Exhibit 10.6
OPERATIONS AND MAINTENANCE AGREEMENT
BETWEEN
TENASKA GEORGIA PARTNERS, L.P.
AND
TENASKA OPERATIONS, INC.
DATED September 10, 1999
1. DEFINITIONS .............................................................................................. 1
2. SCOPE OF SERVICES ........................................................................................ 5
2.1 PURPOSE ............................................................................................... 5
2.2 CHANGES IN OPERATION AND MAINTENANCE .................................................................. 5
2.3 OPERATIONAL SERVICES .................................................................................. 5
2.3.1 General Requirements ............................................................................ 5
(a) Pre-Commercial Operating Period ................................................................. 6
(b) Commercial Operating Period ..................................................................... 9
2.3.2 Operating Reports ............................................................................... 12
2.3.3 Opening the Interconnections .................................................................... 13
2.3.4 Staffing ........................................................................................ 13
2.3.5 General Operation ............................................................................... 13
2.4 ELECTRICAL GENERATING OPERATIONS ........................................................................ 13
2.4.1 Energy Delivery .................................................................................... 13
2.4.2 Coordination with PECO ............................................................................. 13
2.4.3 Plant Maintenance and Scheduled Outages ............................................................ 14
(a) Scheduled Outages ............................................................................... 14
(b) Forced Outage. .................................................................................. 15
2.4.4 Operation on Backup Fuel ........................................................................ 16
2.4.5 Metering ........................................................................................ 16
2.4.6 Disconnection by Utility ........................................................................ 16
2.4.7 Inspection ...................................................................................... 16
2.4.8 Access .......................................................................................... 17
2.4.9 Inspection of Charts and Records ................................................................ 17
2.5 PROCESS WASTE WATER DISPOSAL .......................................................................... 17
2.6 PLANT MAINTENANCE ..................................................................................... 17
2.6.1 Monthly Maintenance Reports ..................................................................... 19
2.7 INVENTORY AND TESTED CAPACITY ......................................................................... 19
2.7.1 Tests ........................................................................................... 20
2.8 PLANT PERMITS ......................................................................................... 20
3. TERM OF THE AGREEMENT .................................................................................... 20
3.1 TERM .................................................................................................. 20
4. TESTING OF THE PLANT ..................................................................................... 21
4.1 ACCESS DURING TESTING ................................................................................. 21
5. COMPENSATION AND PAYMENT ................................................................................. 21
5.1 OPERATING ACCOUNT ..................................................................................... 21
5.2 PRE-COMMERCIAL OPERATING PERIOD BUDGET AND COMPENSATION ............................................... 21
5.3 OPERATING BUDGET ...................................................................................... 23
5.4 COMPENSATION DURING COMMERCIAL OPERATING PERIOD ....................................................... 24
5.5 DETERMINATION OF AVAILABILITY PERCENTAGES ............................................................. 26
5.6 ADJUSTMENT FOR ESCALATION ............................................................................. 26
6. FURTHER AGREEMENTS ....................................................................................... 27
6.1 LICENSES, APPROVALS AND PERMITS ....................................................................... 27
6.2 FUEL AND WATER ........................................................................................ 27
6.3 ACCESS ................................................................................................ 27
7. WARRANTIES ............................................................................................... 28
7.1 WARRANTY OF OPERATOR .................................................................................. 28
7.2 REMEDIES .............................................................................................. 29
7.3 NO IMPLIED WARRANTIES ................................................................................. 29
8. TERMINATION OF AGREEMENT ................................................................................. 29
8.1 OWNER TERMINATION ..................................................................................... 29
8.2 TERMINATION DUE TO PLANT SALE, LEASE OR OPERATOR'S DEFAULT ........................................... 29
8.3 CONTINUED PERFORMANCE DURING DISPUTE .................................................................. 31
8.5 TERMINATION - PROJECT AGREEMENTS ...................................................................... 32
8.6 TERMINATION -CHANGE IN OWNERSHIP ...................................................................... 33
9. INDEMNITY ................................................................................................ 33
9.1 INDEMNIFICATION OF OWNER .............................................................................. 33
9.2 INDEMNIFICATION OF OPERATOR ........................................................................... 33
9.3 NOTICE OF CLAIM AND CLAIM FOR INDEMNITY ............................................................... 34
10. INSURANCE ................................................................................................ 34
10.1 CONSTRUCTION CONTRACTOR INSURANCE ..................................................................... 34
10.2 OPERATOR INSURANCE .................................................................................... 34
(a) Worker's Compensation .............................................................................. 34
(b) Liability Insurance ................................................................................ 35
10.3 OWNER INSURANCE ........................................................................................ 35
10.3.1 All Risk Property and Boiler and Machinery Insurance .............................................. 35
10.3.2 Liability Insurance ............................................................................... 36
10.4 SUBMISSION OF CERTIFICATES OF INSURANCE ............................................................ 36
10.5 WAIVER OF SUBROGATION .............................................................................. 37
10.6 UNAVAILABILITY OF COVERAGE ......................................................................... 37
10.7 NO LIMITATION OF LIABILITY ......................................................................... 37
10.8 INDEPENDENT CONTRACTOR'S INSURANCE ................................................................. 38
10.9 OWNER'S EQUIPMENT .................................................................................. 38
10.10 FAILURE TO INSURE .................................................................................. 38
11. LIABILITY LIMITATIONS .................................................................................... 38
11.1 DAMAGES ............................................................................................ 38
12. DISPUTE - CONTINUING AGREEMENT PERFORMANCE ............................................................... 39
12.1 UNASSISTED SETTLEMENT .............................................................................. 39
12.2 MEDIATION .......................................................................................... 39
12.3 LITIGATION ......................................................................................... 40
13. FORCE MAJEURE ............................................................................................ 40
13.1 FORCE MAJEURE ...................................................................................... 40
13.2 CHANGE OF LAW ...................................................................................... 42
13.3 REMEDY FOR FORCE MAJEURE TERMINATION ............................................................... 42
14. MISCELLANEOUS PROVISIONS ................................................................................. 43
14.1 ASSIGNMENT ......................................................................................... 43
14.2 AUTHORITY TO PROCURE GOODS AND SERVICES ............................................................ 44
14.3 CONFIDENTIALITY OF INFORMATION ..................................................................... 45
14.4 CONFIDENTIAL ....................................................................................... 45
14.5 EXCEPTIONS TO CONFIDENTIALITY ...................................................................... 46
14.6 LENDER APPROVAL .................................................................................... 46
14.7 BOOKS, RECORDS, ACCESS THERETO ..................................................................... 46
14.8 NOTICES ............................................................................................ 47
14.9 REPRESENTATIVES .................................................................................... 48
14.10 EQUAL EMPLOYMENT OPPORTUNITY ....................................................................... 48
14.11 ENTIRE AGREEMENT ................................................................................... 48
14.12 NO WAIVER .......................................................................................... 48
14.13 SEVERABILITY ....................................................................................... 49
14.14 APPLICABLE LAW ..................................................................................... 49
14.15 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS .......................................................... 49
14.16 EXCLUDED REPRESENTATIONS AND INTERESTS ............................................................. 49
14.17 LIMIT OF LIABILITY ................................................................................. 49
14.18 COUNTERPARTS ....................................................................................... 50
14.19 PROJECT AGREEMENTS ................................................................................. 50
14.20 NO JOINT VENTURE ................................................................................... 50
14.21 CORPORATE AUTHORIZATION ............................................................................ 51
14.22 LIENS .............................................................................................. 52
14.23 SET OFF ............................................................................................ 52
14.24 RELEASE OF INFORMATION AND SITE VISIT APPROVAL ..................................................... 52
14.25 CONTRACTS WITH AFFILIATES .......................................................................... 53
OPERATIONS AND MAINTENANCE AGREEMENT
THIS OPERATIONS AND MAINTENANCE AGREEMENT ("AGREEMENT") dated as of
this 10th day of September, 1999, is by and between Tenaska Georgia Partners,
L.P., a Georgia limited partnership, having its principal place of business at
Omaha, Nebraska, hereinafter called "Owner", and Tenaska Operations, Inc., a
Delaware corporation, having its principal place of business at Omaha,
Nebraska,hereinafter called "Operator."
WHEREAS, Owner desires that Operator provide initial startup support
during turnover, testing and operation, operate and maintain the completed Plant
and perform certain other defined services under the terms and conditions set
forth in this Operations and Maintenance Agreement (the "Agreement");
NOW THEREFORE, in consideration of the premises contained in this
Agreement, the Parties hereto, intending to be legally bound, agree as follows:
1. DEFINITIONS
The following terms when used in this Agreement shall have the
following meanings (such meanings to be equally applicable to the singular and
plural forms thereof):
"AFFILIATE" means, as to any Person, another Person which, directly or
indirectly, controls or is controlled by or under common control with,
such other Person. For purposes of this definition, the concept of
"control", when used with respect to any specified Person, shall
signify the possession of the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities or partnership or other ownership
interests, by contract or otherwise.
"AGENCY SUPPLIERS" means those entities with whom contractual
agreements for Materials and services have been entered into by
Operator acting as agent for Owner pursuant to Section 14.2.
"AGREEMENT" means this agreement as amended, supplemented, restated, or
otherwise modified from time to time.
"ANNUAL AVAILABILITY PERCENTAGE" is defined in the Power Purchase
Agreement,, except that, for purposes of this Agreement, adjustments
shall be made in the computation of the Annual Availability Percentage
so that Operator is in no way penalized or disadvantaged by
unavailability of the Plant due to (i) turbine malfunction (the cause
of which is not contributed to by Operator), (ii) unavailability of
natural gas as fuel for the Plant caused by a failure of gas supply or
transportation, or (iii) the inability to export energy from the Plant
because of the unavailability of the Utility's transmission system.
"AVAILABILITY ADJUSTMENT" is defined in Section 5.4(c).
"BANKRUPTCY EVENT" means, with respect to a Party, (a) a general
assignment by that Party for the benefit of its creditors, (b) any
action taken or initiated for the winding-up or liquidation of that
Party or for the appointment of a receiver, trustee or similar officer
for it or any of its revenues or assets, or (c) the institution by or
against that Party of liquidation proceedings or other proceedings for
relief under any bankruptcy Law or any other Law for the relief of
debtors.
"CHANGE OF LAW" is defined in Section 13.2(a).
"COMMERCIAL OPERATING PERIOD" means the period of time between
Commercial Operation and the termination of this Agreement.
"CONFIDENTIAL" is defined in Section 14.4.
"CONSTRUCTION AGREEMENT" means the Engineering, Procurement and
Construction Agreement between Owner and Construction Contractor for
construction of the Plant as from time to time amended, supplemented,
or otherwise modified.
"CONSTRUCTION CONTRACTOR" means the prime contractor for construction
of the Plant that is party signatory to the Construction Agreement.
"CONTRACT YEAR" is defined in the Power Purchase Agreement.
"CREDIT AGREEMENT" means the Construction and Term Loan and
Reimbursement Agreement among Owner and the Lenders, as from time to
time amended, supplemented, otherwise modified, for financing
construction of the Plant.
"DATE OF COMMERCIAL OPERATION" is defined in the Power Purchase
Agreement.
"DISPUTE" is defined in Section 12.
"DISPUTE NOTICE" is defined in Section 12.1.
"DISPUTE PROCEDURE" is defined in Section 12.
"EFFECTIVE DATE" means the date set forth in the first paragraph of
this Agreement.
"FORCE MAJEURE" is defined in Section 13.1(a).
"FORCED OUTAGE" is defined in the Power Purchase Agreement.
"INTERCONNECTION AGREEMENT" is defined in the Power Purchase Agreement.
"INTERCONNECTION FACILITIES" is defined in the Power Purchase
Agreement.
"LAW" means any act and any requirement, permit, ordinance, standard,
code, rule, resolution or regulation of any governmental authority or
agency (federal, national, state, municipal, local or other) including
all environmental and hazardous waste laws which are applicable to the
Plant and which are at any time applicable to performing the services.
"LENDERS" means all construction lenders and all subsequent lenders
that provide financing for the Plant.
"LONG TERM SERVICE AGREEMENT" means the Long Term Parts & Long Term
Service Contract between Owner and General Electric International
Incorporated, as from time to time amended, supplemented, or otherwise
modified.
"MAINTENANCE SERVICES" is defined in Section 2.6(a).
"MATERIALS" means all consumables, tools and spare parts required to
operate and maintain the Plant.
"MEDIATION NOTICE" is defined in Section 12.2.
"METERING EQUIPMENT" means the meters and measuring equipment at each
Point of Delivery to measure capacity and energy delivered by the Plant
to PECO
"OPERATING ACCOUNT" is defined in Section 5.1.
"OPERATING BUDGET" is defined in Section 5.3(a).
"OPERATOR'S REPRESENTATIVE" means the person designated in writing by
Operator and authorized to act on behalf of Operator under this
Agreement.
"OWNER'S REPRESENTATIVE" means the person designated in writing by
Owner and authorized to act on behalf of Owner under this Agreement.
"PARTY(IES)" means Owner or Operator, or both, as appropriate.
"PECO" means PECO Energy Company, a Pennsylvania corporation.
"PERSON" means an individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of
whatever nature.
"PLANT" is defined in Article I of the Power Purchase Agreement.
"PLANT MANUALS" means the manuals prepared by Operator and approved by
Owner, including but not limited to operation, maintenance,
administration, chemistry, environmental quality assurance/quality
control and safety manuals using information from the equipment
manufacturers, Construction Contractor, Operator's experience and other
sources which are to be used as the basis for operation of the Plant in
accordance with generally acceptable industry practices and Prudent
Utility Practice.
"PLANT PERMITS" is defined in Section 6.1.
"POINTS OF DELIVERY" is defined in the Power Purchase Agreement.
"POWER PURCHASE AGREEMENT" means the Power Purchase Agreement between
Owner and, PECO as from time to time amended, supplemented, or
otherwise modified, a composite conformed copy of which is attached
hereto as Exhibit A.
"PRE-COMMERCIAL OPERATING BUDGET" is defined in Section 5.2(a).
"PRE-COMMERCIAL OPERATING PERIOD" means the time period between the
Effective Date of this Agreement and the Date of Commercial Operation.
"PROJECT AGREEMENTS" is defined in Section 14.19.
"PRUDENT UTILITY PRACTICE" is defined in the Power Purchase Agreement.
"REQUEST FOR PAYMENT" is defined in Section 7.1.
"SCHEDULED DATE OF COMMERCIAL OPERATION" is defined in the Power
Purchase Agreement.
"SCHEDULED OUTAGES" is defined in the Power Purchase Agreement.
"SCOPE OF SERVICES" means the services set out in Section 2.
"SERC" means the Southeastern Electric Reliability Council.
"SITE" OR "PLANT SITE" means the real property related to the Plant.
"SUBCONTRACTOR" means any entity, including but not limited to
Affiliates of Operator, contracting directly with Operator or with any
contractor or subcontractor of any tier under Operator (not including
Agency Suppliers) to perform service or supply material to the Plant.
"SYSTEM" means the equipment and all associated components including
but not limited to piping, valves, wiring, controls and components
required to perform a given function or combination of functions of the
Plant.
"TERM" is defined in Section 3.1.
"TERMINATION PAYMENT" is defined in Section 8.2(d).
"TESTED CAPACITY" is defined in Section 2.7(b).
"TESTING PERIOD" is defined in Section 4.1.
"TRANSITION PERIOD" defined in Section 8.2(c).
"UTILITY" shall have the meaning set forth for the term "Local Utility"
in the Power Purchase Agreement.
"YEAR" means calendar year from January 1 through December 31.
2. SCOPE OF SERVICES
2.1 PURPOSE
The purpose of this Agreement is to establish the terms and conditions
pursuant to which Operator shall perform its management and operating
and maintenance services including providing initial startup support
during the Pre-Commercial Operating Period, testing, operation,
maintenance and management of the Plant, all of which Operator shall
perform in accordance with the terms and conditions of this Agreement
and in accordance with Owner's obligations under the Project
Agreements.
2.2 CHANGES IN OPERATION AND MAINTENANCE
Owner may request Operator to make reasonable changes to the services
outlined in this Section 2 and Operator shall use reasonable efforts to
make such requested changes, so long as such changes are reasonably
related to the operation and maintenance of the Plant, and Operator is
technically capable of making such changes. Owner shall bear the cost
for the changes on a cost reimbursement basis.
2.3 OPERATIONAL SERVICES
2.3.1 GENERAL REQUIREMENTS
Operator shall provide skilled personnel, procedures, training, and
administrative, management, and professional/technical services
necessary for the safe and reliable start-up, commissioning, operation,
and maintenance of the Plant, in accordance with this Agreement.
(a) PRE-COMMERCIAL OPERATING PERIOD
During the Pre-Commercial Operating Period, without limitation
of its other obligations contained in this Agreement, Operator
shall, in accordance with the standards set forth in this
Agreement:
(i) Provide the services of a plant manager and a project
manager to represent Operator during the
Pre-Commercial Operating Period to implement the
obligations of this Section 2.3.1(a) and to oversee
the smooth transition of the Plant from construction
to Commercial Operation;
(ii) Provide assistance to Owner, as reasonably requested,
with the execution of Owner's responsibilities
relative to construction and operation of the Plant.
This task includes, but is not limited to, such
things as the preparation of punch lists related to
construction deficiencies, preparation of
applications for licenses and permits, and oversight
of warranty and punch list repairs;
(iii) Review Construction Contractor planning and Plant
engineering design with regard to Plant reliability,
availability and maintainability and provide comments
to Owner. Operator shall review design manuals,
system descriptions, tool lists, spare parts lists,
training programs, and operation methodology of the
Plant prepared by Construction Contractor and provide
comments to Owner;
(iv) Review Plant/machinery plans, specifications and
drawings with respect to their impact on long term
Plant operations and maintenance and provide
recommendations to Owner;
(v) Plan implementation programs to meet the operating
and reporting requirements set forth in this
Agreement, including references from the Power
Purchase Agreement, Interconnection Agreement, Plant
Permits, and all applicable Laws;
(vi) Provide site-specific Plant Manuals related to
operation of the Plant including operations and
maintenance procedures, and policies and procedures
related to administration, safety, training,
environmental quality assurance and quality control,
and water chemistry control. In order to facilitate
the preparation of the Plant Manuals, Owner shall
provide the following data and information to
Operator seven (7) months prior to the Scheduled Date
of Commercial Operation: (1) P&IDs of Plant systems,
(2) electrical drawings of Plant equipment, (3) logic
diagrams, (4) control wiring diagrams and drawings,
(5) vendor manuals and drawings of Plant Systems and
equipment, (6) hard copies of control System screens,
(7) Plant layout drawings, and (8) System
descriptions;
(vii) Develop an overall plan for the operation of the
Plant including procedures to be developed and
implemented, in accordance with the Project
Agreements, Plant Permits, all applicable Laws and
environmental controls, and submit for Owner
approval;
(viii) Prepare the Pre-Commercial Operating Budget nine (9)
months prior to the Scheduled Date of Commercial
Operation and submit it for Owner approval;
(ix) Work with the Owner and Construction Contractor to
develop mutually agreeable procedures for Systems
turnover, including appropriate tagging and lockout
protocols;
(x) Under supervision of the Construction Contractor,
support the Construction Contractor with Plant
startup and testing activities. Operator shall not be
responsible to provide supervision, construction
utilities, procure for, construct or direct startup
of the Plant. This task includes operating the Plant
under the direction of the Construction Contractor in
accordance with the Construction Agreement and in
accordance with this Agreement and operating and
maintaining Plant Systems as they are turned over to
Operator. Any disagreement between Operator and
Construction Contractor with respect to Operator's
obligations shall immediately be referred by Operator
to Owner's Representative;
(xi) Perform routine maintenance and scheduled maintenance
actions on Plant Systems and equipment as they are
turned over to Operator;
(xii) Prepare a maintenance plan for the Plant to include
planning for Scheduled Outages, handling of Forced
Outages, preventive and predictive maintenance
philosophy, and implementation of the Long Term
Service Agreement;
(xiii) Prepare lists of the initial inventory of tools and
spare parts to be purchased for maintenance and
repair of the Plant and its equipment. Set up the
Owner/Operator-approved procurement system at the
Plant and purchase as agent for Owner the initial
inventory of tools, spare parts, consumables, and
other supplies required for operation and maintenance
of the Plant;
(xiv) Set up and implement the inventory control system for
the Plant. Install computer software as required,
train user personnel, integrate the software with the
Plant's purchasing and accounting systems and
initiate vendor contacts;
(xv) Recruit, hire, transfer, or otherwise obtain
qualified personnel in accordance with the
Owner-approved mobilization plan prepared by Operator
for the Plant;
(xvi) Implement all personnel and human resources functions
including payroll, personnel records, benefit plans,
and insurance, and establish an Owner-approved
employee relations and community relations program;
(xvii) Set up and implement in accordance with the
requirements of the Owner, and government agencies,
the Owner/Operator-approved accounting and payroll
systems, and Plant performance monitoring systems at
the Plant. Install computer software as required,
train office personnel and initiate all reporting
systems for accounting, budgeting and Plant
performance;
(xviii) Develop an Owner approved Plant safety program and
implement Plant safety procedures in accordance with
the Plant safety manual;
(xix) Review all Plant processes and equipment for their
impact on water chemistry/environmental control and
develop an overall plan and reporting system for the
Plant chemistry program;
(xx) Prepare a plan nine (9) months prior to the Scheduled
Date of Commercial Operation to conduct initial
training of Plant personnel and submit it to Owner
for Owner approval. This pre-operational training
shall include, among other things, the following
subjects: Plant overview, Plant systems, major
equipment items, Plant safety, Plant environmental,
Plant emergency response, Plant control and emission
monitoring systems, water chemistry control, and
integrated Plant operations. Prepare training
materials, conduct classes, conduct system walkdowns,
and coordinate vendor training with overall operator
and maintenance training program. Training shall be
scheduled to be completed in time for Plant personnel
to support Plant startup and testing activities;
(xxi) Send selected operations and maintenance personnel to
outside specialty schools to develop the skills
required for proper operation and maintenance of the
Plant;
(xxii) Implement an employee qualification program that will
ensure continuous certification/qualification of all
operations and maintenance personnel;
(xxiii) Set up a regulatory reporting program in accordance
with the Plant Permits and all applicable Laws;
(xxiv) Develop a Spill Prevention Control and Countermeasure
Plan that meets the requirements of 40 CFR Part 112
and other applicable Laws;
(xxv) Prepare a Solid and Hazardous Waste Management Plan
that describes the management of Plant-generated
wastes and meets all applicable Laws;
(xxvi) Prepare a plan to comply with Federal, State and
local noise standards and regulations;
(xxvii) Establish contact with PECO, General Electric
International Incorporated and the Utility and
maintain good working relations with each of such
entities;
(xxviii) Create a filing system to store and retrieve all
information related to design, operation and
maintenance of the Plant;
(xxix) Procure, for the account of the Owner, all Materials,
equipment, chemicals, supplies, services, and parts
required for daily operation and maintenance of the
Plant in accordance with the Owner-approved
Pre-Commercial Operating Budget;
(xxx) In the event of personal injury or property damage
accident or incident, or mechanical failure or
breakdown at the Plant, act in accordance with
Prudent Utility Practice to minimize personal injury
or property damage accident or incident or mechanical
failure or breakdown at the Plant and to mitigate any
loss, injury and damage resulting from such event
provided that Operator shall be compensated by Owner
for reasonable costs outside the Pre-Commercial
Operating Budget incurred by Operator in complying
with this Section 2.3(a)(xxx); and
(xxxi) Provide such other reasonable functions and services
as may be directed by Owner. Prior to implementation
of any such functions and services, Owner shall agree
to an appropriate amendment to the Pre-Commercial
Operating Budget covering any incremental operating
expenses to be incurred by Operator.
(b) COMMERCIAL OPERATING PERIOD
During the Commercial Operating Period, Operator will operate
and maintain the Plant in accordance with the standards set
forth in this Agreement. Operator shall continue applicable
services of the Pre-Commercial Operating Period and, without
limitation of its other obligations contained herein, shall:
(i) Provide assistance to Owner pursuant to this
Agreement, including the preparation and coordination
of warranty claims, insurance claims, and license and
permit renewals;
(ii) Maintain a filing system and update all Plant Manuals
and vendor service manuals, and arrange for updating
Plant facilities/System drawings to reflect the
Plant's current "as-built" configuration;
(iii) Prepare annual Operating Budgets in accordance with
this Agreement. Report to Owner monthly on the status
of the Operating Budget and process budget variance
reports, as required. To the extent Operator has the
information, Operator will meet requirements of Owner
for providing information to Lenders regarding the
operation of the Plant as set forth in the Credit
Agreement;
(iv) Perform or arrange for all maintenance required on
all Plant Systems and equipment;
(v) Maintain a predictive maintenance program and oversee
services provided by the predictive maintenance
Subcontractor and perform routine testing, record
keeping and performance/failure reporting activities;
(vi) Arrange for scheduled inspections and overhauls on
major equipment items in accordance with the Long
Term Service Agreement and other maintenance
schedules. This shall include subcontracting for
major repairs between Owner and equipment suppliers
in accordance with the Owner's instructions and/or
coordinating unplanned maintenance and planned
maintenance under the Long Term Service Agreement;
(vii) Arrange for necessary janitorial, garbage pickup,
snow removal, and landscape services and maintain all
access roads within the Plant Site in good repair and
open to traffic at all times;
(viii) Schedule, coordinate and implement, as required,
calibration/testing of all gauges, meters and
recording devices related to the consumption of fuels
and water, and to the sale of electricity;
(ix) Recruit, hire, transfer or otherwise obtain and
retain qualified personnel to maintain the staffing
levels and skill mix required for successful
long-term operation of the Plant;
(x) Implement accounting procedures for the Plant
including payroll, cash disbursements and journals,
client accounting, accounts payable and fixed asset
management;
(xi) Implement a cost-effective inventory control system
and install a computerized inventory management
system designed to ensure that equipment, spare
parts, Materials, supplies and tools are properly
stored, maintained in operable condition and
accounted for and that adequate supplies are
available at all times to support daily operation and
maintenance of the Plant;
(xii) Install and commission a computerized maintenance
management system to effectively plan and control
maintenance operations for the Plant, including
emergency maintenance, corrective maintenance,
preventative maintenance, safety inspections and
Scheduled Outages. The inventory control and
management system and maintenance management system
will be fully integrated with the Plant's purchasing
and accounting systems.
(xiii) Conduct a community relations program with activities
coordinated with Owner and an employee relations
program designed to maintain an enhanced image of the
Plant in the community and maintain good employee
relations;
(xiv) Prepare and submit periodic reports relative to daily
operation and maintenance of the Plant including
environmental compliance records, maintenance and
repair status, Plant operating data, and any other
information reasonably requested by Owner;
(xv) Implement Spill Prevention Control and Countermeasure
Plan in compliance with the requirements of 40 CFR
Part 112 and other applicable Laws;
(xvi) Comply with all applicable Laws regarding solid and
hazardous wastes;
(xvii) Comply with Federal, State and local noise standards
and regulations;
(xviii) Implement, or arrange for implementation of, Plant
security measures in accordance with an
Owner-approved Plant security plan;
(xix) Implement a Plant safety program and report any
injuries in accordance with the requirements of Law
and to Owner;
(xx) Implement a continuing program of training designed
to orient new employees, refresh/cross-train existing
employees, qualify/re-qualify operating personnel,
and keep all Plant personnel abreast of Plant safety
and environmental requirements and emergency
procedures;
(xxi) Send new/replacement operations and maintenance
personnel to outside specialty schools to maintain
the skill levels required for proper operation and
maintenance of the Plant. Examples: I&E technicians
to DCS School and mechanics to turbine maintenance
school;
(xxii) Implement a Plant chemistry program which shall
include minimizing chemical use and maximizing resin
life;
(xxiii) Recommend Plant improvements and supervise
contractors, subcontractors and suppliers; and
(xxiv) Provide such other reasonable functions and services
as may be directed by Owner.
2.3.2 OPERATING AND MAINTENANCE REPORTS
(a) Operator shall report to Owner electronically or in writing, on a
monthly basis, the following information:
(i) Hourly, daily and weekly electric energy generated and
the electric energy exported from the Plant to the
Utility grid and in total;
(ii) Hourly, daily and weekly fuel consumption (natural gas
and fuel oil) stating by unit fuel flow and calorific
value;
(iii) Daily and weekly makeup water received and pipeline
status;
(iv) Weekly and monthly consumption of chemicals for water
treatment plant;
(v) Annual inventory accounting;
(vi) Daily personnel status;
(vii) Records and results of any performance test requested
pursuant to Section 2.7(b) of this Agreement;
(viii) Emissions data in support of federal and state and
local reporting requirements;
(ix) Wastewater effluent data in support of federal, state
and local permits; and
(x) Any other information and report regarding the
operation of the Plant reasonably requested by Owner or
required by the Power Purchase Agreement; and
(xi) All significant maintenance activities, summarized on a
monthly basis.
(b) Operator shall maintain performance data in accordance with
the then current standard Generating Availability Data System
(GADS) of the North American Electric Reliability Council
(NERC) and/or similar requirements. All GADS data is to be
reported on a monthly basis to Owner.
2.3.3 OPENING THE INTERCONNECTIONS
Operator shall immediately open the electrical connection between the
Plant and the Interconnection Facilities upon request of Owner when
inspection of the Plant has revealed a lack of maintenance or the
records required by this Agreement, if Operator has been notified by
Owner of such lack, and such lack has not been corrected within a
reasonable period considering the circumstances of each request after
such notice.
2.3.4 STAFFING
Operator shall staff the Plant with experienced and competent personnel
to monitor, operate and maintain the equipment, train and supervise
personnel in the specific operation of the Plant in accordance with the
equipment and the Project Agreements, and staff the control room of the
Plant with at least one qualified operator during all hours when the
Plant and/or switchyard is in operation.
2.3.5 GENERAL OPERATION
Operator shall operate the Plant on a continuous, reliable and
sustained basis and in a good and workmanlike manner in accordance
with: (i) the terms and conditions of this Agreement and the Project
Agreements, (ii) the Plant Manuals and written procedures, (iii)
generally accepted practices for the operation of similar facilities,
(iv) all equipment manufacturers' recommended procedures and
warranties, (v) Prudent Utility Practice, (vi) applicable Law, (vii)
the limitations of the design and construction of the Plant, (viii)
Plant Permits and (ix) the requirements of insurance policies
applicable to the Plant.
2.4 ELECTRICAL GENERATING OPERATIONS
2.4.1 ENERGY DELIVERY
Operator shall operate the Plant so that all electrical energy
generated at the Plant and delivered to PECO at each Point of Delivery
shall be in accordance with the Power Purchase Agreement.
2.4.2 COORDINATION WITH PECO
(a) Owner shall notify PECO and the Utility of the identity of and
contact information for Operator's Representative. Operator's
Representative so designated will be authorized by Owner to
administer the terms of these Sections 2.4.2 and 2.4.3 with
any representatives properly designated by PECO and/or the
Utility.
(b) Operator shall maintain 24-hour telephone numbers (voice and
fax) that can be used by representatives of PECO and the
Utility to contact Operator's Representative.
(c) Notification under Sections 2.4.2 and 2.4.3 shall be by
telephone followed by telecopy unless explicitly stated
otherwise for a particular application.
(d) Operator shall timely perform all of the obligations and
requirements of Owner set forth in the Power Purchase
Agreement in order to coordinate scheduling with PECO.
Operator will work with PECO prior to Commercial Operation to
develop reliable telephone dispatch procedures for intra-day
scheduling which will ensure that telephonic dispatch notices
are not given by or on behalf of PECO without proper
authorization. Operator is entitled to rely upon telephonic
dispatch orders which it believes in good faith to have been
properly authorized by PECO.
(e) Operator shall operate the Plant on a continuous, reliable and
sustained basis until the end of the Commercial Operating
Period, subject to the following:
(i) Shutdowns or interruptions at the direction of Owner,
PECO or the Utility; and
(ii) Displacements and outages in accordance with Section
2.4.3. Operator shall, with Owner, PECO and the
Utility, coordinate operation of the Plant with the
Utility's electric system in accordance with Sections
2.4.2, 2.4.3 and 2.4.4.
2.4.3 PLANT MAINTENANCE AND SCHEDULED OUTAGES
(a) SCHEDULED OUTAGES
(i) LONG TERM PREVENTIVE MAINTENANCE PROGRAM. Within
ninety (90) days after Commercial Operation,
Operator, with the approval of Owner, will furnish
PECO with a long-term preventative maintenance
program for each major item of equipment constituting
a part of the Plant. Such program shall reflect
planned outages for inspection, repair, maintenance
and overhaul and will be based, at least in part, on
manufacturer's recommendations and may be altered,
with the approval of Owner, from time to time by
reason of later manufacturers' releases pertaining to
major items of equipment of the Plant and Plant
operating experience.
(ii) ANNUAL FORECAST OF SCHEDULE OUTAGE. No later than
ninety (90) days prior to April 1 of each Year,
Operator shall submit to PECO a schedule, as approved
by Owner, for the annual maintenance for the next
five (5) Contract Years and the level of capacity
available, if any, during such maintenance. The
annual maintenance will be scheduled in accordance
with the provisions of the Power Purchase Agreement
and submitted to
PECO for approval in accordance with the Power
Purchase Agreement. In the event that PECO does not
approve the proposed annual maintenance schedule,
Operator shall work with PECO to arrive at an annual
schedule which is acceptable to PECO and Owner.
(iii) RESCHEDULING OF OUTAGES. Operator, with the approval
of Owner, may shift the start date of an outage up to
seven (7) days, or extend a Scheduled Outage by up to
seven (7) days, by providing PECO with written notice
forty-five (45) days before the earlier of the
original Scheduled Outage start date or the new
Scheduled Outage start date, unless the change in the
outage start date or duration would result in more
units of the Plant being in a Scheduled Outage than
would have occurred under the original schedule, in
which case Operator will provide PECO with sixty-five
(65) days prior written notice for the outage change.
(iv) NOTIFICATION. Not less than seven (7) days prior to a
Scheduled Outage, Operator shall notify PECO and the
Utility of the timing, expected duration and the
impact upon the Plant output. Prior to reducing the
Plant output for a Scheduled Outage, Operator shall
notify PECO and the Utility of the latest information
regarding the timing, the rate at which the Plant
will be removed, or ramped down, from service,
expected duration and the impact upon Plant output.
During the Scheduled Outage, Operator shall notify
PECO and the Utility of any changes to the expected
duration of the Scheduled Outage as soon as
practicable.
(v) RETURN TO SERVICE. Operator shall notify PECO and the
Utility prior to returning the Plant to service
following a Scheduled Outage. Operator shall notify
Owner of all plans to return the Plant to service,
but shall not let such notification delay returning
the Plant to service. Such notification shall include
the timing of the start-up and the rate at which the
Plant will be returned, or ramped up, to service.
(b) FORCED OUTAGE
(i) NOTIFICATION. Upon the occurrence of an event
necessitating a Forced Outage, Operator shall as soon as
practicable notify PECO, the Utility and Owner of the
reason, timing, expected duration, the impact upon Plant
output, and the scheduling flexibility of each Forced
Outage.
(ii) UPDATES. During any Forced Outage, Operator shall
notify Owner, PECO and the Utility of any changes to the
expected duration of the outage as they become known.
(iii) RETURN TO SERVICE. Operator shall not return the Plant
to service following a full or partial outage without
notifying PECO and the Utility. Operator shall
notify Owner of all plans to return the Plant to
service, but shall not let such notification delay
returning the Plant to service. Such notification shall
include the timing of the start-up and the ramp up rate
of that portion of the Plant returning to service.
(c) OUTAGE REPORTS
PECO may, from time to time, request a report of the cause of
any Plant outage and the actions taken by Operator to correct
the situation. Operator shall provide such reports upon
request of PECO and with Owner approval.
2.4.4 OPERATION ON BACKUP FUEL
During the period of any interruption of the Plant's primary fuel
supply, Operator shall include, with hourly generation forecasts
prepared under Section 2.4.2(d), updated estimates of the remaining
backup fuel supply.
2.4.5 METERING
(a) Operator shall perform all inspections and testing of meters
required of Owner under the Interconnection Agreement in
accordance with the requirements of such agreement and shall
provide the Utility and PECO with access to observe such
inspection and testing, as applicable. Operator, with approval
from Owner, may request a Utility to perform additional tests
of its meters at any time.
(b) The Utility is to give reasonable notice to Operator of the
time when any inspection or test of relevant meters shall take
place, and Operator and PECO may have representatives present
at the test or inspection.
2.4.6 DISCONNECTION BY UTILITY
The Utility has the right to disconnect the Plant from the Utility's
electric system or interrupt, suspend or curtail delivery, receipt or
acceptance of delivery of energy at the applicable Points of Delivery
in accordance with the provisions of the applicable Interconnection
Agreement. Operator shall notify Owner immediately of any notice from
the Utility of any such disconnection, interruption, suspension or
curtailment and of the reasons for any such disconnection,
interruption, suspension or curtailment.
2.4.7 INSPECTION
Operator shall permit PECO to be present at the capacity test of the
Plant pursuant to Section 5.01 of the Power Purchase Agreement.
2.4.8 ACCESS
Operator shall provide PECO and the Utility the right of sufficient
access to the Plant for those purposes provided in the Power Purchase
Agreement and the Interconnection Agreement, as applicable. Owner shall
receive reasonable advance notice from Operator of any access required
under this Section. Further, Operator shall provide such access subject
to limitations required by Prudent Utility Practice.
2.4.9 INSPECTION OF CHARTS AND RECORDS
The charts and records from the Metering Equipment shall remain the
property of Owner and shall be kept on file by Operator for a period of
not less than six (6) years. At any time, upon request of the Owner,
the Operator will submit records and charts from the Metering
Equipment, together with calculations therefrom, for inspection,
verification and copying by Owner.
2.5 PROCESS WASTE WATER DISPOSAL
(a) Operator shall comply with the wastewater discharge permit for
the Plant and those agreements entered into by Owner with
adjacent landowners.
(b) Process wastewater will be metered and sampled by Operator
within the Plant according to requirements of the agencies
issuing wastewater permits. Operator will monitor ground water
quality according to any applicable requirements of the
wastewater discharge permit for the Plant and those agreements
entered into by Owner with adjacent landowners.
(c) Operator shall operate, inspect, repair and maintain all
equipment, structures and work necessary for the processing
and delivery of the Plant waste water from the Plant in
accordance with the limitations and specifications of any
wastewater permit and all other Laws regarding water disposal
now and hereafter in effect.
2.6 PLANT MAINTENANCE
Operator shall perform Maintenance Services (as defined below) pursuant
to Prudent Utility Practice and in a good and workmanlike manner, with
competent personnel trained and experienced in those services which
they perform, in accordance with: (i) the terms and conditions of this
Agreement and the Project Agreements, including the Long Term Service
Agreement, (ii) the Plant Manuals and written procedures, (iii)
generally accepted practices for the maintenance of similar facilities,
(iv) applicable Laws and Plant Permits, (v) manufacturer's recommended
procedures and tolerances, and (vi) proper safety procedures and
requirements for such services.
With respect to the Maintenance Services, Operator agrees that no used
parts, equipment or components will be used without the consent of
Owner. Operator shall secure, when possible, the regular and extended
manufacturer/supplier warranties for new parts and equipment without
additional cost. Operator shall secure regular warranties for used
parts and equipment whenever possible. Operator shall cooperate with
Owner to enforce manufacturer/supplier parts and equipment warranties.
(a) As used in this Agreement, the term "Maintenance Services" has
reference to the Plant, the Site and the Plant wastewater
and communication lines to the Utility's substation
(excluding the items for which the Utility is responsible
under the Interconnection Agreement) and means, in relation
to the Plant, normal maintenance services required in order
to keep the Plant in good working order and prevent the
Plant from prematurely deteriorating or wearing out. Such
normal maintenance services include visual inspection of the
Plant, cleaning and lubrication of parts thereof as
required, keeping the Plant Site safe and free of debris,
and taking of any other generally accepted protective
measures with respect thereto. Operator shall repair or
replace those parts of the Plant which have worn out,
deteriorated or ceased to function properly so as to restore
the component being replaced or repaired to good working
order. Operator shall procure on behalf of the Owner such
special tools, toolings and assembly devices as are required
to perform such services after obtaining budget approval
from Owner. Operator shall be responsible for all the
repairs, replacements, maintenance and upkeep of the Site,
the Plant and all other structures located thereon
including, without limitation: structural repair and
interior and exterior maintenance of buildings; repair of
access and Site roads or sidewalks; upkeep of trees,
underground systems and appurtenances, shrubbery, lawns or
other aesthetic improvements to land; and upkeep of sewers
and drainage systems.
(b) Operator will furnish Owner as part of each annual Operating
Budget its long-term (not less than five (5) years)
preventive maintenance program for each major item of
equipment of the Plant reflecting Scheduled Outages for
inspection, repair, maintenance and overhaul and coordinated
with the provisions of the Long Term Service Agreement. Such
program will be based, at least in part, on manufacturers'
recommendations and may be altered from time to time, upon
mutual agreement of Owner and Operator, by reason of more
recent manufacturers' releases pertaining to major items of
equipment of the Plant and experience of Operator in
operating the Plant; Owner or Operator will promptly advise
the other of any such changes. The specific times for
Scheduled Outages of the Plant will be scheduled annually in
advance by agreement of Owner and Operator so as to
coordinate Scheduled Outages with PECO as described in
Section 2.4.3(a) of this Agreement. Owner may, upon
reasonable advance written notice to Operator, require
Operator to adjust the projected time schedule for such
major Scheduled Outages (other than emergency repairs) as
necessary in order to comply with Owner's obligations under
the Long Term Service Agreement, the Power Purchase
Agreement and other Project Agreements.
2.6.1 MONTHLY MAINTENANCE REPORTS
Operator shall provide Owner on a monthly basis with a written report
in a form acceptable to Owner of all repairs, replacements or
maintenance performed on the Plant or any portion thereof within the
previous month and of all major repairs or maintenance projected during
the next month, together with the projected time schedule for such
intended major repairs or maintenance. With respect to any such repair,
replacement or maintenance performed, the report shall specify the
equipment repaired, replaced or maintained and the reason therefor.
2.7 INVENTORY AND TESTED CAPACITY
(a) Operator, as agent for Owner, shall purchase with Owner's
approval an adequate initial inventory of spare parts, tools
and supplies, the adequacy of such inventory to be determined
with reference to the recommendations of Operator, equipment
manufacturers and providers of extended service agreements
including the Long Term Service Agreement and to minimize the
duration of outages. Operator shall provide Owner on an annual
basis a written report, in a form reasonably acceptable to
Owner, of all spare parts, tools and supplies.
(b) On an annual basis in accordance with the Power Purchase
Agreement, at the direction of Owner, Operator shall determine
the electrical output capability of the Plant ("Tested
Capacity"). Owner, at any time, may request and Operator shall
perform a performance test of the Plant using in-place station
meters. Determination of Tested Capacity shall be in
accordance with the procedures set forth in the Power Purchase
Agreement.
(c) Owner shall be given reasonable prior notice by Operator of
any performance test planned by Operator and shall have the
right to have representatives present during any performance
test. Operator shall furnish Owner with preliminary results
within forty-eight (48) hours after any performance test is
completed and final written results of any performance test
within ten (10) days after the test is completed.
(d) If either Owner or Operator determines that the performance
test was conducted in a manner or under conditions that make
the results of the test unrepresentative or inaccurate, then,
upon written notice to Owner or Operator, as the case may be,
which specifies the defects in the test and requests a retest,
Operator will rerun the test, with the defects corrected,
within a reasonable time after the notice; such notice must be
given within ten (10) days after the test results are provided
to Owner in a performance test final report.
(e) Operator shall operate the Plant in synchronization with the
Utility's system and subject to and in compliance with the
then-current established guidelines of the Utility and subject
to the Utility's reasonable directions. Operator shall be
responsible for the proper synchronization of the Plant
generators with the Utility's system. Operator shall indemnify
Owner for loss due to damages to the Utility's
physical plant, electric system, or equipment to the extent
that any breach of this Agreement by Operator or negligence
on the part of Operator causes improper synchronization. The
provisions of Section 11 shall apply to this Section.
2.7.1 TESTS
The tests to be performed by Operator shall include tests required
under Project Agreements and other tests requested by Owner.
2.8 PLANT PERMITS
As the same are procured, Owner will supply Operator with copies of all
Plant Permits and copies of all applicable agreements with adjacent
landowners. Operator shall become familiar with the Plant Permits and
agreements with adjacent landowners. Operator shall operate and
maintain the Plant, including the requirement to monitor, maintain
quality assurance/quality control of monitoring equipment, keep
records, notify proper authorities and Owner of any non-compliance, and
report, with a copy to Owner, in such a manner as to comply with the
Plant Permits and agreements with adjacent landowners.
3. TERM OF THE AGREEMENT
3.1 TERM
The primary term of this Agreement shall commence on the Effective Date
and shall continue, subject to the provisions of this Agreement on
termination, for a period of twenty-nine (29) years from the Date of
Commercial Operation, except that the primary term shall automatically
be extended thereafter in annual increments unless either Party
notifies the other in writing no later than ninety (90) days prior to
the end of the primary term or the anniversary of any subsequent
extension term. The primary term and any extension term are sometimes
collectively referred to herein as the "Term".
3.2 Both Owner and Operator shall have all rights provided by this
Agreement, including their rights of termination, during any such
extension.
4. TESTING OF THE PLANT
4.1 ACCESS DURING TESTING
Prior to the period when the Plant is being tested for Commercial
Operation, Operator shall have personnel trained and prepared to assist
Construction Contractor and Owner in determining Mechanical Completion
as defined in the Construction Agreement and to start the Plant for
testing ("Testing Period"). Operator shall be responsible for the
startup support of the Plant at Commercial Operation under the
direction of a start-up manager selected by the Construction
Contractor. After testing, Operator's responsibilities in respect to
the Systems shall commence pursuant to Section 2.3.1(b).
5. COMPENSATION AND PAYMENT
5.1 OPERATING ACCOUNT
Operator shall not be required to bear the expense of funding the
reimbursable operating expenses to the extent approved in the Operating
Budget. Owner shall establish a bank account ("Operating Account") for
the funding of reimbursable operating expenses. Owner shall deposit,
once each month, sufficient funds in the Operating Account to cover all
expenses set forth in the approved Operating Budget and anticipated to
be paid during such month. Operator shall nominate officers or
employees of Operator, to be approved by Owner, who shall have the
written authority to sign checks against the Operating Account.
Operator's expenditures shall be made in accordance with the guidelines
established by the Operating Budget. Operator shall not make any
unauthorized expenditures or withdrawals from the Operating Account and
shall be responsible for such sums. In the event that there are
insufficient funds in the Operating Account to satisfy expenses set
forth in the approved Operating Budget, Operator shall notify Owner of
such condition immediately after Operator has notice or knowledge
thereof and Owner shall immediately make sufficient funds available in
the Operating Account to cover such expenses. Operator shall submit
documentation to Owner of expenditures by the fifteenth (15th) day of
the subsequent month for the previous month.
5.2 PRE-COMMERCIAL OPERATING PERIOD BUDGET AND COMPENSATION
(a) Eleven (11) months prior to the Scheduled Date of Commercial
Operation, Operator shall submit the anticipated costs
associated with Operator's planned salary and benefit program
to Owner for Owner's approval, which approval shall not be
unreasonably withheld. If requested by Owner, and not later
than thirty (30) days prior to the date upon which Operator is
obliged to submit the Pre-Commercial Operating Budget (as
defined below) to Owner, Operator and Owner shall meet to
21
discuss the anticipated costs associated with planned salary
and benefits program. The approved salary and benefits program
shall form the basis for the pre-commercial operating budget
(the "Pre-Commercial Operating Budget").
(b) Nine (9) months prior to the Scheduled Date of Commercial
Operation, Operator shall submit to Owner the
Pre-Commercial Operating Budget for approval by Owner. Owner
and Operator shall use all reasonable efforts to resolve all
budget differences. All documented and approved costs
described hereafter and included in the approved
Pre-Commercial Operating Budget and costs not included in
the Pre-Commercial Operating Budget but approved by Owner,
which are incurred by Operator pursuant to this Agreement,
shall be paid through the Operating Account: (i)(A) the
actual payroll cost in accordance with the approved
Pre-Commercial Operating Budget, for all of Operator's
employees involved in the operation of the Plant, including
paid absences; (B) the cost of payroll burden in accordance
with the following: (1) the actual cost of payroll taxes,
unemployment, insurance, and disability/workers'
compensation insurance; (2) the actual cost of
medical/dental/vision, life, long term disability and
accidental death and dismemberment insurance; (3) the actual
cost of the retirement and 401(k) plans, including plan
administration expenses, provided that such cost shall not
exceed nine percent (9%) of the actual payroll cost
described in Section 5.2(b)(i)(A) above; and (4) the actual
cost of any Owner-approved employee assistance and education
assistance plans, and (C) specific additional costs approved
by Owner in the Pre-Commercial Operating Budget; (ii)
non-labor expenses directly related to the operation of the
Plant as follows: (A) the actual cost of insurance premiums
for coverage required by Section 10, including deductibles
and self-insured retentions for loss directly arising out of
the Scope of Services, if paid by Operator, except as
otherwise provided in Section 5.2(c), (B) the relocation and
recruitment costs of employees, (C) training costs approved
by Owner, (D) costs for community and employee relations
services provided by non-Operator personnel approved by
Owner, (E) all costs, including attorneys' fees, expenses
and judgments and advisor costs associated with union and
organizing activities and contesting such activities and (F)
all costs associated with Plant employee disputes and
litigation, including attorneys' fees, expenses and judgments
and (iii) costs for non-incidental services related directly
to the operation of the Plant approved by Owner at rates
approved by Owner. In addition to the above costs during the
Pre-Commercial Operating Period, Operator shall invoice
Owner within fifteen (15) days of the commencement of the
Pre-Commercial Operating Period, for the amount of
Seventy-Five Thousand Dollars ($75,000) to cover all costs
of overhead during the Pre-Commercial Operating Period
("Fixed Management Fee") which amount shall be paid to
Operator by Owner within twenty-five (25) days of receipt of
invoice.
(c) During or prior to the Pre-Commercial Operating Period, Owner
and Operator shall mutually agree upon the incentive criteria
for the Operator to earn an Incentive Fee (defined in Section
5.4(b) during the Pre-Commercial Operating Period and Owner
shall advise Operator of the information required to be
submitted by Operator to enable Owner to determine the amount
of the Incentive Fee. The maximum value
22
of the Incentive Fee shall be Seventy-Five Thousand Dollars
($75,000). The Incentive Fee criteria shall include, but not
be limited to, the performance of Operator in following a
manpower plan, availability of the Plant during the
Pre-Commercial Operating Period, training personnel to run the
Plant and the ability of Operator to control spending in
accordance with the approved Pre-Commercial Operating Budget.
The Incentive Fee shall be paid to Operator within twenty (20)
days after Owner receives the information provided by Operator
to determine the amount of such Incentive Fee earned.
5.3 OPERATING BUDGET
(a) Ninety (90) days prior to the Scheduled Date of Commercial
Operation, Operator shall prepare and submit to Owner an
Operating Budget for approval by Owner for the period from the
Date of Commercial Operation until December 31 of the Year in
which the Date of Commercial Operation occurred which shall
include information required by the Credit Agreement. After
the Date of Commercial Operation and at least one hundred
twenty (120) days prior to the effective date of each annual
budget, Operator shall submit to Owner a budget, which shall
include the information required by the Credit Agreement, for
approval by Owner for the next Year. Such budget shall be for
all reimbursable costs to be incurred in the operation of the
Plant and shall include, but not be limited to, all
reimbursable labor costs, expendable supplies, parts, office
equipment and supplies, training and travel expenses, tools,
subcontract maintenance, insurance and chemicals required to
operate the Plant in accordance with this Agreement
("Operating Budget"). Owner and Operator shall use all
reasonable efforts to resolve all budget differences. If, with
respect to any operating year, Owner and Operator do not
resolve all budget differences, the most recently approved
Operating Budget (escalated by three and one-half percent
(3.5%)), without regard to amounts budgeted for extraordinary
or non-recurring items, but including all costs for the Long
Term Service Agreement and all contingency funds, shall be
applicable until an Operating Budget is approved for such
operating year.
(b) During any Operating Budget period Operator may request Owner
to approve an increase or decrease in the approved Operating
Budget, which approval shall not be unreasonably withheld.
Operator shall not make a change in the quality of the
services and/or equipment, alter the Scope of Services or
alter the equipment described in the approved Operating Budget
without the written consent of the Owner.
(c) Operator shall make payments from the Operating Account only
for expenses which are in the approved Operating Budget or
which are approved in writing by Owner.
(d) For the purposes of reviewing the performance of Operator in
managing the Operating Budget, such reimbursable costs as
fuel, service fees charged by the
23
Utility, property and ad valorem taxes, shall not be
considered. Operator will include and report all costs to
Owner as a part of the Operating Budget.
5.4 COMPENSATION DURING COMMERCIAL OPERATING PERIOD
(a) During the Commercial Operating Period, the following actual
expenses shall be included in the annual Operating Budget and
paid through the Operating Account: (i)(A) the actual payroll
cost included in the approved Operating Budget, for all
Operator's employees directly involved in the operation of the
Plant, including paid absences in accordance with Operator's
normal policy; (B) the cost of payroll burden in accordance
with the following: (1) the actual cost of payroll taxes,
unemployment insurance premiums, and disability/workers'
compensation insurance premiums; (2) the actual cost of
medical/dental/ vision, life, long term disability and
accidental death and dismemberment insurance premiums; (3) the
actual cost of the retirement and 401(k) plans, including plan
administration expenses, provided that such cost shall not
exceed nine percent (9%) of the actual payroll cost described
in Section 5.4(a)(i)(A) above; and (4) the actual cost of any
Owner-approved employee assistance and education assistance
plans, and (C) specific additional costs approved by Owner in
the Operating Budget; (ii) non-labor expenses directly related
to the operation of the Plant as follows: (A) the actual cost
of insurance premiums for coverage required by Section 10,
including deductibles and self-insured retentions for loss
directly arising out of the Scope of Services, if paid by
Operator, (B) the relocation and recruitment costs of
employees, (C) training costs approved by Owner, and (D) costs
for community and employee relations services provided by
non-Operator personnel and approved by Owner, (E) all costs,
including attorneys' fees, expenses and judgments, and advisor
costs associated with union and organizing activities and
contesting such activities, and (F) all costs associated with
Plant employee disputes and litigation, including attorneys'
fees, expenses and judgments; and (iii) costs for
non-incidental services related directly to the operation of
the Plant approved by Owner at rates approved by Owner. In
addition to the above costs, Owner shall pay to Operator an
annual Fixed Management Fee of Two Hundred Twenty-Five
Thousand Dollars ($225,000). Operator shall invoice Owner for
the annual Fixed Management Fee at the rate of Eighteen
Thousand Seven Hundred Fifty Dollars ($18,750.00) per month
adjusted annually in accordance with Section 5.6(a) to cover
all costs of overhead which amount shall be paid to Operator
by Owner within twenty-five (25) days of receipt of invoice.
(b) Annually during the Commercial Operating Period, Operator
shall be eligible to earn an incentive fee which shall be paid
on the basis of Owner's assessment of Operator's performance
against mutually agreed upon incentive criteria including, but
not limited to, Operator's ability to maintain spending within
the Operating Budget and manage the operation of the Plant in
an effective, efficient and professional manner ("Incentive
Fee"). The maximum value of the Incentive Fee to be earned for
the first full Year of the Commercial Operating Period and
each subsequent Year of this Agreement shall be One Hundred
Thousand Dollars
24
($100,000) for each such period and shall be adjusted annually
for escalation in each subsequent Year in accordance with
Section 5.6(b). Each month the Incentive Fee will be invoiced
and paid at five percent (5%) of the maximum Incentive Fee
value for the current Year and in the event Operator does not
earn at least sixty percent (60%) of the maximum Incentive
Fee, then the unearned portion shall be returned to Owner. The
incentive criteria shall be determined prior to the beginning
of each Year other than the first partial year of the
Commercial Operating Period. The criteria for such partial
year will be developed seven (7) months prior to the Date of
Commercial Operation. Concurrently with developing the
incentive criteria, Owner and Operator shall develop the type
of information and the method of reporting to be used by
Operator to enable Owner to determine the amount of the
Incentive Fee. Operator's performance shall be evaluated and
reviewed with Operator on a quarterly basis. If Owner requests
additional information, Owner shall notify Operator within
seven (7) business days after receipt of the information by
Owner. The Incentive Fee earned for the Year shall be paid to
Operator within twenty (20) days after Owner receives
acceptable information or within twenty (20) days after the
expiration of such seven (7) business days if no request for
further information is made by Owner. In the event that the
period of Operator's performance being assessed by Owner ends
other than at the end of a calendar year, Owner shall pay
Operator for the earned Incentive Fee within sixty (60) days
of the end of such period. In the event that the period of
Operator's performance being assessed by Owner is less than a
full calendar year, the maximum Incentive Fee available for
payment to Operator shall be prorated on the basis of the
number of days in the period of Operator's performance being
assessed in relation to the number 365. The maximum Incentive
Fee available for payment to Operator shall be adjusted
annually for escalation in accordance with Section 5.6(b).
(c) For each Contract Year during the Commercial Operating Period,
there shall be an availability adjustment which shall vary
with the performance of Operator in maintaining the Annual
Availability Percentage for the Plant during the Contract Year
(the "Availability Adjustment"). If the Annual Availability
Percentage for the Contract Year is greater than ninety-seven
percent (97%) Operator shall be paid an Availability
Adjustment determined from the formula:
[(A-97%) x 100/100%] x $25,000
where A is the Annual Availability Percentage for such
Contract Year.
If the Annual Availability Percentage for the Contract Year is
less than ninety-seven percent (97%), Operator shall pay an
Availability Adjustment to Owner determined from the formula:
[(97%-A)x100/100%] x $25,000
where A is the Annual Availability Percentage for such
Contract Year, provided that for purposes of such formula, A
shall not be less than ninety-three percent 93%.
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The maximum value of the Availability Adjustment to be paid
shall be Seventy-Five Thousand Dollars ($75,000) with the
maximum value adjusted annually for escalation in accordance
with Section 5.6(b).
Operator shall provide Owner with all information requested by
Owner to determine the Availability Adjustment. The
Availability Adjustment shall be paid annually by Owner or
Operator, as applicable, within thirty (30) days after the end
of each Contract Year. For any Contract Year of more or less
than 365 days duration, the amount of the Availability
Adjustment shall be adjusted by multiplying the Availability
Adjustment by a fraction, the numerator of which is the number
of days in such Contract Year and the denominator of which is
the number 365.
5.5 DETERMINATION OF AVAILABILITY PERCENTAGES
(a) The "Annual Availability Percentage" shall mean the Annual
Availability Percentage for the Contract Year as determined
pursuant to the Power Purchase Agreement.
(b) For purposes of computing the Availability Adjustment payable
by Operator to Owner as set forth in Section 5.4(c),
adjustments shall be made in the computation of the Annual
Availability Percentage so that Operator is in no way
penalized or disadvantaged by unavailability of the Plant due
to (i) turbine malfunction (the cause of which is not
contributed to by Operator), (ii) unavailability of natural
gas as fuel for the Plant caused by a failure of gas supply or
transportation, or (iii) the inability to export energy from
the Plant because of the unavailability of a Utility's
transmission system.
5.6 ADJUSTMENT FOR ESCALATION
(a) The amount of the Fixed Management Fee, as set forth in
Sections 5.2(b) and 5.4(a) shall be adjusted annually. The
annual adjustment of each amount shall be in accordance with
the following equation:
FIXED MANAGEMENT FEE X (INDEX IN YEAR N)
Base Index
The Base Index shall be Compensation per Hour-Non farm
Business for the Year 1999 as reported by the Department of
Labor, Bureau of Labor Statistics. The Index in Year N
represents the value of the index in each Year subsequent to
Year 1999. Since the index value may be revised after the
initial reporting, any effects of revision shall be made for
the prior year and credited or debited from future payments.
If no future payments are pending, then Owner and Operator
shall reconcile the difference within
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one hundred eighty (180) days of first reporting of the index
using the most current value. In no year shall the value of
the Fixed Management Fee be less than the previous Year.
(b) The maximum annual amounts of the Incentive Fee, the
Availability Bonus and the Availability Adjustment shall be
escalated by three and one-half percent (3.5%) per Year
compounded on the first day of each Year beginning with
January 1, 2001.
6. FURTHER AGREEMENTS
6.1 LICENSES, APPROVALS AND PERMITS
Owner shall be responsible for obtaining and maintaining all federal,
state and local permits, authorizations, franchises, licenses and other
approvals necessary for the Plant to be legally authorized to operate.
Operator shall provide full and reasonable continuing cooperation in
obtaining and maintaining in effect all such permits, authorizations,
franchises, licenses and other approvals necessary to permit it to
operate the Plant ("Plant Permits"). Operator shall review Owner's
applications for accuracy and completeness, as required. Operator shall
be responsible for obtaining and maintaining all permits,
authorizations, franchises, licenses and other approvals required for
performance of Operator's services under this Agreement.
6.2 FUEL AND WATER
Operator shall report to Owner the daily volume of natural gas and fuel
oil consumed and the correlation of such with the forecasted electric
generation plan. Owner shall supply Operator with water of sufficient
quality and quantity to permit the uninterrupted operation of the
Plant.
6.3 ACCESS
Owner shall provide Operator and the agents, employees, Subcontractors
and consultants of Operator access to the Plant to perform the services
under this Agreement, provided that Operator shall give Owner
reasonable prior notice to approve access to the Plant of any persons
(other than direct employees of Operator) that Operator proposes to
give access to the Plant to perform such services. Owner will notify
Operator at least two (2) hours prior to the need for employees of PECO
or the Utility to access the Plant site. As of the submission of the
Pre-Commercial Operating Budget, Operator shall furnish Owner with a
list of the employees engaged in the day-to-day operation of the Plant
and shall inform Owner prior to changes in the list.
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7. WARRANTIES
7.1 WARRANTY OF OPERATOR
Operator warrants and represents that the services performed by
Operator and/or Subcontractors and Agency Suppliers shall be done in a
good and workmanlike manner in accordance with the requirements of this
Agreement, Prudent Utility Practice and standard industry practice and
in accordance with the Plant Manuals. Operator, Subcontractors and
Agency Suppliers shall be competent and appropriately licensed, to
perform services and/or furnish Materials and equipment. Operator shall
monitor all services performed by Operator and Subcontractors and
Agency Suppliers. Operator shall carry out its obligations under
Section 14.2 and shall utilize its best judgment, recognizing Owner's
interest, to obtain the best warranty reasonably available from each
Subcontractor and Agency Supplier. Operator shall require and use
reasonable efforts to verify that all parts and equipment furnished
meet manufacturer's description specifications and performance
specifications and that the Suppliers comply with the terms and
conditions of their contracts. Operator shall pay Subcontractors and
Agency Suppliers in a timely manner and, subject to Owner's prior
approval, all disputes with Subcontractors and Agency Suppliers shall
be resolved expeditiously by Operator. Operator shall cooperate with
Owner in the prosecution of any claims against such Subcontractors and
Agency Suppliers.
Operator shall operate the Plant in compliance with the Interconnection
Agreement. Operator shall indemnify Owner for loss due to damages to
any Utility's physical plant, electric system, or equipment to the
extent that any breach of this Agreement or the Interconnection
Agreement by Operator, such indemnity to be limited to damage amounts
not covered by Owner's insurance. The provisions of Section 11 shall
apply to this Section.
Operator warrants and agrees, and by submission of each reimbursement
request or invoice for payment of Subcontractors (a "Request for
Payment") rewarrants, that:
(i) Title to all Materials (including spare parts, operating
manuals and procedures, and consumables) covered by a Request
for Payment will pass to Owner either by incorporation into
the Plant in the case of parts and consumables or upon payment
for any of such items, whichever occurs first;
(ii) Materials covered by previous Requests for Payment are free
and clear of liens, claims, security interests and
encumbrances and upon payment for equipment and other services
covered by a Request for Payment, no person shall have a right
to file a lien against the Plant or have a claim or security
interest with respect to such Materials and/or services; and
(iii) No interest in nor encumbrance on any Materials covered by a
Request for Payment will have been acquired or imposed or
retained by Operator or any other Person performing any
services or supplying any Materials with respect to the Plant.
28
7.2 REMEDIES
Owner's remedies for Operator's breach of warranty set out in Section
7.1 shall be the same as those set forth in this Agreement for default
by Operator.
7.3 NO IMPLIED WARRANTIES
ANY IMPLIED WARRANTIES BY OPERATOR OF MERCHANTABILITY, QUALITY,
SUITABILITY AND FITNESS ARE EXCLUDED. OPERATOR'S WARRANTIES IN
SECTION 7.1 ARE EXCLUSIVE AND IN LIEU OF ANY OTHER WARRANTIES, EXPRESS
OR IMPLIED.
8. TERMINATION OF AGREEMENT
8.1 OWNER TERMINATION
Each right of Owner to terminate this Agreement, as set forth in this
Agreement, is in addition to and not in lieu of any other right of
Owner to terminate this Agreement. In the event of termination by
Owner, Owner shall have the right to require Operator to remove itself,
its employees, Subcontractors, and equipment from the Plant and the
right to specify the Transition Period in accordance with Section
8.2(c).
8.2 OWNER TERMINATION EVENTS
(a) At any time after the Effective Date of this Agreement, Owner
may terminate this Agreement if the Plant is sold or leased to
a third party (other than an Affiliate), or if Owner's
interest in said Plant is sold to a third party (other than an
Affiliate), or if the Plant or a material portion of the Plant
is condemned or taken by a public authority by giving Operator
at least thirty (30) days prior written notice.
(b) Owner shall have the right to terminate this Agreement after
thirty (30) days' notice to Operator if any of the following
events occur, by delivering a written notice of termination to
Operator:
(i) Operator undergoes a Bankruptcy Event;
(ii) Operator fails in any material respect to comply
with applicable Laws or Plant Permits other than a
failure to file any report required thereunder, or
any Plant permit is lost or is no longer in effect by
fault of Operator and is not subject to renewal
(including by way of refusal by the permitting
authority to renew any material Plant Permit as a
result of an act or omission of Operator);
29
(iii) A material default or breach occurs (and is not
cured or curable) under any Project Agreement as a
result of any failure by Operator to comply with the
provisions of this Agreement;
(iv) Operator fails in any material respect to obtain
or maintain in effect any insurance required to be
obtained by Operator under Section 10, and such
failure continues for fifteen (15) days;
(v) Operator fails to pay any amount when due under this
Agreement and such failure continues for fifteen (15)
days;
(vi) Any lien or other encumbrance is filed against or
attaches to the Plant or any portion thereof or the
Plant Site as a result of any failure by Operator or
any Subcontractor or any Agency Supplier to comply
with the provisions of this Agreement and such lien
or other encumbrance is not removed or appropriate
security therefor is not provided within fifteen (15)
days; or
(vii) Operator fails in any material respect to perform
its obligations hereunder (other than any failure
that is the subject of another event of default) and
such failure continues for thirty (30) days after
receipt from Owner of notice specifying such failure;
(c) Owner has the right to specify a reasonable period not to
exceed six (6) months following the effective date of
termination of this Agreement as a period of transition
("Transition Period") during which Operator will continue to
operate the Plant in accordance with this Agreement. During
this Transition Period, Operator shall also cooperate with
Owner in planning and implementing the closing of the Plant or
cooperate with Owner's lessee or purchaser or a successor
operator, as applicable to facilitate the transition. The
Parties shall mutually agree to a schedule for the orderly
removal of Operator from its operational responsibilities.
Operator shall also provide Owner, Owner's lessee or purchaser
or a successor operator (if such operator is some entity other
than Owner) reasonable access to the Plant to facilitate the
orderly transition of responsibilities.
(d) Upon Owner's termination of this Agreement pursuant to
Section 8.2(a) above and in addition to all reimbursement
costs otherwise authorized under this Agreement, Operator
shall be entitled to receive a termination payment (the
"Termination Payment") equal to the sum of: (i) the direct
cost reasonably incurred by Operator in withdrawing its
personnel and retaining its personnel during the Transition
Period (including any reasonable severance expenses and
employee retainage bonus expenses incurred by Operator, if
such expenses were approved by Owner in advance, which
approval shall not be unreasonably withheld) are consistent
with Operator's corporate policies and result solely from
termination of this Agreement) from the Site and otherwise
demobilizing its operations at the Plant, and (ii) the direct
costs, including damages, attorney fees, expenses and
judgments reasonably incurred by Operator in terminating
contracts entered into by Operator with
30
Subcontractors to carry out Operator's contractual obligations
under this Agreement. Operator shall not voluntarily modify or
terminate any contract entered into by Operator pursuant to
Section 14.2 without the prior written consent of Owner,
except as ordered by a court of competent jurisdiction.
Operator shall document the costs claimed under clause (i)
above to Owner's reasonable satisfaction and shall supply
Owner with copies of the Subcontractor invoices covering
amounts claimed under clause (ii) above. After the effective
date of termination, Operator shall submit an invoice to Owner
for the Termination Payment with the supporting information
and documents referred to above and Owner shall pay such
invoice within thirty (30) days after receipt of same unless
it disputes certain elements thereof, in which event only the
undisputed portion of the Termination Payment needs to be paid
within such 30-day period and the dispute over the remainder
of the Termination Payment shall be submitted to the Dispute
Procedure pursuant to Section 12.
(e) Operator shall have no further obligations to Owner under this
Agreement after Operator has vacated the Plant, except
pursuant to Sections 7, 14.3, 14.4, 14.5, 14.7, 14.22 and
14.24. Notwithstanding this cessation of obligations, neither
Party shall be relieved from any obligations or liabilities
for actions or inactions prior to the effective date of
termination and during the Transition Period.
8.3 CONTINUED PERFORMANCE DURING DISPUTES
During the Dispute Procedure, as described in Section 12, all
terms of this Agreement including the application of Section
13 shall remain in full force and effect and the Parties shall
continue to perform their obligations. If Operator has been
terminated and Owner has demanded that Operator vacate the
Plant premises in accordance with Section 8.1 then only
Sections 7, 8, 14.3, 14.4, 14.5, 14.7, 14.22 and 14.24 shall
survive the termination of this Agreement. Notwithstanding
this cessation of obligations, neither Party shall be relieved
from any obligations or liabilities for actions or inaction
prior to the effective date of termination or during the
Transition Period.
8.4 OWNER'S DEFAULT
Owner shall be in default, except as otherwise provided in Section
8.4(a), under this Agreement (i) if Owner undergoes a Bankruptcy Event
, (ii) in the event that it fails to make payment of all amounts
payable in accordance with this Agreement, or (iii) in the event of a
material breach hereunder or an unexcused failure to perform any of its
other obligations hereunder whether by repudiation, anticipatory breach
or otherwise.
(a) Any alleged default for nonpayment by Owner may be remedied
within fifteen (15) days after Operator tenders notice of such
default to Owner and the Lenders. Operator agrees not to
exercise its rights under this Section 8.4 if the Lenders pay
to
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Operator the sums due Operator under this Agreement within the
time specified in the consent and agreement between Operator
and the Lenders.
(b) Any alleged events of default other than default for
nonpayment may be remedied within fifteen (15) days after
Operator notifies Owner and the Lenders' collateral agent of
such breach, specifying the acts or omission on which the
notice is based, or if the remedy would reasonably take more
than fifteen (15) days then Owner or such collateral agent
shall have such additional period of time to remedy such
default as may be reasonable under the circumstances so long
as Owner commences to remedy same within such 15-day period
and thereafter continues diligently to remedy same within a
reasonable time consistent with the exercise of best efforts
in the prosecution thereof.
8.5 TERMINATION - PROJECT AGREEMENTS
If any permit or license is not granted or if after being granted is,
for any reason, no longer in effect, or if any executed Project
Agreement is legally terminated by a party to such agreement, and as a
result of any of the foregoing actions, Owner elects to terminate
operation of the Plant, Owner may terminate this Agreement by delivery
of written notice to Operator within thirty (30) days after the
occurrence of such event.
(a) Upon Owner's termination of this Agreement under this Section
8.8, in addition to all rights for reimbursement of costs set
forth in this Agreement, Operator shall be entitled to receive
the Termination Payment as set forth in Section 8.2(c),
provided Operator complies with Section 8.2(c) and subject to
the rights of Owner set forth in Section 8.2(c).
(b) If, after such termination, the operation of the Plant is to
be restarted and if Owner is in control of the hiring of the
Plant operator, Owner shall give Operator notice of such
restart as soon as Owner knows of the Plant restart and shall
also notify Operator of the date by which Operator must begin
operation. Operator shall have two (2) calendar days within
which to notify Owner that Operator will accept the
obligations to operate the Plant. In the event of such
acceptance by Operator within the time provided, Owner and
Operator shall enter into a new agreement having terms
identical to the terms of this Agreement, excluding those
terms which are no longer applicable because of a passage of
time and the revision of those terms which are affected by
changes to Lenders agreements, permits, licenses, which shall
be agreed upon by the Parties.
(c) Owner may not terminate this Agreement pursuant to this
Section 8.5 if any Project Agreement is terminated by Owner
solely for the purpose of terminating this Agreement or if any
Project Agreement is terminated as a plan or arrangement,
between Owner and any Person, to replace Operator.
32
8.6 TERMINATION - CHANGE IN OWNERSHIP
Operator may elect to terminate this Agreement upon sixty (60) days
advance written notice to Owner in the event that (i) twenty percent
(20%) or more of the equity ownership percentage (as set forth in
Owner's partnership agreement) in Owner is transferred by any partner
in Owner during any six (6) month period during the term of this
Agreement or (ii) an Affiliate of Tenaska, Inc., ceases to act as the
managing partner of Owner. Owner has the right to specify a reasonable
period, not to exceed six (6) months following the effective date of
notice of termination, as a period of transition ("Transition Period")
during which Operator will continue to operate the Plant in accordance
with this Agreement. During this Transition Period, Operator shall also
cooperate with Owner in planning and implementing an orderly and
efficient transition of Operator's obligations and responsibilities
under this Agreement to the replacement operator selected by Owner. The
Parties shall mutually agree to a schedule for the orderly removal of
the Operator from its operational responsibilities. Operator shall also
provide Owner and the successor operator (if such operator is some
entity other than Owner) reasonable access to the Plant to facilitate
the orderly transition of responsibilities. Operator shall have no
further obligations to Owner under this Agreement after the date of
termination, except for Sections 7, 14.3, 14.4, 14.5, 14.7, 14.22 and
14.24. Notwithstanding this cessation of obligations, neither Party
shall be relieved from any obligations or liabilities for actions or
inactions prior to the effective date of termination and during the
Transition Period.
9. INDEMNITY
9.1 INDEMNIFICATION OF OWNER
Subject to the limitations set forth in Section 11, Operator agrees to
protect, indemnify, and save harmless Owner, partners in Owner, their
Affiliates, parents, their respective agents, servants, officers,
directors, stockholders, employees, successors and assigns from and
against all claims, losses, liabilities, damages, costs, expenses,
demands, judgments, and causes of action of every kind and character
for personal injury to any Person, death or damage to property of any
Person, including without limitation, PECO and the Utility, Operator's
agents, servants, and employees, as well as Subcontractors and the
agents, servants, and employees of Subcontractors and Agency Suppliers,
to the extent that the claim, loss, liability, damage, cost, expense,
demand, judgment or cause of action shall have resulted from or in any
manner arises out of or in connection with the negligence or willful
misconduct of Operator or Subcontractors or breach of this Agreement by
Operator.
9.2 INDEMNIFICATION OF OPERATOR
Subject to the limitations set forth in Section 11, Owner shall
protect, indemnify and save harmless Operator, its subsidiaries,
Affiliates and parents, and their respective agents, servants,
officers, directors, stockholders employees, successors and assigns
from and against any and all claims, losses, liabilities, damages,
costs, expenses, demands,
33
judgments, and causes of action of every kind and character for
personal injury to any Person or death or damage to property of any
Person, including without limitation, PECO and the Utility, Operator's
agents, servants, and employees, as well as Subcontractors and the
agents, servants, and employees of Subcontractors, to the extent that
the claim, loss, liability, damage, cost, expense, demand, judgment, or
cause of action shall have resulted from or in any manner arises out of
or in connection with the negligence or willful misconduct of Owner or
Owner's subcontractors (other than Operator) or the breach of this
Agreement by Owner.
9.3 NOTICE OF CLAIM AND CLAIM FOR INDEMNITY
Promptly after receipt by an indemnified party of any claim or notice
of the commencement of any proceeding as to which the indemnity
provided for in Section 9.1 or 9.2 applies, the indemnified party shall
notify the Party providing the indemnity of such fact. The indemnifying
Party shall assume on behalf of the indemnified party and conduct with
due diligence and in good faith the defense thereof with counsel
reasonably satisfactory to the indemnified party; provided, that the
indemnified party shall have the right to be represented therein by
advisory counsel of its own selection and at its own expense; and
provided further, that if the defendants in any such action include
both the indemnifying Party and one or more indemnified parties and an
indemnified party shall have reasonably concluded that there may be
legal defenses available to the indemnifying party, the indemnified
party shall have the right to select up to one separate counsel to
participate in the defense of such action on its own behalf at the
indemnifying Party's expense.
10. INSURANCE
10.1 CONSTRUCTION CONTRACTOR INSURANCE
Throughout the Pre-Commercial Operating Period, Owner shall maintain
and/or cause Construction Contractor to maintain in effect commercial
general liability insurance, automobile liability insurance, workers'
compensation insurance and excess or umbrella liability insurance, and
Owner shall cause Operator to be included as an additional insured on
all general liability policies.
10.2 OPERATOR INSURANCE
(a) WORKER'S COMPENSATION
Prior to hiring any employees, and continuing throughout the
term of this Agreement, Operator shall maintain in effect
workers' compensation insurance as required by the laws of the
State of Georgia. In addition Operator shall maintain
employer's liability coverage in the minimum amount of
$5,000,000.
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(b) LIABILITY INSURANCE
During the term of this Agreement, Operator shall obtain and
maintain in effect the following liability insurance, provided
that the required limits may be satisfied by any combination
of primary or excess insurance at Operator's sole discretion.
(i) Commercial General Liability Insurance, including
broad form third party property damage, personal
injury, premises-operations, independent contractors,
products-completed operations, blanket broad form
contractual liability, third party bodily injury and
explosion, collapse and underground damage (XCU)
coverage. The policy shall contain limits of
$1,000,000 each occurrence and in the aggregate.
(ii) Automobile Liability Insurance for all owned,
non-owned and hired vehicles with limits of liability
of $1,000,000 combined single limit.
(iii) Excess or umbrella liability insurance following the
terms of the primary insurance set forth in Section
10.2 (a) and Section 10.2 (b)(i) and (ii) above, with
a combined single limit of $15,000,000 per occurrence
and in the aggregate.
(iv) Owner shall review coverages to be obtained by
Operator hereunder from time to time and shall have
the right to change such coverages provided that
Operator shall be reimbursed by Owner for any cost
associated with said change.
10.3 OWNER INSURANCE
10.3.1 ALL RISK PROPERTY AND BOILER AND MACHINERY INSURANCE
(a) Prior to Commercial Operation and throughout the Commercial
Operating Period, Owner shall provide and maintain in effect
insurance for "all risk" property damage including boiler and
machinery with limits determined by Owner in its sole
discretion. Owner shall provide or cause the Builder's Risk
policy provided by Construction Contractor to provide coverage
to include any performance and hot testing prior to the
successful testing of the Plant for Commercial Operation.
(b) The Builders' Risk and the All Risk Property and Boiler and
Machinery insurance policies shall be endorsed to include
Operator as an additional insured with respect to any damage
that may ensue from a covered peril as a result of, or in
connection with, services performed by Operator under this
Agreement.
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10.3.2 LIABILITY INSURANCE
Prior to Commercial Operation and throughout the Commercial Operating
Period, Owner shall provide and maintain in effect the following
liability insurance, provided that the required limits may be satisfied
by any combination of primary or excess insurance at Owner's sole
discretion.
(a) Commercial General Liability Insurance, including broad form
third party property damage, personal injury,
premises-operations, independent contractors,
products-completed operations, blanket broad form contractual
liability, third party property damage and explosion, collapse
and underground damage (XCU) coverage. The policy shall
contain limits of $1,000,000 each occurrence and in the
aggregate.
(b) Automobile Liability Insurance for all owned, non-owned and
hired vehicles with limits of liability of $1,000,000 combined
single limit.
(c) Excess or umbrella liability insurance following the terms of
the primary insurance set forth in Section (a) and Section (b)
above, with a combined single limit of $15,000,000 per
occurrence and in the aggregate.
10.4 SUBMISSION OF CERTIFICATES OF INSURANCE
Within thirty (30) days of the Effective Date, the Party required to
provide insurance shall furnish to the other Party certificates of
insurance evidencing the required coverages, and providing that the
Party not carrying the insurance must be given at least thirty (30)
days' prior written notice of any change in, nonrenewal or cancellation
of such coverages, except for nonpayment of premiums, which shall be
cancelable within ten (10) days prior written notice. If requested each
such insurance policy, or of an insurance policy renewal, shall be
accompanied by evidence which is reasonably satisfactory to the Party
not carrying the insurance of the payment in full of the premium (or
the current premium installment, if the premium is payable in
installments) for such insurance policy or insurance policy renewal.
Certificates of insurance shall be sent or delivered to:
If to Owner:
Tenaska Georgia Partners, L.P.
x/x Xxxxxxx, Xxx.
Xxxxx 000
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Vice President
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If to Operator:
Tenaska Operations, Inc.
Suite 400
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: H. Xxxxxx Xxxxxx, Vice President
10.5 WAIVER OF SUBROGATION
Owner and Operator will require the issuers of the insurance policies
required by this Section 10 to waive, by endorsement on such policies,
any rights of subrogation against the other Party and its directors,
officers or employees and the officers, directors, stockholders and
employees of the partners in Owner, arising from payments made by such
insurers under such policies. In addition, all policies, except
Worker's Compensation Insurance, shall provide for waivers of
subrogation in favor of the Lenders, and any other parties requested by
Owner including the Utility.
10.6 UNAVAILABILITY OF COVERAGE
The foregoing provisions of this Section 10 notwithstanding, if any
insurance coverage specified above is unavailable or is available only
in an amount less than that required, the Party required to provide
such insurance shall:
(i) In the event that any insurance policy required to be obtained
by either Party shall become commercially unreasonable either
as to price or deductible amount, at the option of the other
Party, the Party obligated to provide such insurance shall
insure for such lesser amount or the other Party shall take
out such insurance in an amount agreed upon by the Party
obligated to provide such insurance.
(ii) The Party obligated to provide such insurance shall have a
duty to semi-annually confirm that such required insurance is
still unavailable on commercially reasonable terms. To the
extent such insurance again becomes available, the Party
obligated to provide such insurance shall immediately become
obligated to secure the same after coordinating with the other
Party to avoid creating a duplication of coverage if insurance
has been provided pursuant to (i) above.
10.7 NO LIMITATION OF LIABILITY
The provisions of any insurance hereunder shall not be construed to
limit the liability of either Party under this Agreement. The
provisions of this Section 10.7 shall not limit the provisions of
Section 11.
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10.8 INDEPENDENT CONTRACTOR'S INSURANCE
(a) Owner shall require all of Owner's independent contractors
(other than Operator and Agency Suppliers) to obtain, maintain
and keep in force during the time in which they are engaged in
performing services at the Plant Site reasonably adequate
coverage in accordance with Owner's normal practice and
reasonably acceptable to Operator and furnish Operator with
acceptable evidence of such insurance upon its request. Such
insurance carrier shall have no recourse against Operator for
payment of premiums and claims.
(b) Operator shall require all Subcontractors and Agency Suppliers
to obtain, maintain and keep in force during the time in which
they are engaged in performing services at the Plant Site
reasonably adequate coverage in accordance with Operator's
normal practice and reasonably acceptable to Owner and furnish
Owner with acceptable evidence of such insurance upon its
request.
10.9 OWNER'S EQUIPMENT
All equipment, supplies and Materials belonging to Owner or used by or
on behalf of Owner shall be brought to and kept at the Plant at Owner's
sole expense and Operator shall be responsible for the care and custody
of such equipment, supplies and Materials.
10.10 FAILURE TO INSURE
In the event that the Party obligated to provide insurance hereunder
fails to provide any of the insurance or the coverage amounts required
by this Section 10, the other Party shall have the option of paying the
premium to secure the same and charging the reasonable cost of the same
to the Party obligated to provide insurance pursuant to the limits of
coverage in this Agreement.
11. LIABILITY LIMITATIONS
11.1 DAMAGES
IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY, INDEMNITY, OR OTHERWISE,
SHALL A PARTY TO THIS AGREEMENT BE LIABLE TO THE OTHER PARTY FOR ANY
SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT, PUNITIVE OR EXEMPLARY
DAMAGES, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF REVENUE,
LOSS OF PROFIT, LOSS OF TAX BENEFIT, LOSS OF USE, LOSS ARISING FROM
OWNER'S PAYMENT TO PECO OF AN AVAILABILITY ADJUSTMENT UNDER THE POWER
PURCHASE AGREEMENT, LOSS ARISING FROM
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OWNER'S FAILURE TO RECEIVE AN AVAILABILITY INCENTIVE PAYMENT FROM
PECO UNDER THE POWER PURCHASE AGREEMENT OR THE COST OF REPLACEMENT
POWER.
12. DISPUTE - CONTINUING AGREEMENT PERFORMANCE
In the event of a dispute between Owner and Operator with respect to
the interpretation or performance of this Agreement, including any
dispute which may result in a claim ("Dispute"), the procedures
contained in Sections 12.1, 12.2 and 12.3 shall apply ("Dispute
Procedure"). Throughout the Dispute Procedure and during litigation,
the Parties shall continue to carry out their respective obligations in
good faith pursuant to the provisions of this Agreement without
prejudice to the rights of Owner and Operator to terminate as
specifically provided in this Agreement and the rights of Owner as
provided in Section 8.1.
12.1 UNASSISTED SETTLEMENT
Prior to litigation, an aggrieved Party must institute and complete
this Section 12.1 of the Dispute Procedure. The aggrieved Party shall
notify the other Party in writing of the Dispute then existing
("Dispute Notice"). To institute the Dispute Procedure, the Dispute
Notice must specifically state that the aggrieved Party is invoking the
Dispute Procedure of this Section 12. Within thirty (30) days following
the date of such Dispute Notice, Owner and Operator shall meet to
confer and negotiate in good faith to resolve the Dispute.
12.2 MEDIATION
If the Dispute is not resolved after compliance with the requirements
of Section 12.1, either Party may, within thirty (30) days, submit the
Dispute for mediation before a single impartial mediator selected by
the American Intermediation Service, upon written notice to the other
party ("Mediation Notice"). If the Dispute is timely submitted to a
mediator, within thirty (30) days following the date of such Mediation
Notice, the mediator shall meet in Dallas, Texas with an officer of
each Party who shall be duly authorized, on behalf of the Party he or
she represents, to settle such Dispute. Owner and Operator agree to
participate in good faith in such mediation meetings and negotiations
related thereto. Neither Party shall institute litigation with respect
to a Dispute prior to the earlier of (a) the conclusion of mediation
proceedings or (b) the date which is sixty (60) days after the date of
the Mediation Notice, provided that if litigation is instituted before
a Mediation Notice is given pursuant to Section 14.8, the Mediation
Notice shall be of no effect and the Parties shall proceed with the
litigation.
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12.3 LITIGATION
If the Dispute is not resolved after compliance with the requirements
of Sections 12.1 and 12.2, either Party may, in its sole discretion, submit the
Dispute to litigation.
In addition to the specific rights of termination and suspension as set
forth in this Agreement and except as limited in this Agreement, Owner
and Operator shall also have available the remedies, among others, of
an action for damages, restraining order, temporary or permanent
injunction, or specific performance of all or any provision hereof
together with any other rights accruing to it at law or in equity.
13. FORCE MAJEURE
13.1 FORCE MAJEURE
(a) A delay in or failure to carry out the duties imposed upon
either Party under this Agreement (except payment) shall not
be deemed a breach of this Agreement, if such delay or such
failure is caused by any cause beyond the control of the Party
affected, including, but not restricted to, failure or threat
of failure of facilities (but excluding such failures or
threats of failures caused by Owner's or Operator's failure to
comply with Prudent Utility Practice), Change of Law, flood,
earthquake, storm, fire, lightning, epidemic, war, acts of the
public enemy, riot, civil disturbance or disobedience, strike,
lockout, work stoppages, other industrial disturbance or
dispute, whether determined to have arisen out of an unfair
labor practice of any Party, sabotage, restraint by court
order or other public authority, and action or nonaction by,
or failure to obtain the necessary authorizations or approvals
from, any governmental agency or authority, which by the
exercise of due diligence such Party could not reasonably have
been expected to avoid ("Force Majeure"). Nothing contained
herein shall be construed so as to require a Party to settle
any strike, lockout, work stoppage, or other industrial
disturbance or dispute in which it may be involved.
A party claiming Force Majeure shall make reasonable attempts
to remedy the cause or causes constituting the Force Majeure,
keeping the other Party reasonably informed. Any notice of
Force Majeure as required by Section 13.1(b)(i) shall include
documentation as to the cause of the Force Majeure and a
statement of all facts available that such Force Majeure was
not caused by and was beyond the control of acts of the
declaring Party. If the non-declaring Party believes that the
Force Majeure does not meet the requirements of this Section
13.1(a), then that non-declaring Party shall so notify the
declaring Party.
(b) If either Party because of a Force Majeure event is rendered
wholly or partly unable to perform any of its obligations
under this Agreement, that Party shall be excused
40
from whatever performance is affected by the Force Majeure
event to the extent so affected, provided however:
(i) as a condition of Force Majeure the non-performing
Party must provide written notice no later than seven
(7) days after becoming aware or when such Party
reasonably should have become aware of the Force
Majeure event;
(ii) the period of non-performance shall be of no greater
scope and of no longer duration than is required by
the Force Majeure event;
(iii) the non-performing Party shall continue to perform
the services in good faith and with due diligence and
use its best efforts to limit and remedy its
inability to perform during and after the Force
Majeure event, Operator will use its best efforts to
fulfill its obligations in accordance with this
Agreement;
(iv) when the non-performing Party is able to resume
performance of its obligations under this Agreement,
that Party shall give the other Party written notice
to that effect; and
(v) it is the duty of the claiming Party to prove all the
elements of Force Majeure including but not limited
to (i) specific action taken to work around or
mitigate the impact, (ii) specific event dates,
directions, logic and schedule float to support the
claim, and (iii) specific cause for the claim of
Force Majeure as set forth in this Section 13 and to
provide written documentation of such proof to the
other Party as soon as reasonably possible. A Party
is not required to grant or deny a request for Force
Majeure until such documentation has been supplied.
(d) No condition of Force Majeure shall extend this Agreement
beyond its stated term, nor shall any excuse of performance by
reason of a condition of Force Majeure extend for a time
period greater than one hundred eighty (180) days except upon
the written consent of the performing Party, which the
performing Party may give or withhold in its sole discretion;
provided, however, that if the condition of Force Majeure is
not removed within one hundred eighty (180) days plus any
extension upon such written consent of the performing Party,
the performing Party may, at its sole option and discretion,
terminate this Agreement.
(e) Force Majeure shall include, subject to all Force Majeure
requirements (i) the inability of Operator to perform due to
an inadequate supply of fuel, either natural gas or fuel oil,
which was under the control of a Person other than Operator,
(the inability to deliver because of late ordering is not an
event of Force Majeure), and (ii) design or construction
defects or limitations caused by Construction Contractor, and
(iii) actions or constraints of the Utility to the extent that
they adversely affect the performance of an obligation of this
Agreement.
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(f) During the Transition Period, if a Force Majeure occurs,
Operator shall not be considered in default of this Agreement
with respect to any obligation of Operator affected by or
attributable to such Force Majeure.
(g) Any dispute as to a Force Majeure or its effect shall be
resolved in accordance with Section 12. Operator shall
continue to fulfill its other obligations under this Agreement
which are not affected by the Force Majeure.
13.2 CHANGE OF LAW
(a) A change of Law which materially alters the obligations or
requirements of Operator which occurs after the Effective Date
is a "Change of Law." In the event that the Force Majeure is a
Change of Law, Owner shall have the option to terminate this
Agreement by written notice to Operator within three (3)
months of such Change of Law (or when Owner became aware of
such Change of Law) if Owner decides that to continue the
operation of the Plant considering the cost of implementing
and observing such Change of Law would not be exercising good
business judgment. If such written notice is not received
within such three-(3) month period, this opportunity to
terminate pursuant to this Section 13.2 (a) shall be deemed
waived.
(b) If the operation of the Plant ceases because of a Change of
Law, Operator is terminated, and the operation of the Plant is
to be restarted within one hundred eighty (180) days of the
date of termination and if Owner is in control of the hiring
of the Plant operator, Owner shall give Operator notice of
such restart and shall also notify Operator of the date by
which Operator must begin operation. Operator shall have
fifteen (15) calendar days within which to notify Owner that
Operator will accept the obligations to operate the Plant. In
the event of such acceptance by Operator within the time
provided, Owner and Operator shall enter into a new agreement
having terms identical to the terms of this Agreement.
13.3 REMEDY FOR FORCE MAJEURE TERMINATION
In the event of termination by Owner pursuant to Section 13.2, in
addition to any reimbursement of costs which Operator is entitled to
receive under the terms of this Agreement, Operator shall be entitled
to receive a Termination Payment as set forth in Section 8.2(d).
Operator shall thereafter be relieved of all obligations under this
Agreement other than the obligations specified in Sections 7, 14.3,
14.4, 14.5, 14.7 and 14.22. Notwithstanding this cessation of
obligations, neither Party shall be relieved from any obligations or
liabilities for actions or inaction prior to the effective date of
termination.
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14. MISCELLANEOUS PROVISIONS
14.1 ASSIGNMENT
(a) Except as provided in this Agreement, neither Party shall
assign this Agreement without first obtaining the prior
written consent of the other Party. Owner shall be entitled to
assign its rights hereunder to any Lender or Lenders or any
successor owner of the Plant without the consent of Operator
and Operator shall be entitled to assign its right to receive
payments under this Agreement upon ten (10) days notice to
Owner and shall remain responsible for performance of all
obligations under this Agreement. Operator shall be free to
subcontract any portion of its obligations hereunder to any
third party. Operator shall be free to assign any or all of
its obligations hereunder to a wholly-owned subsidiary of
Operator, if such subsidiary is capable of performing the
obligations of Operator. Operator may assign all of its rights
and obligations under this Agreement to a third party, and
upon such assignment and the written assumption by such third
party of all of the obligations of Operator under this
Agreement, Operator shall be fully released from all of the
obligations of Operator under this Agreement; provided that
Operator shall first obtain the written consent of Owner to
any such assignment and assumption, which consent shall not be
unreasonably withheld. Anything in this Section 14.1(a) to the
contrary notwithstanding, Operator agrees that Owner may sell,
convey or assign its interest in the Plant and its rights, or
any part thereof, under this Agreement, or that Owner may
lease the Plant, to one or more Persons, and such sale,
conveyance, assignment or lease shall include without
prejudice to Owner's rights in Section 8.2, the transfer of
the rights, duties and obligations of Owner, but only such
rights, duties and obligations as are contained in this
Agreement. The rights, duties and obligations of Operator
contained in this Agreement shall not be affected by such
sale, conveyance, assignment or lease. Operator shall agree in
writing to such sale, conveyance or assignment, and shall
release Owner in writing from all obligations hereunder.
(b) Except as provided in Section 14.1(a) above, no assignment of
Owner's obligations hereunder shall be permitted unless:
(i) the assignee is solvent (its assets exceed its
liabilities) at the time of the assignment and will
not be rendered insolvent by reason of the
assignment;
(ii) assigned by an instrument reasonably satisfactory to
Operator's counsel, the assignee represents and
warrants that it is solvent, assumes the obligations
of Owner hereunder, and agrees to be bound by all of
the terms, conditions, covenants and provisions of
this Agreement to the same extent as if it were
Owner; and
(iii) such assignment is accompanied by a simultaneous
assignment of all other Project Agreements to the
same assignee or an Affiliate, of Owner's rights
under all other Project Agreements relating to the
Plant.
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(c) Upon assignment by Owner, except an assignment to Lenders
solely as collateral security, Operator shall deliver to Owner
a written release of all of Owner's obligations under this
Agreement.
(d) This Agreement shall inure to the benefit of and be binding
upon Owner and Operator and their respective successors and
permitted assigns.
14.2 AUTHORITY TO PROCURE GOODS AND SERVICES
(a) Operator shall be authorized to enter into and administer
purchase orders and contracts on behalf of and as agent for
Owner subject to the following:
(i) Any such purchase order or contract shall be made in the name
of Owner and not for the benefit of Operator.
(ii) Any such purchase order or contract shall be in
writing, or a written memorandum containing all
essential terms thereof shall be prepared and signed
by the parties to be bound.
(iii) Wherever appropriate, Operator shall attempt to
obtain quotations from Agency Suppliers for extended
warranty provisions for Owner's consideration prior
to execution of purchase orders or contracts.
(iv) Operator shall not enter into any purchase order or
contract by the terms of which Operator will exceed
the amount budgeted therefor without the prior
approval of Owner.
(v) All purchase orders or contracts obligating Owner to
pay money for goods or services valued in excess of
Seven Thousand Five Hundred Dollars ($7,500) shall be
approved in advance by Owner.
(vi) Purchase orders or contracts for the same or similar
goods or services with the same or substantially the
same parties which in the aggregate for one (1) year
would obligate Owner in excess of Seven Thousand Five
Hundred Dollars ($7,500) shall be approved in advance
by Owner.
(vii) Within ten (10) calendar days following execution a
true copy of each purchase order, contract or
memorandum executed by Operator shall be sent to
Owner.
(viii) Operator may make payments from the Operating Account
for such purchase orders and contracts, provided,
however, that Operator shall not make any payments in
excess of the amounts shown in the applicable
requisition and purchase order or contract without
first obtaining Owner's approval;
44
(b) Owner shall have the right to modify or revoke the authority
of Operator under this Section 14.2 at any time by written
notice to Operator and Operator shall immediately give written
notice of any such modification or revocation to any persons
with whom Operator conducts business on behalf of Owner and
shall send Owner true copies of each such notice sent by
Operator within ten (10) calendar days of receipt of such
notice from Owner.
14.3 CONFIDENTIALITY OF INFORMATION
(a) Each Party agrees, for itself, its Affiliates and their
respective directors, officers, employees and representatives
including, without limitation, attorneys, accountants and
consultants, to keep confidential: (i) this Agreement, (ii)
all negotiations concerning this Agreement, and (iii) all
documents, data, drawings, studies, projections, plans and
other information, whether written or oral, which relate to
economic benefits to or amounts payable by either Party
pursuant to this Agreement or costs of design, construction,
and operations of the Plant including, without limitation,
cost and quantities of fuel used at the Plant.
(b) Each Party agrees, for itself, its Affiliates and their
respective directors, officers, employees and representatives
including, without limitation, attorneys, accountants and
consultants that no adequate remedy at law exists for a
material breach or threatened material breach of any of the
provisions of this Section 14.3, the continuation of which
unremedied will cause the injured Party to suffer irreparable
harm. Accordingly, the Parties agree that the injured Party
shall be entitled, in addition to other remedies which may be
available to it, to immediate injunctive relief from any
material breach of any of the provisions of this Section 14.3
and to specific performance of its rights hereunder, as well
as to any other remedies available at law or in equity.
14.4 CONFIDENTIAL
"Confidential", as used herein, means that information or a document,
including the content, substance or effect of such information or
document shall not be disclosed, discovered or distributed to any other
person, corporation or other entity except pursuant to the valid order
of an administrative or judicial officer having jurisdiction, which
order shall be opposed unless opposition with respect thereto is waived
by each of the Parties and except as hereinafter provided nor shall the
information or documents of a Party be used by the other Party for any
purpose not directly related to such other Party's obligations
hereunder. No Party shall be required to oppose any order requiring
disclosure by appeal, separate legal proceeding or extraordinary
measures in any judicial or administrative proceeding unless the other
Party, after notice, agrees to pay the costs of such opposition.
45
14.5 EXCEPTIONS TO CONFIDENTIALITY
The Parties may, without violating this Section 14, disclose matters
which are made confidential by this Agreement as follows:
(a) Owner may make such disclosures to actual or prospective
co-owners, lenders, underwriters, contractors, suppliers and
others involved in financing, construction and operations
transactions or arrangements or its partners, Affiliates, or
to actual or prospective purchase or lessees of the Plant.
Operator may make such disclosures, if and as is necessary to
carry out its obligations hereunder, to its Affiliates and to
those directly involved in the operation of the Plant,
provided that Operator obtains, as a condition precedent to
the disclosure, a confidentiality agreement with the Person,
corporation or other entity to whom the disclosure is being
made with terms substantially the same as are required under
this Agreement.
(b) A Party may make such disclosures to governmental officials
and parties involved in any proceeding whereby such Party is
seeking a permit, certificate or other regulatory approval or
order necessary or appropriate to carry out this Agreement,
provided that the Party making the disclosure will exercise
reasonable efforts to restrict public access to the
information disclosed by way of protective order or otherwise.
(c) A Party may make such disclosures to governmental officials or
the public as required by any law, regulation or order,
including, without limitation, Laws requiring disclosure of
financial information, information material to financial
matters and filing of financial reports, provided that such
Party will exercise reasonable efforts to restrict public
access to the information disclosed by way of protective order
or otherwise.
Any disclosure permitted by this Section 14.5 will be only to the
extent such disclosure is necessary or required.
14.6 LENDER APPROVAL
This Agreement is subject to review and approval by the Lenders and,
as such, this Agreement is not effective as to, or binding upon,
Owner until the Lenders have given the written approval of this
Agreement.
14.7 BOOKS, RECORDS, ACCESS THERETO
The Parties agree to maintain adequate books, accounts and records with
respect to the operation and maintenance of the Plant and the
collection of revenues therefrom in accordance with generally accepted
accounting principles consistently applied, and in compliance with the
regulations of any governmental regulatory body having jurisdiction
thereof; and to permit employees or agents of the other Party at any
reasonable time and upon
46
reasonable prior notice to inspect such Party's properties, and to
examine or audit such Party's books, accounts and records and make
copies and memoranda thereof provided that such agents enter into a
confidentiality agreement if so requested by the other Party.
14.8 NOTICES
Except as provided in Section 2.4.2(c), any notice or other
communication, including approvals, by one Party to the other required
or permitted by this Agreement shall be in writing and shall be deemed
to have been given when delivered by hand, or when: (a) deposited in
the United States mails with postage prepaid for transmittal by
registered or certified mail, return receipt requested, (b) or
telecopied with telephone confirmation of receipt or (c) placed in the
hands of a recognized commercial courier service for overnight
delivery, addressed as follows:
If to Owner:
Tenaska Georgia Partners, L.P.
x/x Xxxxxxx, Xxx.
Xxxxx 000
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Vice President
If to Operator:
Tenaska Operations, Inc.
Suite 400
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: H. Xxxxxx Xxxxxx, Vice President
Operations
If to PECO:
PECO Energy Company
0000 Xxxxxxxxxxx Xxxx.
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Power Contracts Manager
However, either Party may at any time and from time to time change the
address for communications to it by delivering written notice of the
change of address to the other Party.
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14.9 REPRESENTATIVES
(a) Owner shall designate an Owner's Representative who shall have
authority to act on behalf of Owner on all matters relating to
this Agreement. Owner's Representative shall have authority to
provide notice to and receive notice from Operator and to
exercise all other authority of Owner as permitted or required
by this Agreement.
(b) Operator shall designate an Operator's Representative who
shall have authority to act on behalf of Operator on all
matters relating to this Agreement. Operator's Representative
shall have authority to provide notice to and receive notice
from Owner and to exercise all other authority of Operator as
permitted or required by this Agreement.
14.10 EQUAL EMPLOYMENT OPPORTUNITY
In furtherance of its obligations under Section 2, Operator undertakes
and agrees in the performance of its services pursuant to this
Agreement not to violate any law of the State of Georgia or of the
United States of America relating to equal employment opportunity.
14.11 ENTIRE AGREEMENT
This Agreement contains the entire agreement of the Parties and
supersedes and replaces any prior or contemporaneous oral or written
agreements or understandings between them relating to its subject
matter. No amendment or modification of this Agreement shall be
effective unless set forth in writing and signed by both Parties except
as provided in Section 14.2 in respect to Owner's right to modify or
revoke the authority of Operator. By entering into this Agreement the
Parties do not intend to create third party rights herein or hereto.
14.12 NO WAIVER
No failure by either Party to insist upon the strict performance of any
term, covenant or condition of this Agreement, or to exercise any right
or remedy upon breach of any provision hereof, and no acceptance of
payment for performance during the continuation of any such breach and
no payment under this Agreement by a Party, shall constitute a waiver
of any term, covenant or condition herein or waiver of any subsequent
breach or default in the performance of any term, covenant or condition
herein, or prevent such Party from seeking recovery of any amount paid
through the Dispute Procedure as set out in Section 12.
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14.13 SEVERABILITY
In the event that any provision of this Agreement, or application
thereof, is held by any court of competent jurisdiction to be illegal
or unenforceable, the Parties shall attempt in good faith to agree upon
an equitable adjustment to this Agreement in order to overcome to the
extent possible the effect of such illegality or unenforceability and,
in any event, the validity and enforceability of the remaining portions
of this Agreement shall not be affected.
14.14 APPLICABLE LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF GEORGIA, EXCLUDING CONFLICT OF LAW RULES WHICH
MAY CALL FOR THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION.
14.15 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS
Operator shall comply with all applicable Laws, and the applicable
requirements, guidelines, documents and standards referenced throughout
this Agreement existing at the Effective Date, and Operator shall
comply with any changes in or additions to such applicable Laws and
other requirements which become effective after the Effective Date of
this Agreement. In the event that compliance with such change results
in an increase in Operator's operating expenses relating to this
Agreement, Owner shall approve an appropriate increase in the Operating
Budget to cover such expenses.
14.16 EXCLUDED REPRESENTATIONS AND INTERESTS
Neither Owner nor Operator has made any representations, warranties or
covenants other than as expressly set forth in this Agreement. The
execution of this Agreement shall not be deemed to convey any estate or
interest in the Plant or the Site or any right to exclusive possession
thereof, to Operator. The execution of the Agreement shall not be
construed to impose any liability on Operator which it has not
expressly assumed pursuant to this Agreement.
14.17 LIMIT OF LIABILITY
Any claim asserted by Operator under this Agreement against the Owner
shall be limited to the assets of Owner, and Operator expressly waives
any right to proceed in law or equity against any partners in Owner
(unless a partner is a necessary party in an action against the Owner
in which case Operator agrees that no judgment shall be enforced
against such partner), their Affiliates, or their respective officers,
directors, stockholders, agents, servants
49
and employees of the partners and the Affiliates. Any claim asserted
by Owner under this Agreement against the Operator shall be limited to
the assets of Operator, and Owner expressly waives any right to
proceed in law or equity against any shareholders in Operator (unless
a shareholder is a necessary party in an action against the Operator
in which case Owner agrees that no judgement shall be enforced against
such shareholders), their affiliates, or their respective officers,
directors, stockholders, agents, servants and employees of the
shareholders and the affiliates.
14.18 COUNTERPARTS
This Agreement may be executed by the Parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one
and the same instrument.
14.19 PROJECT AGREEMENTS
Owner shall provide to Operator in a timely manner a copy of the
executed Power Purchase Agreement, the executed Construction Agreement,
the executed Credit Agreement, the executed Interconnection Agreement,
and the executed Long Term Service Agreement, ("Project Agreements").
Operator shall familiarize itself with the terms and conditions of each
of the Project Agreements so as to enable Operator to perform its
services hereunder in accordance with the applicable terms and
conditions of this Agreement and the Project Agreements.
If any Project Agreement is amended or if Owner enters into any
additional agreements applicable to the Plant and Operator's services
hereunder or if applicable laws, Plant Permits or manufacturer's
recommended procedures or the requirements of insurance policies
relating to the Plant are changed, Operator shall perform its services
in accordance with such amendments and changes provided that if such
additional or modified services will cause Operator to incur additional
expense, then an appropriate increase in the Operating Budget shall be
made and Owner's approval of such increase shall not be unreasonably
withheld. The Parties shall make amendments or modifications to this
Agreement as required by the changes contemplated herein.
14.20 NO JOINT VENTURE
Operator is performing this Agreement as an independent contractor
except as otherwise explicitly set forth in this Agreement. Nothing
contained in this Agreement shall be construed as creating a joint
venture or partnership relationship between Operator and Owner.
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14.21 CORPORATE AUTHORIZATION
(a) Operator is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
Operator is duly qualified, authorized to do business and in
good standing in every jurisdiction in which the nature of its
business requires it to be so qualified, and has all requisite
power and authority, to enter into and to perform its
obligations hereunder, and to carry out the terms hereof and
the transactions contemplated hereby.
(b) The execution, delivery and performance by Operator of this
Agreement have been duly authorized by all necessary corporate
action on the part of Operator and do not require any approval
or consent of any holder (or any trustee for any holder) of
any indebtedness or other contractual obligation of Operator
or any other Person, except approvals or consents which have
previously been obtained.
(c) This Agreement is in full force and effect, has been duly
executed and delivered on behalf of, and by the appropriate
officers or agents of Operator and constitutes the legal,
valid and binding obligation of Operator, enforceable against
it in accordance with its terms except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement
of creditors' rights generally and (ii general principals of
equity whether considered in a proceeding in equity or at law.
(d) There is no litigation, action, suit, proceeding or
investigation by any third party pending or, to Operator's
knowledge after due inquiry, threatened against Operator
before or by a court, administrative agency, arbitrator or
governmental authority, body or agency which, if adversely
determined, individually or in the aggregate, (i) could be
reasonably expected to affect adversely the performance by
Operator of its obligations hereunder, or which could be
reasonably expected to modify or otherwise affect adversely
the authorizations to enable Operator to perform this
Agreement, (ii) could be reasonably expected to have a
material adverse effect on the condition (financial or
otherwise), business or operations of Operator, or (iii) could
be reasonably expected to impair the validity, binding effect
or enforceability hereof, against Operator or of any action
taken or to be taken pursuant hereto or any of the
transactions contemplated hereby.
(e) The execution, delivery and performance by Operator of this
Agreement and the consummation of the transactions
contemplated hereby will not result in any violation of,
breach of or default under any term of (i) Operator's
organizational documents, (ii) any contract or agreement to
which Operator is a party or by which it is bound, or (iii)
any license, permit, franchise, judgment, writ, injunction,
decree, order, charter, law, ordinance, rule or regulation
applicable to Operator, except for any such violations,
breaches or defaults which, individually or in the aggregate,
would not adversely affect the performance by Operator of its
obligations under this Agreement.
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(f) No consent, order, authorization, waiver, approval or any
other action, or registration, declaration or filing with, any
Person, board or body, public or private, is required to be
obtained by Operator in connection with the execution,
delivery or performance of this Agreement or the consummation
of the transactions contemplated thereunder.
14.22 LIENS
Operator shall not suffer, and Operator shall not permit any of its
Subcontractors or Agency Suppliers to impose or file any laborers',
materialmen's, mechanics', construction or other lien, claim or
encumbrance on any part of the Plant or the Site, provided however,
that the restriction imposed on Operator with respect to liens by
Operator pursuant to this Section 14.22 shall not apply to a judgment
lien duly obtained by Operator and to those liens, if any, which
Operator is not permitted under the laws of the State of Georgia to
waive or forfeit. If Operator or any Subcontractor or Agency Supplier
imposes or files any laborers', materialmen's, mechanics', construction
or other lien, claim or encumbrance against the Plant or Site and if
Operator does not cause such lien, claim or encumbrance to be released
and discharged within ten (10) days, or file a bond and cause such lien
to be released within ten (10) days, Owner shall have the right to pay
all sums necessary to obtain such release or to secure such bond and
all amounts so paid and all costs incurred, including the cost of such
bond and security required plus attorney fees and administrative
expenses, shall be charged to Operator. Owner shall have the right to
deduct all amounts so paid from any amount then or thereafter due
Operator, or deduct the same from any compensation due Operator under
this Agreement until the total amount of same shall be recouped, as
Owner may elect at its sole discretion. Any unpaid balance shall be
charged to Operator. Operator shall defend, at its expense, and pay all
attorney's fees and costs of all actions commenced against Owner and
its property for the enforcement of any such lien arising out of this
Agreement. If Operator shall fail to defend any such action or
discharge any such lien, claim or encumbrance, it shall pay to Owner
all money that Owner may be compelled to pay in defending and
discharging such lien, claim or encumbrance including all costs and
attorney's fees.
14.23 SET OFF
Owner shall have the right to set off any claim of Owner for liability
of Operator to Owner arising under any provision of this Agreement
against any debt or obligation of Owner to Operator arising under any
provision of this Agreement.
14.24 RELEASE OF INFORMATION AND SITE VISIT APPROVAL
(a) Prior to the release of any information in any form, to any
person, with respect to the Plant, Operator shall obtain
written approval from Owner. This includes without limitation,
(i) press releases which incorporate photos or descriptions of
the Plant, the name Tenaska or the Owner or any affiliated
entity of a partner in Owner; and (ii)
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public relations material, including advertising and
photographs, which refer to the Plant or any other project
of the Tenaska, Inc. affiliated companies.
(b) Prior to allowing access to the Plant of any parties not
directly related to the operation or maintenance of the Plant
or regulatory authorities with jurisdiction over permits or
safety, Operator shall obtain written Owner approval. Such
request for approval shall include the names of the
individuals who will be on the Site including the name of each
such individuals employer or company with whom the individual
is affiliated, the intent of the Site visit, the information
to be provided to such individuals during such visit and any
other information required by Owner for approval.
14.25 CONTRACTS WITH AFFILIATES
Any contract entered into pursuant to this Agreement by Operator with
an Affiliate shall have terms no less favorable to the Owner than are
generally available on an arms-length basis from an unaffiliated party,
and Operator shall notify Owner of any such contract as soon as
reasonably practicable.
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IN WITNESS WHEREOF, each Party has caused this Agreement to be
signed in its name and on its behalf by a duly authorized officer, as of the
day and year first above written.
OWNER:
TENASKA GEORGIA PARTNERS, L.P.,
a Delaware limited partnership
By: Tenaska Georgia I, L.P.
Its: Managing General Partner
By: Tenaska Georgia, Inc.
Its: Managing General Partner
By: /s/__________________________
Title: Vice President
OPERATOR:
TENASKA OPERATIONS, INC.,
a Delaware corporation
By: /s/_____________________________
Title: Vice President
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LIST OF EXHIBITS
EXHIBIT A POWER PURCHASE AGREEMENT
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