Exhibit 10.02
Agreement for Design, Supply of Plant and Equipment
227
CHANGE ORDER
Change Order Date: November 30. 1998 Change Order No.01
Contractor: Telesource CNMI. Inc. CUC Contract No. CUC-PG-97-C057
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This CHANGE ORDER NO.01 is made in reference to the AGREEMENT FOR
DESIGN, SUPPLY OF PLANT AND EQUIPMENT, PRIVATE CONSTRUCTION,
MANINTENANCE AND OPERATION, AND TRANSFER OF OWNERSHIP (Contract
No. CUC-PG-97-C057) effective as of September 17, 1997 between the
COMMONWEALTH UTILITIES CORPORATION and TELESOURCE CNMI, INC. (the
"Original Agreement"). To the extent the terms and conditions of
the Original Agreement are not in conflict with the terms and
conditions of this Change Order No. I the provisions of both the
Original Agreement and this Change Order No. 1 shall hereafter
govern the rights and obligations of the parties (collectively the
"Expanded Agreement").
RECITALS
A. On October 11, 1996 CUC issued Request for Proposal No.
97-0002 (the "RFP"), which solicited responses from independent
power producers for the design engineering, erection and
operation of a power production facility on the island of Tinian
which was capable of sustaining a 10 MW load expandable up to 30
MW. B. On March 6, 1997, after discussions with those responsible
offerors who responded to the RFP, CUC awarded the project to the
Contractor and on September 17, 1997 executed the Original
Agreement for the construction, ownership, operation and eventual
transfer to CUC of the 10 MW expandable Plant
C. During a special session of the Tinian Delegation and
Municipal Council on September 2, 1998, a Joint Resolution was
passed recommending that as per the intent and spirit of the
project RFP, the 10 MW Plant be expanded as quickly as possible
in order to meet the growing power needs of the island.
D. On September 19, 1995, the CUC Operations Committee after
discussions with the Contractor and the Tinian leadership, made a
determination that it was in the best interests of CUC and the
people of Tinian for the expansion the Plant to be undertaken
before the current phase of construction is completed.
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X. Xx September 25, 1998, after a Special Meeting of the CUC
Board of Directors acting upon the recommendation of the CUC
Operations Committee, the Board of Directors determined after a
complete review of all the circumstances surrounding this
project, the terms and conditions of the original RFP and the
Original Contract, and the Contractor's unique position as
general contractor, owner and operator of the Plant, there was a
demonstrated benefit to CUC for the Contractor to commence, the
immediate expansion the Plant pursuant to Change Order in
accordance with Paragraph 5.1 of the Original Agreement "Changes
in the Work," and the terms and conditions of this Change Order
No.1.
AGREEMENT
1. Definitions. Unless otherwise defined, all capitalized
terms used in this Change Order No. 1 are defined in the
Original Agreement and are used herein as so defined.
CHANGE IN THE SCOPE OF WORK
2. Expansion of the Plant Facilities. Subject to the provisions
of Paragraphs 5 and 9 of this Change Order No. 1, Contractor
shall perform all services and furnish all equipment tools,
materials and supplies needed for the fabrication,
installation, assembly, testing, and commissioning of such
additional facilities as are necessary to increase the load
of the Plant and Plant Equipment (collectively the "Plant
Facilities") from 10 MW to 30 MW (the "Expansion").
3. Expansion of Existing Physical Plant. The Expansion shall
include but shall not be limited to all necessary additions
and modifications to the fuel tanks and the building which
houses the generation units, which are currently being built
under the Original Agreement. No additions or modifications
to the warehouse or Plant office shall be included in the
Expansion as these facilities, as currently designed, are
adequate for post-Expansion use.
4. Addition of 30 MW Substation. The Expansion shall include the
construction, testing and commissioning of a new 30 MW
substation to be located on the Site adjacent to the Plant
Facilities (the "Substation"). The Substation addition shall
include all buildings, structures, switchgears, transformers
and other equipment necessary to fully integrate the expanded
Plant Facilities with CUC's existing distribution system, as
generally described in the attached Exhibit "A" which is
hereby incorporated by this reference.
5. Addition of Generation Units. Within fourteen (14) months
after the execution of this Change Order No. 1. Contractor
shall furnish, install, test and commission two (2) five (5)
MW, 720 RPM power generation units which,
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in conjunction with the four (4) two and one-half (2.5) MW
generation units provided under the Original Agreement, shall
increase Plant power generation capacity to a load of twenty
(20) MW. In addition to the installation of the two (2) five
(5) MW units as mentioned above, in the event Contractor in
its sole discretion determines that the Plant Facilities
require expansion in order to satisfy any additional demand
for power, Contractor may install from time to time
throughout the Extended Term as set forth in Paragraph 9 of
this Change Order No.1, one or more additional five (5) MW
generation units; provided, however, that at no time shall
the load of the expanded Plant Facilities exceed thirty (30)
MW and in no event shall the replacement or refurbishment of
any previously installed generation unit be counted as an
additional unit.
1. Expanded Operation and Maintenance Services.
Throughout the Extended Term, as set forth in
Paragraph 9, Contractor shall provide all
services necessary to operate and maintain the
Plant Facilities in the most efficient manner
practical under the manufacturer's
specifications and in coordination with CCC
(the "Plant Operations"). At a minimum, Plant
Operations shall include all services necessary
to operate the Plant Facilities within the
parameters set forth in the Original
Agreement as well as any additional services
necessary for the operation of the
expanded Plant Facilities, as its maximum
capacity is increased from time to time,
upon the same terms.
2. Fuel Consumption and Generator Efficiency.
Contractor shall operate the Plant in accordance
with the manufacturers' fuel consumption
specifications for each generation unit and shall
perform all maintenance and operation work in
accordance with Good Utility Practice and the
Minimum Operations and Maintenance Requirements
as subsequently agreed to in writing by CUC and
Contractor in accordance with the terms and
conditions of the Original Agreement.
8. Fuel Oil. CUC shall, at its own cost, provide all fuel oil
necessary for the operation of the Plant at its maximum
capacity, as such capacity may be increased from time to time
throughout the Extended Term. Fuel shall at a minimum meet
the specifications as set forth in Exhibit A of the Original
Agreement.
CHANGE IN CONTRACT TERM
9. Extended Term. This Extended Agreement shall become effective
upon the execution of this Change Order No.1, and shall
remain in full force and effect until the expiration of ten
(10) years after the successful testing and commissioning of
the last power generation unit installed under Paragraph 5,
unless sooner terminated under Paragraph 11 of this Change
Order or Paragraph 19 of the Original Agreement.
Notwithstanding any other provision in this Change Order No.
1, no additional units shall be installed,
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tested or commissioned so as to allow the Extended Term
to continue beyond the Term of the Lease for the Site,
recorded at File No. 98-2806, Commonwealth Recorder.
CHANGE IN CONTRACT PRICE
10. Payment. Upon receipt of Contractor's monthly invoice, CUC
shall pay each of the following production fees to
Contractor:
(a) For a period of ten (10) years from the date of
Substantial Completion as defined in the Original
Agreement, CUC shall pay for the first 5,140,000
kilowatt-hours produced each month (the "Base Load")
in the manner set forth in Paragraph 6.2 of the
Original Agreement.
(b) For a period of ten (10) years commencing upon the
completion of the expanded 30 MW Plant Facilities and
the successful testing and commissioning of the first
two additional 5 MW generation units, CUC shall pay
in addition to payment under Paragraph (a) above, a
fixed fee of $0.065 (six and a half cents) (the
"Expansion Rate") per each kilowatt-hour produced
each month in excess of the Base Load (the "Second
Phase Load").
(c) In the event any additional generation unit(s) are
added by Contractor pursuant to Paragraph 5, and for
a period of ten (10) years commencing upon the their
successful testing and commissioning, CCC shall pay
in addition to payment under Paragraphs (a) and (b)
above, an additional fee for power produced in excess
of the Base and Second Phase Loads, at a rate of
$0.065 (six and a half cents) per each kilowatt-hour
or as mutually agreed upon by the parties.
(d) From the expiration of each ten year period as
set forth in Paragraphs (a) and (b)
above through the end of the Extended Term, the
fee due from CUC to contractor for each kilowatt-
hour produced under such Paragraph shall be
reduced to $0.03 (three cents) per kilowatt-hour,
adjusted to reflect the annual increase in the
Gross Domestic Product Implicit Price Deflector
for each year commencing as of 1999. This
reduced fee shall represent the cost of operation and
maintenance, including manpower, consumables,
spare parts and lubricating oil, but shall not
include the cost of CUC provided fuel.
11. Prepayment. CUC shall be entitled to terminate this Expanded
Agreement for convenience upon pre-payment of the sum of the
pre-payment purchase price for the applicable period as set
forth in Schedule 2 to the Original Agreement and the
pre-payment purchase price for the expansion as set forth in
Schedule 2.1, which is attached to this Change Order No. 1 as
Exhibit "B" and is hereby incorporated by reference. CUC's
option to terminate for convenience by pre-payment may be
exercised by giving written notice to Contractor at least
ninety (90) days prior to the applicable buy-out date listed
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in Schedule 2.1, and by payment of the sum of the applicable
pre-payment purchase prices as set forth in Schedule 2 and
Schedule 2.1. Pre-payment shall be possible only in those
years in which pre-payment is allowed under both Schedule 2
and Schedule 2.1.
EQUITABLE ADJUSTMENTS TO ORIGINAL AGREEMENT
12. Final Payment Date. Title and risk of loss shall pass from
Contractor to CUC in the manner set forth in Paragraph 24.1
of the Original Agreement; provided however that title and
risk of loss shall remain in Contractor, to protect
Contractor's security interest in the expanded Plant
Facilities, until all payments owing under this Extended
Agreement are paid in full. Notwithstanding any other
provision in this Change Order No. 1, after the final payment
is made by CUC pursuant to sub-Paragraph 10(b) of this Change
Order No. 1, Contractor shall not have nor allow any third
party liens or any other third party encumbrances to remain
or be placed on the Plant or Plant Facilities constructed
under the Original Agreement, or the Plant or Plant
Facilities comprising the expansion to twenty (20) MW
pursuant to Paragraphs 2, 3,4 and 5 of this Change Order
No.1.
13. Damages. In addition to all rights and remedies available to
the parties under the Original Agreement, each party shall be
entitled to recover any proven loss, cost, expense, or
damages incurred, including lost profits, attributable to a
breach by the other party of this Extended Agreement;
provided that the damages provisions of the Original
Agreement shall be applicable as set forth In Paragraph 14
below.
14. Savings Clause. All rights and obligations of the parties as
set forth in the Original Agreement shall apply to this
Extended Agreement to the extent they do not conflict with
the express terms of this Change Order No. 1. To the extent
there is an ambiguity between this Change Order No. 1 and the
Original Agreement, the Original Agreement shall be deemed to
express the over-all intent of the Parties in interpreting
the express provisions of this Change Order No.1.
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IN WITNESS WHEREOF, the parties have executed this Change
Order No. 1 as on the date(s) set forth below.
Procurement and Supply
I hereby certify that to the best of my information and
belief this Change Order is in compliance with the CUC
Procurement Regulations, is for a public purpose, and does not
waste or abuse public funds.
/s/ Xxxxxxx Dlg. Xxxxxxx Date: 12/4/98
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Xxxxxxx DLG. Xxxxxxx
Manager, Procurement & Supply
Commonwealth Utilities Corporation Comptroller
I hereby certify that there are sufficient funds
available for the execution of this Change Order.
/s/ Xxxxx Xxx Date: 12/3/98
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Xxxxx Xxx
Comptroller
Attorney General
I hereby certify that this Change Order has been
numbered, reviewed and approved as to form and legal capacity.
/s/ Xxxxxxx X. Ohli for Maya B. Kara Date: 12/3/98
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Maya B. Kara
Attorney General (Acting)
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Commonwealth Utilities Corporation
/s/ Xxxxxxx X. Xxxxxxxxxx Date: 12/3/98
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Xxxxxxx X. Xxxxxxxxxx
Executive Director
/s/ Xxxx X. Xxxx Xxxx Date: 12/3/98
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Xxxx X. Xxxx Xxxx
Chairman, Board of Directors
Commonwealth Development Authority
/s/ Xxxx X. Xxxxxxx Date: 12/9/98
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Xxxx X. Xxxxxxx
Chairman, Board of Directors
Telesource CNMI, Inc.
On behalf of Telesource CNMI, Inc., I represent that I am
authorized to bind Telesource CNMI Inc. to the terms of this
Change Order, and by my signature I do so hereby accept for
Telesource, CNMI, Inc., and bind Telesource CNMI, Inc. to, the
terms of this Change Order. I further represent for Telesource
CNMI, Inc. that no person associated with Telesource CNMI, Inc.
has retained any person in violation of Section 6-205 of the CUC
Procurement Regulations.
/s/ Khajardour X. Xxxxxxxx Date: 11/30/98
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Xxxxxxxxx X. Xxxxxxxx
President
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CERTIFICATION OF CONTRACT COMPLETION
I hereby certify that this contract bears all signatures
and is therefore complete.
/s/ Xxxxxxx DLG. Xxxxxxx Date: 12/10/98
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Xxxxxxx DLG. Xxxxxxx
Manager, Procurement & Supply
SCHEDULE OF
EQUIPMENT
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(General Description of Equipment, Subject to Modification and
Elaboration)
The following lists a general description of the
equipment making up the major components of the first expansion
from a 10 MW facility to a 30 MW facility capable of a 20 MW
maximum load:
1. 2 X 5 MW Diesel Generator Sets
2. Cooling System
3. Breeching System with Mufflers
4. Stack Suitable for Four (4) Exhaust Units
5. Building Expansion Suitable for
Thirty (30) MW
6. Extension of Existing Switchgear
7. Main 420,000 Gallon Fuel Storage Tank
8. Daily Fuel Tanks with Fuel Accessories
9. Compressed Air Starting System
10. Lube Oil Distribution System
Ii. Waste Oil Disposal System
12. Substation
13. Ventilation Fans and Air Intake System
Please see the attached layout drawings and schematics
for further detail.
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EXHIBIT "B"
SCHEDULE 2.1
PREPAYMENT FOR EXPANSION PHASE
(To Be Paid in Addition to the Prepayment Price Set Forth
in Schedule 2)
EXPANDED 20 MW PHASE AMOUNT IN US$
Commissioning & Testing 12,250,000.00
End of Year 3 9,783,000.00
End of Year 4 8,821,000.00
End of Year 5 7,750,000.00
End of Year 6 6,540,000.00
End of Year 7 5,200,000.00
End of Year 8 3,900,000.00
EXHIBIT "B"
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