two Hundred Thirty-three Thousand Two Hundred Fifty Dollars ($233,250)
per calendar month from the Commencement Date through March 31, 1995.
Beginning April 1, 1995, MCV will pay a total of Twenty-seven Million
One Hundred Sixty-nine Thousand Seven Hundred Thirteen Dollars
($27,169,713), in 1994 dollars ("Base IF Price"), as the IF, which will
be paid in monthly installments of Two Hundred Eighty-three Thousand
Seventeen Dollars and Eighty-four Cents ($283,017.84) per calendar month
and will continue until the monthly payments in 1994 dollars total
Twenty-seven Million One Hundred Sixty-nine Thousand Seven Hundred
Thirteen Dollars ($27,169,713), prior to adjustment for inflation, which
will occur upon the accumulation of 768,000 EOH ("Base IF Period"),
utilizing March 1, 1995, as the EOH starting date.
(3) Beginning with the first month after the Base IF Price of
Twenty-seven Million One Hundred Sixty-nine Thousand Seven Hundred
Thirteen Dollars ($27,169,713), has been paid (in 1994 dollars before
adjustments for escalation) MCV will then pay ABB the sum of Twenty
Million Three Hundred Seventy-seven Thousand Two Hundred Eighty-four
Dollars ($20,377,284), stated in 1994 dollars ("Second Base IF Price"),
covering the period of the subsequent two "C" Inspections of the
Equipment which is expected to conclude at 1,344,000 EOH (the "Second
Base IF Period"), utilizing March 1, 1995, as the EOH starting date.
This amount will be paid in monthly installments of Two Hundred
Eighty-three Thousand Seventeen Dollars and Eighty-four Cents
($283,017.84, in 1994 dollars) per calendar month and are subject to
adjustments for inflation and EOH. If the final payment of the Base IF
Price is less than a full month's payment, then a full month's payment
will be invoiced by prorating the remaining portion of the monthly
payment utilizing the Second Base IF Price.
(4) Beginning with the April 1, 1998, fiscal year (i.e.; April to March),
both the Base IF Price and Second Base IF Price monthly payments will be
adjusted (up or down), each April 1, according to actual EOH utilization
rates for the prior years, relative to an assumed 8,000 EOH per year for
each unit of Equipment. The actual EOH for each unit of Equipment will
be calculated based on actual operations for the twelve (12) month
period beginning on March 1 of each year. Monthly payments will be
adjusted for contract-to-date cumulative EOH variations from the 96,000
EOH/year plan which will be spread over the remaining months of the
applicable period, according to the formulas in 5.3 (a)(6) below.
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(5) Effective immediately the monthly IF payments, for each month in the
contract fiscal year of April to March, after being adjusted for EOH
will then be increased or decreased, as the case may be, by the same
percentage as each of the following: Fifty percent (50%) of the increase
or decrease, if any, in the "Industry Labor Index", as defined and
calculated pursuant to Section 5.3(b) of the Service Agreement, from
January of the previous year to January of the subject calendar year and
Fifty percent (50%) of the increase or decrease, if any, in the
"Millwright Wage Rate", as defined and calculated pursuant to Section
5.3(b) of the Service Agreement, from January 1 of the previous calendar
year to January of the subject calendar year and as shown in the formula
contained in 5.3 (a)(6) below.
(6) Beginning with the April 1, 1998, payment and each year thereafter,
monthly payments will be calculated in accordance with the following
formula:
BASE IF PRICE FORMULA:
IFAMP = [BIFPRCV / ((768,000 - CAEOH) / 8,000)] x EOH x IFA
SECOND BASE IF PRICE FORMULA:
IFAMP = [SBIFPRCV / ((1,344,000 - CAEOH) / 8,000)] x EOH x IFA
Where:
IFAMP = Adjusted Monthly Payments
BIFPRCV = $27,169,713 less all amounts previously paid
SBIFPRCV = $20,377,284 less all amounts previously paid
768,000 = Total contract EOH (12 units x 8,000 EOH x 8 years) for
Base IF Period
1,344,000 = Total contract EOH (12 units x 8,000 EOH x 14 years) for
Second Base IF Period
CAEOH = Cumulative actual EOH of all units as of March 1 of each year
8,000 = 8,000 EOH per unit x 12 units / 12 months per year
EOH = CAEOH / Cumulative assumed EOH of all units as of March 1
of each year (12 units x 8,000 EOH x number of years into the
contract EOH, utilizing March 1, 1995, as the EOH starting
date).
IFA = Inspection Fee Adjustment: 50% of the increase or decrease
in both the Industry Labor Index and Millwright Wage Rate,
pursuant to Section 5.3 (b) of the Service Agreement.
*** SEE EXHIBIT C FOR SAMPLE CALCULATION.
(7) At 768,000 cumulative EOH, utilizing March 1, 1995, as EOH start date
(end of Base IF Period) and at 1,344,000 cumulative EOH, utilizing March
1, 1995, as EOH start date (end of Second Base IF Period) the Parties
will reconcile all payments made to ensure that the total payment,
expressed in 1994 dollars equals Twenty-seven Million One Hundred
Sixty-nine Thousand Seven Hundred Thirteen Dollars ($27,169,713) and
Twenty Million Three Hundred Seventy-seven Thousand Two Hundred
Eighty-four Dollars ($20,377,284) respectively. If the payments total
less than Base IF Price or Second Base IF Price at the end of the
respective terms, then MCV will make a true-up payment to ABB, if
payments will exceed the Base IF Price or Second Base IF Price prior to
reaching the applicable cumulative EOH levels, then payments will cease
once the Base IF Price or Second Base IF Price total payments have been
made.
(8) The IF shall be increased or decreased for Force Majeure Costs or
Change of Law Costs (as defined and set forth in the Contract).
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HOT GAS PATH PARTS ADDENDUM FEE:
5.5(d)
(1) MCV shall pay ABB for the supply of HGP Parts (including 11NM Parts
to be provided under this Amendment No. 2) and related technical
support, described in this Amendment No. 2. MCV shall pay ABB the sum
of One Hundred Fifty Eight Million Dollars ($158,000,000), in monthly
installments as set forth herein, stated in 1993 dollars ("Base Price")
and subject to adjustments for inflation and for US dollar to Swiss
Franc exchange rate differences. Payments will begin with the April 1,
1994, payment and continue until the monthly payments in 1993 dollars
totals One Hundred Fifty Eight Million Dollars ($158,000,000), prior to
adjustments for inflation and for US dollar to Swiss Franc exchange
differences, which will occur upon the accumulation of 864,000 EOH (the
"Base Period") utilizing March 1, 1994, as the EOH start date.
(2) Beginning with the first month after the Base Price of One Hundred
Fifty Eight Million Dollars ($158,000,000) has been paid (in 1993
dollars before adjustments for escalation or the Swiss Franc exchange
rate) MCV will then pay ABB the sum of One Hundred Eight Million Four
Hundred Ninety-three Thousand Three Hundred Thirty-three Dollars
($108,493,333), stated in 1993 dollars ("Second Base Price"), for the
supply of HGP Parts (including 11NM Parts to be provided under this
Amendment No. 2) and related technical support over the period covering
the subsequent two "C" Inspections of the Equipment which is expected to
conclude at 1,440,000 EOH (the "Second Base Period") utilizing March 1,
1994, as EOH starting date. This amount will be paid in monthly
installments and subject to adjustments for inflation, for US dollar to
Swiss France exchange differences. If the final payment of the Base
Price is less than a full month's payment, then a full month's payment
will be invoiced by prorating the remaining portion of the month
utilizing the Second Base Price.
(3) All payments are to be made monthly and are due on the first day of
each month.
(4) Beginning with the April 1, 1998, fiscal year (i.e.; April to March)
monthly Base Price and the monthly Second Base Price payments will be
adjusted (up or down), each April 1, according to actual EOH utilization
rates for the previous years, relative to an assumed 8,000 EOH per year
unit of Equipment. The actual EOH for each unit of Equipment will be
calculated based on actual operations for the twelve month period
beginning on March 1 of each year. Monthly payments will be adjusted
for contract-to-date cumulative EOH variations from the 96,000 EOH/year
plan, which will be spread over the remaining months of the applicable
period according to the formula shown in 5.5(d)(6).
(5) In addition the monthly payments will be adjusted for:
(i) Swiss inflation indices from January 1 of the previous
calendar year to January 1 of the current calendar year, pursuant
to Sections 5.5 (b) of the Service Agreement, and for
(ii) US dollar to Swiss Franc exchange rate differences, in
which the monthly payments will be further increased or decreased,
as the case may be, by the same percentage as the increase or
decrease, if any, from the 1993 contract base US dollar equivalent
of the Swiss Franc rate of $0.6750/SFr to that rate published in
the Wall Street Journal (WSJ) for trading in the spot market on
January 1 (or the first business day thereafter if a holiday) of
the current calendar year, in accordance with the following formula
and as shown in the formula contained in 5.5(d)(6).
Exchange Rate Adjustment = (Current year exchange rate, measured in
US$ per Swiss Franc, as published in the
WSJ on the first business day of the year
- Contract Base Exchange Rate of .6750) /
Contract Base Exchange Rate of .6750 .
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(6) Beginning with the April 1, 1998, payment and each year thereafter,
monthly payments will be calculated in accordance with the following
formula:
BASE PRICE FORMULA:
BPAMP = [BPRCV / ((864,000 - CAEOH) / 8,000] x EOH x E&CAF
SECOND BASE PRICE FORMULA:
SBPAMP = [SBPRCV / ((1,440,000 - CAEOH) / 8,000] x EOH x E&CAF
Where:
BPAMP = Adjusted Base Price Monthly Payments
SBPAMP = Adjusted Second Base Price Monthly Payments
BPRCV = $158,000,000 less all amounts previously paid during the
Base Period
SBPRCV = $108,493,333 less all amounts previously paid during the
Second Base Period
864,000= Base Price total contract EOH (12 units x 8,000 EOH x 9
years)
1,440,000 = Second Base Price total contract EOH (12 units x 8,000 EOH x
15 years)
CAEOH = Cumulative actual EOH of all units as of March 1 of each year
8,000 = 8,000 EOH per unit x 12 units / 12 months per year
EOH = CAEOH / Cumulative assumed EOH of all units as of March 1
of each year (12 units x 8,000 EOH x number of years into the
contract EOH, utilizing March 1, 1994, as EOH start date)
E&CAF = Cumulative Escalation and Yearly Currency Adjustment
Factor (Base Year 1993) in accordance with this Article 5.
*** SEE EXHIBIT D FOR SAMPLE CALCULATION.
(7) At 864,000 cumulative EOH, utilizing March 1, 1994, as EOH start date
(end of Base Period) and at 1,440,000 cumulative EOH, utilizing March 1,
1994, as EOH start date (end of Second Base Period) the Parties will
reconcile all payments made to ensure that the total payment, expressed
in 1993 dollars equals One Hundred Fifty Eight Million Dollars
($158,000,000) and One Hundred Eight Million Four Hundred Ninety-three
Thousand Three Hundred Thirty-three Dollars ($108,493,333),
respectively. If the payments total less than Base Price or Second Base
Price at the end of the respective terms, then MCV will make a true-up
payment to ABB, if payments will exceed the Base Price or Second Base
Price prior to reaching the applicable cumulative EOH levels , then
payments will cease once the Base Price or Second Base Price total
payments have been made.
5.5(e)
MCV shall pay ABB Forty-one Million Five Hundred Sixty Thousand Dollars
($41,560,000) for the supply of 11 sets of 11NM Parts, nine sets of VIGV's
and one (1) GT Rotor. Ten percent (10%) is to be invoiced upon signing of
this Amendment No. 2 and the remaining ninety percent (90%) will be invoiced
unit by unit (1/11 of the 90% balance) upon completion of each 72,000 EOH "C"
inspection. Payment is net thirty (30) days.
5.5(f)
MCV shall pay ABB a "One Time Payment" of Four Million Dollars ($4,000,000),
prior to adjustments for escalation or the Swiss Franc exchange rate. One
hundred percent (100%) will be invoiced upon completion of the first
scheduled 11NM "C" inspection of a NM converted unit. Payment is net thirty
(30) days. This payment is subject to the following adjustments:
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(i) Swiss inflation indices as of the calendar quarter of the year in
which the payment is to be made, relative to the first calendar quarter
of 1998, pursuant to Sections 5.5 (b) of the Service Agreement, and for
(ii) US dollar to Swiss Franc exchange rate differences, in which the
payment will be further increased or decreased, as the case may be, by
the same percentage as the increase or decrease, if any, from the US
dollar equivalent of the Swiss Franc rate published in the Wall Street
Journal (WSJ) on the first business day following the date of this
agreement to that rate published in the WSJ for trading in the spot
market on January 1 (or the first business day thereafter if a holiday)
of the year in which the payment is to be made, in accordance with the
following formula.
Exchange Rate Adjustment = [Current year exchange rate, as published in
the WSJ on first business day of year the
payment is to be made - Contract Base Exchange
Rate (the exchange rate on the first business
day following the date of this agreement as
published in the WSJ)] / Contract Base
Exchange Rate.
5.ARTICLE 9 - TERMINATION
Modify the Article by addition of the following language:
"Certain obligations in this Amendment No. 2, are severable from the Service
Agreement and Agreement Amendment No. 1, and may be separately terminated.
Should the:
- Service Agreement and Agreement Amendment No. 1 be terminated prior
to the completion of all ABB obligations under the Plan, the (i) HGPP
Addendum; (ii) HGP Parts Amendment No. 1; (iii) those provision of this
Amendment No. 2, applicable to the Plan; and (iv) all the terms and
conditions of the Service Agreement applicable to performance of the
Plan shall continue in full force and effect.
- Plan obligations of this Amendment No. 2, no longer be in effect
during the term of this Amendment No. 2, then the Service Agreement,
Agreement Amendment No. 1, and those portions of this Amendment No. 2
not applicable to the Plan will remain in effect and the purchase of
future HGP Parts shall be performed as if the Plan never existed.
In the event of any termination of the Plan and/or the services under the
Services Agreement pursuant to this Article 9, whether by MCV or ABB, MCV
shall pay ABB all amounts accrued and owing under Article 5, Payment, and in
addition, shall pay a pro rata share of the monthly payment, for the month in
which termination occurs, calculated by dividing the number of days in the
month occurring prior to the date of termination with the number of days in
the month of termination. Furthermore, if termination of the Plan is by MCV
for other than cause per 9.1 of the Services Agreement, MCV shall pay or
cause to be paid to ABB the amount of Fifteen Million Dollars ($15,000,000)
as liquidated damages and not as a penalty, which amount shall be the full
measure of damages of any kind whatsoever for MCV's termination of the Plan.
The liquidated damage value applicable to the Plan shall be reduced to Five
Million Dollars ($5,000,000) upon completion of the last 96,000 EOH "C"
inspection or July 1, 2003, which ever comes last. If termination of the
services under the Service Agreement is by MCV for other than cause per 9.1
of the Services Agreement after 2001 (prior to 2001 the Contract termination
schedule shown in Exhibit 9.2, shall continue to apply), MCV shall pay or
cause to be paid to ABB the amount of Five Hundred Thousand Dollars
($500,000), escalated in 1988 Dollars, as liquidated damages and not as a
penalty, which amount shall be the full measure of damages of any kind
whatsoever for MCV's termination of the services under the Services
Agreement. Any payment of liquidated damages required hereunder shall be
made within ten (10) calendar days of such termination of the Plan."
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6.ACCEPTANCE TESTING AND PERFORMANCE GUARANTEES
6.1 General:
ABB guarantees that the 11N GT units converted to 11NM will have, on
average, a gross:
1. KW Output increase, as measured at the gas turbine
generator terminals, of no less than 6.9% (i.e. 6,000 kW per unit
at MCV reference performance of 86.66 MW).
2. Efficiency increase, as measured at the gas turbine
generator terminals and combustor fuel input, of no less than 5%
multiplicative. (e.g. pre outage efficiency measured as 30% the
post installation performance guarantee point will be 31.5% [30% X
1.05])
6.2 Acceptance and Performance Testing:
All acceptance and performance testing ("Testing") shall be performed
by MCV at MCV's expense. A pre-outage test shall be performed by MCV on
each Unit within sixty (60) days of the "C" Inspection at which the
Unit will be upgraded and no more than seven (7) days after initial
operation of the Unit following completion of that "C" Inspection. Any
re-Testing that may be required shall be performed by MCV no more than
seven (7) days after initial operation of the Unit following ABB
correction. The final Testing procedure shall be mutually agreed upon.
ABB's and MCV's agreement on the Testing procedure shall not be
unreasonably withheld. If ABB and MCV are unable to mutually agree on
the test procedure, MCV may perform Testing, using calibrated
instruments, in accordance with the test procedure contained within
Unit 7 upgrade contract dated September 16, 1996. ABB shall be
provided the opportunity to witness all Testing and review all Testing
results. All test results shall be made available to ABB within thirty
(30) days following each test.
The Testing shall (i) utilize the data acquired during the Testing
allowing one (1) times the test uncertainty for verification of MWe
increase; and (ii) be furnished to ABB with a detailed description of
the analytical procedure used to perform the calculations.
6.3 Acceptance
Conformance:
If following Testing on a unit ABB has demonstrated that the 11 NM unit
performance (power and efficiency) is equal to or better than that
measured during the performance test conducted prior to conversion to
11NM, the unit shall be considered Accepted for the purposes of this
Agreement. Acceptance Testing shall not be deemed to have been
completed unless ABB has first been provided the opportunity to repair,
replace, modify or otherwise correct such Equipment, as may be
necessary to improve the performance to the specified performance.
Non-Conformance:
If following Testing on a unit ABB has not demonstrated that the 11 NM
unit performance (power and efficiency) is equal to or better than that
measured during the performance Testing conducted prior to conversion
to 11NM, MCV may, at its option:
(i) Accept the unit for the purposes of this Agreement,
notwithstanding any performance non-conformity, and ABB shall
proceed with the installation of the remaining units; or
(ii) Cancel the installation of the remaining units based upon
that unit's nonconformance with the performance acceptance
criteria. In the event of cancellation:
- ABB is obligated to fix within 36 months the
performance deficiency of any unit converted that does not at
least achieve the performance measure prior to conversion or
return the unit to 11N configuration;
- ABB shall be entitled to full payment for the
units actually converted;
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- ABB shall be paid any performance bonus for the
units actually installed and be responsible for any LDs for
the units actually installed which are not returned to 11N
configuration.
- All other provisions of this Amendment shall be
considered terminated, except that ABB shall be obligated to
support all 11 NM GT Units (if any) under the Contract which
are retained in operation by MCV and the Contract will be
restated as if this Amendment No. 2 never existed.
6.4 Remedy:
Liquidated Damages:
To the extent that upgraded Units are Accepted but fail to meet the
specified performance guarantees ABB, at its option, may within 36
months first repair, replace, modify or otherwise correct such
Equipment, as may be necessary to improve the performance to the
specified performance in lieu of liquidated damages.
In the event such repair, replacement, modification or otherwise
corrective work is performed successfully, as demonstrated by MCV
Testing performed within seven (7) days following completion by ABB of
the corrective action, the provisions of this Article regarding
liquidated damages ("LDs") shall not apply.
In any event, if the specified performance guarantees are not achieved
as demonstrated by MCV Testing performed within seven (7) days
following completion by ABB of the corrective action, ABB shall pay, as
LDs and not as a penalty, the sum of:
(i) Two Hundred Fifty Dollars ($250) per kW for each full kW
of performance less than the guaranteed KW Output increase
calculated as follows for those Units subject to LDs:
KWLDs = [(POKW * 1.069) - PIKW] x $250
Where:
KWLDs = KW Output Liquidated Damages (calculation must result
in a positive number to require payment of liquidated
damages)
POKW = Sum of the Pre-Outage Measured KW
PIKW = Sum of the Post Installation Measured KW
(ii) One Hundred Thousand Dollars ($100,000) for each full %,
on average, the units subject to LDs actual performance is less
than the guaranteed efficiency calculated as follows:
EFLD = [(1 - ((PIE)/(XXX x 1.05))) x 100]** x $100,000
** Rounded down (e.g. 1.25% converts to 1%)
Where:
EFLD = Efficiency Liquidated Damages (calculation must result
in a positive number to require payment of liquidated
damages)
XXX = Sum of the Pre-Outage Measured Efficiencies
PIE = Sum of the Post Installation Measured Efficiency
In no event shall the LDs set forth above exceed One Million Seven
Hundred Fifty Thousand Dollars ($1,750,000) per unit for all units
subject to LDs.
Bonus:
To the extent that the upgraded Unit exceed the following specified
levels, ABB shall be paid a Bonus equal to the sum of:
11
ABB
(i) Two Hundred Fifty Dollars ($250) per kW for each full kW
of performance more than the Bonus KW Output increase level
calculated as follows for those Units subject to Bonus:
KWB = [PIKW - (POKW * 1.161)] x $250
Where:
KWB = KW Output Bonus (calculation must result in a positive
number to require payment of bonus)
POKW = Sum of the Pre-Outage Measured KW
PIKW = Sum of the Post Installation Measured KW
(ii) One Hundred Thousand Dollars ($100,000) for each full %,
on average, the Units subject to Efficiency Bonus, actual
performance is more than the efficiency bonus point calculated as
follows:
EB = [(1 - ((PIE)/(XXX x 1.19))) x 100]** x $100,000
** Rounded down (e.g. 1.25% converts to 1%)
Where:
EB = Efficiency Bonus (calculation must result in a negative
number to require payment of EB)
XXX = Sum of the Pre-Outage Measured Efficiencies
PIE = Sum of the Post Installation Measured Efficiency
6.5 Exclusivity of Remedies:
ABB's obligations with respect to performance guarantees shall
terminate at the time (i) Testing is conducted and ABB pays LDs in
accordance with the provisions of 6.3 above; or (ii) the Testing is
conducted and the upgraded turbines meet or exceed the performance
guarantees; or (iii) the pre-outage or post outage Testing of any unit
is not conducted by MCV in accordance with the terms hereof. In the
event Testing is not conducted (i) all eleven (11) units will be deemed
Accepted by MCV for the purposes of this Agreement; (ii) all eleven
(11) units will be considered to have met all performance guarantees;
and to the extent that a Bonus is due ABB for units actually tested,
MCV shall pay such Bonus to ABB within thirty (30) days following
receipt therefor.
No additional warranty shall apply to such performance guarantees. The
guarantees contained herein and the specified remedies are the sole and
exclusive: (i) obligations of ABB and (ii) remedies and obligations of
MCV with respect to performance of the Work.
ENTIRE AGREEMENT:
Except as herein modified all other provisions of the Contract shall remain in
full force and effect. This Amendment No. 2, shall inure to the benefit of,
and be binding upon, the parties to this Contract and their respective
successors and assignees.
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment No. 2,
to be executed by their duly authorized officers or representatives effective
as of the date first above written.
MIDLAND COGENERATION VENTURE
LIMITED PARTNERSHIP ABB POWER GENERATION INC.
BY: XXXXX M, KEVRA BY: Xxxx Xxxxxxxxxx Xx.
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NAME: XXXXX X. XXXXX NAME: XXXX XXXXXXXXXX XX.
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TITLE: PRESIDENT TITLE: PRESIDENT
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DATE: JANUARY 20, 1998 DATE: JANUARY 20, 1998
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