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EXHIBIT 10.102
FIXED PRICE
ENGINEERING, PROCUREMENT
AND
CONSTRUCTION AGREEMENT
BETWEEN
EAST COAST POWER L.L.C.
AS OWNER
AND
NATIONAL ENERGY PRODUCTION CORPORATION
AS CONTRACTOR
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS 1
Section 1.1. Definitions. 1
Section 1.2. Interpretation. 15
ARTICLE 2 THE WORK 15
ARTICLE 3 CONTRACT DOCUMENTS 15
ARTICLE 4 RESPONSIBILITIES OF THE CONTRACTOR AND OWNER 16
Section 4.1. Design and Engineering Work. 16
Section 4.2. Procurement of Materials and Services. 18
Section 4.3. Inspections of Materials and Work. 18
Section 4.4. Construction and Installation. 19
Section 4.5. Training and Operations. 19
Section 4.6. Facility Site Conditions. 20
Section 4.7. Work Schedule and Detailed Schedule. 20
Section 4.8. As-Builts. 21
Section 4.9. Standard of Performance; Inspection. 21
Section 4.10. Corporate Guaranty Agreement. 21
Section 4.11. Project Manager. 22
Section 4.12. Government Authorizations. 22
Section 4.13. System Turnover Packages. 22
Section 4.14. Owner's Responsibilities. 22
ARTICLE 5 TIME OF COMMENCEMENT AND COMPLETION 22
Section 5.1. Commencement; Completion. 22
Section 5.2. Limited Notice to Proceed. 23
Section 5.3. Notice to Proceed. 23
Section 5.4. Owner Delay for Failure to Give Notice to Proceed. 23
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ARTICLE 6 FIXED PRICE CONTRACT 23
Section 6.1. Contract Price. 23
Section 6.2. Payment Schedule. 23
Section 6.3. Monthly Invoices. 24
Section 6.4. Monthly Payments. 24
Section 6.5. Payments Not Waiver or Acceptance of Work. 25
Section 6.6. Payment of Subcontractors. 25
Section 6.7. Interest and Disputed Invoices. 25
Section 6.8. Offsets. 25
Section 6.9. Change Orders. 26
Section 6.10. Owner Directed Changes. 26
Section 6.11. Contractor Requested Changes. 26
Section 6.12. Adjustments to Agreement; Performance of Changes. 27
Section 6.13. Other Provisions Unaffected. 28
Section 6.14. Impact of Excusable Event. 28
Section 6.15. Mitigation of Excusable Event. 29
ARTICLE 7 STAGES OF COMPLETION 29
Section 7.1. Notice of Mechanical Completion and Punch List. 29
Section 7.2. Start-Up and Performance and Reliability Testing. 30
Section 7.3. Test Prerequisites. 30
Section 7.4. Substantial Completion Criteria. 31
Section 7.5. Substantial Completion. 31
Section 7.6. Notice of Final Completion. 31
Section 7.7. Fuel-NG and Fuel-LSFO Supply and Generated Electricity. 32
Section 7.8. Title and Risk of Loss Until Substantial Completion. 32
ARTICLE 8 PERFORMANCE TESTS AND RELIABILITY TEST 33
Section 8.1. Performance Tests. 33
Section 8.2. Failure to Meet Minimum Performance Guarantees. 34
Section 8.3. Remedial Work; Costs and Performance of Remedial Work. 34
Section 8.4. Re-Performance of Performance Tests. 35
Section 8.5. Failure to Meet Performance Guarantees and Substantial Completion Prior to the
Guaranteed Completion Date. 35
Section 8.6. Liquidated Damages Not a Penalty. 35
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Section 8.7. Other Performance Guarantee Exclusions. 35
Section 8.8. Reliability Test. 35
ARTICLE 9 RESPONSIBILITIES OF CONTRACTOR 36
Section 9.1. Supervision. 36
Section 9.2. Employees and Agents. 36
Section 9.3. No Reliance. 36
Section 9.4. Labor and Materials. 36
Section 9.5. Discipline. 36
Section 9.6. Taxes. 36
Section 9.7. Governmental Authorizations, Fees, and Notices. 37
Section 9.8. Compliance with Laws. 37
Section 9.9. Liability for Breach. 37
Section 9.10. Contractor Staffing. 37
Section 9.11. Record Documents. 39
Section 9.12. Quality Control. 39
Section 9.13. Periodic Status Report. 40
Section 9.14. Use of Facility Site and Existing Facility Site, Hazardous Materials and Clutter 40
Section 9.15. Cleaning Up. 42
Section 9.16. Independent Contractor. 42
Section 9.17. Operations Manual. 43
Section 9.18. Operating Spare Parts; Owner Provided Start-Up Spare Parts. 43
Section 9.19. Office space/utilities. 43
ARTICLE 10 WARRANTIES 43
Section 10.1. Complete Facility. 43
Section 10.2. Warranty Period. 44
Section 10.3. Remedial Warranty Work. 44
Section 10.4. Procedures for Remedial Warranty Work. 45
Section 10.5. Other Warranty Exclusions. 45
Section 10.6. Subcontractor Warranties. 45
Section 10.7. Year 2000 Warranty. 46
Section 10.8. No Implied Warranties and Exclusive Remedy. 46
ARTICLE 11 INDEMNIFICATION 46
Section 11.1. Contractor's Indemnification of Owner. 46
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Section 11.2. Owner's Indemnification of Contractor. 47
Section 11.3. Patent Indemnity. 47
Section 11.4. Notice. 47
Section 11.5. Defense of Claims. 48
Section 11.6. Other Provisions; Survival. 48
ARTICLE 12 INSURANCE 48
ARTICLE 13 PROTECTION OF PERSONS AND PROPERTY 48
Section 13.1. Safety Precautions and Programs. 48
Section 13.2. Occupational Safety and Health Act. 49
Section 13.3. EEO Compliance. 49
Section 13.4. Emergencies. 50
ARTICLE 14 SUBCONTRACTORS 50
ARTICLE 15 LIENS 51
ARTICLE 16 PATENTS, OWNERSHIP OF DOCUMENTS AND CONFIDENTIAL INFORMATION 51
Section 16.1. No Incorporation. 51
Section 16.2. Confidential Information. 51
Section 16.3. Disclosure of Confidential Information. 52
Section 16.4. Exchange of Information and Publication. 53
ARTICLE 17 TERMINATION OF AGREEMENT 53
Section 17.1. Termination Events. 53
Section 17.2. Termination for Convenience. 54
Section 17.3. Termination Due to the Owner's Default. 54
Section 17.4. Payment on Termination 55
ARTICLE 18 OWNER'S RIGHT TO STOP THE WORK 56
Section 18.1. Suspension of Work Without Cause. 56
Section 18.2. Substitute Performance 56
ARTICLE 19 OTHER PROVISIONS 56
Section 19.1. Notices 56
Section 19.2. No Waiver. 58
Section 19.3. Governing Law. 58
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Section 19.4. Dispute Resolution. 58
Section 19.5. Owner's project director, Owner's Representative and owner's engineer. 59
Section 19.6. Headings. 59
Section 19.7. Non-Waiver Clause. 59
Section 19.8. Severability. 60
Section 19.9. Assignment and Financing Support. 60
Section 19.10. No Third Party Beneficiaries. 61
Section 19.11. Limitation of Liability. 61
Section 19.12. Waiver of Consequential Damages. 61
Section 19.13. Amendments. 62
Section 19.14. Title to Fuel and Electrical Output. 62
Section 19.15. Non-Collusion. 62
Section 19.16. Counterparts. 62
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EXHIBITS
Exhibit A - Contract Price
Exhibit A-1 - Contractor's Affidavit
Exhibit A-2 - Contractor's Final Affidavit and Release of Liens
Exhibit A-3 - Subcontractor's Affidavit and Release of Liens
Exhibit B - Work Schedule
Exhibit C - Statement of Work
Exhibit C-1 - Training
Exhibit D - Key Work
Exhibit E - Performance Guarantees
Exhibit F - Liquidated Damages
Exhibit G - Performance Tests
Exhibit G-1 - Output and Heat Rate Test Procedure Guidelines
Exhibit G-2 - Sound Test Procedure Guidelines
Exhibit G-3 - Emission Test Procedure Guidelines
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Exhibit G-4 - Reliability Test
Exhibit G-5 - Steam Output Procedure Guidelines
Exhibit H - Insurance
Exhibit I - Enron Corp Guarantee
Exhibit J - Existing Facility Site
Exhibit K - Change Order Pricing
Exhibit L - Drawings and Specifications
Exhibit M - Construction Permits and Governmental Authorizations
Exhibit N - Owner's Responsibilities
Exhibit O - Warranty Claim Procedures
Exhibit P - Fuel Specifications
Exhibit Q - Warranty Claim Form
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FIXED PRICE
ENGINEERING, PROCUREMENT
AND
CONSTRUCTION AGREEMENT
THIS FIXED PRICE ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT
("Agreement" or "Contract"), is entered into upon the 2nd day of June, 2000
("the Effective Date"), between East Coast Power L.L.C. ("Owner"), a Delaware
limited liability company, whose address is 711 Louisiana, Suite 3200, Houston,
Texas 77002-2716 and National Energy Production Corporation ("Contractor"), a
Delaware corporation, whose address is 11831 North Creek Parkway N., Bothell,
Washington 98011. Owner and Contractor shall be, individually, a "Party".
RECITALS
A. Owner desires to engage Contractor to provide turnkey services for the
design and engineering of, procurement for and construction,
commissioning and testing of a nominal 172 MW gas-fired cogeneration
plant, utilizing a newly-manufactured General Electric Model 7FA
Combustion Turbine Generator Set, currently owned by Owner and located
at the manufacturing facility of General Electric Company, in
Greenville, South Carolina (the "Turbine") and a dual pressure level
HRSG and associated equipment under the terms and provisions set forth
herein; and,
B. Contractor desires to undertake and fully perform such services under
the provisions set forth herein; and,
C. Contemporaneously with the execution hereof, Owner has assigned to
Contractor that certain purchase order for the Turbine dated as of
December 27, 1999, executed as of December 30, 1999 and effective
February 4,1999, by and between Enron North America Corp., a Delaware
corporation, as "Purchaser", and General Electric Company, a New York
corporation, as "Seller," as amended (the "Purchase Order"), which
Purchase Order was previously assigned by Enron North America Corp. to
Owner pursuant to that certain assignment dated as of December 30,
1999, so that the Turbine shall be part of the Equipment to be
supplied by Contractor hereunder.
D. NOW, THEREFORE, in consideration of the agreement of Owner to pay the
Contract Price to Contractor, and of the premises and the mutual
covenants and conditions herein contained, Owner and Contractor do
hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. DEFINITIONS.
The following definitions shall apply to this Agreement:
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"ADJUSTED ELECTRICAL OUTPUT-LSFO" shall mean the Electrical Output-LSFO
measured under the conditions of a Performance Test-LSFO but which is corrected
to the Guarantee Conditions as outlined in the guidelines of Exhibits G and
G-1.
"ADJUSTED ELECTRICAL OUTPUT-NG" shall mean the Electrical Output-NG measured
under the conditions of a Performance Test-NG but which is corrected to the
Guarantee Conditions as outlined in the guidelines of Exhibits G and G-1.
"ADJUSTED HEAT RATE-LSFO" shall mean the Heat Rate-LSFO measured under the
conditions of a Performance Test-LSFO but which is corrected to the Guarantee
Conditions as outlined in Exhibits G and G-1.
"ADJUSTED HEAT RATE-NG" shall mean the Heat Rate-NG measured under the
conditions of a Performance Test-NG but which is corrected to the Guarantee
Conditions as outlined in Exhibits G and G-1.
"ADJUSTED HP STEAM OUTPUT-LSFO" shall mean the HP Steam Output-LSFO as measured
under the conditions of a Performance Test-LSFO but which is corrected to the
Guarantee Conditions as outlined in the guidelines of Exhibits G, G-1 and G-5.
"ADJUSTED HP STEAM OUTPUT-NG" shall mean the HP Steam Output-NG as measured
under the conditions of a Performance Test-NG but which is corrected to the
Guarantee Conditions as outlined in the guidelines of Exhibits G, G-1 and G-5.
"ADJUSTED IP STEAM OUTPUT-LSFO" shall mean the IP Steam Output-LSFO as measured
under the conditions of a Performance Test-LSFO but which is corrected to the
Guarantee Conditions as outlined in the guidelines of Exhibit G, G-1 and G-5.
"ADJUSTED IP STEAM OUTPUT-NG" shall mean the IP Steam Output-NG as measured
under the conditions of a Performance Test-NG but which is corrected to the
Guarantee Conditions as outlined in the guidelines of Exhibit G, G-1 and G-5.
"ADJUSTED STEAM OUTPUT" shall mean collectively the Adjusted HP Steam
Output-NG, the Adjusted IP Steam Output-NG, the Adjusted HP Steam Output-LSFO
and the Adjusted IP Steam Output-LSFO.
"AFFILIATE" shall mean in relation to any Party, a Person that controls, is
controlled by, or is under common control with such Party. As used in this
definition the term "control" means, with respect to a Person that is a
corporation, the ownership, directly or indirectly, of more than 50% of the
voting securities of such Person or, with respect to a Person that is not a
corporation, the power to direct the management or policies of such Person,
whether by operation of law, by contract, or otherwise. For purposes of this
Agreement, Cogen Technologies Linden Venture, L.P. shall be deemed an Affiliate
of Owner (regardless of whether Cogen Technologies Linden Venture, L.P. meets
the requirements of the foregoing definition of "Affiliate" in its relationship
with Owner.
"AIR PERMIT" shall mean the Air Pollution Control Permit and Prevention of
Significant Deterioration Permit, Permit Activity #990003, Facility ID #40955,
Approval Date December 7, 1999,
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Expiration Date December 6, 2004, issued by the State of New Jersey, Department
of Environmental Protection.
"AIR EMISSIONS GUARANTEES" shall mean the Air Emissions Guarantee-NG and the
Air Emissions Guarantee-LSFO.
"AIR EMISSIONS GUARANTEE-LSFO" shall have the meaning set forth in Section 2.3
of Exhibit E.
"AIR EMISSIONS GUARANTEE-NG" shall have the meaning set forth in Section 2.2 of
Exhibit E.
"AIR EMISSIONS TEST" has the meaning set forth in Exhibit G-3.
"AS-BUILTS" shall mean the completed and corrected drawings of the Facility as
actually constructed as of the date of Final Completion and as certified by a
P.E.
"BAR" shall have the meaning set forth in Exhibit H.
"BASE LOAD" shall mean the operation of the Facility at 100% Electrical Output
for the prevailing ambient temperature, relative humidity, barometric pressure,
fuel heating value, exhaust temperature limitation, rated frequency and
voltage.
"BUSINESS DAYS" means days in which national banks are open for business in New
York, New York.
"CHANGE IN LAW" shall mean the occurrence of any of the following after the
Effective Date:
(a) the enactment of any new Law;
(b) the modification or repeal of any existing Law;
(c) a change in the interpretation or application of Law;
(d) the imposition of a requirement for Governmental
Authorizations not required at the Effective Date or
reasonably expected on the Effective Date to be required
following the Effective Date to carry out the Work;
(e) after the date of grant of any Governmental Authorizations a
change in the terms and conditions attaching to such
Governmental Authorizations or the attachment of any new
terms or conditions;
(f) any Governmental Authorizations (other than Construction
Permits) not being granted on a timely basis on application
therefor having been duly made; or
(g) any such Governmental Authorizations as has been granted
ceasing to remain in full force and effect for reasons not
attributable to the claiming party or, if granted for a
limited period, not being renewed on a timely basis on
application therefor being duly made, or being renewed on
terms or subject to conditions which are materially less
favorable to the Contractor than those attached to the
original Governmental Authorizations, and which are more
burdensome on Contractor
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than the Laws or Governmental Authorizations in effect on the
Effective Date, or in the case of Governmental Authorization,
are more burdensome than the request conditions committed to
in application for such Governmental Authorization where an
Official Governmental Authorization has not been issued prior
to the Effective Date but with respect to which an
application has been filed,
and, in each case, which are more burdensome on Contractor than the Laws or
Governmental Authorizations in effect on the Effective Date, or in the case of
Governmental Authorizations, are more burdensome than the requirements and
conditions committed to in application for such Governmental Authorizations
where an official Governmental Authorization has not been issued prior to the
Effective Date but with respect to which an application has been filed.
"CHANGE" shall mean any material deviation in the Agreement other than a formal
written amendment to the Agreement executed by the Parties.
"CHANGE ORDER" shall mean a written order pursuant to Article 6.
"CONSTRUCTION PERMITS" shall mean the Air Permit, the City of Linden, New
Jersey Planning Board approval, the Department of Community Affairs of the
State of New Jersey approval; and any other required permits to allow the
commencement and completion of construction of the Facility.
"CONTRACT DOCUMENTS" shall have the meaning set forth in Article 3.
"CONTRACT PRICE" shall have the meaning set forth in Exhibit A.
"CONTRACTOR" shall have the meaning set forth in the introductory paragraph of
this Agreement.
"CONTRACTOR CHANGE REQUEST" shall have the meaning set forth in Section 6.12.
"CONTRACTOR PARTIES" shall mean Contractor, its Affiliates, agents, officers,
directors, employees, representatives, insurers, Subcontractors, and all of
their respective agents, officers, directors, employees, representatives,
contractors, and subcontractors, or anyone of which to be referred to
individually as a "Contractor Party".
"CONTRACTOR PROJECT MANAGER" shall mean Richard Kuprewicz or any other person
designated as such by Contractor in a notice in writing to Owner.
"CORRECTION PERIOD" shall have the meaning set forth in Section 8.3.
"CUSTOMER" shall mean Bayway Refining Company and other Owner customers taking
Electrical Output from the Facility.
"DEFAULT RATE" shall mean the rate of interest calculated from the date a
payment was due until the date payment is made and shall be at the lesser of
(a) a rate of interest one percent above the rate announced from time to time
by Morgan Guaranty Trust Company, New York as its prime commercial interest
rate, and (b) the maximum amount of non-usurious interest permitted by law.
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"DATE OF SUBSTANTIAL COMPLETION" shall mean the date Contractor delivers to
Owner the Notice of Substantial Completion which is subsequently endorsed as
approved by Owner as set forth in Section 7.5.
"DELAY LIQUIDATED DAMAGES" shall have the meaning set forth in Exhibit F.
"DELIVERY" means, with respect to any equipment and other goods provided by
Contractor to be incorporated into the Facility, transportation of such goods
to and placement of such goods at the Facility Site.
"DISPUTE" shall mean any material claim or disagreement over the terms of this
Agreement, payments due hereunder, the performance of the Work, or other
matters concerning the Work or the Contract Documents.
"DRAWINGS AND SPECIFICATIONS" shall mean the Drawings and Specifications listed
in Exhibit L.
"EFFECTIVE DATE" shall be the date set forth in the introductory paragraph of
this Agreement.
"ELECTRICAL OUTPUT" shall mean the Electrical Output-LSFO and Electrical
Output-NG produced by the Facility.
"ELECTRICAL OUTPUT-LSFO" shall mean the electrical power produced at the
Facility as measured at the generator terminals minus the Net Auxiliary Power
while operating on Fuel-LSFO at Base Load.
"ELECTRICAL OUTPUT-NG" shall mean the electrical power produced at the Facility
as measured at the generator terminals minus the Net Auxiliary Power while
operating on Fuel-NG at Base Load.
"ELECTRICAL OUTPUT GUARANTEE-LSFO" shall mean that the average Adjusted
Electrical Output-LSFO shall meet or exceed the value set forth in Section 3.3
of Exhibit E.
"ELECTRICAL OUTPUT GUARANTEE-NG" shall mean that the average Adjusted
Electrical Output-NG shall meet or exceed the value set forth in Section 3.1 of
Exhibit E.
"ELECTRICAL OUTPUT, HEAT RATE & STEAM OUTPUT TEST" has the meaning as set forth
in Exhibit G-1.
"ELECTRICAL OUTPUT LIQUIDATED DAMAGES-LSFO" shall have the meaning set forth in
Section 2.2 of Exhibit F.
"ELECTRICAL OUTPUT LIQUIDATED DAMAGES-NG" shall have the meaning set forth in
Section 2.1 of Exhibit F.
"EMISSIONS GUARANTEE-LSFO" shall have the meaning set forth in Section 2.3 of
Exhibit E.
"EMISSIONS GUARANTEE-NG" shall have the meaning set forth in Section 2.2 of
Exhibit E.
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"EQUIPMENT" means the equipment to be supplied by Contractor in accordance with
the terms of this Agreement.
"EXCUSABLE EVENT" means any unforeseeable or unpreventable event beyond the
reasonable control, and without negligence of, such Party (or any third Person
over whom such Party has control including any subcontractor) and which causes
a delay in or total or partial failure of the performance by such Party of its
obligations hereunder. Subject to the foregoing, Excusable Event shall include
but shall not be limited to: Owner Delay, Change in Law, Facility Site
Variations, Owner caused physical damage to the Work at the Facility Site, and
force majeure events, including sabotage, acts of (declared or undeclared) war,
acts of civil or military authority, guerilla or terrorist activity, public
enemy acts, civil riots or disobedience, restrictions by order of a court or
public authority, riot, blockade, or other economic sanction of an official
nature, explosions, fires, action or inaction of any Governmental Authority,
national, regional or local strikes, work stoppages, boycotts, walkouts or
other labor disputes (except those that are directed at the Contractor at the
Facility Site), floods, storms, accidents in shipping, hurricanes, tornadoes,
fuel or energy shortage, fire, lightning, epidemics, sand storm, plague,
holocaust or other events similar to the foregoing affecting either Party.
Notwithstanding the foregoing, an Excusable Event shall not include delay
resulting from (i) normal weather conditions which could reasonably be
anticipated by experienced contractors operating in New Jersey, (ii) the
occurrence of any manpower or equipment shortages except if such shortage
results from an act, event or condition which would constitute an event giving
rise to an Excusable Event or (iii) any delay, default or failure (direct or
indirect) in obtaining equipment, or any subcontractor or worker performing any
Work or any other delay, default or failure (financial or otherwise) of a
subcontractor, vendor or supplier except if such delay, default or failure
results from any act, event or condition which would, with respect to such
subcontractor, supplier or vendor, as the case may be, give rise to an
Excusable Event if such supplier, subcontractor or vendor were a Party to this
Contract. A Party's financial inability to perform shall not constitute an
Excusable Event.
"EXISTING FACILITY" OR "EXISTING PLANT" shall mean the 725 MW gas-fired
combined cycle cogeneration facility owned by Cogen Technologies Linden
Venture, L.P. and located in Linden, New Jersey on the Existing Facility Site
of the Bayway Refinery facility, but excluding the Facility.
"EXISTING FACILITY SITE" shall mean the site on which the Existing Facility is
located as shown on the site plan set out in Exhibit J.
"EXTENDED WARRANTY PERIOD" shall have the meaning set forth in Section 10.2.
"FACILITY" shall mean the nominal 172 MW gas-fired power station to be located
at Owner's Existing Facility Site location and including the Turbine and all
other energy producing equipment and its auxiliary equipment, electrical
transformers, interconnection facilities and metering facilities, as may be
required for the receipt of fuel and for delivery of steam and electricity, and
all other improvements, related solely to the power station and located on the
Facility Site, all as set forth in the Statement of Work.
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"FACILITY SITE" shall mean the area and the land, spaces, above or below the
ground as described in Exhibit J.
"FACILITY SITE ACCESS AND SAFETY PROCEDURES" shall have the meaning set forth
in Section 9.14(a)
"FACILITY SITE MANAGER" shall have the meaning set forth in Section 9.10.2.
"FACILITY SITE VARIATIONS" shall have the meaning set out in Section 4.6.
"FAR SOURCE SOUND LEVEL GUARANTEE" shall have the meaning set forth in Section
1.2 of Exhibit E.
"FINAL COMPLETION" shall have the meaning as set forth in Section 7.6.
"FINANCIAL CLOSE" shall mean the execution of all loan agreements, security
agreements, promissory notes, equity commitments, and guarantees and other
financing agreements by the Lenders and the Owner and its affiliates in
connection with the provision of long term project financing of the Facility
and the Work in an amount not less than the Contract Price plus a reasonable
contingency, the satisfaction or waiver of all conditions precedent to the
general availability of funds to Owner for the construction of the Facility
under such financing agreements, and the occurrence of the initial disbursement
of funds thereunder by the lenders.
"FUEL" shall mean Fuel-LSFO and Fuel-NG.
"FUEL DELIVERY POINT" shall be the point of interconnection between the
Facility and a new natural gas and liquid fuel transportation facility to be
constructed at the border of the Facility Site.
"FUEL-LSFO" shall mean low sulfur fuel oil in accordance with the Fuel
Specifications.
"FUEL-NG" shall mean natural gas in accordance with the Fuel Specifications.
"FUEL SPECIFICATIONS" shall have the meaning set forth in Exhibit P.
"GOOD INDUSTRY PRACTICE" OR "GIP" shall mean those practices, methods,
techniques and standards, as in effect or generally applicable on the date of
this Agreement, that are generally accepted for use in the electric power
generation industry in the United States and commonly used in prudent power
generation engineering and operations to design, engineer, construct, test,
operate and maintain equipment lawfully, safely, efficiently and economically
as applicable to equipment of the size, service and type used in the Facility;
provided, however, that Good Industry Practice is not intended to be limited
solely to the optimum practice, methods or actions to the exclusion of all
other practices, methods or actions but is instead to be construed as a range
of possible practices used by contractors, owners and operators of power
generating facilities similar to the Facility in terms of capacity, location
and operating characteristics. Good Industry Practice shall in all events
include compliance in the performance of the Work with environmental standards
and requirements set forth in the Statement of Work and observance of
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all environmental protection laws applicable to the Facility in effect from
time to time in New Jersey and the United States.
"GOVERNMENTAL AUTHORITY" shall mean any national, state or local government and
any political subdivision thereof and any other governmental,
quasi-governmental, administrative, judicial, public or statutory body,
ministry, department, instrumentality, agency, authority, board, bureau,
corporation or commission with jurisdiction over the Facility.
"GOVERNMENTAL AUTHORIZATIONS" shall mean, without limitation, any clearance,
consent, license, approval, permit, rule, regulation, ordinance, order, code or
standard issued or required to be issued by any Governmental Authority.
"GUARANTEED COMPLETION DATE" shall have the meaning as set forth in Section
5.1.
"GUARANTEE CONDITIONS" shall have the meaning set forth in Section 4.0 of
Exhibit G.
"HAZARDOUS MATERIALS" shall mean (i) any petroleum or petroleum product,
asbestos in any form that is or could become friable, dielectric fluid
containing levels of polychlorinated biphenyl (PCB's) or mercury (whether
sealed within equipment or otherwise); (ii) any material or substance which is
deemed a pollutant, or hazardous or toxic substance under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.,ss.9601 et
seq., the Resource Conservation and Recovery Act 42 U.S.C.,ss.6901 et seq., the
Toxic Substances Control Act, 15 U.S.C.,ss.2601 et seq., and any other New
Jersey or U.S. federal law, rule, regulation, ordinance or requirement, all as
amended or hereafter amended, or deemed to be such by a Government Authority
generally or relating to the generation, excavation, transportation, removal or
disposal of pollutants or hazardous or toxic substances and materials.
"HEAT RATE" shall mean Heat Rate-LSFO and Heat Rate-NG.
"HEAT RATE GUARANTEES" mean the Heat Rate Guarantee-LSFO and the Heat Rate
Guarantee-NG.
"HEAT RATE GUARANTEE-LSFO" shall mean that the average Adjusted Heat Rate-LSFO
shall not exceed the value set forth in Section 4.3 of Exhibit E.
"HEAT RATE GUARANTEE-NG" shall mean that the average Adjusted Heat Rate-NG
shall not exceed the value set forth in Section 4.1 of Exhibit E..
"HEAT RATE LIQUIDATED DAMAGES" shall mean the combination of Heat Rate
Liquidated Damages-LSFO and Heat Rate Liquidated Damages-NG, in the aggregate.
"HEAT RATE LIQUIDATED DAMAGES-LSFO" shall have the meaning set forth in Section
2.4 of Exhibit F.
"HEAT RATE LIQUIDATED DAMAGES-NG" shall have the meaning set forth in Section
2.3 of Exhibit F.
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"HEAT RATE-LSFO" shall mean the heat rate of the Turbine as measured following
the protocol outline in Exhibit F of the Purchase Order while operating the
Turbine on Fuel-LSFO at Base Load.
"HEAT RATE-NG" shall mean the heat rate of the Turbine as measured following
the protocol outline in Exhibit F of the Purchase Order while operating the
Turbine on Fuel-NG at Base Load.
"HP STEAM GUARANTEE-LSFO" shall mean that the average Adjusted HP Steam
Output-LSFO shall be equal to or exceed the value set forth in Section 5.3 of
Exhibit E.
"HP STEAM GUARANTEE-NG" shall mean that the average Adjusted HP Steam Output-NG
shall be equal to or exceed the value set forth in Section 5.1 of Exhibit E.
"HP STEAM OUTPUT-LSFO" shall mean the high pressure steam output while
operating on Fuel-LSFO at Base Load as measured at the high pressure steam flow
meter.
"HP STEAM OUTPUT-NG" shall mean the high pressure steam output while operating
on Fuel-NG at Base Load as measured at the high pressure steam flow meter.
"HRSG" means heat recovery steam generator.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the meaning set forth
in Section 11.5.
"INDEPENDENT ENGINEER" means an individual or entity of high standing and
established reputation, expert in the field of designing and constructing
facilities of the type representative of the Facility, or in the event that
Lender appoints an independent engineer, the independent engineer so appointed.
"IP STEAM GUARANTEE-LSFO" shall mean that the average Adjusted IP Steam
Output-LSFO shall be equal to or exceed the value set forth in Section 5.7 of
Exhibit E.
"IP STEAM GUARANTEE-NG" shall mean that the average Adjusted IP Steam Output-NG
shall be equal to or exceed the value set forth in Section 5.5 of Exhibit E.
"IP STEAM OUTPUT-LSFO" shall mean the intermediate pressure steam output while
operating on Fuel-LSFO at Base Load as measured at the intermediate pressure
steam flow meter.
"IP STEAM OUTPUT-NG" shall mean the intermediate pressure steam output while
operating on Fuel-NG at Base Load as measured at the intermediate pressure
steam flow meter.
"LAW" shall mean, without limitation, any applicable environmental, health,
safety, or other law, rule, regulation, ordinance, order, permit, code,
standard, directive or other Governmental Authorization of any Governmental
Authority.
"LENDER" means the bank(s), financial institution(s) or other Person(s)
providing financing or refinancing for the construction and/or permanent
financing for the Project or any agent or trustee of any of the foregoing.
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"LIMITED NOTICE TO PROCEED" shall have the meaning set forth in Section 5.2.
"LIQUIDATED DAMAGES" shall mean the Delay Liquidated Damages and/or Performance
Liquidated Damages, collectively or independently, as required by the context
in which the term is used.
"MECHANICAL COMPLETION" shall mean, with respect to the Facility, the
completion of the Work relating thereto, including the setting of the
applicable equipment on foundations; connecting such equipment to other
applicable equipment with piping, wiring, controls, and safety systems;
ensuring that such equipment and such related operating systems are
individually cleaned, leak checked, lubricated, and point-to-point checked to
verify that such equipment and such related operating systems have been
correctly installed so as to respond to simulated test signals equivalent to
actual signals received during operation; and ensuring that such equipment and
related operating systems are ready for initial operation, adjustment and
testing and may be so operated, adjusted and tested without damage thereto or
to any other property and without injury to any person. Mechanical Completion
shall include but not be limited to the following pre-commissioning activities
with respect to the applicable unit, system or component: stroking of all
control valves, phase rotation of electrical equipment, and continuity of other
electrical circuits (including loop checks) and response of controls and
control equipment.
"MINIMUM PERFORMANCE ELECTRICAL OUTPUT GUARANTEE-LSFO" shall mean that the
average Adjusted Electrical Output-LSFO shall meet or exceed the value set
forth in Section 3.4 of Exhibit E.
"MINIMUM PERFORMANCE ELECTRICAL OUTPUT GUARANTEE-NG" shall mean that the
average Adjusted Electrical Output-NG shall meet or exceed the value set forth
in Section 3.2 of Exhibit E..
"MINIMUM PERFORMANCE HEAT RATE GUARANTEE-LSFO" shall mean the average Adjusted
Heat Rate-LSFO shall not exceed the value set forth in Section 4.4 of Exhibit
E.
"MINIMUM PERFORMANCE HEAT RATE GUARANTEE-NG" shall mean the average Adjusted
Heat Rate-NG shall not exceed the value set forth in Section 4.2 of Exhibit E.
"MINIMUM PERFORMANCE GUARANTEES" shall mean the Minimum Performance Guarantees-
LSFO and Minimum Performance Guarantees-NG, collectively or independently, as
required by the context in which the term is used.
"MINIMUM PERFORMANCE GUARANTEES-LSFO" shall mean (a) the Minimum Performance
Electrical Output Guarantee-LSFO, (b) Emissions Guarantee-LSFO, (c) Minimum
Performance Heat Rate Guarantee-LSFO, (d) Minimum Performance Steam Output
Guarantee-LSFO and (e) Steam Purity Guarantee.
"MINIMUM PERFORMANCE GUARANTEES-NG" shall mean (a) the Minimum Performance
Electrical Output Guarantee-NG, (b) Emissions Guarantee-NG, (c) Minimum
Performance Heat Rate Guarantee-NG, (d) Near Source Sound Level Guarantee, (e)
Far Source Sound Level Guarantee, and (f) Minimum Performance Steam Output
Guarantee-NG.
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"MINIMUM PERFORMANCE HP STEAM GUARANTEE-LSFO" shall mean that the average
Adjusted HP Steam Output-LSFO shall be equal to or exceed the value set forth
in Section 5.4 of Exhibit E.
"MINIMUM PERFORMANCE HP STEAM GUARANTEE-NG" shall mean that the average
Adjusted HP Steam Output-NG shall be equal to or exceed the value set forth in
Section 5.2 of Exhibit E.
"MINIMUM PERFORMANCE IP STEAM GUARANTEE-LSFO" shall mean that the average
Adjusted IP Steam Output-LSFO shall be equal to or exceed the value set forth
in Section 5.8 of Exhibit E.
"MINIMUM PERFORMANCE IP STEAM GUARANTEE-NG" shall mean that the average
Adjusted IP Steam Output-NG shall be equal to or exceed the value set forth in
Section 5.6 of Exhibit E.
"MINIMUM PERFORMANCE STEAM OUTPUT GUARANTEE-NG" shall mean the Minimum
Performance HP Steam Output Guarantee-NG and the Minimum Performance IP Steam
Output Guarantee-NG.
"MONTH" shall mean a calendar month.
"NEAR SOURCE SOUND LEVEL GUARANTEE" shall have the meaning set forth in Section
1 of Exhibit E.
"NET AUXILIARY POWER" shall mean the station power consumption as measured at
the 4160 volt switchgear minus the 480 volt power supplied to PSE&G as measured
at the 480 volt switchgear, plus the generator step up transformer losses as
measured during factory testing. In equation form, Net Auxiliary Power = (Power
consumption at 4160 switchgear - power supplied to PSE&G at 480 switchgear) +
GSU losses measured during factory testing.
"NJDEP" shall mean the New Jersey Department of Environmental Protection.
"NOTICE OF FINAL COMPLETION" shall have the meaning set forth in Section 7.6.
"NOTICE OF MECHANICAL COMPLETION" shall have the meaning set forth in Section
7.1.
"NOTICE OF SUBSTANTIAL COMPLETION" shall have the meaning set forth in Section
7.5.
"NOTICE TO PROCEED" shall have the meaning as set forth in Section 5.3.
"OFFSET" shall have the meaning set forth in Section 6.9.
"OPERATIONS MANUAL" shall have the meaning set forth in Section 9.17.
"OPERATOR" shall mean the entity which is to enter into an agreement with Owner
for the operations and maintenance of the Facility.
"OUTPUT LIQUIDATED DAMAGES-LSFO" shall mean Electrical Output Liquidated
Damages-LSFO and Steam Output Liquidated Damages-LSFO.
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"OUTPUT LIQUIDATED DAMAGES-NG" shall mean Electrical Output Liquidated
Damages-NG and Steam Output Liquidated Damages-NG.
"OWNER" shall have the meaning set forth in the introductory paragraph of this
Agreement.
"OWNER DELAY" means any delay by Owner in performing its obligations under this
Agreement, which delay adversely affects Contractor's cost, schedule or other
performance under this Agreement.
"OWNER PARTIES" shall mean Owner, its Affiliates, agents, officers, directors,
employees, representatives, insurers, contractors, Customers, and all of their
respective agents, officers, directors, employees, representatives,
contractors, and subcontractors, or any one of which to be referred to
individually as an "Owner Party".
"OWNER'S ENGINEER" shall have the meaning set forth in Section 19.5.
"OWNER'S PROJECT DIRECTOR" shall have the meaning set forth in Section 19.5.
"OWNER'S FACILITY SITE REPRESENTATIVE" shall have the meaning set forth in
Section 19.5.
"PERIOD" shall mean an increment of time as called for by the context in which
the term is used.
"PERFORMANCE GUARANTEES" shall mean the Performance Guarantees-LSFO and
Performance Guarantees-NG, collectively or independently, as required by the
context in which the term is used.
"PERFORMANCE GUARANTEES-LSFO" shall mean the Electrical Output Guarantee-LSFO,
the Heat Rate Guarantee-LSFO, the Steam Output Guarantee-LSFO, the Steam Purity
Guarantee, the Air Emissions Guarantee-LSFO, the Near Source Sound Level
Guarantee and the Far Source Sound Level Guarantee, collectively or
independently, as required by the context in which the term is used
"PERFORMANCE GUARANTEES-NG" shall mean the Electrical Output Guarantee-NG, the
Heat Rate Guarantee-NG, and the Steam Output Guarantee-NG, and the Air
Emissions Guarantee-NG, collectively or independently, as required by the
context in which the term is used.
"PERFORMANCE LIQUIDATED DAMAGES" shall mean the Heat Rate Liquidated Damages-
NG, Heat Rate Liquidated Damages- LSFO, Output Liquidated Damages- NG and
Output Liquidated Damages-LSFO, collectively or independently, as required by
the context in which the term is used.
"PERFORMANCE TEST" shall mean the Performance Test-LSFO and the Performance
Test-NG and includes the Electrical Output, Heat Rate and Steam Output Test,
the Steam Purity Test, the Sound Test and the Air Emissions Test.
"PERFORMANCE TEST-LSFO" shall mean a test administered while operating on
Fuel-LSFO in accordance with the procedures set out in Exhibits G, G-1, G-2,
G-3, G-4 and G-5 to determine whether the Facility meets the Performance
Guarantees or Minimum Performance Guarantees.
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"PERFORMANCE TEST-NG" shall mean a test administered while operating on Fuel-NG
in accordance with the procedures set out in Exhibits G, G-1, G-3, G-4 and G-5
to determine whether the Facility meets the Performance Guarantees or Minimum
Performance Guarantees.
"PERSON" shall mean any natural person, firm, corporation, company, voluntary
association, partnership, joint venture, trust, incorporated organization,
unincorporated organization, Governmental Authority or other entity.
"PROJECT" shall mean the development, design, engineering, manufacture,
procurement, financing, construction, permitting, completion, testing,
insurance, ownership, operation and maintenance of the Facility, any agreements
concerning same, and all activities incidental thereto.
"PUNCH LIST" shall have the meaning set forth in Section 7.1.
"QC DIRECTOR" shall have the meaning set forth in Section 9.12.
"READY TO TEST NOTICE " shall have the meaning as set forth in Section 7.3.
"RELIABILITY TEST" shall mean a test to determine the reliability of the
Facility and shall consist of operations under the conditions and subject to
the criteria described in Section 2.0 of Exhibit G-4.
"REMEDIAL WARRANTY WORK" shall have the meaning set forth in Section 10.3.
"REMEDIAL WORK" shall have the meaning set forth in Section 8.3.
"SAFETY REPRESENTATIVE" shall have the meaning set forth in Section 9.10.3.
"SOUND TEST" has the meaning as set forth in Exhibit G-2.
"STATEMENT OF WORK" shall be as set out in Exhibit C and Exhibit C-1.
"START-UP" shall mean the action of bringing the Facility from shutdown to
synchronization at minimum load for the first time after achieving Mechanical
Completion.
"STEAM OUTPUT" shall mean HP Stream Output-LSFO, IP Steam Output-LSFO, HP Steam
Output-NG and IP Steam Output-NG.
"STEAM OUTPUT GUARANTEE" shall mean the Steam Output Guarantee-LSFO and the
Steam Output Guarantee-NG.
"STEAM OUTPUT GUARANTEE-LSFO" shall mean the HP Steam Output Guarantee-LSFO and
the IP Steam Output Guarantee-LSFO.
"STEAM OUTPUT GUARANTEE-NG" shall mean the HP Steam Output Guarantee-NG and the
IP Steam Output Guarantee-NG.
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"STEAM OUTPUT LIQUIDATED DAMAGES" shall mean Steam Output Liquidated
Damages-LSFO and Steam Output Liquidated Damages-NG.
"STEAM OUTPUT LIQUIDATED DAMAGES - LSFO" shall mean Steam Output Liquidated
Damages-LSFO(HP) and Steam Output Liquidated Damages-LSFO(IP).
"STEAM OUTPUT LIQUIDATED DAMAGES-LSFO(HP)" shall have the meaning set forth in
Section 2.6 of Exhibit F.
"STEAM OUTPUT LIQUIDATED DAMAGES-LSFO(IP)" shall have the meaning set forth in
Section 2.6 of Exhibit F.
"STEAM OUTPUT LIQUIDATED DAMAGES - NG" shall mean Steam Output Liquidated
Damages-NG(HP) and Steam Output Liquidated Damages-NG(IP).
"STEAM OUTPUT LIQUIDATED DAMAGES-NG(HP)" shall have the meaning set forth in
Section 2.5 of Exhibit F.
"STEAM OUTPUT LIQUIDATED DAMAGES-NG(IP)" shall have the meaning set forth in
Section 2.5 of Exhibit F.
"STEAM PURITY GUARANTEE" shall mean that Contractor guarantees that the high
pressure and intermediate pressure steam purity will not exceed the values set
forth in Section 5.9 of Exhibit E.
"STEAM PURITY TEST" shall have the meaning set forth in Section 5.0 of Exhibit
G-5.
"SUBCONTRACTOR" shall mean a person or entity who has a direct contract with
Contractor or obligation to supply goods or perform services for the
Contractor, or any subcontractor, supplier, materialman or vendor of any tier,
engaged in connection with performance of the Work. The term "Subcontractor" is
referred to throughout the Contract Documents as if singular in number and
means a Subcontractor or its authorized representatives. A Subcontractor may be
an affiliate of Contractor.
"SUBSTANTIAL COMPLETION" shall have the meaning set forth in Section 7.4.
"TEST PREREQUISITES" shall have the meaning set forth in Section 7.3.
"TURBINE" shall have the meaning set forth in the Recitals.
"WARRANTY PERIOD" shall have the meaning set forth in Section 10.2.
"WORK" shall mean all design, engineering, and procurement services,
supervision, labor, materials, tools, equipment, instrumentation, security,
offices, temporary structures, insulation, foundations, painting, scaffolding
and incidentals, for the design, construction, precommissioning, commissioning,
Start-Up and testing of the Facility, and training of Owner's personnel, and
all other items and services necessary to fully perform, complete and construct
the Facility in accordance with this Agreement and as set forth in Exhibit C.
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"WORK SCHEDULE" shall mean the work schedule included in Exhibit B hereof
identifying significant milestone events and a summary project schedule
relating to the engineering, design, manufacture, Delivery of Equipment,
installation, Start-Up and testing of the Work, as may be modified from time to
time pursuant to the terms of the Contract Documents.
SECTION 1.2. INTERPRETATION.
(a) REFERENCES. The words "this Agreement," "herein," "hereof,"
"hereby," "hereunder," and words of similar import refer to this Agreement and
the Contract Documents as a whole and not to any particular subdivision unless
expressly so limited.
(b) CONSTRUCTION OF AGREEMENT. In construing this Agreement: (i) no
consideration shall be given to the captions of the articles, sections,
subsections, exhibits or clauses, which are inserted for convenience in
locating the provisions of this Agreement and not as an aid in its
construction; (ii) no consideration shall be given to the fact or presumption
that one Party had a greater or lesser hand in drafting this Agreement; (iii)
examples shall not be construed to limit, expressly or by implication, the
matter they illustrate; (iv) the word "includes" and its derivatives means
"includes, but is not limited to," and corresponding derivative expressions;
(v) a defined term has its defined meaning throughout this Agreement, and each
exhibit, attachment, and schedule to this Agreement, regardless of whether it
appears before or after the place where it is defined; (vi) the plural shall be
deemed to include the singular, and vice versa; (vii) each gender shall be
deemed to include the other gender; (viii) all references to prices, values or
monetary amounts refer to United States dollars, unless expressly provided
otherwise; and (ix) all references to articles, sections, paragraphs, clauses,
exhibits, attachments or schedules refer to articles, sections, paragraphs and
clauses of this Agreement, and to exhibits, attachments or schedules attached
to this Agreement, unless expressly provided otherwise.
(c) EXHIBITS. The Exhibits to this Agreement form part of this
Agreement and, subject to the terms of Article 3, shall be of full force and
effect as if expressly set out in the body of this Agreement.
ARTICLE 2
THE WORK
Contractor shall fully and timely perform and in every respect
complete the Work in accordance with the provisions of the Contract Documents.
ARTICLE 3
CONTRACT DOCUMENTS
The "Contract Documents" consist of this Agreement and the Exhibits.
The Contract Documents are complementary and should be read together to avoid
inconsistent interpretations. However, in the event of irreconcilable conflicts
between the terms of the Contract Documents, the following descending order of
precedence shall prevail:
(i) Articles 1-19 of this Agreement,
(ii) All Exhibits except Exhibit C (but including Exhibit
C-1) and
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(iii) Exhibit C.
The Contract Documents represent the entire and complete agreement among Owner,
Contractor and Seller with respect to the subject matter hereof and supersede
all prior negotiations, representations, or agreements, either written or oral.
The Contract Documents may be amended or modified only by a Change Order or by
a written amendment signed by both Parties.
ARTICLE 4
RESPONSIBILITIES OF THE CONTRACTOR AND OWNER
Contractor shall procure and supply the Equipment, design, engineer,
procure and construct a complete Facility (including completion of civil works
and the Start-Up, commissioning and testing of the Facility) which complies
with the requirements set forth in this Agreement and all applicable Laws and
Governmental Authorizations. Contractor's obligation to comply with applicable
Law is subject to the limitations and conditions set forth in Exhibit C and
Exhibit E with respect to noise emissions and air emissions and LSFO Tank Foam
System. In the event the applicable Law imposes an obligation on Contractor
which is more burdensome than specified in the Work set forth in the Exhibits
for the Performance Guarantees for noise and air emissions when operating at
Base Load and more burdensome than the specified Work for the LSFO Tank Foam
System, then Contractor shall be entitled to a Change Order for the cost and
schedule impact resulting from additional obligations imposed by applicable
Law. Contractor shall furnish, undertake, provide or cause to be provided, in a
good and workmanlike manner, the Equipment, construction equipment and all
services, supervision, testing, labor and personnel necessary to design,
engineer, procure, construct, Start-Up, commission and test the Facility in
accordance with GIP and the provisions of this Agreement.
SECTION 4.1. DESIGN AND ENGINEERING WORK.
(a) DESIGN OF THE FACILITY. Contractor shall design and engineer the
Facility in accordance with this Agreement (including Exhibit C) so that the
Facility will meet and achieve the Performance Guarantees.
(b) DRAWINGS AND SPECIFICATIONS.
(i) SUBMISSION BY CONTRACTOR. From time to time throughout
the term of this Agreement, as substantial Changes are made thereto,
Contractor shall submit to Owner current copies of the Drawings and
Specifications. Contractor shall, on a monthly basis, provide Owner
with an updated listing (in an electronic format) of all Drawings and
Specifications.
(ii) REVIEW BY OWNER. Within seven (7) Business Days of
receipt of any drawings or other documentation required to be
submitted to Owner under Exhibit L, Owner shall respond with any
comments thereto. If Owner fails to respond within the seven (7)
business day period, then such drawing or document shall be deemed to
have been acceptable to Owner. Within ten (10) Business Days following
receipt of any comments from Owner, Contractor shall amend such
drawing or document or otherwise take account of or respond to Owner's
comments and shall resubmit such drawing or document for Owner review.
Owner shall notify Contractor of any comments it may
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have with respect to any resubmitted Drawings and Specifications
within five (5) days of its receipt.
(iii) COMPLIANCE WITH DRAWINGS. In the case of Drawings and
Specifications that Contractor has submitted to Owner for review in
accordance with Exhibit L, Contractor shall inform the Owner of its
intent to deviate from such previously submitted Drawing and
Specifications prior to departing from such. Such notice will include
details of such deviation. Within five (5) Business Days of receipt of
such deviation notice, Owner shall respond with its approval or any
comments thereto. If Owner fails to respond within five (5) Business
Day of receipt of such deviation notice, then such drawing or document
shall be deemed to have been acceptable to Owner.
(iv) CONTRACTOR'S RESPONSIBILITY. Anything herein to the
contrary notwithstanding, Owner's review of or comment upon any
Drawings and Specifications submitted by Contractor shall not be
construed as constituting approval or disapproval, as the case may be,
of the Work, nor shall Owner's review or comment upon such Drawings
and Specifications alter Contractor's status as an independent
contractor under Section 9.16 with respect to the Work. Contractor
shall at all times retain responsibility for completing the Work in
accordance with this Agreement, regardless of whether or not Owner has
reviewed or commented upon the Drawings and Specifications.
(c) FACILITY IN COMPLIANCE WITH LAW. Subject to Contractor's rights
under Change in Law protections provided for under this Agreement, Contractor
shall design and construct the Facility such that it is in compliance with all
Laws.
(d) ENGINEERING WORK. As part of Contractor's design and engineering
services, Contractor will prepare heat and material balances and design
calculations, prepare flow and process diagrams, and one-line diagrams, prepare
electrical, structural, foundation, piping and instrument drawings, prepare
general arrangement drawings and plot plans for the Facility, make drawings and
prepare specifications of all equipment and materials and prepare the other
Drawings and Specifications required in order to comply with Good Industry
Practices in the performance of the Work, including all interconnections, and
furnish necessary technical and Quality Control inspection services. Such
engineering services shall include a review and approval of the engineering of
the HRSG and its auxiliary equipment.
(e) SUBCONTRACT SPECIFICATIONS. Contractor shall perform any design
and engineering services necessary to prepare specifications for the purchase
of equipment, materials and services from Subcontractors.
(f) CERTIFICATIONS. Contractor shall cause to be certified the
Drawings and Specifications as required by Law. Any design, engineering, or
other professional service which is to be performed by Contractor, and which is
required by Law to require the employment of licensed personnel, shall be
performed by or under the supervision of personnel licensed to perform such
services, as required by Law.
(g) ADDITIONAL DRAWINGS AND SPECIFICATIONS. From time to time during
the course of the construction of the Facility, Owner's Project Director may
request and Contractor shall
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provide various drawings and specifications pertaining to the Facility but
which are not listed on Exhibit L. Owner may provide comments upon such
additional drawings and specifications to Contractor at Owner's discretion.
SECTION 4.2. PROCUREMENT OF MATERIALS AND SERVICES.
Contractor shall procure, inspect, expedite, deliver, store,
warehouse, and furnish all materials and services necessary to construct,
Start-Up, commission and test the Facility in accordance with this Agreement.
SECTION 4.3. INSPECTIONS OF MATERIALS AND WORK.
(a) ACCESS TO INSPECT AND HOLD POINTS. Contractor shall carry out at
the place of manufacture, at the Facility Site and at the Existing Facility
Site all such tests and inspections as are required hereunder or as are
reasonably necessary to ensure the Work complies with the requirements of this
Agreement, including all inspections required by Contractor's Quality Control
policies at all places where Work is being performed. Owner, Customer and
Independent Engineer shall be entitled to attend any such tests and/or
inspections which are material in nature through their own duly authorized and
designated inspectors or representatives, provided that they have specifically
requested advance notice of such tests and/or inspections. While Owner's
initial notice of its desire to attend such tests or inspections shall be
provided in response to the Detailed Schedule pursuant to Section 4.7, Owner at
any time may request notice of additional tests and inspections which Owner
wishes to attend or witness. Whenever Contractor is ready to carry out any such
test and/or inspection, and Owner has specifically requested advance notice of
such test and/or inspection, Contractor shall give such notice to Owner,
reasonably in advance of such test and/or inspection but with no less than 2
working days advance notice for activities on Facility Site or Existing
Facility Site, and 3 working days for activities not at the Facility Site or
Existing Facility Site, identifying the test to be performed and the place and
time thereof. Contractor shall obtain from any relevant third Party or
manufacturer any necessary permission or consent to enable Owner to attend the
test or inspection as herein provided. In no event shall Owner's attendance at
such test or inspection impede, hinder or delay the Work.
Owner, its authorized representatives and Customer shall at all times have
access to any place where Work is being performed on Facility Site and the
Existing Facility Site by Contractor and any Subcontractor to observe the Work,
testing of the Facility and any Start-Up, pre-commissioning and commissioning,
and shall, by way of example and not limitation, have access to all test
procedures, quality control reports and test reports and data, including all
adjustment, installation and alignment data for the equipment. Upon reasonable
advance notice to Contractor, Owner and its authorized representative shall
have access to all places where the Work is being performed away from the
Facility Site and Existing Facility Site by the Contractor and any
Subcontractor, subject to any reasonable proprietary property restrictions of
the Subcontractors. Wherever the Work is being performed, Owner and its
representatives shall comply with any and all safety procedures prescribed by
Contractor (including those prepared pursuant to Section 9.14(a)) and shall in
no way impede, hinder or delay the Work.
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Notwithstanding the foregoing, the Owner shall witness, and Customer and/or
Independent Engineer may be present for: (i) the operating test of the
substation protective relay system, (ii) the initial energization of the
interconnection equipment, (iii) the Performance Tests, (iv) the final gas
turbine shop performance test, (v) HRSG code hydro test and (iv) the HRSG boil
out and chemical cleaning, and Contractor shall not be authorized to conduct
such tests unless Owner is present. Subject to Contractor having met the notice
requirements above, in the event that Owner is not present on the date
scheduled for the test, such failure to be available to witness shall be deemed
to be an Owner Delay unless Owner directs Contractor to proceed with the Work
without Owner witnessing such test. If any of the Owner observed tests at any
of the hold points should result in non-conformance with the Statement of Work,
the Contractor will remedy such non-conformance and repeat such tests and
inspections.
(b) REPLACEMENT. If any part of the Work fails to pass any test and/or
inspection, Contractor shall (i) give notice to Owner under Section 4.3(a)
above and, (ii) either rectify or replace such part of the Work, and shall
repeat the test and/or inspection to Owner's reasonable satisfaction in
accordance with the terms of this Agreement.
(c) NO WAIVER. Contractor agrees that neither the execution of a test
and/or inspection of Facility or any part of the Work, nor the attendance by
Owner's representatives, shall release Contractor from any responsibilities
under this Agreement or constitute a waiver by Owner of any of its rights
hereunder.
SECTION 4.4. CONSTRUCTION AND INSTALLATION.
Contractor shall construct, install, interconnect, erect,
precommission, Start-Up, commission and test the Facility and provide all
supervision, labor, equipment, materials, tools, utilities, consumables,
transportation, housing, meals, and other items and facilities and initial
fills of consumables (including any temporary materials, equipment, supplies,
and facilities such as cleaning and flushing agents and the disposal thereof)
necessary for the proper execution and completion of such construction,
installation, precommissioning, Start-Up, commissioning, and testing of the
Facility in accordance with the Contract Documents.
SECTION 4.5. TRAINING AND OPERATIONS.
Contractor shall provide the training of Owner's or Operator's
operating and maintenance personnel, including on-the-job training on Facility
Site and Existing Facility Site during the commissioning and Start-Up of the
Facility, in accordance with requirements of Exhibit C-1.
(a) QUALIFIED PERSONNEL FOR TRAINING. Owner shall, in sufficient time
after reasonable notice from Contractor, provide or cause to be provided
suitably qualified operators for training by Contractor. Owner shall supply, or
cause to be supplied, such small tools, classrooms, office equipment, desk-top
computers and other similar equipment not provided by Contractor pursuant to
the terms of Exhibit C-1 necessary to facilitate on-the-job training of the
operations personnel.
(b) OPERATORS. Subsequent to such training, Owner shall provide such
operators to Contractor for the purpose of operation of the Facility during the
Start-Up, commissioning and performance testing of the Facility until
Substantial Completion. Such operators will remain in
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the employ of Operator at the cost of Owner or Operator, but shall perform all
Work contemplated under this Section 4.5 at Contractor's direction until
Substantial Completion.
SECTION 4.6. FACILITY SITE CONDITIONS.
If during performance of the Work, Contractor encounters conditions at
the Facility Site and Existing Facility Site which materially increase
Contractor's cost or time for performance of the Work, which conditions
include, but are not limited to, Hazardous Materials, geological or
geotechnical conditions, manmade underground obstructions, burial grounds,
artifacts of historical or archeological significance, or endangered animals or
plants (the "Facility Site Variations"), Contractor shall be entitled to an
adjustment to the Contract Price and/or Guaranteed Completion Date pursuant to
a Change Order in accordance with the Change Provisions of Article 6; provided
however (i) in the case of geotechnical conditions, a Facility Site Variation
shall only exist if the conditions vary from those set out in geotechnical
survey dated April 18, 2000, prepared by Dames & Moore, (ii) and in the case of
underground obstructions, a Facility Site Variation shall only exist if the
conditions vary from the Owner's Facility Site yard utilities drawings numbered
COGT1608M2001 (Demolition Plan); and (iii) no Facility Site Variation shall
exist as a result of foreseeable conditions that could have been observed by a
qualified contractor during a site visit, such site visit being limited to a
visual inspection of the routes to the Facility Site, the Existing Facility
Site and the configuration of the Existing Facility. Such increase in cost or
time for performance shall be reflected in a Change Order under Article 6.
SECTION 4.7. WORK SCHEDULE AND DETAILED SCHEDULE.
Contractor shall develop and perform the Work in compliance with the
Work Schedule (Exhibit B). The Work Schedule is a generalized schedule showing
major milestone events to be achieved during the performance of the Work.
Contractor and Owner, by Change Order under Article 6, may revise the Work
Schedule to reflect all current conditions, including any rescheduling
necessary to ensure the timely completion of the Work by the Guaranteed
Completion Date.
Contractor shall develop a "Level III" Primavera Project Planner(P3)
schedule ("Detailed Schedule") indicating the manner in which Contractor
proposes to perform each element of the Work so as to comply with, or support,
as applicable, each of the major milestones set forth in the Work Schedule. The
Detailed Schedule shall be created in the critical path method in sufficient
detail to show all key elements involved in procurement of materials,
engineering, design, drawing production and reviews, document submittals,
manufacturing, fabrication, Delivery, field installation, inspections (shop and
field), hold points pursuant to Section 4.3(a), Start-Up, Test Prerequisites,
conducting Performance Tests and all interdependencies and critical path items
associated therewith. The Detailed Schedule may be modified from time-to-time
by the Contractor, except that the dates of the milestone events specified in
the Work Schedule shall not be modified for other reasons than an Excusable
Event, a Facility Site Variation, or other excused delays pursuant to the
Change Order provisions in Article 6.
Contractor shall submit the Detailed Schedule to Owner within one
month after the Effective Date. Owner shall review, comment, and, in the case
of ensuring that the major
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milestones in the Work Schedule are shown in the Detailed Schedule at the same
time as those in the Work Schedule, approve the Detailed Schedule within
fifteen (15) days of receipt. A copy of the computer files required to
replicate the Detailed Schedule will be made available to Owner with each
Monthly Progress Report and upon request. The Detailed Schedule shall be the
means by which Owner provides initial notice to Contractor of those tests and
inspections which Owner expects to witness.
During the progress of the Work, Contractor shall promptly notify
Owner in writing in the event that Contractor has reason to believe that any of
the dates of the Work Schedule milestone events, including the Ready for
Testing date, may change. Said notice shall specify the causes of the potential
schedule impact, recovery measures planned by Contractor and any necessary
adjustment to the Work Schedule.
SECTION 4.8. AS-BUILTS.
On or before Final Completion, Contractor shall deliver to Owner a
complete, reproducible set of As-Built Drawings and Specifications in
accordance with Exhibit L in hard copy format (and to the extent available in
electronic format Auto CADD version 12 or higher, whichever is used by
Contractor), reflecting the accurate and complete construction in record
configuration of the Facility. In addition, on or before Final Completion,
Contractor shall deliver to Owner a written notice certifying to Owner that
Contractor has delivered to Owner a complete list of all As-Built Drawings and
Specifications indicating the date of the final revision thereof and the date
of transmission thereof to Owner.
SECTION 4.9. STANDARD OF PERFORMANCE; INSPECTION.
Contractor covenants with Owner to perform the Work in a good and
workmanlike manner in accordance with Good Industry Practice. In addition to
Owner's rights in Sections 4.1(b)(ii), 4.3(a), and 4.7 Owner and its designees
shall have the right, but not the obligation, to review and inspect
Contractor's performance during the progress of the Work to determine whether
such performance complies with the Contract Documents. Owner may provide
written comments to Project Manager regarding Contractor's performance of Work
if Owner believes Contractor's performance of the Work does not comply with the
Contract Documents. Within ten (10) days after receipt by Contractor of Owner's
comments, Contractor shall respond to Owner's comments acknowledging
Contractor's acceptance of Owner's comments or stating Contractor's objections
to Owner's comments. Owner's review or inspection of or failure to review or
inspect Contractor's performance shall not diminish any rights Owner may have
in respect of any deficiencies in Contractor's performance hereunder. Any
review and inspection by Owner shall be performed in a reasonable and timely
manner so as not to impede or disrupt Contractor's performance of the Work or
the Work Schedule.
SECTION 4.10. CORPORATE GUARANTY AGREEMENT.
Contractor shall provide the Owner with a guaranty from Enron Corp. in
the form attached as Exhibit I. A duly executed form of such guaranty shall be
delivered on or before the 10th day following the Effective Date.
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SECTION 4.11. PROJECT MANAGER.
Contractor shall, within ten (10) days after the Effective Date,
designate in writing a qualified and competent project manager ("Project
Manager"), reasonably acceptable to Owner, who shall be duly authorized to
execute or direct the execution of the Work. Owner shall be entitled to rely on
the authority of such person to commit Contractor with regard to all matters
relating to the Contract. The Project Manager shall have full authority to
represent Contractor with respect to any and all matters pertaining to the
Contract Documents and direction given to him by the Owner's Project Director
or his designee shall be binding on Contractor.
SECTION 4.12. GOVERNMENT AUTHORIZATIONS.
Owner shall be responsible for obtaining the Construction Permits and
other Government Authorizations described as "Owner's Permits" in Exhibit M,
and Contractor shall be responsible for obtaining the Construction Permits and
other Government Authorizations described as "Contractor's Permits" in Exhibit
M. With respect to any other Construction Permits or Governmental
Authorizations not specifically referenced in Exhibit M, Owner shall be
responsible for obtaining the Construction Permits and other Government
Authorizations associated with the Facility that are typically obtained by an
owner and operator of facilities similar to the Facility and Contractor shall
be responsible for obtaining Government Authorizations typically obtained by a
Contractor which are related to Contractor's performance of the Work. Each
Party shall provide reasonable assistance to the other Party in obtaining the
Government Authorizations for which the other is responsible.
SECTION 4.13. SYSTEM TURNOVER PACKAGES.
From time to time, when each system turnover package for each plant
system has been completed, Contractor shall give notice to Owner that such
completion has occurred, and in such notice shall designate a date and time
(not less than 72 hours after the date of such notice) that Contractor desires
to check and walk down each such completed system and its Sub-systems, and
Owner should be entitled to accompany Contractor on such check and walk down.
SECTION 4.14. OWNER'S RESPONSIBILITIES.
In addition to being responsible for performing its obligations set
out elsewhere in the Contract Documents, Owner shall be responsible for
performing its obligations set out in Exhibit N.
ARTICLE 5
TIME OF COMMENCEMENT AND COMPLETION
SECTION 5.1. COMMENCEMENT; COMPLETION.
The (i) rights and the obligations of the Parties and (ii) subject to
the provisions of this Section 5.1, Work to be performed under this Agreement
shall commence as of the later of the Effective Date or the date of delivery of
the guaranty pursuant to Section 4.10. The performance of the Work shall
continue pursuant to the Work Schedule and as set out in this Section 5.1.
Provided Owner has issued the Notice to Proceed by September 1, 2000,
Contractor shall cause
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Substantial Completion of the Facility to occur on or before October 22, 2001
(the "Guaranteed Completion Date").
SECTION 5.2. LIMITED NOTICE TO PROCEED.
Owner may, prior to issuing a Notice to Proceed, issue a limited
notice to proceed authorizing Contractor to commence performance of the part of
the Work subject to mutual agreement of Owner and Contractor (the "Limited
Notice to Proceed"). Contractor shall commence with such part of the Work upon
receipt of any Limited Notice to Proceed and shall thereafter proceed
continuously and diligently to perform such Work. In the event Owner shall
assign this Agreement to a third party prior to the issuance of the Limited
Notice to Proceed, Contractor shall not be obligated to commence the Work
unless the assignee has a Standard & Poor's rating of BBB (-) or better or the
obligations of such assignee under this Agreement are guaranteed by an entity
having such credit rating. It is acknowledged that Owner has such credit
rating.
SECTION 5.3. NOTICE TO PROCEED.
Owner may issue a written notice to proceed (the "Notice to Proceed")
to Contractor provided that the insurance required to be obtained by Owner
pursuant to Article 12 shall be in effect and Owner shall have delivered to
Contractor the certificates required by the terms of Exhibit H. In the event
Owner shall assign this Agreement to a third party prior to the issuance of the
Notice to Proceed, Contractor shall not be obligated to commence the Work
unless the assignee has a Standard & Poor's rating of BBB (-) or better or the
obligations of such assignee under this Agreement are guaranteed by an entity
having such credit rating.
SECTION 5.4. OWNER DELAY FOR FAILURE TO GIVE NOTICE TO PROCEED.
Failure of Owner to issue the Notice to Proceed by September 1, 2000
shall constitute an Owner Delay.
ARTICLE 6
FIXED PRICE CONTRACT
SECTION 6.1. CONTRACT PRICE.
Owner shall pay Contractor and Contractor agrees to perform the Work
for the Contract Price.
SECTION 6.2. PAYMENT SCHEDULE.
The Contract Price shall be paid to Contractor in the currency
specified in accordance with the terms shown on Exhibit A, which sets forth the
portion of the Contract Price allocable to each payment. The Payment Schedule
shall be used as the basis for the preparation of progress invoices as
described in Section 6.3 below. The Payment Schedule shall reflect a retention
by Owner of five percent (5%) of the otherwise payable amount. Such retained
sums shall be payable to Contractor on Substantial Completion, less an amount
to be mutually agreed upon in good faith between Owner and Contractor equal to
(i) two times the value of any uncompleted
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items on the Punch List and (ii) Performance Liquidated Damages which may
become payable to Owner by Contractor upon the expiration of the Correction
Period.
SECTION 6.3. MONTHLY INVOICES.
After the Effective Date, and during the performance of the Work,
Contractor shall submit, on or before the fifth Business Day of each calendar
month, invoices in accordance with Exhibit A, with such supporting
documentation and additional data as Owner may reasonably require to
substantiate Contractor's right to payment including the (i) a listing of the
milestones listed in Exhibit A as precedence for payment (the "Payment
Milestones") (ii) evidence that such Payment Milestones have been achieved.
Such invoice shall also set out the amount payable by Owner associated with any
amounts necessitated by a Change Order and reasonable documentation supporting
progress of such Work in accordance with the terms of the Change Order. Such
invoice shall set out the cumulative amounts paid to date, and the amount due
pursuant to this invoice. The Project Manager or Facility Site Manager will
review the proposed invoice and supporting documentation with the Owner's
Project Director or his designee five (5) days prior to submittal.
Notwithstanding the foregoing, Contractor will invoice Owner an amount equal to
the monthly payments to General Electric Company ("GE Turbine Payments") and
equal to the monthly payment to the vendor of the HRSG ("HRSG Payments") within
twenty-four (24) hours after its receipt of such invoice from each of General
Electric Company and the HRSG vendor.
SECTION 6.4. MONTHLY PAYMENTS.
On or before the first Business Day of the calendar month following
the month in which Owner receives an invoice pursuant to Section 6.3, Owner
shall pay to Contractor the full amount specified in such invoice less
retention provided for in Section 6.2 and less any disputed amount, and except
that Owner shall pay to Contractor an amount equal to the GE Turbine Payment,
less retention, and an amount equal to the HRSG Payment, less retention, not
later than twenty-four (24) hours prior to the due date of Contractor's
obligation to make each GE Turbine Payment to General Electric Company and not
later than twenty-four (24) hours prior to the due date of Contractor's
obligation to make each HRSG Payment to the HRSG vendor, respectively. All
payments made by Owner to Contractor hereunder shall be, for purposes of this
Agreement, made by wire transfer of immediately available funds to the account
of Contractor designated by written notice to Owner.
With each Invoice, as a condition to Owner's obligation to make any
payment hereunder, Contractor shall provide Owner (i) a certificate containing
Contractor's certification that each of the milestones relating to such payment
has been met and, in the case of Changes priced according to Exhibit K, stating
that each item of cost or expense covered by the Invoice has been incurred in
accordance with the terms of and conditions of this Contract and that all
physical progress is as represented by the Contractor that no such obligation,
item of cost or expense has been the basis of any previous payment and (ii) a
Contractor's affidavit in the form attached as Exhibit A-1, stating that the
Work is free of liens.
As a condition to payment of the final invoice, Contractor shall
execute and deliver to Owner a Contractor's Affidavit and Release of Liens in
the form attached hereto as Exhibit A-2.
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In addition, as a further condition to payment of the final invoice, Contractor
shall provide from (i) all Subcontractors whose primary scope of work is
related to the supply of Equipment having an aggregate value of One Million
Dollars ($1,000,000.00) or more for Work performed, and (ii) from all
Subcontractors (down to and including 2nd tier Subcontractors) whose primary
scope of work is performed on the Facility Site or Existing Facility Site and
whose subcontract value is equal to or greater than Two Hundred Fifty Thousand
Dollars ($250,000.00), a release and waiver of liens in the form attached as
Exhibit A-3 in connection with the Work performed by each such Subcontractor.
SECTION 6.5. PAYMENTS NOT WAIVER OR ACCEPTANCE OF WORK.
No payment made by Owner under this Agreement shall constitute a
waiver of any claim or right Owner may have at that time or thereafter.
SECTION 6.6. PAYMENT OF SUBCONTRACTORS.
Contractor shall promptly pay, in accordance with the terms and
conditions set forth in the respective Subcontract, each Subcontractor the
amount to which said Subcontractor is entitled. Contractor shall, by an
appropriate agreement with each Subcontractor, require each Subcontractor to
make timely payments to its laborers, suppliers and subcontractors in a like
manner.
SECTION 6.7. INTEREST AND DISPUTED INVOICES.
Amounts not paid by either Party to the other when due, under any
provision of this Agreement, including the provisions of this Article 6, shall
bear interest from the date payment was originally due to and including the
actual date of payment at the Default Rate. If there is any Dispute about any
amount invoiced by Contractor, Owner shall promptly pay the amount not in
Dispute, and any Disputed amount, not paid with 15 days of Owner's receipt of
such invoice which is ultimately determined to have been payable shall be paid
with interest at the Default Rate from the date the Disputed amount was payable
to and including the date payment is made. The Parties shall use all reasonable
efforts to resolve any Dispute as soon as possible; all unresolved Disputes
shall be resolved in accordance with Section 19.4.
SECTION 6.8. OFFSETS.
Notwithstanding anything herein to the contrary, upon prior
notification to Contractor, Owner shall have a right to set-off against amounts
payable by Owner to Contractor (a) any amount previously paid by Owner to
Contractor which has been determined to have been not due under the terms of
this Agreement, (b) any fine or penalty imposed by any Governmental Authority
which is payable by Contractor, or which is assessed against Owner for any act
or omission of Contractor, and which is paid by Owner on Contractor's behalf,
(c) subject to the provisions of Article 15 hereof, all costs (including
reasonable attorneys' fees) incurred by Owner to discharge liens on the
Facility, and (d) any other amounts due Owner and which have not been paid by
Contractor in accordance with the terms of this Agreement.
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If, at the time of final payment, a Dispute exists between the parties
as to the value of the amounts withheld hereunder, the parties shall make all
reasonable efforts to resolve the Dispute in accordance with Section 19.4
hereof.
SECTION 6.9. CHANGE ORDERS.
No Change shall be made except in accordance with a duly issued
"Change Order" resulting from either an Owner Directed Change or Contractor
Requested Change and executed in writing by Owner and Contractor. All Change
Orders shall contain full particulars of the Change, and any adjustments of the
Contract Price, Work Schedule, Performance Guarantees, Minimum Performance
Guarantees, Warranties, Guaranteed Completion Date and any other modification
to this Agreement. All Change Orders shall be signed by the persons authorized
to do so by Owner's Project Director and Contractor's Project Manager, or their
respective designees.
SECTION 6.10. OWNER DIRECTED CHANGES.
Owner, at any time, by written notice to Contractor, may direct
Changes in the Work ("Owner Directed Change") provided that such Change is
generally consistent with the Work as envisioned by the Contract Documents.
Contractor shall provide to Owner's Project Director supporting documentation
("Supporting Documentation") including a detailed breakdown of each cost
component of direct and indirect costs as well as contingency and fee within
ten (10) Business Days after receipt of such Owner Directed Changes.
Notwithstanding the foregoing, if upon receipt of an Owner Directed
Change, Contractor is unable to furnish the Supporting Documentation within the
ten (10) Business Day period provided above due to the scope of the change,
Contractor within five (5) Business days after receipt of the Owner Directed
Change shall notify Owner of the amount of time Contractor will need to furnish
the Supporting Documentation (the "Extended Time Period") and Contractor will
then furnish the Supporting Documentation prior to the expiration of the
Extended Time Period.
Contractor and Owner shall mutually agree to the price to be charged
for the Owner Directed Change.. Within seven (7) Business Days of receipt of
the estimate, Owner will notify Contractor in writing of its acceptance or
rejection of the estimate, and if accepted, Contractor shall promptly prepare a
Change Order reflecting the Change for Owner's approval. Upon Owner's approval
of such request and agreement on the terms of an associated Change Order,
Contractor shall proceed with the implementation of such Change. As an
alternative to waiting for Contractor to furnish the Supporting Documentation
in a situation in which an Extended Time Period is involved, Owner may elect
not to wait until the expiration of the Extended Time Period to obtain from
Contractor the Supporting Documentation, but instead may direct the Contractor
to commence and proceed with the Owner Directed Change with payment therefor to
be made pursuant to the terms of Section 6.12(e)(3) hereof.
SECTION 6.11. CONTRACTOR REQUESTED CHANGES.
Contractor may, by written notice, request a Change in the Work
("Contractor Change Request"). Such Contractor Change Request may be as a
result of (i) Contractor suggesting a Change to the Statement of Work, (ii) a
Change in Law, or (iii) Contractor requesting that a
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Change Order be issued as a result of an Excusable Event, or (iv) an
instruction by Owner which Contractor contends is a Change. Contractor shall
provide supporting documentation including a detailed breakdown of each cost
component of direct and indirect costs as well as contingency and fee prior to
performing the Work as changed unless the parties otherwise agree. Contractor
and Owner shall mutually agree to appropriate contingency and fee given the
scope of the Change. Within seven (7) Business Days of receipt of the
Contractor Change Request, Owner will notify Contractor in writing of its
acceptance or rejection of such Contractor Change Request and if accepted,
Contractor shall promptly prepare a Change Order reflecting the Change. Upon
Owner's approval of such request and agreement on the terms of an associated
Change Order, Contractor shall proceed with the implementation of such Change.
If Owner elects not to proceed with any Contractor Requested Change requested
pursuant to Section 6.12(i), Contractor shall continue to be obligated to
perform its obligations under this Agreement without the Change which it had
requested and shall not be entitled to any relief or exclusion from liability
under this Agreement arising from such election not to proceed with such
Change. If Owner rejects or elects not to proceed with a Contractor Requested
Change pursuant to Section 6.11(ii) or Section 6.11(iii) the provisions of
Section 6.12(d) shall apply.
SECTION 6.12. ADJUSTMENTS TO AGREEMENT; PERFORMANCE OF CHANGES.
(a) Should any Change cause an increase or decrease in the cost of or
time required for performance of this Agreement by Contractor, or otherwise
affect any provision of this Agreement, and Contractor is entitled to an
adjustment as a result of such Change, then an adjustment will be made to the
Contract Price and, as necessary, the Contract Documents which are affected by
such Change, including, but not limited to, the payment schedule set out in
Exhibit A, Work Schedule, Performance Guarantees, Minimum Performance
Guarantees, Guaranteed Completion Date, warranties or any other provisions of
this Agreement. In the case of Excusable Events, the impact will be based on a
reasonable assessment of the impact of the Excusable Event.
(b) Upon receipt of an Owner Directed Change, and as part of a
Contractor Change Request submission, as the case may be, Contractor shall
promptly prepare and submit to Owner an estimate of the increase or decrease in
price, expressed as a lump sum, necessitated in the Contract Price by the
Change, or otherwise and shall specify any adjustment(s) to the Contract
Documents (including the Work Schedule, Performance Guarantees, Minimum
Performance Guarantees, Guaranteed Completion Date, warranties or any other
provisions of this Agreement ) necessitated by the Change.
(c) In the absence of any Dispute over a Change Order, or upon
Contractor's receipt of Owner's acceptance of a Contractor Requested Change,
Contractor may proceed with implementation of the Change.
(d) If Owner rejects or elects not to proceed with a Contractor Change
Request made pursuant to Section 6.11(ii) or Section 6.11(iii) and if a Dispute
shall exist as a result thereof, then either Party at any time may invoke the
provisions of Section 19.4 to resolve the Dispute. If the Contractor Change
Request was based upon a Change in Law and Owner elects not to proceed with the
Change, then Contractor shall not be held responsible for, and Owner shall bear
the risk of, any consequences occurring as a result of Owner's refusal to
approve the Change
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requested by the Contractor insofar as Contractor's proposed Change would have
avoided the resulting problem.
(e) (1) If Contractor invokes Section 19.4 to resolve a Dispute
arising from Owner's refusal to agree to a Contractor Change Request arising
out of an Owner instruction, then Contractor shall implement the Change as
directed by Owner without deficiency or delay. Upon resolution of the dispute,
if it is determined that the Contractor Change Request was valid, then the
Change Order shall be approved by Owner and shall be implemented pursuant to
the Dispute resolution. Owner shall pay amounts, if any, due Contractor
determined pursuant to such resolution provided Owner shall pay all undisputed
amounts prior to such Dispute resolution. If it is determined that the
Contractor Change Request was not valid, no Change Order will be executed.
(2) If the Contractor Change Request involved a Contractor request
for an extension of the Guaranteed Completion Date, and, Contractor is
ultimately determined, after resolution of the Dispute under Section 19.4, to
have been entitled to such extension, then Contractor is further entitled to a
Change for any increased cost, calculated in accordance with Exhibit K, Change
Order Pricing, resulting from extraordinary efforts to meet the Guaranteed
Completion Date during resolution of the Dispute, provided Owner has been
reasonably informed of such costs as they are incurred by Contractor.
(3) If Owner: (A) issues an Owner Directed Change or (B) agrees to
a Contractor Change Request, but the Parties are unable to agree on the lump sum
estimate set forth in subparagraph (b) above applicable to such Change, then the
provisions of this subparagraph (e) notwithstanding, Contractor shall proceed to
perform such Change; PROVIDED HOWEVER, that Contractor shall be compensated for
the Change in accordance with Exhibit K, Change Order Pricing.
SECTION 6.13. OTHER PROVISIONS UNAFFECTED.
Except to the extent a Change Order specifically amends one or more
provisions hereof, all provisions of this Agreement shall apply to all Change
Orders, and no Change shall be implied as a result of any other Change Order.
SECTION 6.14. IMPACT OF EXCUSABLE EVENT.
Each Party shall be excused from performance and shall not be
considered to be in default with respect to any obligation hereunder, except
the obligation to pay money in a timely manner for Work actually performed or
other liabilities actually incurred, if and to the extent that its failure of,
or delay in, performance is due to an Excusable Event. An Excusable Event shall
entitle Contractor to an adjustment of the terms of this Agreement pursuant to
a Change Order in accordance with this Article 6 provided that:
(a) such Party gives the other Party notice describing the particulars
of the Excusable Event as soon as is reasonably practicable but in no event
later than two (2) Business Days after the Party first becomes aware of the
occurrence or commencement of such event, and if such notice was not written,
such notice will be followed by a written notice not later than four (4)
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Business Days after the Party first becomes aware of the occurrence or
commencement of such event;
(b) the suspension of performance is of no greater scope and of no
longer duration than is reasonably required by the Excusable Event;
(c) no obligations of the affected Party which arose before the
occurrence causing the suspension of performance that remain unaffected by the
Excusable Event are excused as a result of the occurrence;
(d) subject to Section 6.15, the affected Party uses reasonable
efforts to overcome or mitigate the effects of such occurrence; and
(e) when the affected Party is able to resume performance of its
obligations under this Agreement, such Party gives the other Party written
notice to that effect and promptly resumes performance hereunder.
SECTION 6.15. MITIGATION OF EXCUSABLE EVENT.
Contractor shall act reasonably to remove or mitigate the effects of
any Excusable Event. However, Contractor shall not be required to do the
following without Owner's prior approval, which approval need not be in the
form of a Change Order prior to Contractor taking the action: (a) subcontract
additional Work or work additional hours for which premium time is payable, (b)
schedule additional work shifts, or (c) otherwise incur additional costs, if,
in any such case, such subcontracting, additional hours, additional shifts or
other additional costs would not have been required to meet the Guaranteed
Completion Date in effect prior to the occurrence of such Excusable Event.
ARTICLE 7
STAGES OF COMPLETION
SECTION 7.1. NOTICE OF MECHANICAL COMPLETION AND PUNCH LIST.
At least twenty five (25) days prior to the date Contractor reasonably
projects that Mechanical Completion of the Facility will be achieved, and each
week thereafter, Contractor shall deliver to Owner notice of the date on which
Contractor believes Mechanical Completion of the Facility will be achieved. On
the date that Contractor believes that Mechanical Completion of the Work has
been achieved it shall deliver to Owner "Notice of Mechanical Completion"
stating that in Contractor's opinion Mechanical Completion of the Work has been
achieved as of the date of the Notice. Delivery of the Notice of Mechanical
Completion shall establish Mechanical Completion.
No later than fourteen (14) days prior to the anticipated date of
Mechanical Completion, Contractor, with Owner's Project Director or his
designee, shall jointly make a thorough examination of the Facility and prepare
and sign a punch list (the "Punch List") setting forth all observable remaining
items of the Work that are incomplete or found to not be in working order each
of which must be completed by Contractor prior to Final Completion, all in
accordance with the Contract Documents. The Punch List shall differentiate
between (i) those items that must be
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completed and/or corrected by Contractor prior to issuing a Notice of
Substantial Completion and (ii) those items that will not interfere with the
safe, continuous operation of the Facility at the Minimum Performance
Guarantees levels) and can be completed after Substantial Completion. The Punch
List shall be updated and published weekly by Owner and Contractor until
Contractor has achieved Final Completion, provided that no new items shall be
added to the Punch List after thirty (30) days after Contractor achieving
Substantial Completion. After such thirty (30) day period, the parties may
agree in writing to have some or all the Punch List Items to be performed by
the Owner or its Operator at a mutually agreeable price. Upon reaching such
written agreement, including the associated financial settlement completion of
such items, shall be deemed to be accomplished by Contractor. Regardless of
whether Owner and/or Operator shall have performed any of the Punch List items,
Contractor will continue to be fully responsible for all warranties provided
for herein.
SECTION 7.2. START-UP AND PERFORMANCE AND RELIABILITY TESTING.
Upon issuance of the Notice of Mechanical Completion but after
Contractor has satisfied all Testing Prerequisites pursuant to Section 7.3,
Contractor shall diligently perform the Work to Start-Up the Facility, which
Work shall include commissioning tests of the Facility, perform the steam
interconnection with the Existing Facility, complete the Performance and
Reliability Testing, achieve Substantial Completion by the Guaranteed
Completion Date and achieve Final Completion.
SECTION 7.3. TEST PREREQUISITES.
Contractor shall perform such tests, inspections, construction
checkout procedures, and Start-Up sequences, including, but not limited to,
those listed in the last paragraph of Section 4.3(a) and Section 1.0 of Exhibit
G-4 as Contractor may reasonably believe are necessary to ensure that the
Facility is ready for safe and stable operation, prior to commencing the
Reliability Test and the Performance Tests. Upon completion of the events
described in the immediately preceding sentence (the "Test Prerequisites"),
Contractor shall provide written certification to Owner that the Facility is in
compliance with all the Statement of Work requirements (except those as set out
in the Punch List), that it has satisfied all Test Prerequisites, is ready to
begin the Performance Tests and Reliability Test, and is expected to meet the
Minimum Performance Guarantees ("Ready To Test Notice"). If after receipt of
the Ready to Test Notice, but no case later than 2 Business Days after receipt
of such, Owner reasonably determines that Contractor has not satisfied all Test
Prerequisites or taken such other steps as are necessary to satisfy Owner that
Contractor has satisfied all Test Prerequisites, it will notify Contractor in
writing of such determination. Contractor shall, prior to conducting the
Performance Tests and Reliability Test either provide additional supporting
data substantiating that it had satisfied all Test Prerequisites or take such
other steps as are necessary to satisfy Owner that Contractor has satisfied all
Test Prerequisites. In the event Contractor disagrees with an Owner
non-approval of the Test Prerequisites, Contractor may submit such disagreement
to Dispute resolution pursuant to Section 19.4. In the event that it is
determined that Contractor was correct in its position that it has satisfied
all Test Prerequisites, a delay arising as a result of such resolution through
the utilization of the Dispute resolution mechanism pursuant to Section 19.4
shall be an Owner Delay.
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SECTION 7.4. SUBSTANTIAL COMPLETION CRITERIA.
Substantial Completion shall mean that:
(i) the Facility has achieved Mechanical Completion;
(ii) Start-Up of the Facility has occurred;
(iii) the Facility has been demonstrated during a Performance
Test to meet the Minimum Performance Guarantees and Contractor has so
certified to Owner pursuant to a Performance Test Certificate in
accordance with the terms of Section 1.3 of Exhibit G;
(iv) the Facility has met the requirements of the Steam
Purity Test;
(v) the Facility has met the requirements of the Reliability
Test;
(vi) completed turnover packages for all plant systems have
been delivered to Owner; and
(vii) all Punch List items, except those identified for
completion after Substantial Completion, including those provided
pursuant to Section 7.1 to be completed after Substantial Completion,
have been completed.
SECTION 7.5. SUBSTANTIAL COMPLETION.
Upon achieving Substantial Completion, Contractor shall deliver to
Owner a "Notice of Substantial Completion". The Notice of Substantial
Completion shall include documentation that verifies that Contractor has
achieved Substantial Completion including a copy of the Performance Test
Certificate indicating that the Facility has met criteria for the Minimum
Performance Guarantees. Owner shall endorse the Notice of Substantial
Completion within 72 hours of receipt approving such notice, or state in
writing reasons for Owner's non-approval. In the event Contractor disagrees
with an Owner non-approval, Contractor may submit such disagreement to Dispute
resolution pursuant to Section 19.4.
SECTION 7.6. NOTICE OF FINAL COMPLETION.
Following Substantial Completion, Contractor shall perform all
remaining Work to achieve Final Completion. On the date that Final Completion
of the Work has been achieved, Contractor shall deliver to Owner notice that
Final Completion has been achieved as of that date ("Notice of Final
Completion"). Contractor shall deliver with the Notice of Final Completion the
items listed on Exhibit L. "Final Completion" shall mean that the following
shall have occurred:
(a) Substantial Completion has been achieved,
(b) Contractor has achieved the Performance Guarantees- NG or the
Minimum Performance Guarantees - NG and no further corrective actions pursuant
to Section 8.3 are required,
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(c) Contractor has achieved the Performance Guarantees - LSFO or the
Minimum Performance Guarantees - LSFO and no further corrective actions
pursuant to Section 8.3 are required,
(d) Contractor has paid to Owner all Electrical Output Liquidated
Damages-NG, Electrical Output Liquidated Damages - LSFO, Steam Output
Liquidated Damages-NG, Steam Output Liquidated Damages-LSFO, Heat Rate
Liquidated Damages-NG and Heat Rate Liquidated Damages-LSFO,
(e) Contractor has submitted its final waiver of liens and the waiver
of liens from Subcontractors pursuant to Section 6.4,
(f) Contractor has completed the Punch List items pursuant to Section
7.1,
(g) Contractor has submitted the documentation as set out in Exhibit L
which is required to be submitted prior to Final Completion,
(h) Contractor has performed all other requirements which are
specifically stated in the Contract Documents to be accomplished prior to Final
Completion, and
(i) Contractor has delivered to Owner all vendor manuals provided by
equipment suppliers to the Project.
SECTION 7.7. FUEL-NG AND FUEL-LSFO SUPPLY AND GENERATED ELECTRICITY.
(a) Owner shall be responsible for supplying all Fuel-NG and Fuel-LSFO
as required by Contractor for the Start-Up, Performance Testing and other
activities necessary to allow Contractor to cause the Facility to achieve
Substantial Completion and Final Completion. Owner shall cause the Fuel-NG and
LSFO to be available at the Fuel Delivery Point no later than the dates so
reflected in Exhibit B. Electrical Output, if any, generated by the Facility
during Start-Up, Performance Testing and other Work shall be the property of
the Owner. Contractor will support Owner in its meetings with Bayway Refining
Company during construction of the Facility to assist Owner in causing Bayway
Refining Company to be responsible for the availability of Fuel supply to the
Facility.
(b) Owner shall be responsible for obtaining all Governmental
Authorizations necessary, if any, for operations during Start-Up and
Performance Testing.
SECTION 7.8. TITLE AND RISK OF LOSS UNTIL SUBSTANTIAL COMPLETION.
(a) CONTRACTOR WARRANTY OF TITLE. Contractor warrants good title to
all the Work and warrants and guarantees that the Facility will be free and
clear of any and all liens, claims for payment, charges, security interests,
encumbrances and rights of other persons arising as a result of any actions or
failure to act of Contractor, its Subcontractors, or their employees or
representatives. Title to all Equipment and materials to be incorporated into
the Facility will pass to Owner upon Delivery to the Facility Site or Existing
Facility Site; PROVIDED HOWEVER, that in the event of Owner's termination of
this Agreement prior to Substantial Completion (i) for any default of
Contractor and failure of Contractor to remedy that default, all
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as provided by Section 17.1, or (ii) for convenience under Section 17.2, then,
upon termination, title shall pass to Owner for all equipment and materials
delivered to the Facility Site or Existing Facility Site and for which Owner
has paid, and in the case of equipment and material not yet delivered or not
yet paid, pursuant to the terms of Section 17. Except with respect to third
party equipment designs as to which Contractor has only been granted a license
and does not have title, title to drawings, specifications and like materials
specifically prepared as part of the Work shall pass to Owner upon payment
therefor. Contractor may retain one copy of all such documents for
recordkeeping purposes. With respect to such third party equipment designs,
Contractor grants to Owner an irrevocable, non-exclusive, perpetual,
royalty-free license to use and reproduce such third party equipment designs
for the purposes of operating, maintaining and rebuilding the Facility.
(b) RISK OF LOSS. Notwithstanding passage of title as provided in this
Section 7.8, Contractor shall at all times use reasonable care at no additional
cost to Owner to preserve and protect all materials and equipment (whether
provided by Contractor or Owner) used by Contractor in the execution of the
Work from damage or loss due to weather, fire, theft, unexplained disappearance
or other casualty at the Facility Site or Existing Facility Site, and shall
bear the risk of loss of and damage to, and shall be obligated to repair,
replace, or reconstruct all or any portion of the Work which is lost, damaged
or destroyed prior to the Date of Substantial Completion. Should Owner elect to
insure equipment in transit under Owner's BAR, Contractor shall be liable for
deductibles on any covered loss under the BAR.
(c) USE BY OWNER. Subject to the terms of Section 1.5 of Exhibit G,
Owner may, with Contractor's consent, occupy or use any complete or partially
completed portion of the Work at any stage, provided such occupancy or use is
approved by the builders-all-risk and property insurer (unless the risk
management departments of both Owner and Contractor confirm that such approval
is not necessary) and provided such occupancy or use is in compliance with Law
and is for the purpose that such portion of the Work was intended. Such partial
occupancy or use may commence prior to Substantial Completion only if Owner and
Contractor have agreed in writing to any Changes to this Agreement necessitated
by such use, including Changes with respect to the risk of loss and damage of
such completed or partially completed portion of the Work and changes with
respect to acceptance of such Work by Owner. Consent of Contractor to partial
occupancy or use shall not be unreasonably withheld or delayed.
(d) CONTRACTOR'S PRESERVATION AND PROTECTION. Contractor shall at all
times use reasonable care at no additional cost to Owner to preserve and protect
all materials and equipment (whether stored or installed), paving, structures,
and any and all other items on the Facility Site or Existing Facility Site
whether belonging to Owner or others, from damage resulting from Contractor's
operations or in connection with the performance of the Work.
ARTICLE 8
PERFORMANCE TESTS AND RELIABILITY TEST
SECTION 8.1. PERFORMANCE TESTS.
Contractor shall conduct Performance Tests set forth in Exhibit G, to
determine whether the Facility will meet Performance Guarantees and the Minimum
Performance Guarantees.
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In addition to the notice requirements set out in Section 4.3(a),
Contractor shall provide Owner at least 40 days advance notice of the date that
Contractor anticipates it will commence the Performance Tests on Fuel-NG and on
Fuel-LSFO (which may be different dates). Upon receipt of such notice, Owner
shall so notify the applicable Government Authorities (including the NJDEP).
Contractor will thereafter provide Owner with weekly updates as to the
anticipated dates of Performance Testing related to emissions. Owner shall
arrange for the Government Authorities to be in attendance at the Performance
Test. In the event such Government Authority is not available on the date
Contractor is actually ready to conduct the Performance Tests, and Owner
directs Contractor to wait for the Governmental Authority, such delay shall
constitute an Owner Delay, provided that if Contractor ultimately desires to
conduct the Performance Tests for emissions and sound earlier that the date set
out in the 40-day notice, Owner shall use reasonable efforts to cause the
Government Authority to be available at such earlier date, but failure to do so
prior to the date in the 40-day notice shall not be an Owner Delay. In the
event that Contractor notifies Owner in its weekly updates that the date for
the Performance Test for sound and emissions will be later than the date set
out in the initial 40-day notice, Owner shall be responsible for arranging for
the Government Authority to be available at such later date.
SECTION 8.2. FAILURE TO MEET MINIMUM PERFORMANCE GUARANTEES.
Contractor guarantees that the Facility, when Performance Tests are
conducted in accordance with the Testing Procedures in Exhibits G, G-1, G-2,
G-3, G-4 and G-5, will meet the Performance Guarantees and Minimum Performance
Guarantees. If the performance of the Facility, as demonstrated by a
Performance Test, is less than the Minimum Performance Guarantees in any
respect, Contractor shall commence and diligently proceed to repair, replace,
or add such materials, structures, instrumentation, or equipment necessary to
cause the Facility to meet the Minimum Performance Guarantees in accordance
with requirements set forth in Exhibit E.
SECTION 8.3. REMEDIAL WORK; COSTS AND PERFORMANCE OF REMEDIAL WORK.
In the event that (i) Substantial Completion is achieved without
causing the Facility to achieve the Performance Guarantee-NG or (ii) Contractor
has not caused the Facility to achieve the Performance Guarantees-LSFO,
Contractor shall be required to, and shall have the right to make all
reasonable attempts to improve the performance of the Facility to meet the
Performance Guarantees, until the earlier of (i) a period of 180 days after
Substantial Completion, (ii) Contractor achieves the Performance Guarantees,
(iii) or the Parties agree no further improvement is likely (the "Correction
Period"). When determining the reasonableness of an attempt to improve
performance, the cost of the remedial measures will be weighed against the
expected improvement in performance. Any Work done to cause the Facility to
meet the Performance Guarantees shall be "Remedial Work." All Remedial Work
shall be performed by Contractor under the terms of this Agreement, including
Section 4.1. Prior to commencing any Remedial Work, Contractor shall submit to
Owner its proposed plans and recommendations for such Remedial Work for Owner's
review and approval, which may not be unreasonably withheld, provided, however,
that Owner's reasonable belief that the implementation of such Remedial Work on
the Facility would adversely affect the operation or performance of the
Facility or Owner's commercial plans shall constitute reasonable grounds for
withholding approval of the proposed Remedial Work.
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SECTION 8.4. RE-PERFORMANCE OF PERFORMANCE TESTS.
Following Substantial Completion, if Contractor performs Remedial Work
after a Performance Test, a subsequent Performance Test shall be conducted
promptly after the completion by Contractor of such Remedial Work.
SECTION 8.5. FAILURE TO MEET PERFORMANCE GUARANTEES AND SUBSTANTIAL
COMPLETION PRIOR TO THE GUARANTEED COMPLETION DATE.
Subject to and except as otherwise provided by the terms of this
Agreement, if Contractor fails (a) upon Substantial Completion, to meet the
Performance Guarantees, or (b) to achieve Substantial Completion prior to the
Guaranteed Completion Date, Contractor shall be assessed Liquidated Damages as
set forth in Exhibit F.
SECTION 8.6. LIQUIDATED DAMAGES NOT A PENALTY.
The Parties acknowledge and agree that, because of the unique nature
of the Facility, it is difficult or impossible to determine with precision the
amount of damages that would or might be incurred by Owner as a result of
Contractor's failure to achieve the Performance Guarantees or Substantial
Completion as required by this Agreement. It is understood and agreed by the
Parties that (i) Owner shall be damaged by failure of Contractor to meet these
obligations, (ii) it would be impracticable or extremely difficult to fix the
actual damages resulting therefrom, (iii) any sums which would be payable under
this Article 8 are in the nature of liquidated damages, and not a penalty, and
are fair and reasonable estimates of such damages, and (iv) such payment
represents a reasonable estimate of fair compensation for the loss of revenue
which may be reasonably anticipated from such failure. The Parties therefore
agree that such liquidated damages shall, without duplication, be the sole and
exclusive measure of damages with respect to any such failure by Contractor.
SECTION 8.7. OTHER PERFORMANCE GUARANTEE EXCLUSIONS.
After the earlier of Substantial Completion and Owner placing the
Facility into commercial operation, the duties, liabilities and obligations of
Contractor under this Article 8 (or Exhibit E) do not extend to any repairs,
adjustments, alterations, replacements or maintenance which may be required as
a result of normal wear and tear in the operation of the Facility, normal
degradation in the performance of Equipment, any Excusable Event, or as a
result of Owner's failure to operate or maintain the Facility substantially in
accordance with the Equipment manufacturer's recommendations and Good Industry
Practice and the Operation Manual provided by Contractor.
SECTION 8.8. RELIABILITY TEST.
Contractor shall cause the Reliability Test to be performed and passed
in accordance with the requirements of Exhibits G and G-4.
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ARTICLE 9
RESPONSIBILITIES OF CONTRACTOR
SECTION 9.1. SUPERVISION.
Contractor shall supervise and direct the Work in accordance with Good
Industry Practice. Contractor shall be solely responsible for all construction
means, methods, techniques, sequences, and procedures, and for coordinating all
portions of the Work. Further, Contractor shall promptly report to Owner any
discrepancies or problems which Contractor has knowledge of during the course
of construction.
SECTION 9.2. EMPLOYEES AND AGENTS.
Contractor shall be responsible for the supervision and direction of
Contractor's employees, subcontractors, and sub-subcontractors and their agents
and employees, and other persons in its employ performing any portion of the
Work.
SECTION 9.3. NO RELIANCE.
Contractor shall not be relieved from its obligations to perform the
Work in accordance with the Contract Documents by the activities or duties of
Owner or its designees hereunder or by inspections, tests, or approvals
required or performed hereunder in so far as Owner does not disrupt
Contractor's Work or otherwise impede the Work Schedule.
SECTION 9.4. LABOR AND MATERIALS.
Unless otherwise expressly agreed by the Parties, Contractor shall
provide and pay for all labor, materials, equipment, instrumentation, supplies,
tools, construction equipment, and machinery, scaffolding, transportation, and
all other facilities, services, materials, and equipment necessary for the
proper execution and completion of the Work, whether temporary or permanent,
and whether or not included in the Facility, and all contributions to union
funds and benefits, insurance, taxes and other costs and fees associated
therewith.
SECTION 9.5. DISCIPLINE.
Contractor shall at all times enforce strict discipline and good order
among its employees, agents, Subcontractors and other licensees at the Facility
Site or Existing Facility Site and shall not employ at the Facility Site or
Existing Facility Site or permit access to any unfit person or anyone not
skilled in the task assigned by Contractor. Contractor shall use its reasonable
efforts to employ policies and practices which are reasonably designed to avoid
work stoppages or strikes.
SECTION 9.6. TAXES.
The Contract Price does not include state and local sales and use
taxes, except as specifically described below. The Parties anticipate that the
majority of the Work will be exempt from sales and/or use taxes pursuant to New
Jersey law, as an integrated plant comprised of machinery and equipment
necessary in the production of electrical or steam energy. Owner
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agrees to provide Contractor with its affidavit in support of such exemption, a
letter required by law to be provided by Contractor to vendors, suppliers and
subcontractors, and instruction on the use of the affidavit in connection with
the purchase of the equipment and machinery. In the event the Parties agree
that Owner should be responsible for the direct payment of sales and/or use
taxes and remit the same directly to the State of New Jersey, if applicable,
then Owner shall provide Contractor with written evidence confirming Owner's
right to accrue such sales and/or use taxes and remit the same directly to the
State of New Jersey. Additionally, Contractor agrees to pass on to Owner the
benefit of any valid tax exemptions it may receive, including, without
limitation, exemptions for the purchase of machinery, equipment or other
tangible personal property for resale. Contractor shall pay and be responsible
for all customs, duties, excise, payroll, FICA, occupational and gross receipt
taxes and similar taxes on Contractor's tools, overhead and consumables (where
consumables shall mean items of Work, supplies, equipment and materials used on
the construction of the Facility but not incorporated into the Facility), and
all other taxes (excluding sales and use tax on Equipment) incurred in or
resulting from its performance of the Work, which shall be included in the
Contract Price. In the event Contractor is required to pay or remit any sales
and/or use taxes on non-exempt portions of the Work, if any, or otherwise,
arising out of this Agreement, Owner shall reimburse Contractor for such taxes
as an addition to the Contract Price pursuant to a Change Order in accordance
with Article 6 hereof. Any penalties assessed against Contractor for excluded
sales tax shall be paid by Owner unless such penalties result from Contractor's
non-compliance with the tax procedures established hereunder. Owner and
Contractor shall mutually develop a tax procedure relating to the acquisition
of Equipment.
SECTION 9.7. GOVERNMENTAL AUTHORIZATIONS, FEES, AND NOTICES.
Contractor and Owner shall procure all Governmental Authorizations in
accordance with Schedule M. Contractor, on behalf of Owner, shall be
responsible to obtain all State of New Jersey Department of Community Affairs
Governmental Authorizations for the Work.
SECTION 9.8. COMPLIANCE WITH LAWS.
Subject to Section 6.12, Contractor shall give all notices and comply
with all Laws bearing on or relating to its performance of the Work.
SECTION 9.9. LIABILITY FOR BREACH.
Contractor shall assume full responsibility for, and shall bear all
costs attributable to, its performance of any portion of the Work contrary to
any Laws.
SECTION 9.10. CONTRACTOR STAFFING.
9.10.1 Contractor shall provide an adequate number of
qualified and competent project management and supervisory staff, craft
persons, and other personnel to perform the Work.
9.10.2 At all times during the course of the Work at the
Facility Site and Existing Facility Site, Contractor shall provide a qualified,
competent, and responsible individual who shall serve as Facility Site manager
(the "Facility Site Manager"). The Facility Site Manager
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shall be approved by Owner prior to performance of any Work at the Facility
Site and Existing Facility Site under this Contract. The Facility Site Manager
shall support the Project Manager and act as his/her representative at the
Facility Site and Existing Facility Site during the absence of the Project
Manager and direct the Facility Site and Existing Facility Site project
management and supervisory staff and communicate and disseminate information to
all personnel, vendors, suppliers and others on Facility Site and Existing
Facility Site or in connection with the Work, including, without limitation,
representatives of the Owner, Customer, or the Lender. Owner shall be entitled
to rely on the authority of such person to commit Contractor with regard to all
matters relating to the Contract Documents. All communications given to the
Facility Site Manager by Owner's Project Director or his designee shall be as
binding as if given to Contractor. If such Facility Site Manager shall leave
Contractor's employ, or become incapacitated or otherwise incapable of serving,
Contractor shall, with Owner's reasonable approval, designate a successor.
9.10.3 At all times during the course of the Work, Contractor
shall provide a qualified, competent and responsible individual who shall serve
as safety representative (the "Safety Representative") at the Facility Site and
Existing Facility Site . The Safety Representative shall be approved by Owner
prior to performance of the Work at the Facility Site and Existing Facility
Site under this Contract. The Safety Representative shall be responsible for
maintaining safe working conditions at the Facility Site and Existing Facility
Site.
9.10.4 Contractor shall not transfer or remove any of the
Project Manager, the Facility Site Manager or Safety Representative from
performance of the Work without prior written approval of Owner, such approval
not to be unreasonably withheld or delayed. Whenever required by Laws or any
applicable industry codes or standards, Contractor agrees to employ only
licensed personnel to perform engineering, design, architectural, or other
professional services in the performance of the Work. All such professional
services shall be performed with the degree of care, skill and responsibility
customary among such licensed personnel.
9.10.5 Contractor shall employ (or cause to be employed) only
persons who are careful and appropriately qualified, skilled and experienced in
their respective trades or occupations. Owner may require Contractor to remove
(or cause to be removed) any person employed on the Facility Site and Existing
Facility Site who, in the reasonable opinion of Owner:
(i) persists in any misconduct;
(ii) is incompetent or negligent in the performance of
his duties;
(iii) fails to conform to any provisions of this Contract;
or
(iv) persists in any conduct which is prejudicial to
safety, health or the protection of the environment.
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If appropriate, Contractor shall then appoint (or cause to be appointed), at
Contractor's sole and complete cost, a suitable replacement person.
9.10.6 Contractor shall furnish Owner with the names and
addresses of Project Manager, Facility Site Manager and Safety Representative.
9.10.7 Contractor shall provide at its own cost office and
other temporary accommodations, including sanitary accommodations, for its
Facility Site personnel.
SECTION 9.11. RECORD DOCUMENTS.
Contractor shall maintain at the Facility Site one record copy of the
Drawings and Specifications, including, once available, the Drawings and
Specifications, Change Orders and other modifications in good order and marked
currently to record all changes made during construction, and approved
drawings, product data, and samples. During the prosecution of the Work, these
items shall be available to Owner and shall be delivered to Owner upon
completion of the Work.
SECTION 9.12. QUALITY CONTROL.
Contractor shall establish, implement and maintain a quality assurance
and control program which shall be submitted to Owner for review and comment.
At all times during the course of the Work at the Facility Site and Existing
Facility Site, Contractor shall provide a qualified, competent and responsible
individual who shall serve as quality assurance and control director (the "QC
Director") which QC Director shall be, or his designee shall be, on site at all
times work is being performed.. The QC Director shall be approved by Owner
prior to performance of the Work at the Facility Site and Existing Facility
Site under the Contract. The QC Director shall be responsible for maintaining
quality assurance and control in all aspects of the performance of the Work. If
Owner comments on Contractor's quality assurance and control program, such
reasonable comments will be communicated to Contractor as soon as practicable
after receipt of such program but no later than twenty (20) days after receipt
thereof, Contractor shall effect changes in response to, or otherwise address,
such comments by way of a preamble or preface to the Contractor's standard
quality control program and resubmit the program within twenty (20) days of
receipt of such comments for subsequent review and comment. The program shall
be set forth in a manual to be submitted to Owner and shall be designed to meet
the following objectives:
(a) that purchased Equipment and all documentation with respect
thereto meet the requirements of the Contract;
(b) that the quality of Equipment not be diminished during receiving,
storing, transporting, handling, erection, installation, inspection and
testing; and
(c) that systems, Equipment and structures are fabricated, installed
and erected in strict compliance with all applicable instructions and the
Contract.
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SECTION 9.13. PERIODIC STATUS REPORT.
Not later than the tenth (10th) day of each month during the
construction of the Facility, Contractor shall submit six (6) copies of the
Monthly written progress reports for the immediately preceding month to Owner
summarizing, among other matters, the current and anticipated progress of the
Work as compared to the Work Schedule, the causes of, and corrective action
taken or to be taken in respect of, any delays, the work planned, commenced and
completed by each subcontractor, the approximate completion percentage of the
Work and the current projected schedule for completion of the Work. Contractor
shall submit such reports to Owner once every thirty (30) calendar days.
Accompanying the report shall be a concise written summary prepared by Project
Manager outlining significant achievements, problems, and issues that affect
the Work. Additionally, unless otherwise agreed by the Parties, Project Manager
(including the Facility Site Manager upon commencement of the Work at the
Facility Site) shall conduct monthly meetings with Owner and its
representatives at mutually agreed locations, and when construction activities
begin, at the Facility, discussing all such matters affecting the Work.
Contractor and Owner shall mutually agree on the submittal of such other
interim reports concerning the progress of, and other matters relating to, the
Work in form and substance as reasonably agreed by Contractor and Owner from
time to time. The monthly report shall be received by the Owner no later than
two (2) days prior to the meeting.
Contractor shall submit to Owner six (6) copies of monthly progress
reports indicating the status of the Detailed Schedule, including milestones
reached, special events that have occurred during the period of the report,
drawing status, procurement status, Delivery status, installation status,
testing status, and a detailed schedule for the remainder of the Work. The
Detailed Schedule shall be marked to clearly identify completion of Work
performed.
SECTION 9.14. USE OF FACILITY SITE AND EXISTING FACILITY SITE,
HAZARDOUS MATERIALS AND CLUTTER .
(a) ACCESS TO FACILITY SITE AND EXISTING FACILITY SITE. The Parties
recognize that Contractor will require access through the Existing Facility
Site to gain access to the Facility Site and will require access to the
Existing Facility Site to perform certain portions of the Work; however, to the
extent practical, Contractor shall confine its construction activities to the
Facility Site. Owner shall provide Contractor unrestricted access to the
Existing Facility Site for the purpose of gaining access to the Facility Site,
subject to the Facility Site Access, Safety Procedures and the requirements of
Bayway Refinery Company. Owner shall provide Contractor reasonable access to
the Existing Facility Site as required by Contractor for performance of the
Work. Contractor recognizes that the Existing Facility is an operating
facility, and Owner recognizes Contractor's requirements for timely access to
the Existing Facility for performance of Work. Contractor's construction
efforts shall not impede the normal operation of the Existing Facility except
as authorized in writing by Owner, provided that Owner shall be obligated to
use all reasonable efforts to make the Existing Facility available to
Contractor, to include scheduling Existing Facility outages as required by
Contractor so as to not impede Contractor's progress of the Work. Subsequent to
the Effective Date and prior to the issuance by Owner of the Notice to Proceed,
Owner and Contractor shall meet and establish Existing Facility Site, Existing
Facility, and Facility Site access procedures which shall include safety
requirements, notification procedures, and permit to work procedures (the
"Facility Site Access and Safety Procedures").
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Contractor and Owner shall comply with such Facility Site Access and Safety
Procedures and the requirements of Bayway Refinery Company.
(b) HAZARDOUS MATERIALS. Contractor shall be responsible for the
proper collection, removal, and disposal of any Hazardous Materials furnished,
used, applied, consumed, or stored to or at the Facility Site by any Contractor
Party, including used oils, greases, and solvents from flushing and cleaning
processes performed in the Work and shall assume generator status for said
materials. Contractor shall provide a detailed plan to Owner outlining the
handling and disposal of any Hazardous Material that is introduced by any
Contractor Party to the Facility Site. The Work, at all times, shall be
performed in accordance with applicable Laws. All costs, fines, liabilities,
penalties, and other expenses associated with the handling, transporting, and
disposing of Hazardous Materials introduced on or to the Facility Site by any
Contractor Party shall be paid by Contractor, without reimbursement by Owner.
Contractor shall prepare and submit an application with NJDEP for emergency
EPA/NJDEP identification number as required by New Jersey law. Contractor shall
use reasonable skill and care to ensure that there will not be Hazardous
Material specified or incorporated into the Work; provided that where in the
opinion of Contractor this results in a conflict with any relevant statutory
requirements or where the Statement of Work would be prejudiced through lack of
suitable alternatives, then Contractor shall immediately notify Owner in
writing specifying the conflict or prejudice which has arisen and the substance
that Contractor wishes to stipulate or use and Contractor shall not stipulate
or use the same without, in each case, the prior written consent of Owner,
which shall not be unreasonably withheld.
CONTRACTOR SHALL BE LIABLE FOR AND SHALL INDEMNIFY, PROTECT,
DEFEND AND HOLD HARMLESS OWNER AND ITS DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS FROM AND AGAINST ANY AND ALL DEMANDS, CLAIMS, SUITS AND
CAUSES OF ACTION AND ANY AND ALL LIABILITY, COSTS, EXPENSES,
SETTLEMENTS AND JUDGMENTS OF THIRD PARTIES INCURRED IN CONNECTION
THEREWITH (INCLUDING COURT COSTS AND ATTORNEY'S FEES INCURRED BY OWNER
IF AND ONLY IF CONTRACTOR FAILS TO ADDRESS SUCH CLAIM BY ITS OWN
ATTORNEY HAVING RECEIVED NOTICE OF THE CLAIM) ARISING OUT OF THE
CIRCUMSTANCES DESCRIBED IN THIS SUBPARAGRAPH (b).
(c) PRE-EXISTING HAZARDOUS MATERIALS. Owner and Contractor recognize
that contaminated soils may be found at the Facility Site. Owner shall be
responsible for the testing and removal from the Facility Site and proper
disposal as required by applicable Laws or for otherwise making safe in
accordance with applicable Laws any Hazardous Materials existing on the
Facility Site at the date of this Agreement. Contractor shall notify Owner
immediately upon the discovery of any suspected Hazardous Materials and shall
provide such assistance as may be reasonably requested by the Owner to
facilitate the measures to be implemented by Owner pursuant to this Section
9.14(c).
OWNER SHALL BE LIABLE FOR AND SHALL INDEMNIFY, PROTECT,
DEFEND AND HOLD HARMLESS CONTRACTOR, CONTRACTOR'S AFFILIATES, ANY
SUBCONTRACTOR AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS FROM AND AGAINST ANY AND ALL DEMANDS, CLAIMS, SUITS AND CAUSES
OF ACTION AND ANY AND ALL LIABILITY, COSTS, EXPENSES, SETTLEMENTS AND
JUDGMENTS OF THIRD PARTIES INCURRED IN CONNECTION THEREWITH (INCLUDING
COURT COSTS AND ATTORNEY'S
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FEES INCURRED BY CONTRACTOR IF AND ONLY IF OWNER FAILS TO ADDRESS SUCH
CLAIM BY ITS OWN ATTORNEY HAVING RECEIVED NOTICE OF THE CLAIM) ARISING
OUT OF THE CIRCUMSTANCES DESCRIBED IN THIS SUBPARAGRAPH (c).
(d) CLUTTER AND SIGNS. Contractor shall not clutter the Facility Site
with any materials or equipment not required for the immediate prosecution of
the Work. Contractor shall not, nor shall it permit any of its Subcontractors
to, display on or about the Facility Site any sign, logo, trademark, or
advertisement, unless approved by Owner in writing. Except for purposes of
prosecuting the Work, Contractor shall not, and Contractor shall not permit its
Subcontractors to, photograph all or any portion of the Facility without the
prior written consent of Owner. Further, Owner shall have the right to review
and approve all photographs taken prior to the release thereof by Contractor or
its Subcontractors.
SECTION 9.15. CLEANING UP.
Contractor shall at all times keep the Facility Site (and the areas in
the Existing Facility Site where Contractor performs work) in a neat, clean,
and safe condition and shall remove from the Facility Site and Existing
Facility and the vicinity thereof, and properly dispose of off-Site, all debris
and rubbish caused by Contractor's operations at reasonable intervals in
accordance with GIP. Upon completion of the Work, Contractor shall promptly
return unused materials furnished by Owner and remove from the Facility Site
and Existing Facility Site all of Contractor's equipment, material, and like
items, leaving such premises and the vicinity clean, safe, and ready for use.
In the event Contractor or any of its subcontractors shall fail to
maintain the Work area as described above in a manner satisfactory to Owner or
Government Authority, or fail to effect such cleanup or removal in compliance
with the applicable Laws or this Contract, Owner shall have the right after
providing ten (10) days notice to Contractor to perform such cleanup and remove
such items on behalf of, at the risk of, and at the expense of, Contractor. Any
and all costs and expenses so incurred by Owner will be deducted from any
monies due Contractor.
SECTION 9.16. INDEPENDENT CONTRACTOR.
In performing the Work hereunder, Contractor shall at all times be an
independent contractor and shall have sole responsibility for and control over
the details and means and methods of performing the Work, subject to the
provisions of this Contract. No subcontractor, agent, or employee of Contractor
shall be deemed to be the agent, subcontractor, representative or employee of
Owner. Owner and Contractor hereby covenant and agree that in the approving or
furnishing of plans and specifications, or in the making of inspections by
Owner, or in the taking of any other action or the exercise of any right
pursuant hereto, Owner is acting for and on its own behalf and not as agent of
Contractor.
Contractor shall be responsible to Owner for the acts and omissions of
all its employees and all its subcontractors, their agents and employees and
all other Persons performing any of the Work.
Contractor shall be solely responsible for the acts of its employees
and thus, shall be solely responsible for their compliance with the
requirements of any applicable labor contracts.
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Any employment matters regarding the payment of salaries, remuneration,
benefits, allowances and any other such employment benefits shall be
Contractor's sole responsibility.
SECTION 9.17. OPERATIONS MANUAL.
No less than three (3) months prior to the Guaranteed Completion Date,
Contractor shall prepare and deliver five (5) copies to Owner of complete
Equipment and system instructions for the Start-Up, operation and maintenance
of the Facility (the "Operations Manual") in preliminary draft form. Subsequent
to such Delivery, Contractor shall update and revise the Operations Manual,
when and as necessary, until Substantial Completion and thereafter as necessary
to reflect the completion of all Punch List items and warranty obligations.
Contractor shall obtain all instruction manuals and special directions that are
required for this purpose from Equipment manufacturers or shall itself provide
any such written instructions which are not available from the manufacturers.
The Operations Manual shall be based on sound engineering and Good Industry
Practice and shall be prepared in full consideration of the experience level
and technical background of a power plant technician and Contractor's
training-related obligations under Section 4.5. The Operations Manual shall be
prepared, subject to the foregoing standards, with the goal of achieving
operation of the Facility at the capacity, efficiency, reliability, safety and
maintainability levels contemplated by the Contract. Contractor shall perform
all tests, including Start-Up and Performance Tests, in accordance with the
Operations Manual.
SECTION 9.18. OPERATING SPARE PARTS; OWNER PROVIDED START-UP SPARE
PARTS.
Contractor shall prior to Substantial Completion provide Owner with a
comprehensive list of recommended spare parts for the Equipment supplied
hereunder. Except for spare parts required for Contractor to cause the Facility
to achieve Substantial Completion, the Contract Price is exclusive of operation
and maintenance spare parts and the Contractor shall have no obligation to
provide operation and maintenance spare parts.
Owner will make available to Contractor existing spare parts for
Start-Up and commissioning purposes, so long as operation of the Existing
Facilities will not be compromised. Contractor will provide replacements for
any start up or commissioning spare parts provided by Owner on a timely basis.
SECTION 9.19. OFFICE SPACE/UTILITIES.
At all times during the performance of the Work, Contractor shall
supply space for six (6) offices to Owner's personnel and representatives at
the Facility Site and shall furnish utilities (telephone lines, electricity
lines, water and sewage) to serve such office space, such space and utilities
to be comparable to Contractor's office space and facilities at the Facility
Site.
ARTICLE 10
WARRANTIES
SECTION 10.1. COMPLETE FACILITY.
Contractor represents and warrants to Owner that the Facility,
including the Turbine, and all material, Equipment and workmanship related
thereto and the installation/erection thereof
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shall (i) be new and of the kind and quality described in the Contract
Documents or, if not described, standard power generation industry grade, (ii)
be suitable for the purpose of meeting the design set forth in the Statement of
Work and for causing the Facility to satisfy the Performance Guarantees as
contemplated herein, (iii) be free from defects in title, material, design,
workmanship and quality, (iv) comply with all Laws and standards and
regulations of any Government Authority having jurisdiction over the Work and
applicable to the performance of the Work, and (v) conform to the Statement of
Work and all other terms and conditions of the Contract Documents. Further,
Contractor warrants that all engineering services and advice shall be
competently performed and in accordance with GIP, and that adherence to the
Operations Manual shall allow operation and maintenance of the Facility in
accordance with manufacturers' guidelines and that such operation will not
impair any warranty of Equipment or Work.
SECTION 10.2. WARRANTY PERIOD.
The warranty set forth in Section 10.1 shall commence at the Date of
Substantial Completion, and extend for a period of 365 days following the Date
of Substantial Completion (the "Warranty Period"). The Warranty Period with
respect to any Work that is repaired, replaced, modified or otherwise altered
or corrected after the Date of Substantial Completion shall extend for 365 days
from the date of completion of such repair, replacement, modification,
correction or alteration (the "Extended Warranty Period"), provided that in no
event shall the Extended Warranty Period extend beyond 730 days from
commencement of the Warranty Period.
SECTION 10.3. REMEDIAL WARRANTY WORK.
If a failure to meet any warranty set forth herein occurs within the
Warranty Period, Owner shall notify Contractor in writing promptly, but not
later than seven (7) days after discovery of the warranty claim, and shall, as
soon as practicable, make the applicable portion of the Work available for
correction. Contractor, at its expense, shall as soon as is practicable
thereafter correct any warranty defect by: (i) repairing any defective Work or
parts at the Facility Site; (ii) replacing any defective Work or parts at the
Facility Site; or (iii) re-performing the Work, all of which shall be referred
to as Remedial Warranty Work ("Remedial Warranty Work"). Contractor's Remedial
Warranty Work shall include the removal and replacement of all equipment and
materials necessary to effect the repair or replacement of the Work. The method
of correction shall be as selected by the Contractor after prior consultation
with the Owner. In lieu of Contractor's correction of the defect, the Parties
may agree to an equitable adjustment to the Contract Price or a cash payment
from Contractor to Owner. Contractor's warranty on such Remedial Warranty Work
shall be the same as the original warranty set forth in Section 10.1 hereof and
shall extend for the remainder of the applicable Warranty Period or twelve (12)
months from completion of the Remedial Warranty Work, whichever is longer, but
in no event shall it extend more than twenty-four (24) months from the Date of
Substantial Completion. Owner may require Contractor to perform a root cause
analysis on any warranty item which has failed. If the root cause analysis
demonstrates that the failure was due to misuse by Owner or Operator, Operator
error or that the failure only affected the failed item and would not affect
other aspects of the Facility, then Owner shall bear the cost of the root cause
analysis. Otherwise, Contractor shall bear such cost.
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SECTION 10.4. PROCEDURES FOR REMEDIAL WARRANTY WORK.
Contractor shall perform Remedial Warranty Work in accordance with the
warranty claim procedure set forth in Exhibit O. Owner agrees to make the
applicable piece of Equipment available to Contractor to inspect and to perform
such Remedial Warranty Work in a manner which will not materially adversely
interfere with Owner's ability to operate its system to serve its Customers;
provided, however, Owner shall shut down the Facility to permit performance of
the Remedial Warranty Work by Contractor, and Owner shall not continue to
operate the Facility if Contractor reasonably determines that Owner's continued
operation of the Facility prior to effecting the Remedial Warranty Work will
damage the Facility. Contractor shall coordinate with Owner to cause the
performance of such acts or tests as Owner may reasonably require to verify
that the Remedial Warranty Work satisfies the requirements of the Contract
Documents. Should Contractor fail to proceed promptly to correct defective
Work, fail to perform the Remedial Warranty Work on or before the Remedial
Completion Date as may be extended or otherwise comply with the terms of
Contractor's warranties hereunder, Owner may, after notification of Contractor,
perform or cause the Remedial Warranty Work to be performed at Contractor's
expense in an amount not to exceed the amount such Remedial Warranty Work would
reasonably cost if performed by Contractor while working at maximum effort and
employing overtime labor. Contractor shall be liable for the satisfaction and
full performance of its obligations hereunder including payment for Remedial
Warranty Work performed by or at the direction of Owner. Owner shall be
entitled to such payments within thirty (30) days from the date of Owner's
invoice to Contractor for same accompanied by reasonable supporting
documentation.
SECTION 10.5. OTHER WARRANTY EXCLUSIONS.
The duties, liabilities and obligations of Contractor under this
Article 10 do not extend to any repairs, adjustments, alterations, replacements
or maintenance which may be required as a result of normal wear and tear in the
operation of the Facility, normal degradation in the performance of Equipment,
any Excusable Event, or as a result of Owner's failure to operate or maintain
the Facility substantially in accordance with the manufacturer's
recommendations, Good Industry Practice and the Operations Manual provided by
Contractor.
SECTION 10.6. SUBCONTRACTOR WARRANTIES.
Contractor shall use commercially reasonable efforts to obtain
standard vendor warranties for the benefit of Contractor and Owner for all
equipment with warranty periods equal to or longer than the Warranty Period. If
such warranties extend beyond the Warranty Period, then they shall be
transferred to Owner at the end of the Warranty Period, together with an
assignment to Owner, or other acceptable provision for Owner enforcement or
Contractor enforcement on behalf of Owner of any security, bond or other
performance guarantee with respect to such warranties, and Contractor shall act
as liaison for Owner with such vendors in prosecuting any warranty claims.
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SECTION 10.7. YEAR 2000 WARRANTY.
Contractor warrants to Owner that the Equipment delivered by
Contractor pursuant to this Agreement will be "Year 2000 Capable," meaning that
(i) the computer hardware and software that is part of said Equipment and any
information technology contained therein will accurately process date and time
data within the Warranty Period and (ii) neither performance nor functionality
of the said Equipment will be affected materially by dates within the Warranty
Period. If any failure to meet the Year 2000 Warranty occurs on or before the
end of the Warranty Period, Contractor will, at its option, modify or replace
the non-conforming Equipment so that it meets the Year 2000 Capable warranty.
Contractor shall have no responsibility for, and does not warrant against, any
such failure of the Equipment that is directly or indirectly caused by the
failure of products with the Equipment to function properly, use of date or
information that is inaccurate or incompatible with the Equipment's interfaces,
requirements, or specifications, or use of the Equipment other than in
accordance with the written instructions of Contractor.
SECTION 10.8. NO IMPLIED WARRANTIES AND EXCLUSIVE REMEDY.
THE EXPRESS WARRANTIES AND GUARANTEES SET FORTH IN THIS ARTICLE 10 ARE
EXCLUSIVE AND NO OTHER WARRANTIES OR GUARANTEES OF ANY KIND, WHETHER STATUTORY,
WRITTEN, ORAL, EXPRESS OR IMPLIED (INCLUDING WARRANTIES OF FITNESS FOR A
PARTICULAR PURPOSE OR MERCHANTABILITY AND IMPLIED WARRANTIES OF CUSTOM OR
USAGE) SHALL APPLY AND SUCH WARRANTIES ARE EXPRESSLY EXCLUDED. OWNER'S REMEDIES
AS DESCRIBED IN ARTICLE 10 ARE OWNER'S EXCLUSIVE FOR BREACH OF WARRANTY AND ANY
REMEDIES TO WHICH OWNER WOULD OTHERWISE BE ENTITLED AT LAW ARISING OUT OF SUCH
WARRANTIES ARE HEREBY EXCLUDED.
ARTICLE 11
INDEMNIFICATION
SECTION 11.1. CONTRACTOR'S INDEMNIFICATION OF OWNER.
CONTRACTOR, ON BEHALF OF ITSELF, ITS AFFILIATES, SUCCESSORS, ASSIGNS,
OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS SHALL PROTECT, DEFEND, INDEMNIFY,
AND HOLD HARMLESS OWNER FROM AND AGAINST ALL CLAIMS OF A CONTRACTOR PARTY AND
OF THIRD PARTIES FOR DEATH, PERSONAL INJURY OR PROPERTY DAMAGE WHICH IN ANY WAY
ARISE OUT OF OR ARE RELATED TO THE PERFORMANCE OF THE WORK, OR ARE CAUSED BY OR
ATTRIBUTABLE TO THE ACTS OR OMISSIONS OF ANY CONTRACTOR PARTY OR TO THE BREACH
OF THIS AGREEMENT BY ANY CONTRACTOR PARTY; PROVIDED, HOWEVER, THAT CONTRACTOR'S
OBLIGATION TO INDEMNIFY THE OWNER WITH RESPECT TO DAMAGE CAUSED BY ANY
CONTRACTOR PARTY TO THE EXISTING FACILITY SHALL BE LIMITED TO AN AMOUNT EQUAL
TO THE COST OF REPAIRING THE EXISTING FACILITY, BUT NOT TO EXCEED THE SUM OF
ONE HUNDRED THOUSAND
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DOLLARS ($100,000). NEITHER CONTRACTOR NOR ITS SUBCONTRACTORS SHALL BE LIABLE
TO OWNER OR ANY OF OWNER'S AFFILIATES FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES
IN RELATION THERETO.
SECTION 11.2. OWNER'S INDEMNIFICATION OF CONTRACTOR.
OWNER, ON BEHALF OF ITSELF, ITS AFFILIATES, SUCCESSORS, ASSIGNS,
OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS SHALL PROTECT, DEFEND, INDEMNIFY,
AND HOLD HARMLESS CONTRACTOR FROM AND AGAINST ALL CLAIMS OF AN OWNER PARTY AND
OF THIRD PARTIES FOR DEATH, PERSONAL INJURY OR PROPERTY DAMAGE WHICH IN ANY WAY
ARISE OUT OF OR ARE RELATED TO THIS AGREEMENT AND ARE CAUSED BY OR ATTRIBUTABLE
TO THE ACTS OR OMISSIONS OF ANY OWNER PARTY OR TO THE BREACH OF THIS AGREEMENT
BY ANY OWNER PARTY.
SECTION 11.3. PATENT INDEMNITY.
Contractor expressly warrants and represents that it shall indemnify,
defend and save Owner and its Affiliates, successors, assigns, officers,
directors, employees and agents harmless from and against any and all claims
whatsoever arising from or in any manner related to an infringement of patents
or the improper use of other proprietary rights which may occur in connection
with Contractor's or any Subcontractor's performance of the Work pursuant to
this Agreement and the ownership or use of the Facility or any part thereof
provided by Contractor or any Subcontractor (including, without limitation, the
use of any such part in conjunction with, or as modified, supplemented or
otherwise affected by, any equipment); provided that Contractor shall have no
indemnity obligations hereunder with respect to any claim arising out of (a)
use of Equipment in combination with devices or products not supplied by
Contractor or any of its respective Subcontractors, (b) use of Equipment in an
application or environment for which it was not designed. Should any such claim
materially impair Contractor's performance of the Work or continued operations
of the Facility, then Contractor shall, at its own expense, timely procure the
right to continue its performance of the Work so as not to materially impair
the Work Schedule or such continued operations of the Facility. This Section
11.3 states the entire liability of the Contractor for patent infringement in
connection with the performance of the Work and ownership and use of the
Facility or any part thereof provided by Contractor or any Subcontractor.
SECTION 11.4. NOTICE.
Each Party shall promptly notify the other in writing of any claims
from any third Party which may be covered by the indemnities set forth in this
Article 11. Without limiting the generality of the foregoing, Owner shall
notify Contractor in writing as soon as Owner shall receive notice of any
claims of infringement of patents or other proprietary rights occurring in
connection with Contractor's performance of the Work. In turn, Contractor shall
timely notify Owner in writing of any claims which Contractor may receive
alleging infringement of patents or other proprietary rights which may affect
Contractor's performance of the Work.
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SECTION 11.5. DEFENSE OF CLAIMS.
The Party responding to or responsible for an indemnification given
pursuant to this Article 11 (the "Indemnifying Party") shall have sole charge
and direction of the defense of any suit or proceeding based on any claim,
demand, loss, damage, cause of action, suit on liability for which the
indemnifying Party is responsible under any such Section. The Party asserting
that it is entitled to indemnification pursuant to this Article 11 (the
"Indemnified Party") shall give the Indemnifying Party such assistance as the
Indemnifying Party may reasonably require in such defense, and shall have the
right to be represented in such defense by counsel of its own choice at its own
expense. If the Indemnifying Party fails to defend diligently such suit or
proceeding, the Indemnified Party may, in its reasonable discretion, either
defend such suit or proceeding or settle the claim which is the basis thereof,
without the consent of the Indemnifying Party, without relieving the
Indemnifying Party of its obligation under Sections 11.1, 11.2, or 11.3 and in
either case the Indemnifying Party shall reimburse the Indemnified Party for
its expenses, court costs and reasonable attorneys' fees. If any claim
described in Section 11.3 is held to constitute an infringement of any patent
or other proprietary rights and use of any equipment or process included in the
Work is enjoined, the Contractor shall at its own expense and at Contractor's
option (a) procure for Owner the right to continue to use the infringing
equipment or process, (b) replace such equipment or process with non-infringing
equipment or process of equal utility and efficiency, or (c) modify such
equipment or process so that it becomes non-infringing without affecting its
utility or efficiency; provided that Contractor may only elect the action
described in clause (b) or (c) if Contractor and Owner agree upon a schedule
for such action which will allow Contractor to complete such action within a
reasonable period of time without unreasonably interfering with the operation
of the Facility.
SECTION 11.6. OTHER PROVISIONS; SURVIVAL.
The indemnification obligations of the Parties in this Article 11 and
of Contractor's and Owner's environmental indemnification in Sections 9.14(b)
and (c) are in addition to and shall not limit or be limited by Contractor's
indemnification obligations contained in Section 13.2. Notwithstanding any
other provision hereof, the indemnification provisions set forth in Sections
9.14(b), 9.14(c), 11.1, 11.2, 11.3, and 13.2 of this Agreement shall survive
the termination or expiration of this Agreement.
ARTICLE 12
INSURANCE
Contractor and Owner shall provide and maintain insurance as set forth
in Exhibit H.
ARTICLE 13
PROTECTION OF PERSONS AND PROPERTY
SECTION 13.1. SAFETY PRECAUTIONS AND PROGRAMS.
Subject to Section 11.1, Contractor shall be fully responsible for
initiating, maintaining, and supervising adequate and lawful safety
precautions, procedures, and programs in connection with the Work, which
precautions, procedures, and programs shall conform in all respects to all
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Laws. Additionally, Contractor shall take all reasonable precautions for the
safety of, and shall provide all reasonable protection to prevent damage,
injury, or loss to:
(a) all persons in and about the Facility Site and Existing Facility
Site where the Work is performed;
(b) the Work and all materials and equipment to be incorporated
therein, whether in storage at the Facility Site/Existing Facility Site or
off-Site, under the care, custody, or control of Contractor or any of its
Subcontractors; and,
(c) all other property at the Facility Site in proximity to the
locations where the Work is performed, including, without limitation, the
facilities, instrumentation, walks, pavements, roadways, equipment, structures,
and utilities of Owner.
Contractor shall give all notices and comply with all Laws bearing on
the safety of persons or property or their protection from damage, injury, or
loss at the Facility Site.
Contractor shall develop an appropriate safety management plan and
take all necessary safety and other precautions to protect property and persons
from damage, injury, or illness arising out of the performance of the Work
consistent with the Facility Site Access and Safety Procedures. Contractor
shall comply strictly with all Laws pertaining to health or safety which are
applicable to Contractor or to the Work. At all times while any of the
Contractor's employees, agents, or subcontractors are on the Facility Site and/
or Existing Facility, Contractor shall be responsible for providing them with a
safe working environment. Contractor shall inspect the working environments
where its employees, agents, or subcontractors are or may be present on the
Facility Site and shall promptly take action to correct conditions which cause
or may reasonably be expected to cause such working environments to become an
unsafe place of employment.
Contractor shall participate in and manage jointly with Owner, a
safety incentive program which Owner may choose to develop with Contractor.
SECTION 13.2. OCCUPATIONAL SAFETY AND HEALTH ACT.
Contractor shall comply with all applicable safety and health
standards and regulations promulgated by the Secretary of Labor under the
Occupational Safety and Health Act of 1970 ("OSHA"), and all other applicable
Federal, state, or local health and safety regulations. In addition to the
other indemnification obligations of Contractor contained in this Agreement,
Contractor shall indemnify and hold harmless Owner against any liability,
fines, penalties, civil penalties, costs, and expenses incurred by any Owner
because of Contractor's failure to comply with OSHA regulations.
SECTION 13.3. EEO COMPLIANCE.
Contractor represents that its U.S. corporate practices, and that of
its affiliates, partners and U.S. suppliers and subcontractors are, and will
continue to be, in compliance the provisions of Section 202 of Executive Order
11246 which is incorporated herein by reference pursuant to regulations
promulgated under such Order (41 C.F.R. 60-1.4(d)).
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SECTION 13.4. EMERGENCIES.
In the event of any emergency endangering life or property, Contractor
shall take such action as may be reasonable and necessary to prevent, avoid, or
mitigate damage, injury or loss and shall report as soon as possible any such
incidents, including Contractor's response thereto, in writing to Owner.
Whenever, in the reasonable opinion of Owner, Contractor has not taken
sufficient precautions for the safety of the public or the protection of the
Work, or any equipment relating thereto, or of the Facility Site or Existing
Facility or other public or private property creating, in the reasonable
opinion of Owner, an emergency requiring immediate action, then Owner may
suspend the performance of all Work until such time as such emergency has
passed in order to protect the personnel, equipment or property at risk or
provide suitable protection by causing such Work to be done and material to be
furnished and placed. Owner shall notify Contractor of such action concurrently
with or promptly after taking such action. Provided that the emergency was not
an event that Contractor would otherwise be eligible for increase in Contract
Price, the reasonable cost of such Work and material (after taking into account
its emergency nature) shall be borne by Contractor and if the same is not paid
upon presentation by Owner of invoices relating thereto, such costs may be
deducted by Owner from any amounts due or to become due Contractor.
ARTICLE 14
SUBCONTRACTORS
Contractor shall have portions of the Work performed by
Subcontractors. Owner shall have the right, upon written request, to receive
from Contractor a copy of all Subcontractor equipment specifications,
performance guarantee data, and warranties, as well as a copy of all shop and
field performance test reports and vendor field representative reports with
respect to Work performed by Subcontractors.
Owner desires to have the right of prior reasonable approval of
Subcontractors for certain items of Work which are listed in Exhibit D (the
"Key Work"). Exhibit D contains a list of potential Subcontractors which
Contractor and Owner have agreed are approved for the Key Work. In the event
that Contractor is considering the selection of a Person not listed in Exhibit
D for an item of Key Work, then Contractor shall notify Owner of the proposed
Subcontractor at the earliest practical point in the selection process and
furnish to Owner all information reasonably requested by Owner with respect to
Contractor's selection criteria. Contractor shall request, in writing, Owner's
consent for Contractor to enter into a Subcontract with a Person not named on
Exhibit D for performance of an item of Key Work. Owner must respond to
Contractor's request for its consent within five (5) Business Days after
receipt of the request and the information described above in this Article 14.
If Owner fails to timely respond to Contractor's request, then Contractor shall
have the right to execute such Subcontract with the proposed Subcontractor for
the performance of the Key Work. If Owner has refused to consent to the
proposed Subcontractor, then the Contractor shall not enter into a Subcontract
with such proposed Subcontractor for such item of Key Work.
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ARTICLE 15
LIENS
Contractor shall not suffer or permit, and shall promptly remove and
discharge, any lien or other encumbrance recorded as a claim against the Work,
the Facility Site, or any other property of Owner or against any monies due or
to become due for any Work performed or materials furnished for the Work by
reason of any claim or demand against, or any action or non-action of,
Contractor or any of its Subcontractors or any materialman or any other person
or entity (other than Owner or Customer) arising out of the Work. Contractor
shall take all actions necessary to have any such lien released or discharged
or furnish a bond or other security reasonably satisfactory to Owner insuring
that Owner will be fully protected from any such lien. Upon the failure of
Contractor to promptly resolve, pay, discharge or provide security reasonably
acceptable to Owner for any such lien or other encumbrance, within ten (10)
days notice of Owner's intent to pay or discharge such lien or other
encumbrance, Owner may take all actions and steps necessary to release or
discharge any such lien and Contractor agrees to reimburse Owner, on demand,
for all monies paid by Owner (including reasonable attorneys' fees) in the
releasing, satisfying, and discharging of any such liens. If any such lien or
encumbrance has been so filed, Owner may upon ten (10) days written notice to
Contractor, withhold from any payment due to Contractor hereunder the amount of
the lien plus reasonable expenses (including reasonable attorneys' fees)
related thereto until said claim or lien has been discharged or there has been
furnished to Owner bond or other security reasonably satisfactory to Owner
insuring that Owner will be fully protected and held harmless from any
liability, fees, or costs in connection therewith; otherwise, Owner may
exercise its right of offset under Section 6.8. Unless such lien results from
the actions of Owner, any delay in the performance of the Work resulting from
such lien shall not be considered to be an Excusable Delay.
ARTICLE 16
PATENTS, OWNERSHIP OF DOCUMENTS AND CONFIDENTIAL INFORMATION
SECTION 16.1. NO INCORPORATION.
Contractor shall not incorporate into the Work or the Facility any
confidential information or trade secrets, patented or unpatented, of any third
Party other than Owner and Contractor or which Owner or Contractor does not
have the right to use, or which infringes any patent or copyright. Contractor
shall notify Owner of any patent, patent application, or other proprietary
right which may be infringed or violated by the Work, or any portion thereof to
be furnished hereunder and of which Contractor is or becomes aware.
SECTION 16.2. CONFIDENTIAL INFORMATION.
Subject to Section 16.3, in respect of any information concerning the
Parties which is designated in writing as proprietary and any information
disclosed to the other Party related to this Agreement which is designated as
confidential, a Party shall not, for a period of three (3) years from the date
of its receipt, publish or otherwise disclose it to others without the written
approval of the other Party. Both parties shall at all times use their
reasonable endeavors to keep all information regarding the terms and conditions
of this Agreement confidential. Accordingly,
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neither Party shall disclose the same to any other Person, provided that the
provisions of this Section 16.2 shall not apply to information which:
(a) was furnished prior to this Agreement without restriction;
(b) is or becomes knowledge available within the public domain (other
than by breach of the foregoing obligation of confidentiality);
(c) is received by either Party from a third Party without restriction
and not in breach of this Agreement;
(d) is independently developed by either Party; or,
(e) the Contractor may provide to any Subcontractor any information
necessary to carry out and complete its portion of the Work, subject to the
inclusion in the terms of the subcontract or purchase order entered into by the
Contractor with such Subcontractor (or the Subcontractor by which such other
Subcontractor is appointed) of provisions substantially similar to the
provisions of this Section 16.2.
SECTION 16.3. DISCLOSURE OF CONFIDENTIAL INFORMATION.
The provisions of Section 16.2 notwithstanding, either Party shall be
entitled to disclose the terms and conditions of this Agreement and any data or
information acquired by it under or pursuant to this Agreement without the
prior written consent of the other Party:
(a) to any Affiliate of such Party;
(b) to any outside consultants or advisers engaged by or on behalf of
such Party in connection with the Work or the financing or operation of the
Facility and acting in that capacity;
(c) to any Persons from whom the Contractor intends to invite tenders
in respect of the subcontracting of any element of the Work;
(d) to any security trustee, any bank or other financial institution
and its advisers from which such Party is seeking or obtaining financing;
(e) to the extent required by Law, or rules or regulations of any
securities or stock exchange, or pursuant to an order of any court of competent
jurisdiction, provided that to the extent practical the original disclosing
Party is given notice and adequate time to seek a protective order applicable
to the information before it is disclosed;
(f) to any insurer under a policy of insurance required to be taken
out by either Party under the Contract; or
(g) to directors, employees and officers of such Party;
PROVIDED, HOWEVER, that:
(x) the disclosing Party determines in good faith that the
recipient has a legitimate need to see such data or information;
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(y) the recipient (other than the Owner's Engineer) is not a
direct competitor of either Party; and
(z) the recipient has been made aware of and has agreed to be
bound by the requirements of Section 16.2.
SECTION 16.4. EXCHANGE OF INFORMATION AND PUBLICATION.
The parties shall:
(a) make available to each other without charge such materials,
documents and data as would normally be made available to the other Party in
connection with the Work or the operation of the Facility (except any internal
cost accounting or cost reporting data or any materials, documents and data
protected by legal privilege or which is subject to any duty of confidentiality
to any third Party) acquired or brought into existence in any manner whatsoever
by each of them in connection with the Work as the other may reasonably request
for the purposes of exercising its rights or carrying out its duties in respect
of the Work or performing its obligations under this Agreement; and
(b) use all reasonable endeavors to make available to the other such
materials, documents and data acquired or brought into existence by third
parties as the other may reasonably request for the purposes referred to in
sub-paragraph (a) above, and as would normally be made available by Persons
acting in accordance with Good Industry Practice.
Neither Party shall, without the prior written authority of the other,
publish, alone or in conjunction with any other Person, any article or other
material relating to any Dispute arising under the Agreement nor impart to any
radio or television program or any other medium any information regarding any
such Dispute. The Contractor may use information concerning the signing of the
Agreement, the general nature of the Work and the extent of the Contractor's
involvement in the Work, without the prior approval of the Owner, in sales
brochures, qualification and experience documents and similar external
announcements and publications and, with the prior approval of the Owner (which
approval shall not be unreasonably withheld or delayed), in press releases and
similar external announcements and publications.
ARTICLE 17
TERMINATION OF AGREEMENT
SECTION 17.1. TERMINATION EVENTS.
If Contractor (a) shall commence a voluntary proceeding (or an
involuntary proceeding shall be commenced against Contractor which remains not
stayed or not discharged for more than thirty (30) days after Contractor
receives a notice of such involuntary proceeding) seeking liquidation,
reorganization, or other relief with respect to Contractor or its debts under
any bankruptcy, insolvency, or other similar laws now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian, or other
similar official of Contractor or a substantial part of its property, or if
Contractor shall consent to any such relief or to the
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appointment of or taking possession by any such official in any such proceeding
commenced by or against Contractor, or (b) makes a general assignment for the
benefit of its creditors, (c) fails to achieve Substantial Completion within 90
days after the Guaranteed Completion Date and upon or after the 90th day is not
applying all reasonable effort to achieve Substantial Completion or,
notwithstanding having used all reasonable efforts to achieve Substantial
Completion, fails to do so within one (1) year after the Guaranteed Completion
Date, (d) repeated failures to make prompt payment to Subcontractors or for
materials, equipment, or labor, unless Contractor places reasonably
satisfactory security protecting the Owner, (e) commits a material violation of
any Laws pertaining to performance of its obligations under this Contract, or
(f) otherwise breaches a material provision of the Contract Documents, then
Owner may without prejudice to any other right or remedy terminate this
Agreement and take possession of the Work and may finish the Work by whatever
method Owner may deem expedient. In such case Contractor shall not be entitled
to receive any further payment until the Work is finished. Owner's right to
terminate the Agreement following the occurrence of the events or circumstances
described in this Section 17.1 shall be subject to Owner having first given
Contractor thirty (30) days' prior written notice of its intention to terminate
the Agreement, during which period Contractor shall have failed in the case of
paragraph (c), (d), (e) and (f) to remedy or to take all reasonable steps to
remedy of the default.
SECTION 17.2. TERMINATION FOR CONVENIENCE.
Owner may, at its option, terminate the Agreement at any time by
written notice thereof to Contractor. Upon any such termination, Owner shall
pay Contractor in accordance with Section 17.4. The provisions of the Contract
Documents which by their nature survive final acceptance of the Work, shall
remain in full force and effect after such termination to the extent provided
in such provisions; however, Contractor does not warrant any terminated Work.
Upon receipt of any such notice, Contractor shall, unless the notice directs
otherwise immediately discontinue the Work on that date specified in the
notice.
SECTION 17.3. TERMINATION DUE TO THE OWNER'S DEFAULT.
In the event that Owner:
(a) has failed to pay to Contractor the amount due under any invoice
for payment, or the undisputed amount, within twenty-five (25) days after the
date of its receipt by Owner; or
(b) shall have voluntarily or involuntarily commenced bankruptcy,
insolvency, reorganization, stay, moratorium or similar debtor-relief
proceedings, or shall have become insolvent or generally does not pay its debts
as they become due, or admits in writing its inability to pay its debts or
makes an assignment for the benefit of its creditors; or
(c) has insolvency, receivership, reorganization or bankruptcy
proceedings brought against it and the petition commencing such proceedings is
not controverted and the proceedings dismissed or effectively stayed within
sixty (60) days of such commencement; or
(d) commits a material violation of any Law pertaining to performance
of its obligations under this Contract; or
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(e) has committed a material breach of this Contract for which
Contractor cannot be compensated by a Change or an adjustment to the Contract
Price,
then Contractor shall be entitled, without prejudice to any other rights or
remedies under the Contract, to serve a written notice of its intention to
terminate the Contract on Owner specifying the grounds for the service of such
notice. If the Owner has not remedied or taken all reasonable steps to commence
the remedy of the circumstances giving rise to the service of such notice
within thirty (30) days of receipt by Owner of such notice, Contractor shall be
entitled, by further notice in writing to Owner, to terminate the Contract
forthwith.
SECTION 17.4. PAYMENT ON TERMINATION
(a) In the event of termination under Section 17.2 or Section 17.3,
Owner shall pay Contractor the following termination payment:
(i) payment for the actual costs expended prior to receipt of
the notice of termination, plus overhead and profit of 8% on such
actual costs, and
(ii) all costs reasonably incurred by Contractor in ceasing
the Work, including demobilization costs and vendor/subcontractor
cancellation charges. Owner shall be entitled to credit for amounts
paid prior to termination.
(b) In the event of termination pursuant to Section 17.1, the
following shall apply:
Owner shall immediately take possession of the Work and all except one
(1) copy of the Contract Documents or make arrangements to take
possession of the Work and engage another person to complete the Work
or Owner may complete the Work itself. If the cost of completing the
Work hereunder, to include Owner's reasonable costs and unpaid amounts
for the Equipment, exceeds the unpaid portion of the Contract Price,
then Contractor shall pay the difference to Owner. Owner shall pay
Contractor a termination payment which shall include payment for the
undisputed amounts under outstanding invoices. Owner shall be entitled
to credit for amounts paid prior to termination.
(c) In the event of (a) or (b) above, Contractor shall follow the
Owner's instructions concerning canceling any materials or equipment ordered or
subcontracts entered into prior to termination. The subcontracts and purchase
orders not cancelled shall be assigned to Owner, and Owner shall be responsible
for all payments and all other obligations relating to these orders and
subcontracts.
(d) In the event of termination of this Agreement for any reason after
the Purchase Order has been assigned to Contractor but prior to delivery and
final payment for the Turbine by Contractor within five (5) Business Days after
such termination, Contractor shall reassign the Purchase Order to Owner or its
designee, using the same form of assignment delivered to Contractor by Owner,
and Owner shall reimburse Contractor for installments or other reasonable
payments, made by Contractor pursuant to the Purchase Order prior to the date
of such termination and which have not previously been paid by Owner. In the
event of termination of this Agreement after Contractor has made final payment
for the Turbine, Contractor shall convey the Turbine to Owner or its designee
by bill of sale in form and substance reasonably acceptable
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to Owner, which shall include assignment of the Purchase Order by Contractor to
Owner, including all warranty rights associated with the Purchase Order, and in
which Contractor shall warrant good title to the Turbine and warrant that the
Turbine is free and clear of any and all liens, claims for payment, charges,
security interests, and encumbrances, and shall further represent that, to the
best of Contractor's knowledge, the Turbine is free from defect.
ARTICLE 18
OWNER'S RIGHT TO STOP THE WORK
SECTION 18.1. SUSPENSION OF WORK WITHOUT CAUSE.
Subject to the provisions of Article 17, Owner, in Owner's sole and
absolute discretion, may suspend or stop the performance of all or any part of
the Work at any time without cause. The Guaranteed Completion Date shall be
extended for a period equal to that during which Contractor's performance was
precluded by such suspension by Owner, plus any reasonable additional time
required by Contractor and/or its Subcontractors to remobilize and restart the
Work and Contractor shall be eligible for a Change Order pursuant to Article 6
for costs incurred by Contractor as a result of such suspension.
SECTION 18.2. SUBSTITUTE PERFORMANCE
If Contractor fails to perform any part of the Work in accordance with
the Contract Documents, Owner may, without limiting any other remedy of Owner,
stop the Work, subject to the Owner having first given the Contractor at least
twenty one (21) days prior notice of its intention to stop the Work (which
notice shall describe, with specificity, each item which Owner believes
Contractor has failed to perform and provide reference to the applicable
provision of this Agreement under which performance is required), and
Contractor shall promptly commence action to correct such deficiencies. If
Contractor fails to promptly commence action to correct such deficiencies,
Owner may make good such deficiencies and a Change Order shall be issued
deducting from payments then or thereafter due Contractor the cost of
correcting such deficiencies.
ARTICLE 19
OTHER PROVISIONS
SECTION 19.1. NOTICES
Any notice, demand, submission, request or approval required or
permitted hereunder shall be in writing and shall be deemed to have been
sufficiently given if the same is sent by registered or certified United States
mail, return receipt requested (with all postage, registration, certification
and other fees and charges prepaid), facsimile transfer, hand delivery,
overnight delivery, or other reasonable method, and addressed as follows:
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IF TO OWNER:
East Coast Power L.L.C.
1095 Cranbury - South River Road, Suite 10
Jamesburg, New Jersey 08831
Attention: Vice President of Operations
Fax: 609-409-9404
WITH A COPIES TO:
East Coast Power L.L.C.
c/o Bayway Refining Company Refinery
Railroad and Chemical Avenue
Linden, New Jersey 07036
Attention: Project Director
Fax: 908-474-0804
AND TO:
East Coast Power L.L.C.
Pennzoil Place/South Tower
711 Louisiana Street, 32nd Floor
Houston, Texas 77002-2716
Attention: Vice President of Projects and Operations Support
Fax: 713-345-9705
IF TO CONTRACTOR:
National Energy Production Corporation
11831 North Creek Parkway North
Bothell, Washington 98011
Attn: Richard Kuprewicz
Fax: 425-415-3095
AND IF THE NOTICE IS A NOTICE OF DEFAULT OR ALLEGED DEFAULT HEREUNDER,
WITH A COPY TO:
National Energy Production Corporation
11831 North Creek Parkway North
Bothell, Washington 98011
Attn: John Gillis
Fax: 425-441-3046
Notice given by personal delivery or mail shall be effective upon
actual receipt. Notice given by telegram or telecopier shall be effective upon
actual receipt if received during the recipient's normal business hours, or at
the beginning of the recipient's next business day after
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receipt if not received during the recipient's normal business hours. All
Notices by telegram or telecopier shall be confirmed promptly after
transmission in writing by certified mail or personal delivery. Any party may
change any address to which Notice is to be given to it by giving notice as
provided above of such change of address.
SECTION 19.2. NO WAIVER.
No action or failure to act by Owner or Contractor shall constitute a
waiver of any right or duty afforded any of them under the Contract Documents,
nor shall any such action or failure to act constitute an approval of or
acquiescence in any breach thereunder, except as may be specifically agreed in
writing.
SECTION 19.3. GOVERNING LAW.
THIS CONTRACT SHALL BE CONSTRUED AND INTERPRETED UNDER THE LAWS OF THE
STATE OF NEW JERSEY WITHOUT REGARD FOR ITS CONFLICTS OF LAWS RULES OR
PRINCIPLES.
SECTION 19.4. DISPUTE RESOLUTION.
(a) NEGOTIATION OF DISPUTES AND DISAGREEMENTS. If any Dispute arises
out of this Agreement or the performance of the Work which the Parties
(provided that any dispute between Seller and Contractor shall not be resolved
pursuant to this Agreement) are not able to settle or resolve within a period
of ten (10) days after the Dispute arises, then each Party (provided that the
dispute involves such Party) shall nominate a senior officer of its management
to meet at a mutually agreed time and place not later than five (5) days after
the initial ten (10) day period that the Dispute has arisen to attempt to
resolve such Dispute. If resolution of such Dispute is not obtained within five
(5) days after the meeting of senior officers for such purpose, or such longer
period as the Parties may mutually agree upon, then any Party may initiate
mandatory arbitration in Houston, Texas before a panel of three arbitrators in
accordance with the Construction Industry Arbitration Rules of the American
Arbitration Association. The arbitrators shall have the authority to make any
award or judgment which a court of competent jurisdiction in the State of Texas
could make; provided, however, such arbitrators shall not have authority to
impose any indirect, consequential or punitive damages. The decision of the
arbitrators shall be final and binding.
Any deadline specified in this section may be altered by mutual
agreement. In the event of any emergency situation requiring prompt resolution,
the Parties agree to act in good faith to shorten the applicable time periods
and streamline the negotiation and arbitration process as much as reasonably
possible.
The procedure specified in this Section 19.4 shall be the exclusive
procedure for the resolution of disputes between the Parties arising out of or
relating to this Agreement; provided, however, that a party may seek a
preliminary injunction or other preliminary judicial relief if, in its
reasonable judgment, such action is necessary to avoid irreparable damage. Even
if such judicial action is necessary, however, the Parties agree that they will
continue to participate in good faith in the procedures specified in this
Section. To the extent permitted by applicable Law, all applicable statutes of
limitation shall be tolled while the procedures specified in this
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section are pending, and the Parties agree to take such action, if any,
required to effectuate such tolling. In the event a Party refuses to arbitrate
as required by this section, either party may bring action in any court of
competent jurisdiction to enforce the arbitration provisions of this Agreement.
(b) NO DELAY IN PERFORMANCE OF WORK. The existence of any Dispute
under this Agreement or the pendency of the Dispute settlement or resolution
procedures set forth herein shall not in and of themselves relieve or excuse
any Party from its ongoing duties and obligations under this Agreement, and
Contractor shall nevertheless promptly proceed with the performance of the
Work, including any Change Order giving rise to a Dispute, except where
otherwise provided by Article 6.
SECTION 19.5. OWNER'S PROJECT DIRECTOR, OWNER'S REPRESENTATIVE AND
OWNER'S ENGINEER.
Owner shall designate a qualified and competent representative
("Owner's Project Director"), who shall be duly authorized to execute or direct
the execution of the Work. Contractor shall be entitled to rely on the
authority of such person to commit Owner with regard to all matters relating to
the Contract. The Owner's Project Director shall have full authority to
represent Owner with respect to any and all matters pertaining to this Contract
and direction given by him to Contractor shall be binding on Owner. Owner shall
furnish Contractor a copy of such written authorization for the Owner's Project
Director within five (5) days of the execution of this Agreement. In addition,
Owner shall designate an individual who shall serve as Owner's Facility Site
representative ("Owner's Facility Site Representative"). Owner's Facility Site
Representative shall support the Owner's Project Director and act as his/her
representative at the Facility Site and Existing Facility Site during the
absence of the Owner's Project Director.
Owner also shall designate an engineering firm licensed in the State
of New Jersey (the "Owner's Engineer"). The Owner's Engineer will be used by
Owner to perform various engineering functions, including, but not limited to,
overseeing Contractor on design issues, drawings, drawing review, construction
methods, system walkdown and check out, witnessing equipment tests and
personnel training.
SECTION 19.6. HEADINGS.
Article and Section headings used in the Contract Documents are for
convenience of reference only and shall not affect the construction or
interpretation of the Contract Documents.
SECTION 19.7. NON-WAIVER CLAUSE.
Any delay, waiver or omission by Owner or Contractor to exercise any
right or power arising from any breach or default by Contractor or Owner in any
of the terms or provisions hereof shall not be construed to be a waiver by
Owner or Contractor of any subsequent breach or default of the same or other
terms or provisions on the part of Contractor or Owner.
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SECTION 19.8. SEVERABILITY.
If any of the provisions, or portions or applications thereof, of this
Agreement are held to be unenforceable or invalid by any court of competent
jurisdiction, Owner and Contractor shall negotiate an equitable adjustment in
the provisions of this Agreement with a view toward effecting the purposes of
this Agreement, and the validity and enforceability of the remaining provisions
or portions, or applications thereof, shall not be affected thereby.
SECTION 19.9. ASSIGNMENT AND FINANCING SUPPORT.
19.9.1 Each Party agrees that it will not sell, assign or
transfer this Agreement or any part thereof or interest therein, either by
power of attorney or otherwise, without the prior written reasonable consent of
the other Party, and that any such sale, assignment or transfer, without such
consent, shall be null and void. The sale of all or substantially all of a
Party's assets or the sale of its stock in an amount sufficient to constitute a
change of control shall constitute a transfer by such Party for the purpose of
this Section 19.9. Each Party may assign this Agreement to an Affiliate,
including a partnership, project entity or such equivalent under the laws of
the U.S. upon providing ten (10) days prior written notice to the other Party
so long as such entity assumes all of such Party's obligations and liabilities
hereunder. No such assignment shall release a Party from its obligations under
this Agreement or, in the case of Contractor, release Contractor from its
obligation to provide the corporate guarantee required by Section 4.10 hereof.
19.9.2 Contractor agrees to execute an appropriate consent to
any assignment of this Agreement by Owner to Lender as reasonably requested by
Lender acknowledging, in effect, that this Agreement has been duly authorized
and is valid and enforceable against Contractor and does not conflict with any
Law binding upon Contractor or its articles of incorporation or by-laws, that
this Agreement is in full force and effect, that Contractor will not agree to
any amendment to this Agreement without Lender's approval in writing to the
extent that Lender's consent to such amendment is required under Owner's
financing documentation and made known by Owner to Contractor, that Contractor
will not terminate this Agreement by reason of Owner's default without giving
Lender notice of default and a reasonable opportunity to cure within the time
limits for Owner's cure as set forth in this Agreement (plus such longer period
as may be reasonably necessary if Lender in good faith is endeavoring to obtain
possession of the Facility in order to so cure), that Agreement will deliver to
Lender a copy of each notice of default simultaneously with the delivery
thereof to Owner, that upon written instruction from Lender, Contractor will
make all payments due to Owner hereunder in accordance with the instruction of
Lender, as the case may be, and that in the event Lender exercises its rights
under its financing documentation with Owner, Contractor will accept
performance by Lender, or its successors or assigns, notwithstanding any
restriction under or in accordance with this Agreement and that Contractor
shall have no right to terminate this Agreement so long as Lender cures all
defaults of Owner hereunder within the limits of Owner's cure as set forth in
this Agreement (plus such longer period as may be reasonably necessary if
Lender in good faith is endeavoring to obtain possession of the Facility in
order to so cure, provided that, in any case, Contractor continues to receive
payments due to it under and in accordance with this Agreement) except those
defaults that are not susceptible to cure by Lender by the payment of money or
otherwise. Contractor also agrees, upon the request of Owner, to furnish to
Lender an opinion of
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counsel to Contractor with respect to the enforceability of this Agreement
against Contractor.
19.9.3 Notwithstanding the provisions of 19.9 above, in the
event that (i) Contractor's support of Owner's lending program requires work
products other than those that would otherwise be required for the performance
of the Work other than execution and delivery of documentation customary in
project finance transactions, (ii) such work products are required out of the
order that Contractor would otherwise perform the Work and such reordering has
an adverse impact of Contractor's performance of the Work, or (iii) such
support otherwise causes Contractor a delay in the performance of the Work or
an increased cost, Contractor shall be eligible for an equitable adjustment in
time to perform and the Contract Price pursuant to the Change Order provisions
of Article 6 unless such additional work or expense is incurred as the result
of Contractor's own negligence or failure to otherwise comply with the terms of
this Agreement.
19.9.4 Notwithstanding the provisions of Section 19.9.1, any
Party may assign any of its rights hereunder, without the consent of the other
Parties, to any of such Party's subsidiaries or affiliates, or to any other
person or Party for the purpose of any financing arrangement.
SECTION 19.10. NO THIRD PARTY BENEFICIARIES.
This Agreement is for the sole and exclusive benefit of the Parties
hereto and shall not be deemed to stipulate any benefit or create a cause of
action for third parties, including Customers.
SECTION 19.11. LIMITATION OF LIABILITY.
The aggregate liability of Contractor, and its subcontractors and
suppliers, partners, shareholders, directors, officers, employees, agents,
Affiliates, or any of their respective directors, officers or employees, on all
claims of any kind shall not exceed 90% the Contract Price whether said claims
are based on contract, guarantee, indemnity (other than under Article 11),
warranty, tort, including negligence or gross negligence of Contractor or any
subcontractor or supplier, strict liability or otherwise, and whether said
claims are for any and all losses or damages arising out of, connected with, or
resulting from this Agreement, or from the performance or breach thereof, or
for services on equipment or materials covered by or furnished pursuant to this
Contract or any expansion thereof.
The following claims are excluded from the above-mentioned limit of
liability: claims based on fraud, willful acts or indemnity under Article 11.1.
SECTION 19.12. WAIVER OF CONSEQUENTIAL DAMAGES.
NO PARTY, NOR ANY OF THEIR AFFILIATES OR SUBCONTRACTORS, SHALL BE
LIABLE TO THE OTHER PARTY AS A RESULT OF ANY ACTION OR INACTION UNDER THIS
AGREEMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION, NEGLIGENCE OR OTHER
FAULT, STRICT LIABILITY, BREACH OF CONTRACT OR WARRANTY FOR ANY CONSEQUENTIAL,
SPECIAL, INCIDENTAL OR INDIRECT LOSSES OR DAMAGES OF ANY NATURE WHATSOEVER,
INCLUDING LOSS OF PROFITS, INTEREST, INCREASED EXPENSE OF OPERATION OF THE
FACILITY OR EQUIPMENT, CLAIMS OF CUSTOMERS, CONSTRUCTION CORRECTION OR REPAIR
COSTS
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WHETHER ARISING UNDER THE LAW OF CONTRACTS, TORTS (INCLUDING, WITHOUT
LIMITATION, NEGLIGENCE OF EVERY KIND AND STRICT LIABILITY), WITH OR WITHOUT
FAULT, OR PROPERTY, OR AT COMMON LAW OR IN EQUITY, OR OTHERWISE, AND WHETHER
CAUSED BY UNAVAILABILITY OF THE EQUIPMENT, SHUT DOWNS OR SERVICE INTERRUPTIONS,
OR OTHERWISE.
SECTION 19.13. AMENDMENTS.
No change, amendment or modification of this Agreement shall be valid
or binding upon the parties hereto unless such change, amendment or
modification shall be in writing and duly executed by both parties hereto.
SECTION 19.14. TITLE TO FUEL AND ELECTRICAL OUTPUT.
Contractor shall never assert, nor be deemed to have acquired, title
to either Fuel-NG, LSFO or Electrical Output.
SECTION 19.15. NON-COLLUSION.
Contractor represents and warrants that Contractor has not given,
made, promised or paid, nor offered to give, make, promise or pay any gift,
bonus, commission, money or other consideration to any employee, agent,
representative or official of the Owner as an inducement to or in order to
obtain the goods or services to be provided to the Owner under this Agreement.
Contractor agrees that Contractor shall not accept any gift, bonus, commission,
money, or other consideration from any person (other than from the Owner under
this Agreement) for any of the services performed by Contractor under or
related to this Agreement. If any such gift, bonus, commission, money, or other
consideration is received by or offered to Contractor, Contractor shall
immediately report that fact to the Owner and, at the sole option of the Owner,
the Owner may elect to accept the consideration for itself or to take the value
of such consideration as a credit against the compensation otherwise owing to
Contractor under this Agreement.
SECTION 19.16. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original and comprise one Agreement.
SECTION 19.17. ENTIRE AGREEMENT.
This Agreement, together with the letter agreement of even date
herewith by and between Owner and Contractor, represents the entire agreement
between the parties with respect to the subject matter hereof.
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Owner:
EAST COAST POWER L.L.C.
BY:
------------------------------------
NAME:
----------------------------------
TITLE:
---------------------------------
Contractor:
NATIONAL ELECTRIC PRODUCTION CORPORATION
BY:
------------------------------------
NAME:
----------------------------------
TITLE:
---------------------------------
<PAGE> 71
EXHIBIT A
CONTRACT PRICE AND TERMS
Part I Contract Price
The Contract Price is US dollars ($91,750,000).
Part II Options - None
Part III Payment Schedule on the next page
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<TABLE>
<CAPTION>
DATE MILESTONES INVOICE CHANGE PERIOD CUMULATIVE AMOUNT
AMOUNT ORDERS TOTAL DUE
(NOTE 5)
<S> <C> <C> <C> <C> <C> <C>
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</TABLE>
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EXHIBIT E
PERFORMANCE GUARANTEES
1.0 SOUND LEVEL GUARANTEES
1.1 NEAR SOURCE SOUND LEVEL GUARANTEE
Provided the Facility is operating at a steady state condition at Base
Load during a sound level test conducted in accordance with Exhibit G-2,
Contractor guarantees that the near field average A-weighted sound
pressure levels of the Facility shall not exceed 85dB(a) (referenced to 20
micropascals) (the "Near Source Sound Level Guarantee") when measured
during a Performance Test or Sound Level Test in accordance with the Sound
Level Test Procedures at one and half (1.5) meters above any working
elevation and one (1) meter from the surface of the equipment. This
guarantee applies only to inhabited areas of the Facility. (For example
such guarantee would not apply to the inside of the combustion turbine
acoustic enclosure. Ear protection would be worn in such areas.) The Near
Source Sound Level Guarantee is limited to normal sound sources within the
Scope of Work.
1.2 FAR SOURCE SOUND LEVEL GUARANTEE
Contractor guarantees that the far field average A-weighted sound pressure
level of the Facility (referenced to 20 micropascals) shall meet the local
ordinance requirements at the nearest residential receptor while operating
at a steady state condition at Base Load during a sound level test
conducted in accordance with Exhibit G-2 (the "Far Source Sound Level
Guarantee").
1.3 SOUND LEVELS
In the event the Sound Level Guarantees are not met but nonetheless the
Facility can be operated under applicable Law, Liquidated Damages shall
not be assessed provided all other conditions to Substantial Completion
have been achieved.
2.0 AIR EMISSIONS GUARANTEES
2.1 AIR EMISSION GUARANTEES REQUIRED ON ALL FUELS
The following conditions shall be met for cases defined in Section 2.2 and
2.3 of this Section 2.0:
(a) SO2 to SO3 conversion through the CO catalyst shall not exceed
29.5%,
(b) Ammonia slip shall be limited to a maximum of 2 ppmvd @ 15% O2,
(c) Minimum gas temperature into inlet of CO catalyst bed shall be
700(degrees)F.
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(d) Minimum gas temperature into inlet of SCR catalyst bed shall be
605(degrees)F.
2.2 NATURAL GAS OPERATION
As a Minimum Performance obligation, Contractor guarantees that air
emissions as measured at the stack continuous emission monitoring ("CEM")
point during an Air Emission Test shall not exceed the following values
(the "Air Emissions Guarantee-NG") when the Facility is operated on
Fuel-NG at Base Load and Guarantee Conditions as defined in Section 4.0 of
Exhibit G.
<TABLE>
<CAPTION>
CATEGORY LEVEL UNIT OF MEASURE
--------------------------------------------------------------
<S> <C> <C>
NOx 2.5 ppmvd @ 15% O(2)
--------------------------------------------------------------
NOx 16.62 lb/hr
--------------------------------------------------------------
CO 2.0 ppmvd @ 15% O(2)
--------------------------------------------------------------
CO 8.12 lb/hr
--------------------------------------------------------------
SO2 1.44 lb/hr(max per fuel
specification in
Exhibit P
--------------------------------------------------------------
Ammonia Slip 2 ppmvd @ 15% O(2)
--------------------------------------------------------------
TSP 7.0 lb/hr
(front half only)
--------------------------------------------------------------
PM10 28.79 lb/hr
(front and back half)
--------------------------------------------------------------
UHC 7.0 ppmvw
--------------------------------------------------------------
VOC 0.84 ppmvd @ 15% O(2)
--------------------------------------------------------------
VOC 1.96 lb/hr
--------------------------------------------------------------
</TABLE>
2.3 LOW SULFUR FUEL OIL OPERATION. As a Minimum Performance obligation,
Contractor guarantees that air emissions as measured at the stack CEM
point during an Emission Test shall not exceed the following values (the
"Air Emissions Guarantee-LSFO") when the Facility is operated on Fuel-LSFO
at Base Load and Guarantee Conditions as defined in Section 4.0 of Exhibit
G:
<TABLE>
<CAPTION>
CATEGORY LEVEL UNIT OF MEASURE
--------------------------------------------------------------------
<S> <C> <C>
NOx 6.0 ppmvd @ 15% O(2)
--------------------------------------------------------------------
NOx 42.33 lb/hr
--------------------------------------------------------------------
CO 6.0 ppmvd @ 15% O(2)
--------------------------------------------------------------------
CO 25.78 lb/hr
--------------------------------------------------------------------
SO2 46.88 lb/hr (max per fuel
specification in Exhibit P
--------------------------------------------------------------------
Ammonia Slip 2 ppmvd @ 15% O(2)
--------------------------------------------------------------------
</TABLE>
2
<PAGE> 75
<TABLE>
<S> <C> <C>
--------------------------------------------------------------------
TSP 17.0 lb/hr
(front half only)
--------------------------------------------------------------------
PM10 61.23 lb/hr
(front and back half)
--------------------------------------------------------------------
UHC 7.0 ppmvw
--------------------------------------------------------------------
VOC 1.2 ppmvd @ 15% O(2)
--------------------------------------------------------------------
VOC 2.96 lb/hr
--------------------------------------------------------------------
</TABLE>
3.0 ELECTRICAL OUTPUT GUARANTEES.
3.1 ELECTRICAL OUTPUT GUARANTEE-NG. Contractor guarantees that the average
Adjusted Electrical Output-NG of the Facility, as demonstrated during the
most recent Performance Test-NG shall be equal to or greater than
167,822kW.
3.2 MINIMUM PERFORMANCE ELECTRICAL OUTPUT GUARANTEE-NG. The corresponding
minimum electrical output guarantee is that the average Adjusted
Electrical Output-NG of the Facility, as demonstrated during the most
recent Performance Test-NG, shall be equal to or greater than 161,906 kW.
3.3 ELECTRICAL OUTPUT GUARANTEE-LSFO. Contractor guarantees that the average
Adjusted Electrical Output-LSFO, as demonstrated during the most recent
Performance Test-LSFO shall be equal to or greater than 157,198 kW.
3.4 MINIMUM PERFORMANCE ELECTRICAL OUTPUT GUARANTEE-LSFO. The corresponding
minimum electrical output guarantee is that the average Adjusted
Electrical Output-LSFO, as demonstrated during the most recent Performance
Test-LSFO, shall be equal to or greater than 151,284 kW.
4.0 HEAT RATE GUARANTEES
4.1 HEAT RATE GUARANTEE-NG. Contractor guarantees that the average Adjusted
Heat Rate-NG, as demonstrated during the most recent Performance Test on
Fuel-NG, shall not exceed 9643 BTU/kWh (LHV). Electrical Output-NG will be
utilized in calculating Heat Rate-NG. Determination of Heat Rate-NG will
follow the protocol outlined in Exhibit F of the Purchase Order.
4.2 MINIMUM PERFORMANCE HEAT RATE GUARANTEE-NG. The corresponding maximum heat
rate guarantee is that the average Adjusted Heat Rate-NG, as demonstrated
during the most recent Performance Test-NG, shall not be more than 10,035
BTU/kWh (LHV). Electrical Output-NG will be utilized in calculating Heat
Rate-NG. Determination of Heat Rate-NG will follow the protocol outlined
in Exhibit F of the Purchase Order.
4.3 HEAT RATE GUARANTEE-LSFO. Contractor guarantees that the average Adjusted
Heat Rate-LSFO, as demonstrated during the most recent Performance
Test-LSFO shall not exceed 10,678 BTU/kWh (LHV). Electrical Output-LSFO
will be utilized in calculating Heat Rate-LSFO. Determination of Heat
Rate-LSFO will follow the protocol outlined in Exhibit F of the Purchase
Order.
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4.4 MINIMUM PERFORMANCE HEAT RATE GUARANTEE-LSFO. The corresponding maximum
heat rate guarantee is that the average Adjusted Heat Rate-LSFO, as
demonstrated during the most recent Performance Test-LSFO, shall not be
more than 11,115 BTU/kWh (LHV). Electrical Output-LSFO will be as utilized
in calculating Heat Rate-LSFO. Determination of Heat Rate-LSFO will follow
the protocol outlined in Exhibit F of the Purchase Order.
5.0 STEAM GUARANTEES
5.1 HP STEAM GUARANTEE-NG. Contractor guarantees that the production of the
average Adjusted HP Steam Output-NG as demonstrated during the most recent
Performance Test-NG, shall be equal to or greater than 520,400 #s/hr as
measured at the high pressure steam outlet flow meter located directly
downstream of the HRSG superheater.
5.2 MINIMUM PERFORMANCE HP STEAM GUARANTEE-NG. Contractor guarantees that the
minimum average Adjusted HP Steam Output-NG, as demonstrated during the
most recent Performance Test-NG shall be equal to or greater than 507,390
#s/hr as measured at the high pressure steam outlet flow meter located
directly downstream of the HRSG superheater.
5.3 HP STEAM GUARANTEE-LSFO. Contractor guarantees that the production of the
average Adjusted HP Steam Output-LSFO as demonstrated during the most
recent Performance Test-LSFO, shall be equal to or greater than 528,200
#s/hr, as measured at the high pressure steam outlet flow meter located
directly downstream of the HRSG superheater.
5.4 MINIMUM PERFORMANCE HP STEAM GUARANTEE-LSFO. Contractor guarantees that
the minimum average Adjusted HP Steam Output-LSFO, as demonstrated during
the most recent Performance Test-LSFO shall be equal to or greater than
514,995 #s/hr as measured at the high pressure steam outlet flow meter
located directly downstream of the HRSG superheater.
5.5 IP STEAM GUARANTEE-NG. Contractor guarantees that the production of the
average Adjusted IP Steam Output-NG as demonstrated during the most recent
Performance Test-NG shall be equal to or greater than 33,800 #s/hr as
measured at the intermediate pressure steam outlet flow meter located
directly downstream of HRSG superheater.
5.6 MINIMUM PERFORMANCE IP STEAM GUARANTEE-NG. Contractor guarantees that the
minimum average Adjusted IP Steam Output-NG, as demonstrated during the
most recent Performance Test-NG shall be equal to or greater than 32,955
#s/hr as measured at the intermediate pressure steam outlet flow meter
located directly downstream of the HRSG superheater.
5.7 IP STEAM GUARANTEE-LSFO. Contractor guarantees that the production of the
average Adjusted IP Steam Output-LSFO as demonstrated during the most
recent Performance Test-LSFO, shall be equal to or greater than 31,550
#s/hr as measured at the intermediate pressure steam outlet flow meter
located directly downstream of the HRSG superheater.
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5.8 MINIMUM PERFORMANCE IP STEAM GUARANTEE-LSFO. Contractor guarantees that
the minimum average Adjusted IP Steam Output-LSFO, as demonstrated during
the most recent Performance Test-LSFO shall be equal to or greater than
30,761 #s/hr as measured at the intermediate pressure steam outlet flow
meter located directly downstream of the HRSG superheater.
5.9 STEAM PURITY GUARANTEE. Contractor guarantees that the HP and IP steam
purity as measured at the sample point on the respective HRSG outlet steam
lines shall not exceed the following limits when the Facility is operating
at Base Load and Guarantee Conditions while operating on Fuel-LSFO and at
1% blowdown:
<TABLE>
<CAPTION>
IMPURITIES STANDARDS
<S> <C>
Total Dissolved Solids 50 ug/l or less
Sodium 20 ug/l or less
Silica 20 ug/l or less
Cation conductivity 0.2 uS/cm or less
(u = micro)
</TABLE>
5
<PAGE> 78
EXHIBIT F
LIQUIDATED DAMAGES
1.0 DELAY LIQUIDATED DAMAGES.
1.1 DELAY LIQUIDATED DAMAGES. Owner may assess and Contractor agrees to pay
liquidated damages (the "Delay Liquidated Damages") at the rate of
$36,000.00 per day for each day that Contractor fails to cause the
Facility to achieve Substantial Completion by the Guaranteed Completion
Date; provided however, in the event Owner elects to place the Facility
into commercial operations prior to Contractor causing the Facility to
achieve all criteria for Substantial Completion such Delay Liquidated
Damages shall not be assessed against Contractor from the date of
commencement of such commercial operations. Owner from time to time shall
invoice Contractor for any Delay Liquidated Damages which have become due,
and Contractor shall pay each such invoice within 30 days after receipt
thereof.
2.0 PERFORMANCE LIQUIDATED DAMAGES:
2.1 ELECTRICAL OUTPUT LIQUIDATED DAMAGES-NG. Provided Contractor has
achieved the Minimum Performance Electrical Output Guarantee-NG,
liquidated damages shall be assessed by Owner, and Contractor agrees to
pay, if a Performance Test has been conducted on the Facility on
Fuel-NG, at a rate of Five Hundred Twenty-Four Dollars ($524.00) for
each kW that the Adjusted Electrical Output of the Facility (as
measured during the most recent Performance Test on Fuel-NG) is less
than the Electrical Output Guarantee-NG (the "Electrical Output
Liquidated Damages-NG").
2.2 ELECTRICAL OUTPUT LIQUIDATED DAMAGES-LSFO. Provided Contractor has
achieved the Minimum Performance Electrical Output Guarantee-LSFO,
liquidated damages shall be assessed by Owner, and Contractor agrees to
pay, if a Performance Test has been conducted on the Facility on
Fuel-LSFO, at a rate of Five Hundred Twenty-Four Dollars ($524.00) for
each kW that the Adjusted Electrical Output of the Facility (as measured
during the most recent Performance Test on Fuel-LSFO) is less than the
Electrical Output Guarantee-LSFO (the "Electrical Output Liquidated
Damages-LSFO").
2.3 HEAT RATE LIQUIDATED DAMAGES-NG. Provided Contractor has achieved the
Minimum Performance Heat Rate Guarantee-NG, liquidated damages shall be
assessed by Owner, and Contractor agrees to pay, if a Performance Test has
been conducted on the Facility on Fuel-NG, at a rate of Six Thousand
Dollars ($6,000.00) for each BTU/kWh (LHV) that the average Adjusted Heat
Rate for the Facility (as measured during the most recent Performance Test
on Fuel-NG) exceeds the Heat Rate Guarantee-NG (the "Heat Rate Liquidated
Damages-NG").
2.4 HEAT RATE LIQUIDATED DAMAGES-LSFO. Provided Contractor has achieved the
Minimum Performance Heat Rate Guarantee-LSFO, liquidated damages shall be
assessed by Owner, and Contractor agrees to pay, if a Performance Test has
been conducted on the Facility on Fuel-LSFO, at a rate of Six Thousand
Dollars $6,000.00) for each BTU/kWh
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<PAGE> 79
(LHV) that the average Adjusted Heat Rate for the Facility (as measured
during the most recent Performance Test on Fuel-LSFO) exceeds the Heat
Rate Guarantee-LSFO (the "Heat Rate Liquidated Damages-LSFO").
2.5 STEAM OUTPUT LIQUIDATED DAMAGES-NG. Provided Contractor has achieved the
Minimum Performance HP Steam Guarantee-NG and the Minimum Performance IP
Steam Guarantee-NG, liquidated damages shall be assessed by Owner, and
Contractor agrees to pay, if a Performance Test has been conducted on the
Facility on Fuel-NG, at a rate of Two Hundred Twenty Dollars ($220.00) for
each lb of HP Steam that the Adjusted HP Steam Output of the Facility (as
measured during the most recent Performance Test on Fuel-NG) is less than
the HP Steam Guarantee-NG (the "Steam Output Liquidated Damages-NG (HP)").
Contractor agrees to pay, if a Performance Test has been conducted on the
Facility on Fuel-NG, at a rate of One Hundred Forty Dollars ($140.00) for
each lb of IP Steam that the Adjusted IP Steam Output of the Facility (as
measured during the most recent Performance Test on Fuel-NG) is less than
the IP Steam Guarantee-NG (the "Steam Output Liquidated Damages-NG (IP)").
2.6 STEAM OUTPUT LIQUIDATED DAMAGES-LSFO. Provided Contractor has achieved the
Minimum Performance HP Steam Guarantee-LSFO and the Minimum Performance IP
Steam Guarantee-LSFO, liquidated damages shall be assessed by Owner, and
Contractor agrees to pay, if a Performance Test has been conducted on the
Facility on Fuel-LSFO, at a rate of Two Hundred Twenty Dollars ($220.00)
for each lb of HP Steam that the Adjusted HP Steam Output of the Facility
(as measured during the most recent Performance Test on Fuel-LSFO) is less
than the HP Steam Guarantee-LSFO (the "Steam Output Liquidated
Damages-LSFO (HP)"). Contractor agrees to pay, if a Performance Test has
been conducted on the Facility on Fuel-LSFO, at a rate of One Hundred
Forty Dollars ($140.00) for each lb of IP Steam that the Adjusted IP Steam
Output of the Facility (as measured during the most recent Performance
Test on Fuel-LSFO) is less than the IP Steam Guarantee-LSFO (the "Steam
Output Liquidated Damages-LSFO (IP)").
3.0 PERFORMANCE TEST REQUIRED. A Performance Test must be performed before
Performance Liquidated Damages can be assessed.
3.1 SETTING OUT OF PERFORMANCE LIQUIDATED DAMAGES. Performance related
Liquidated Damages, if any, shall be due and payable by Contractor
pursuant to Section 2.0 of this Exhibit F in accordance with the rates set
forth herein and the calculations set forth in the Notice of Substantial
Completion issued pursuant to Section 7.5 of the Agreement. Contractor
agrees to pay undisputed Performance Liquidated Damages attributable to
the amount by which the Facility fails to meet the Electrical Output
Guarantee-NG, the Heat Rate Guarantee-NG, Electrical Output
Guarantee-LSFO, the Heat Rate Guarantee-LSFO and the Steam Output
Guarantee-NG and the Steam Output Guarantee-LSFO, (i) as it pertains to
the result of the Performance Test on which Contractor declares
Substantial Completion within 7 days of such declaration, and (ii) any
additional Performance Liquidated Damages as the same becomes due because
the Facility performance is degraded by Contractor's attempts to improve
performance pursuant to Section 8.3 of the Agreement, upon the earlier of
Owner and Contractor determining that further efforts by
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<PAGE> 80
Contractor to improve the performance of the Facility are not warranted or
180 days after Substantial Completion (and such additional Performance
Liquidated Damages shall be based on the last Performance Test.).
3.2 REDUCTION IN PERFORMANCE LIQUIDATED DAMAGES. In the event as a result of
the Remedial Work Contractor improves the Facility's performance for which
Performance Liquidated Damages are payable after Owner has been paid
Performance Liquidated Damages by Contractor then Owner shall:
(a) refund to Contractor an amount equal to the Performance Liquidated
Damages associated with such improvement in electrical output, HP
steam, and/heat rate performance; and/or
(b) reduce the offset associated with such improvement in the Adjusted
Electrical Output, the Adjusted Heat Rate, or Adjusted Steam Output
associated with performance on Fuel-NG or Fuel-LSFO;
however, such reduction in offset or amount of refund shall not
exceed the amount actually previously offset or paid for failure of
the Facility to meet the Performance Guarantees.
4.0 MAXIMUM LIABILITIES FOR LIQUIDATED DAMAGES.
4.1 MAXIMUM DELAY LIQUIDATED DAMAGES. Contractor's maximum liability for
Delay Liquidated Damages shall be 10% of the Contract Price.
4.2 MAXIMUM ELECTRICAL OUTPUT LIQUIDATED DAMAGES. Contractor's maximum
liability for Electrical Output Liquidated Damages shall be 10% of the
Contract Price.
4.3 MAXIMUM HEAT RATE LIQUIDATED DAMAGES. Contractor's maximum liability
for Heat Rate Liquidated Damages shall be 10% of the Contract Price.
4.4 MAXIMUM STEAM OUTPUT LIQUIDATED DAMAGES. Contractor's maximum
liability for Steam Output Liquidated Damages shall be $2,000,000.
4.5 MAXIMUM AGGREGATE LIQUIDATED DAMAGES. Notwithstanding Section 4.1, 4.2,
4.3 and Section 4.4 above, Contractor's maximum aggregate liability for
Liquidated Damages, if any, under this Agreement shall be 30% of the
Contract Price.
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<PAGE> 81
EXHIBIT H
MINIMUM INSURANCE REQUIREMENTS
1.0 CONTRACTOR'S INSURANCE. Effective with the commencement of the Work, and
for the duration of its obligations under this Agreement, Contractor shall
maintain insurance of the types and in the minimum amounts hereinafter set
forth. Contractor shall furnish a certificate of insurance to Owner
evidencing that such coverages are in effect prior to starting the Work.
The policies shall contain provisions that no cancellation or material
changes in coverage shall become effective except on thirty (30) days
advance written notice thereof to Owner.
1.1 WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE. Contractor agrees
to comply with Workers Compensation laws of the state(s) or areas where
the Work is performed, and to maintain a Workers Compensation and
Employers Liability policy. This policy shall be endorsed to provide: all
states coverage, voluntary compensation coverage and occupational disease.
If the Work is to be performed on or near navigable waters, the policy
shall include coverage for United States Longshoreman's and Harbor
Worker's Act, Death on the High Seas, Jones Act, and all shall contain
endorsement for borrowed servants.
Workers Compensation Statutory
Employers Liability $2,000,000 Each Accident (Minimum)
$2,000,000 Disease Each Employee
(Minimum)
1.2 COMMERCIAL GENERAL LIABILITY INSURANCE Commercial General Liability
insurance, to include coverage for: explosion, collapse and underground
("XCU") perils; broad form property damage to include coverage for damage
to the Existing Facility and loss of use thereof arising out of
Contractor's performance of the Work; contractual liability (particularly
the applicable provisions of the "General Indemnity" section of this
contract; products and completed operations coverage for a period of one
(1) year after Substantial Completion.
Bodily Injury and $2,000,000 Combined Single Limit
Property Damage Each Occurrence (Minimum)
1.3 AUTOMOBILE LIABILITY INSURANCE Automobile Liability insurance which shall
include coverage for all owned, non-owned, leased and hired vehicles.
Bodily Injury and $2,000,000 Combined Single Limit
Property Damage Each Occurrence (Minimum)
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<PAGE> 82
1.4 UMBRELLA LIABILITY INSURANCE
Bodily Injury and 13,000,000 Combined Single Limit
Property Damage Each Occurrence (Minimum and Excess
of Primary)
Applying in excess of the limits shown for Employers Liability, Commercial
General Liability, and Automobile Liability, with terms and conditions at least
as broad as those of the underlying policies.
2.0 OWNER'S INSURANCE
Effective with the commencement of the Work, and until Final Completion,
Owner shall maintain insurance of the types and in the amounts hereinafter
set forth. Owner shall furnish a certificate of insurance to Contractor
evidencing that such coverages are in effect prior to starting the Work.
The policies shall contain provisions that no cancellation or material
changes in coverage shall become effective except on thirty (30) days
advance written notice thereof to Contractor.
2.1 BUILDERS ALL RISK
A Builder' All Risk ("BAR") insurance policy covering the risk of physical
loss of or damage to tangible property to be used in the performance of
the Work or incorporated into the Facility, but not including Contractor's
tools and equipment. Such policy shall provide coverage while Property is
in transit to the Facility Site, in temporary offsite storage while
awaiting transit to the Facility Site; and while at the Facility Site.
Such coverage shall apply on a replacement cost basis insuring the total
cost of the Facility and will also include coverage for removal of debris;
testing and commissioning, and a twelve (12) months extended maintenance
period.
2.2 MARINE CARGO INSURANCE
To the extent that the Work will include ocean marine shipments, and that
such shipments are outside the scope of coverage of the insurance provided
by Owner in 2.1, Owner shall purchase insurance for the risk of loss of or
damage to tangible property while in the course of ocean transit on a
warehouse to warehouse basis, at a limit of 110% of the cost of the
largest single shipment. The deductible on the insurance policy referred
to in this Section 2.2 shall not exceed $100,000.
ADDITIONAL REQUIREMENTS
All policies of insurance required under this Exhibit H shall be endorsed to
provide that the coverage provided therein shall be primary and without right of
contribution from any similar policies which may be maintained by the parties
hereto. All deductibles under such policies up to a maximum of $100,000 shall be
the sole responsibility of Contractor, unless the loss is caused by the
negligence of Owner.
2
<PAGE> 83
All policies of insurance required under Section 1.0 with the exception of
workers' compensation shall name Owner as an additional insured, and all
policies of insurance required under Section 1.0 shall provide for a waiver of
subrogation in favor of Owner, its agents officers and employees.
All policies of insurance required under Section 2.0 shall name Contractor, its
subcontractors and agents as additional insured and shall provide for a wavier
of subrogation in favor of Contractor, subcontractors, agents and employees. All
insurance policies covering the risk of physical loss of or damage to property
comprising the Existing Facility shall provide for a wavier of subrogation in
favor of Contractor, its subcontractor, vendors, suppliers, agents officers and
employees for their activities at the Facility Site.
Contractor shall require any subcontractor at any tier, vendor, supplier,
material dealer and others connected with the Work irrespective of their
contractual relationship to Contractor or Owner, to provide and maintain
insurance consistent with the specifications of Sections 1.1, 1.2 and 1.3 of
this exhibit at all times during the period that their agreement related to Work
under this Contract is in force and effect at the subcontractor's, vendor's,
supplier's, material dealer's, or others' own cost, with insurance limits and in
form and issuing companies acceptable to Owner.
3
<PAGE> 84
EXHIBIT I
ENRON CORP. GUARANTY
Guaranty
This Guaranty Agreement (the "Guaranty"), dated and effective as of
_____________, is made and entered into by Enron Corp., an Oregon corporation
("Guarantor") in favor of _________________________ ("Counterparty").
WHEREAS, Counterparty has agreed to enter into a Fixed Price Engineering,
Procurement and Construction Agreement dated [_____________], 2000 for the
construction of the ___________________ Power Project (the "Agreement") with
National Energy Production Corporation, a Delaware corporation (the "Company"),
a subsidiary of Guarantor. Guarantor will directly or indirectly benefit from
the transactions to be entered into between the Company and Counterparty.
NOW THEREFORE, in consideration of Counterparty entering into the Agreement,
Guarantor hereby covenants and agrees as follows:
1. DEFINITIONS. Unless otherwise defined herein, capitalized terms used in
this Guaranty shall have the same meanings as set forth in the Agreement.
2. GUARANTY.
(a) Guarantor hereby absolutely, irrevocably and unconditionally
guarantees due and punctual payment and performance (in the case of
performance to cause the performance through Guarantor's payment to
another party to perform the Company's performance obligations) of
all the obligations and liabilities of the Company to Counterparty
in connection with and to the extent provided for in the Agreement
(the "Obligations"). If for any reason the Company shall fail duly
and punctually to pay and perform the Obligations owed by it under
the Agreement (including, without limitation, liquidated damages),
then Guarantor shall promptly pay or cause a third party to perform
such Obligations upon Guarantor's receipt of Counterparty's Demand,
as hereinafter defined. This guaranty is an absolute, unconditional,
continuing guaranty of payment and performance and is in no way
conditioned upon whether Counterparty has made any attempt to
require payment and performance by the Company before making demand
under this Guaranty. This is a guaranty of payment and performance
rather than a guaranty of collection.
Guarantor's liability hereunder shall be and is specifically limited
to payments expressly required to be made under the Agreement (even
if such payments are deemed to be damages) and, except to the extent
specifically provided in the Agreement, in no event shall Guarantor
be subject hereunder to consequential, exemplary, equitable loss of
profits, punitive, tort, or any other damages or costs.
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<PAGE> 85
The aggregate amount covered by this Guaranty shall not exceed
$______ AAAAA U.S. Dollars [100% of the Contract Price]), provided
however, that such aggregate amount shall be adjusted to reflect any
adjustment to the Contract Price as the result of a Change Order
made pursuant to Section 6.9 of the Agreement.
(b) This Guaranty shall be binding upon and enforceable against
Guarantor without regard to the genuineness, regularity, validity or
enforceability of the Agreement or of any term thereof or lack of
power or authority of the Company to enter into any such agreement.
This Guaranty shall be binding upon and enforceable against
Guarantor as to the Agreement, including any change, amendment or
modification to the Agreement whether or not notice thereof is given
to Guarantor.
(c) If the Agreement or the Company's Obligations thereunder are
terminated as a result of the rejection or disaffirmance thereof by
any trustee, receiver or liquidating agency of the Company, or for
any property of the Company, in any assignment for the benefit of
creditors or any bankruptcy, insolvency, reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar proceeding, Guarantor's obligations hereunder shall continue
to the same extent as if the Agreement or the Obligations
thereunder, as the case may be, had not been so rejected or
disaffirmed.
(d) The obligations of Guarantor hereunder shall not be subject to any
counterclaim, setoff, deduction, abatement or defense based upon any
claim Guarantor or the Company may have against Counterparty, except
as such rights may be available under the Agreement including,
without limitation, rights based on the excused nonperformance by
the Company and rights based on the failure to perform by
Counterparty under the Agreement.
(e) With respect to the unconditional obligations of Guarantor
hereunder, Guarantor unconditionally waives: (i) all notices which
may be required by statute, rule or law or otherwise to preserve any
rights against Guarantor hereunder; (ii) any requirement for the
enforcement, assertion or exercise of any right, remedy, power or
privilege under or in respect of the Agreement; and (iii) any
requirement that the Company be joined as a party to any proceedings
for the enforcement of any provision of this Guaranty. Guarantor
hereby agrees not to assert or enforce any right of contribution,
reimbursement, indemnity, subrogation or any other right to payment
from the Company as a result of Guarantor's performance of its
obligations pursuant to this Guaranty until all Obligations are paid
in full.
(f) The obligations of Guarantor set forth herein constitute the full
recourse obligations of Guarantor enforceable against it to the full
extent of all its assets and properties, subject to the indemnities,
limitations, releases and waivers of liability in favor of the
Company and Guarantor contained in the Agreement.
3. DEMANDS AND NOTICE. If the Company fails or refuses to pay or perform
any Obligations as required by the Agreement and the Counterparty makes
a demand upon
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<PAGE> 86
Guarantor in writing reasonably and briefly specifying in what manner and
what amount the Company has failed to pay or perform pursuant to the
Agreement (hereinafter referred to as a "Demand"), then Guarantor shall
pay or cause a third party to perform such Obligations noted in such
Demand within five (5) Business Days. A single written Demand shall be
effective as to any specific default during the continuance of such
default, until the Company or Guarantor has cured such default, and
additional written demands concerning such default shall not be required
until such default is cured.
4. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Oregon and has the full
corporate power, authority and legal right to execute, deliver and
perform its obligations under this Guaranty;
(b) No authorization, approval, consent or order of, or registration or
filing with, any court or other governmental body having
jurisdiction over Guarantor is required on the part of Guarantor for
the execution and delivery of this Guaranty; and
(c) This Guaranty, when executed and delivered, will constitute a valid
and legally binding agreement of Guarantor, "except as the
enforceability of this Guaranty may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and by general
principles of equity as they apply to the Guarantor.
(d) The execution and delivery of, and performance by Guarantor of its
obligations under, this Guaranty will not (i) result in a violation
of, or be in conflict with, or constitute a default or an event
which would with notice or lapse of time or both become a default
under, any provision of the amended and restated articles of
incorporation or by-laws of Guarantor, or any material ("material"
for purposes of this representation meaning creating a liability of
$100,000,000 or more)agreement or other instrument to which
Guarantor is a party or by which it or its property is bound, in any
way that would materially and adversely affect Guarantor's property
or business or its ability to perform its obligations under this
Guaranty, (ii) result in the creation of any lien upon any property
of Guarantor, or (iii) result in a violation of any statute, rule or
regulation, judgment, order, decree or award of any court,
arbitrator or governmental or public instrumentality binding upon
Guarantor or its property.
5. AMENDMENT OF GUARANTY. No term or provision of this Guaranty shall be
amended, modified, altered, waived or supplemented except in a writing
signed by Guarantor and Counterparty.
6. WAIVERS. Guarantor hereby unconditionally waives (a) notice of
acceptance of this Guaranty; (b) presentment and demand concerning the
liabilities of Guarantor, except as provided in Section 3 hereof; (c)
any right to require that any action or proceeding be brought against
the Company or any other person; and (d) any requirement that
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<PAGE> 87
Counterparty seek enforcement of any performance against the Company or
any other person prior to any action against Guarantor under the terms
hereof.
Except as to applicable statutes of limitation, no delay of Counterparty
in the exercise of, or failure to exercise, any rights hereunder shall
operate as a waiver of such rights, a waiver of any other rights or a
release of Guarantor from any obligations hereunder.
Guarantor consents to the renewal, compromise, extension, acceleration or
other changes in the time of payment of or other changes or modifications
to the terms of the Agreement.
7. CONSENT TO ASSIGNMENT. Guarantor hereby consents to the collateral
assignment by Counterparty to Lender of Counterparty's interest in this
Guaranty in connection with the financing or refinancing of the Facility.
If requested by Lender, Guarantor shall execute and deliver a written
Consent and Agreement with Lenders confirming its consent, which shall
include terms reasonable and customary in project finance transactions.
8. EXPENSES. Guarantor agrees to pay to Counterparty on demand all reasonable
costs and expenses (including, without limitation, attorneys' fees) in any
way relating to the enforcement or protection of the rights of the
Counterparty hereunder should Guarantor be required to pay under this
Guaranty.
9. SUBROGATION. Guarantor will not exercise any rights which it may have by
way of subrogation until all the Obligations to Counterparty shall have
been paid in full.
10. NOTICE. Any Demand, notice, request, instruction, correspondence or other
document to be given hereunder by any party to another (herein
collectively called "Notice") shall be in writing and delivered personally
or mailed by certified mail, postage prepaid and return receipt requested,
or by telegram or telecopier, as follows:
To Counterparty: To Guarantor:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attn.: Vice President,
Attn.: Finance and Treasurer
Fax No.: Fax No.: (713) 646-3422
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon
actual receipt if received during the recipient's normal business hours,
or at the beginning of the recipient's next business day after receipt if
not received during the recipient's normal business hours. All Notices by
telegram or telecopier shall be confirmed promptly after transmission in
writing by certified mail or personal delivery. Any party may change any
address to which Notice is to be given to it by giving notice as provided
above of such change of address.
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<PAGE> 88
11. MISCELLANEOUS
(a) This guaranty shall in all respects be governed by, and construed in
accordance with, the laws of the state of New York (other than the
laws governing choice of law).
(b) This Guaranty shall be binding upon Guarantor, its successors and
assigns, and shall inure to the benefit of and be enforceable by
Counterparty and its successors and assigns.
(c) The Guaranty embodies the entire agreement and understanding between
Guarantor and Counterparty and supersedes all prior agreements and
understandings relating to the subject matter hereof.
(d) All agreements, representations and warranties contained herein or
made in writing by or on behalf of Guarantor in connection with the
transactions contemplated hereby shall survive the execution and
delivery of this Guaranty.
(e) If any provision of this Guaranty or any application thereof shall
be invalid or unenforceable, the remainder of this Guaranty and any
other application of such provision shall not be affected thereby.
(f) Nothing in this Guaranty or any other document referred to herein is
intended to waive any rights not specifically waived in said
documents nor is intended to enlarge or modify the obligations or
duties of Counterparty.
(i) The headings in this Guaranty are for purposes of reference only,
and shall not affect the meaning hereof.
(ii) This Guaranty may be executed in any number of counterparts, each of
which when so executed shall be deemed an original, fully
enforceable counterpart, but all of which together shall constitute
one instrument.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty on ___________ 2000,
but it is effective as of the date first above written.
ENRON CORP.
By: _________________________________
Name: _______________________________
Title: ______________________________
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