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Resolution No. 8625
3 01 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 8625 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF AN AGREEMENT BY AND BETWEEN THE CITY OF VERNON AND NEW AGE FUEL, INC. IN CONNECTION WITH THE CITY'S PUBLIC BENEFIT PROGRAM WHEREAS, on August 4, 2004, the City Council of the City of Vernon adopted Resolution No. 8511 approving a City of Vernon Renewable Portfolio Standard ("Vernon RPS"); and WHEREAS, the City Council Public Benefits Committee Section reviewed various alternatives for encouraging the development of renewable resources goals contained within the Vernon RPS; and WHEREAS, the City determined that the firm of New Age Fuel, Inc. ("New Age") offered a desirable program for generating electric energy for the City's Light & Power Department customers through a biomass process; and WHEREAS, on September 1, 2004, the City Council of the City of Vernon adopted Resolution No. 8487 authorizing the City Administrator to negotiate and execute, upon subsequent approval by the City Council, a definitive agreement with New Age at a development and delivery cost not to exceed $11,657,000.00; and WHEREAS, negotiations with New Age are completed for the design, acquisition and construction of initially a Phase One Refined Fuel Oil Processing Plant Facility at a cost of $6,563,000 and a Phase Two Refined Fuel Oil Processing Plant Facility at a cost of $5,410,000 and, at the City's option, subsequent Refined Fuel Oil Processing Plant Facilities that would refine waste oil into usable diesel fuel to be used, among other purposes, to power combustion turbine generators and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the City's existing diesel generators located at Station A to help generate electricity from renewable sources; and WHEREAS, the City Council Public Benefits Committee Section has recommended that an Equipment Purchase and Construction Agreement with New Age Fuel, Inc. be approved and executed. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the recitals contained hereinabove are true and correct. SECTION 2: The City Council of the City of Vernon hereby approves the Equipment Purchase and Construction Agreement with New Age, in substantially the same form as the copy which is attached hereto as Exhibit A and incorporated by reference. SECTION 3: The City Council of the City of Vernon hereby authorizes the Mayor to execute said Agreement for, and on behalf of, the City of Vernon and the City Clerk is hereby authorized to attest thereto. SECTION 4: The City Council of the City of Vernon hereby directs the City Clerk, or his designee, to transmit an executed Agreement to the following: New Age Fuel, Inc. Attn: Michael B. Horrell 1700 Asbury Avenue Evanston, IL 60201 SECTION 5: The City Council of the City of Vernon hereby authorizes the City Administrator, or his authorized designee, to make changes, execute additional necessary documents and take whatever actions deemed necessary to carry out the intent of this Resolution. - 2 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 6: The City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 15th day of December, 2004. ATTEST: BRUCE V. MALKENHORST, City Clerk °LEONIS C. MAL`$URG, Mayor - 3 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 8625, was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Wednesday, December 15, 2004, and thereafter was duly signed by the Mayor of the City of Vernon. (SEAL) BRUCE V. MALKENHORST, City Clerk - 4 - EXHIBIT EQUIPMENT PURCHASE AND CONSTRUCTION AGREEMENT This Equipment Purchase and Construction Agreement (this "Agreement") is made, entered into and executed in duplicate originals, either copy of which may be considered and used as the original hereof for all purposes, as of this 15th day of December, 2004, in the City of Vernon, County of Los Angeles, State of California. BY AND BETWEEN THE CITY OF VERNON (hereinafter referred to as "City") 4305 Santa Fe Avenue Vernon, CA 90058 AND NEW AGE FUEL, INC., a Delaware corporation (hereinafter referred to as "Contractor") Attention: Michael B. Horrell 1700 Asbury Avenue Evanston, IL 60201 RECITALS A. The California electric restructuring legislation signed into law on September 23, 1996, AB 1890, requires that municipal electric utilities establish a nonbypassable usage based charge to fund investments in energy related public benefit charge (PBC) programs. AB 995, signed into law September 30, 2000, extended funding for PBC programs to January 1, 2012. B. The City is a participant in the PBC programs and is a member utility in the Public Benefit Programs of the Southern California Public Power Authority Program (the "Program"), and is subject to the terms of AB 1890 and AB 995. C. With respect to municipal electric utilities, AB 1890 and AB 995 mandate that each municipal utility must collect and spend a set percentage of annual revenues during the years 1998-2012 on PBC programs (the "PBC Funds"). 01910/0001 104034.1 1 D. The PBC programs are to provide: (1) cost-effective management services to promote energy efficiency and conservation; (2) investment in renewable energy resources; (3) research and development programs; and (4) services for low-income customers. To date, the City of Vernon has spent most of its PBC Funds for energy efficiency and educational purposes. E. Senate Bill 1078, which became law on January 1, 2003, orders municipal electric utilities to devise local standards concerning development and implementation of a Renewable Portfolio Standard (RPS) in light of the legislation's public policy goals. The public policy goal of the law is to "increase the use of renewable energy sources within California to 20 percent and to improve the diversity, reliability, public health and environmental benefits of the energy mix." F. The City now believes that it is in the best interest of the City and the businesses located in the City to use certain of the PBC Funds to invest in the design, . acquisition, and construction of one or more PESCO (a patented process) Oil Re -refining Plant (PORP) Refined Fuel Oil ("RFO") Recycling Facilities at sites designated by City (the "Project"). The Facilities would refine waste oil and plastics into usable diesel fuel, 100 and 300 tube oil and Naptha fuel which would be used, among other purposes, to power new combustion turbine generators and the City's existing diesel generators at Station A to help generate electricity from renewable sources. G. The Project, initially, is divisible into two separate phases, with the first phase being the construction of the larger RFO Recycling Facility (the "Phase One Facility"), and the second phase being the construction of the smaller RFO Facility (the "Phase Two Facility"). Together, the Phase One Facility and the 01910A001,104034.1 2 Phase Two Facility are referred to as the "RFO Facilities". The term "Project' shall mean and refer to the design, acquisition, and construction of the Phase One Facility unless and until the City exercises its option to cause Contractor to design, acquire, and construct the Phase Two Facility, at which time the term "Project' shall be deemed to include the design, acquisition, and construction of the Phase One Facility and the Phase Two Facility. H. The City retains the option to develop and construct subsequent phases to the Project, creating more facilities. Toward this end, the City may pledge its PBC Funds and its contracted share of the operating profits from the Project to fund additional facilities. I. Contractor has advised the City that it is qualified and capable of acquiring the Equipment (as defined below) and furnishing the labor, materials, skills, and expertise necessary to design, construct, test, and operate the RFO Facilities and otherwise perform the services described in this Agreement (the "Work"). J. There are a limited number of companies that have the expertise required to design, construct, and operate the Project, and Contractor has the exclusive patents for the most efficient RFO success and the required expertise, and has bid the Work at a price competitive to this very special market. It is currently contemplated that the Phase One Facility of the Project will be located at Carson City, Nevada; provided, however, that the City, in its sole and absolute discretion, may elect to construct the Project at another location in either the State of Nevada, California or Oregon, on property owned or to be acquired by the City. Prior to the commencement of the Work (as defined below), the City will notify Contractor in writing of the location for the Project. 01910/0001 104034.1 3 K. The funds for the construction of the Project are currently held in a separate account of the City's Light & Power Department Fund. The City shall disburse the fields held in that account for the construction of the Project in accordance with the terms of this Agreement. L. The parties agree that, following the Contractor's completion of the Work, the City will employ the Contractor to operate the Phase One Facility at of the Site, including all rights of the use of the RFO Facilities, and Contractor will maintain and operate the Facilities, on the terms and conditions of an Operating Agreement between the parties (the "Operating Agreement'). The Operating Agreement will be entered into within 60 days following the execution of this Agreement. The material terms of the Operating Agreement are set forth in Exhibit "A" attached hereto and incorporated herein (the "Operating Agreement Terms'). M. The City will appoint GALLIERA, INC., dba TRICO CONSTRUCTION ("TRICO") as its Project Manager, and Contractor has appointed Mike Horrell as Contractor's Representative. TRICO will assign its principal, Jim Bruchera, to the Project. N. The City and Contractor desire to enter into this Agreement on the basis of the recitals set forth above, and on the terms and conditions set forth below. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. Contingencies. 1.1 Preconditions to Notice to Proceed. This Agreement shall be effective upon its mutual execution by the City and Contractor. However, Contractor shall not commence any of the Work or undertake any obligations or liabilities under this Agreement, and the City 01910/0001 104034.1 4 shall not be liable for any obligations, liabilities, costs, expenses under this Agreement, and neither party shall have any rights, duties, or obligations hereunder unless and until the conditions set forth in Paragraphs 1.1.1 and 1.1.2 are satisfied. 1.1.1 Site and FundingContin en�cies. Neither party shall have any rights or obligations hereunder until the City notifies Contractor in writing that the City has identified and owns the property on which the Project will be constructed (the "Site") and the City has confirmed the City's ability to obtain full funding for the Project. When the City has acquired the Site, the City will deliver notice to the Contractor (the "First Notice to Proceed'). If the City does not deliver to Contractor the First Notice to Proceed within 180 days after the mutual execution of this Agreement, this Agreement shall automatically be null and void, and of no further force and effect, and neither party shall have any obligation or liability to the other. When issued, the First Notice to Proceed shall authorize Contractor to perform the Work related to the Phase One Facility. A second notice to proceed (the "Second Notice to Proceed") shall be required before the Contractor is authorized to proceed with Work on the Phase Two Facility. When the First Notice to Proceed is issued, the City will represent and warrant to Contractor that the City (a) is the sole owner of the Site (subject to any easements or other recorded rights of third parties), and (b) has the right to construct the Facilities on the Site, subject to obtaining the Permits, as defined below, and (c) has the right to employ Contractor as the operator of RFO Facilities on the Site. In addition, the City covenants and agrees that upon completion of the Phase One Facility and, if applicable, upon completion of the Phase Two Facility, or any subsequent facilities, the City will contract with Contractor to operate the Phase One Facility and, if applicable, the Phase Two Facility or any subsequent facilities. The City represents and warrants that after it has acquired the Site, it will have the full right and authority to permit the 01910/0001 104034.1 5 development, design, and construction of the Facilities by Contractor and to hold legal title and ownership to the Facilities. 1.1.2 Permits. Certain approvals, including, without limitation, permits, authorizations, consents, and licenses, including, without limitation, any permits or authorizations required by the States of Nevada, California or Oregon, where applicable, or any governmental agency of the States of Nevada, California or Oregon, where applicable, Environmental Protection Agency (EPA) or the relevant Air Quality Management District (AQMD) of the particular state involved, or other governmental or quasi -governmental agencies are required in order to perform the Work, and construct and operate the Facilities (collectively, the "Permits"). Notwithstanding anything set forth above to the contrary, the Contractor is hereby authorized and directed to work with all governmental and quasi -governmental agencies having jurisdiction over the design, construction, and operation of the Facilities in order to obtain the Permits prior to the Contractor's receipt of the First Notice to Proceed. It is the intent of the parties that the satisfaction of the conditions described in Paragraph 1.1.1 and 1.1.2 be pursued concurrently. Contractor and City shall cooperate to obtain the Permits as set forth below: (a) All Permits will be obtained in the name of, for the benefit of, and be the sole property of the City. The Contractor has no authority, express or implied, real or apparent, to obtain any Permits in its own name or for its own benefit in connection with the Facilities. Contractor shall have no right, title, or interest in or to the Permits, and all applications for the Permits shall be in the name of the City. Notwithstanding the above, Contractor shall obtain 01910/0001 104034.1 necessary permits as required for its status as an operator of the various facilities contemplated for the Project. (b) All Work Product, as defined in Paragraph 15.1, required to obtain the Permits, shall at all times be and remain the sole property of the City, and the Contractor shall have no right, title, or interest in or to the Work Product. (c) The Work Product, applications for Permits, and Permits shall be delivered to the City as they are obtained, granted, or developed, whether developed or generated by the Contractor or agents, employees, representatives, or subcontractors of the Contractor; provided, however, that the Contractor may retain copies of the Work Product, Permit applications, and Permits for its purposes related to its obligations under this Agreement. (d) Contractor shall commence the process of obtaining the Permits upon the later of full execution of this Agreement and the City's issuance of a Purchase Order (the "Commencement Date"), and Contractor shall use its commercially reasonable efforts to complete the process of obtaining all required Permits within 120 days after the Commencement Date (the "Completion Date"). Contractor's failure to obtain the Permits by the Completion Date shall not constitute a default hereunder, or 01910/0001 104034.1 7 entitle the City to any remedies or damages; provided, however, that the City may terminate this Agreement with cause as set forth in Paragraph 14.3 if the Permits are not obtained by the Completion Date. (e) The City will cooperate with the Contractor in attempting to obtain the Permits; provided, however, that the City may, in its sole and absolute discretion, approve the terms on which the Permits are granted, and shall have the right to reject Permits that have conditions, costs, or other requirements that are not acceptable to the City, in its sole and absolute discretion. (f) During the process of obtaining the Permits, the Contractor shall consult with counsel selected by the City if any legal issues or questions arise and to pursue obtaining the Permits. The City shall bear the costs of all such counsel. (g) The City shall pay all costs associated with obtaining the Permits, including, without limitation, fees for applying for Permits, costs of obtaining surveys, documents, studies, and reports required in connection with obtaining Permits, and costs of counsel selected by the City. (h) The City shall reimburse Contractor for its direct, out of pocket expenses, without markup or profit, for costs incurred by the Contractor in obtaining the Permits, 01910/0001 104034.1 8 including, without limitation, messenger fees, overnight mailing fees, long distance costs, costs of faxes, and mileage at $.10 per mile. There is to be no charge for overhead or administration, as such costs are to be included in the compensation described above. (i) Invoices are to be submitted on a monthly basis, and all approved charges will be paid within thirty (30) days following the City's approval of the invoice. In the event of a dispute over an invoice, the City shall pay the undisputed portion within 30 days after approval of the undisputed portion. 0) Contractor shall use its commercially reasonable efforts to obtain the Permits without conditions, costs, or other requirements that are not acceptable to the City. (k) Contractor shall employ personnel who are knowledgeable in the process of obtaining Permits and have background, experience, and expertise in working with the governmental or quasi -governmental agencies who are responsible for issuing the Permits. If the City is not satisfied with the personnel employed by the Contractor for these purposes, the Contractor will replace such personnel at no additional cost to the City, unless the new person's standard hourly 01910/0001 104034.1 9 rate, as charged to all other clients is higher than the replaced person's rate. (1) Contractor does not guaranty that it will be able to obtain the Permits on terms acceptable to the City, and the parties acknowledge and agree that neither party shall have any obligation or liability to the other in such event. Neither party shall claim any damages, including, without limitation, loss of business or profitability, as a result of the Contractor's failure to obtain the Permits by the Completion Date or at all. (m) The Contractor's indemnity, as described in Paragraph 9.11 shall apply to the process of obtaining the Permits. 1.2 Agreements Required to Proceed. 1.2.1 The Schedule. Within thirty (30) days after its receipt of the First Notice to Proceed, Contractor shall deliver to City a proposed schedule for the delivery of Design Development Documents for the Phase One Facility (the "First Design Development Documents") and the Construction Documents for the Phase One Facility (the "First Construction Documents"). Within sixty (60) days after delivery of the First Notice to Proceed, the parties shall agree to the schedule for the Phase One Facility (the "First Schedule"). The First Schedule shall be signed by the parties and attached hereto as Exhibit "C". 1.2.2 Design Development Documents. The City and Contractor shall endeavor to reach agreement on the terms of the First Design Development Documents within the time period set forth in the Schedule. The First Design Development Documents shall further 01910/0001 104034.1 10 define the Project, including drawings and outline specifications fixing and describing the Project size and character as to Site utilization, and other appropriate elements, including the structural, architectural, mechanical, and electrical systems. If the City and Contractor agree on the First Design Development Documents within the time period set forth in the First Schedule, the First Design Development Documents shall be signed by the parties, and a copy shall be attached hereto as Exhibit "D". 1.2.3 Construction Documents. After the First Design Development Documents have been finalized, Contractor shall develop the First Construction Documents consistent with the First Design Development Documents, and the City and Contractor shall endeavor to reach agreement on the terms of the First Construction Documents within the time period set forth in the First Schedule. The First Construction Documents shall set forth in detail the requirements for construction of the Work for the Phase One Facility, and shall be in compliance with all applicable codes, laws, and regulations in effect at the time of their preparation. When Contractor submits the First Construction Documents, Contractor shall identify in writing all material changes and deviations that have taken place from the First Design Development Documents, and explain why such changes or deviations have been made. The City shall then approve or disapprove the First Construction Documents. If the parties reach agreement on the First Construction Documents within the time period set forth in the First Schedule, they shall be signed by the parties, and attached hereto as Exhibit " E". In addition, three sets of the First Construction Documents will be provided to the City prior to the commencement of construction. After City has approved the First Construction Documents, Contractor shall then submit them to the relevant local agency(ies) for approval and issuance of required permits. 0191M001 104034.1 11 1.2.4 Failure to Agree on First Schedule or First Design or First Construction Documents. If the parties do not reach agreement on the First Schedule within the time frame set forth above, or do not reach agreement on the First Design Development Documents and the First Construction Documents within the time frames set forth in the First Schedule, this Agreement shall automatically terminate, and be of no further force and effect, and neither party shall have any further obligation or liability to the other. 1.2.5 Phase Two Facility Process. If the City exercises its option to cause Contractor to design, acquire, and construct the Phase Two Facility, a Second Schedule, Second Design Development Documents, and Second Construction Documents will be developed in accordance with the procedures described above. All of the terms and conditions of this Agreement (except for the time frames and pricing) shall apply to the Phase Two Facility. 1.2.6 Subsequent Facilities. If the City exercises its option to cause Contractor to design, acquire and construct facilities in addition to the Phase One and Phase Two Facilities, subsequent Schedules, subsequent Design Development Documents, and subsequent Construction Documents will be developed in accordance with the procedures described above. All of the terms anct conditions of this Agreement (except for the time frames and pricing) shall apply to these subsequent facilities. 2. The Work. 2.1 Services. The Contractor shall perform all the work required by this Agreement and the Design Documents and Construction Documents (collectively, the "Contract Documents") or reasonably inferable therefrom for the design and construction of the PORP Refined Fuel Oil Recycling Facilities; provided, however, that the Contractor shall only perform the Work required to design and construct the Phase One Facility until the City has provided to 01910/0001 104034.1 12 Contractor written notice of the City's exercise of its option to cause Contractor to design and construct the Phase Two Facility and all subsequent facilities. "PORP (RFO) Recycling Facilities" shall mean oil and/or plastic recycling facilities consisting of a utility refining process, system, and related equipment, collectively known as a "PESCO RFO Recycling Plant" ("PORP"). 2.2 Equipment. Contractor represents and warrants that it has the right to initially sell to the City the two PORP (RFO) Recycling Facilities Equipment (the "Equipment"), any additional PORP (RFO) Recycling Facilities Equipment the City requests pursuant to the exercise of its option for additional facilities, pursuant to the terms and conditions of "Encore Energy - Pesco Memorandum of Understanding Exclusive Sales and Representation Agreement", made and entered into by and between Encore Energy and PESCO. 2.3 Startup of Operations. With the assistance of the City's Project Manager, Contractor (through the Design -Builder) shall, if applicable to the particular PORP facility, direct the checkout of utilities and start up operations and adjusting and balancing of systems and equipment for readiness. 3. Time of Commencement and Substantial Completion. 3.1 Commencement Date. Contractor shall create the First Schedule, the First Design Development Documents, and the First Construction Documents following the City's issuance of a written First Notice to Proceed (the "Commencement Date"). Following receipt of the First Notice to Proceed, and in accordance with the First Schedule, Contractor shall acquire the Equipment and shall provide or cause all necessary construction supervision, inspection, testing, labor, materials, tools and subcontracted items necessary to design and construct the Phase One Facility in accordance with the Contract Documents. 01910M001 104034.1 13 3.2 Substantial Com letion. Contractor shall diligently prosecute the Work and achieve Substantial Completion of the Phase One Facility not later than 240 days after the Construction Commencement Date (the "Substantial Completion Date"), and the Punch List items and all other work required to complete the Phase One Facility shall be completed within 60 days after the Substantial Completion Date. The Work shall proceed in accordance with the First Schedule. The First Schedule shall establish the dates for the start and completion of the various stages of the construction for the Phase One Facility, including the dates when information and approvals are required from the City. 3.3 Inability to Meet Time Schedule. If the Work is not completed within the time period as set forth in the Schedule, the City shall have the option of canceling this Agreement in order to proceed with the purchase of Equipment and provision of Work from another vendor. 4. Time of Performance. Contractor shall commence and complete the Phase One Facility as follows: 4.1 Time Schedule. Contractor shall begin to obtain the Equipment and perform the Services (including entering into any contracts as required to accomplish the Work) for the Phase One Facility upon the Contractor's receipt of the First Notice to Proceed from the City (the "Construction Commencement Date"). Contractor shall diligently prosecute the work and achieve Substantial Completion no later than two hundred forty (240) days after the Commencement Date (the "Substantial Completion Date"). The time between the Construction Commencement Date and the Substantial Completion Date shall be the "Contract Time". In addition to achieving the Substantial Completion Date, Contractor shall be obligated to 01910/0001 104034.1 14 accomplish the milestones described in the First Construction Progress Schedule by the dates set forth in the First Construction Progress Schedule, as defined in Paragraph 9.8 below. 4.2 Inability to Meet Time Schedule. Except if performance is excused, as set forth in Paragraph 4.3 below, Contractor's failure to install the Equipment and complete the Services for the Phase One Facility within the Contract Time, or Contractor's failure to achieve the milestones by the dates set forth in the First Construction Progress Schedule, as defined in Paragraph 9.8 below, shall constitute a material default of this Agreement, and, among other remedies available to it, including those set forth in this Paragraph 4, the City shall have the option of terminating this Agreement. 4.3 Force Majeure. Neither party shall be considered to be in default in any of its obligations under this Agreement when a failure of performance shall be due to an uncontrollable force. The term "uncontrollable force" shall mean any cause beyond the control of the party affected, including, but not restricted to, flood, earthquake, storm, fire, lightening, epidemic, war, riot, civil disturbance or disobedience, federal, state, or municipal action, statute, ordinance, or regulation, embargoes of the United States Government or any other government, which by exercise of due diligence such party could not reasonably have been expected to avoid and by exercise of due diligence has been unable to overcome. Either party rendered unable to fulfill any of its obligations under this Agreement by reason of an uncontrollable force, shall give written notice within five (5) business days of such fact to the other party and shall exercise due diligence to remove such inability with all reasonable dispatch. The time required to achieve Substantial Completion or a milestone shall be extended by Change Order by the number of days of delay caused by the uncontrollable force, as the City may reasonably determine. An extension of time for achievement of Substantial Completion by reason of an uncontrollable force shall not 01910/0001 104034.1 15 justify extra compensation for Contractor for administrative or other costs or expenses; provided, however, that if the time for achieving Substantial Completion is materially extended by reason of uncontrollable force through no fault of Contractor, Contractor shall be entitled to an increase in the Contract Sum, but only in any amount equal to the increase in Contractor's direct cost resulting from such delay. 4.4 Contractor's Delay. If the City determines that the performance of the Work has not progressed or reached the level of completion required by the Contract Documents so as to achieve the timely and orderly completion of the Work by the date for Substantial Completion, the City shall have the right to order Contractor to take corrective measures deemed necessary or desirable by the City to expedite the progress of construction (and Contractor hereby covenants to perform such corrective measures), including (a) working additional shifts of overtime, (b) supplying additional manpower, equipment and facilities, and (c) other similar measures (collectively, the "Extraordinary Measures"). Such Extraordinary Measures shall continue until the progress of the Work complies with the stage of completion required by the Contract Documents. The City's right to require Extraordinary Measures is solely for the purpose of ensuring -Contractor's compliance with the milestones and the date of Substantial Completion. 4.4.1 Contract Sum. Contractor shall not be entitled to any adjustment in the Contract Sum in connection with Extraordinary Measures required by the City under this Paragraph 4.4. 4.4.2 Exercise of Right. The City may exercise its rights under this Paragraph 4.4 as frequently as the City deems necessary or desirable to ensure that Contractor's 01910/0001 104034.1 16 performance of the Work will comply with the completion date set forth in the Contract Documents. 4.4.3 Further Rigl, i s. If the City determines, in its sole discretion, that Contractor's corrective measures are not sufficient to expedite the progress of the construction of the Work, the City shall be entitled, but not obligated, upon three (3) days prior written notice to Contractor, to take such corrective measures itself, in which event the City may deduct its costs and expenses with respect to such corrective measures from the amounts due to Contractor under the Contract Documents. 5. Contract Sum. 5.1 Contract Sum. As full and complete compensation for all Services and Equipment (including Contractor Equipment) provided by Contractor and its agents and subcontractors, if any, the City shall pay to Contractor, subject to additions and deductions by Change Order as provided in the this Agreement, the amount of $6,563,000 for the Phase One Facility (the "Phase One Contract Sum") and the amount of $5,4101,000 for the Phase Two Facility (the "Phase Two Contract Sum"). If and when the City exercises its option to cause Contractor to construct the Phase Two Facility, the term "Contract Sum" shall mean and refer to the Phase One Contract Sum and the Phase Two Contract Sum. Except for costs to be borne by the City, as described in this Agreement, and except for authorized Change Orders signed by the City, the City is under no obligation to compensate Contractor for Work, Equipment, Contractor Equipment, Services, or fees incurred under this Agreement in excess of the Phase One Contract Sum for the Phase One Facility) and the Phase Two Contract Sum for the Phase Two Facility. If and when the City elects to exercise its option for additional PORP facilities under this Agreement and cause Contractor to construct said additional facilities, City and 01910/0001 104034.1 17 Contractor shall mutually agree upon the Contract Sum for each additional facility, as full and complete compensation for all Services and Equipment (including Contractor Equipment). 5.2 Costs in Excess of Contract Sum. If the actual cost of the Work for the Phase One Facility exceeds the Phase One Contract Sum or the actual cost of the Work for the Phase Two Facility exceeds the Phase Two Contract Sum, each as adjusted for changes in the Work which have been approved in writing by City, Contractor shall pay such excess from its own funds, and the City shall have no liability for the payment of all or any part of the excess. 6. Payment Terms. 6.1 Application for Pa lam. On or before the fifteenth day of each month during the performance of the Work, Contractor shall submit to Project Manager, for approval by Project Manager and the City, an itemized Application for Payment certified as true and correct by Contractor's Representative, in form and substance acceptable to the City and Project Manager, supported by such data substantiating Contractor's right to payment as the City may require. Such Application shall cover all Work completed during the previous calendar month, and shall: 6.1.1 set forth in reasonable detail the costs and expenses incurred or paid by Contractor during the immediately preceding calendar month to any subcontractor, materialman, employee or laborer for services actually performed and for materials actually incorporated in the Work (or suitably stored on the Site); 6.1.2 show the names of contractors, subcontractors and materialmen to be paid and the amount to be paid to each; 6.1.3 set forth the total amount of expenditures to date and the total estimated expenditures to be made for the remaining balance of the Work; 01910/0001 104034.1 18 6.1.4 set forth the total amount of retainage to be held by the City pursuant to Paragraph 6.3.1 of this Agreement; and be accompanied by copies of invoices, payrolls, equipment rental schedules, affidavits, and such other evidence as City may require to support the Application for Payment submitted by Contractor. 6.2 Certificate for Payment. Project Manager shall, within seven (7) days after the receipt of Contractor's Application for Payment, either issue a Certificate for Payment to City, with a copy to Contractor, for such amount as Project Manager determines is properly due, or notify Contractor in writing his reasons for withholding a Certificate as provided in Paragraph 6.3.2 below. 6.3 Progress ss Payments. 6.3.1 Payment by City. Not later than thirty (30) days following City's receipt of the Certificate for Payment from Project Manager, the City shall pay to Contractor the amount of ninety percent (90%) of the amount set forth in the Certificate of Payment properly allocable to labor, materials and equipment incorporated in the Work or suitably stored at the Site, for the period covered by the Application for Payment, less the aggregate of previous payments made by the City and less any amounts withheld for a reason set forth in Paragraph 6.3.2 below. 6.3.2 Payment Holds. Project Manager may decline to certify payment and may withhold his Certificate in whole or in part, to the extent necessary to protect the City, if in his opinion the Work has not progressed to the point indicated or the quality of the Work is not in accordance with the Contract Documents. Project Manager may also decline to certify payment because of (a) defective Work not remedied; 01910/0001 104034.1 19 (b) third party claims filed or reasonable evidence indicating probable filing of such claims; (c) failure of Contractor to make payments properly to Subcontractors or for labor, materials or equipment; (d) reasonable evidence that the Work cannot be completed for the unpaid balance of the Contract Sum; (e) damage to City or another contractor; (f) reasonable evidence that the Work will not be completed within the Contract Time; or (g) Contractor's default hereunder or other failure to carry out the Work in accordance with the Contract Documents. 6.4 Terms re Payments. 6.4.1 Title to City. Contractor warrants that title to all Work, materials and Equipment covered by an Application for Payment will pass to the City either by incorporation in the construction or upon the receipt of payment by Contractor, whichever occurs first, free and clear of all liens, claims, security interests or encumbrances, and that no seller of any material will retain an interest therein or an encumbrance thereon. 6.4.2 Payments to Subcontractors. Contractor shall be solely responsible for paying all sums due to any subcontractors used in the performance of the Work. Except in the event that the City has failed to make payments to Contractor under the terms set forth in this Agreement, Contractor shall indemnify, defend, protect, and hold harmless the City and its elected officials, officers, and employees from and against any claims made by any subcontractors, employees, or agents of Contractor alleging that such parties have not been paid 01910/0001 104034.1 20 for any Equipment provided or Services performed in connection with the Work. Such indemnity shall including all costs and expenses of defense, including, without limitation, reasonable attorneys' fees and costs, and court costs. Applications for Payment may not include requests for payment of amounts Contractor does not intend to pay to a subcontractor or material supplier because of a dispute or other reason. 6.4.3 Payment is Not Acceptance. No Certificate for Payment, nor any progress payment, nor any use of the Project by City, shall constitute an acceptance of any Work not in accordance with the Contract Documents. 7. Substantial Completion/Final Payment. 7.1 Substantial Completion. When Contractor considers that the Work is "Substantially Complete", as defined in this Paragraph 7.1, Contractor shall notify City and Project Manager thereof. If Project Manager and City determine that the Work is Substantially Complete, Project Manager will prepare a Certificate of Substantial Completion, which shall (a) establish the date of Substantial Completion, (b) list all immaterial items that will not interfere with City's utilization of the Work for its intended purpose (such final list approved by City being referred to herein as the "Punch List"), (c) fix the time within which Contractor shall complete all items on the Punch List, and (d) certify that the Work has been substantially completed in a good and workmanlike manner, in substantial accordance with the Contract Documents and in compliance with all applicable laws. Substantial Completion shall mean that all of the Permits have been obtained, all inspections by governmental and quasi -governmental agencies that may be required have been completed and approved, and the Facility is in condition to be operated and used for its intended purposes (subject only to items on the Punch List), and is legally authorized to be operational, and has passed all tests and inspections by the City. 01910,0001 104034.1 21 7.2 Further Pa 1Y lent. Upon Substantial Completion of the Work and upon application by Contractor and certification by Project Manager, as provided in Paragraph 6.2 above, City shall make any payment required to ensure that Contractor has received 90% of the Contract Sum, less such amounts as the Project Manager may determine for all incomplete Work and unsettled claims. 7.3 Final Payment. Final payment, constituting the entire unpaid balance of the Contract Sum, shall be paid by the City to the Contractor when (a) the Work, including all Punch List items, has been completed to City's satisfaction; (b) Project Manager has issued and City has approved the final Certificate of Payment; (c) all warranties and guarantees required under the Contract Documents have been assigned to and accepted the City; and (d) Contractor has submitted to the City (1) data establishing payment satisfaction of all its obligations, such as receipts, (2) a certificate evidencing that the insurance required by Paragraph 17.6 and Exhibit "F" to remain in force after final payment is currently in effect and will not be cancelled or allowed to expire until at least thirty days' prior written notice has been given to City, and a written statement that such policies will be renewable, and (3) a full set of "as -built" sepias incorporating all the reproducible records, drawings showing changes in the Work made during construction, based on marked -up prints, drawings and other data known by Contractor, and (5) copies of electronic media, if any, including computer tapes, reflecting the final design of the Project. 7.4 Accounting Records. Contractor shall keep full and detailed accounts and exercise such controls as may be necessary for proper financial management under this Agreement, and shall maintain such books and records for a period of three (3) years after final payment, or for such longer period as may be required by law. 01910/0001 104034.1 22 8. The City's Rights and Obligations. 8.1 City's Obligations to Provide Utilities, Storage, and Security. The City shall provide, at the Cit f's cost, temporary water, power, and other utilities for the use of Contractor and its subcontractors during the Contract Time. The City shall also be responsible for security at the Site during the Contract Time, and shall provide storage facility for Equipment ordered hereunder at no cost to Contractor. 8.2 013's Right to Stop the Work. If Contractor fails to correct defective Work as required by this Agreement, or if Contractor is otherwise in default under the Contract Documents, the City, by written notice to Contractor, may order Contractor to stop the Work, or any portion thereof, until Contractor has corrected such defective work or cured such default. The City's right to stop the Work shall not impose any duty on City to exercise such right for the benefit of Contractor or any other person or entity. 8.3 City's Right to Carry Out the Work. If Contractor defaults or neglects to carry out the Work in accordance with the Contract Documents and fails within seven (7) days after receipt of written notice from City to commence and continue correction of such default or neglect with diligence and promptness, City may, without prejudice to any other remedy it may have, make good such deficiencies and deduct from the payments then or thereafter due Contractor the cost of correcting such deficiencies. 01910tDO01 104034.1 23 9. Contractor's Rights and Obligations. 9.1 Review of Contract Documents. 9.1.1 Consistency: Contractor shall compare the Contract Documents and shall at once report to Project Manager any error, inconsistency or omission Contractor may discover. Provided that Contractor timely reports any such error, inconsistency or omission, Contractor shall not be liable to the City for any damage resulting from any such errors, inconsistencies or omissions in the Contract Documents, except for such damage arising from Contractor's negligence or willful misconduct. If Contractor performs any construction activity involving a recognized error, inconsistency or omission in the Contract Documents without such notice to Project Manager, Contractor shall assume appropriate responsibility for such performance and shall bear an appropriate amount of the attributable costs for correction. represents to City that: 9.1.2 Representations. By executing the Agreement, Contractor (a) The Contract Documents are sufficiently complete and detailed for Contractor to (1) perform the Work required to produce the results intended by the Contract Documents, and (2) comply with all of the requirements of the Contract Documents. (b) The Work required by the Contract Documents, including all construction details, construction means, methods, procedures, sequences and techniques necessary to perform the Work, use of materials, selection of equipment and requirements of product manufacturers, and safety 019101" 1 104034.1 24 precautions and programs in connection with the Work, is consistent with (1) good and sound practices within the construction industry, (2) requirements of any warranties applicable to the Work, (3) requirements of all laws, regulations or policies of all governmental authorities having jurisdiction over the Project, and (4) requirements of any permit or authorization required for the Project. (c) Contractor has the expertise, skills, background, and experience necessary to perform the Work described herein, and all of Contractor's employees, subcontractors, and agents providing services or equipment for this Project will possess the expertise, skills, background, and experience necessary for the work they will perform. Contractor and all of its employees, subcontractors, and agents are properly trained and, if required by law, licensed to perform the services to be provided hereunder. 9.2 Supervision and Construction Procedures. 9.2.1 Supervision. Contractor shall supervise and direct the Work, using its best skill and attention. Contractor shall be solely responsible for all construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work under the Contract Documents. Contractor shall review any specified construction or installation procedure (including those recommended by any product manufacturer). Contractor shall advise Project Manager (a) if the specified procedure deviates from acceptable construction practice, (b) 01910i0001 104034.1 25 if following such procedure will affect any warranties, and (c) of any objections which Contractor may have to such procedure. 9.2.2 Responsibility for Conduct. Contractor shall be responsible to City for the acts and omissions of itself, its agents, its employees, subcontractors and sub - subcontractors and their respective agents and employees, and other persons performing any Work under a contract with Contractor. 9.2.3 No Release. Contractor shall not be relieved from its obligations to perform the Work in accordance with the Contract Documents either by the activities or duties of Project Manager in his administration of the Contract Documents, or by inspections, tests or approvals required or performed by persons other than Contractor. 9.2.4 Coordination. Whenever the work of Contractor or a Subcontractor is dependent upon the work of other Subcontractors, then Contractor shall require the Subcontractor to coordinate his work with the others. 9.2.5 Delivery and Storage. All materials and Equipment shall be delivered, handled, stored, installed, and protected in accordance with the best current practices in the industry, in accordance with manufacturers' specifications and recommendations, and in accordance with Contract Document requirements. The term "delivery" in reference to any item specified or indicated, means the unloading and storing of such items with proper protection at the Site. All risk of loss to stored materials and Equipment and Contractor Equipment shall be borne by Contractor. Risk of loss or damage shall pass to the City upon completion of installation of all Equipment, testing, and written acceptance by the City. 9.2.6 Confirmation of Dimensions. Before ordering materials and equipment, or performing Work, Contractor shall verify indicated dimensions. If any 01910/0001 104034.1 26 discrepancy exists, Contractor shall take field measurements required for the proper fabrication and installation of the Work. Upon commencement of any item of Work, Contractor shall be responsible for the dimensions related to such item of Work. 9.3 Labor and Materials. 9.3.1 Contractor's Payment for Work. Unless otherwise provided in the Contract Documents, Contractor shall provide and pay for all labor, materials, equipment, tools, construction equipment and machinery, transportation, and other services necessary for the proper execution and completion of the Work, whether temporary or permanent and whether or not incorporated or to be incorporated in the Work. Contractor shall be responsible for all cutting, fitting or patching that may be required to complete the Work or to make its several parts fit together properly. 9.3.2 Provision of Workers and Material. Contractor shall furnish an adequate supply of skilled workers and proper materials to perform the Work in the best and most sound manner consistent with the interests of City. 9.3.3 Assignment of Warranties. Contractor shall assign to City at the time of final completion of the Work, or upon any earlier termination of this Agreement, any and all manufacturers' warranties relating to materials and labor used in the Work and further agrees to perform the Work in such manner so as to preserve any and all such warranties. Contractor shall assemble and deliver to City complete copies of all warranties, guaranties, and operating and maintenance data from all manufacturers whose equipment is installed in the Work. 9.4 Testing. 9.4.1 Equipment. Contractor shall inspect all Equipment as it is .delivered, and will reject any Equipment that is defective, with the cost of repair or replacement 0191MG0I 104034.1 27 being the responsibility of Contractor. Contractor will begin testing the various Equipment components as they are received or installed, as appropriate, taking into account the nature of the Equipment. The City reserves the right to test any and all Equipment, regardless of the results of Contractor's testing. In the event that the test results obtained by either Contractor or the City reveals that any portion of the Equipment does not meet the City's specifications or the City identifies any defects in or damage to the Equipment, Contractor shall promptly repair or replace any defective Equipment; provided, however, that if, in the City's reasonable discretion, the quantity or quality of the defects are substantial, the City shall have the option of rejecting the entire shipment of Equipment from that vendor or subcontractor, and obtaining another vendor to provide that Equipment. Contractor shall be responsible for all direct and indirect costs that may be incurred by the City in connection with the rejection and/or replacement of damaged or defective Equipment, including any damage caused to the City's existing equipment or materials by the installation or use of defective Equipment or Services provided by Contractor or its subcontractors. 9.4.2 Testing of the Project. The City shall test the Phase One Facility and, if applicable, the Phase Two Facility and all subsequent PORP facilities. Such testing shall take place promptly after Substantial Completion of the Phase One Facility, and subsequently, if applicable, the Phase Two Facility and all subsequent PORP facilities has been achieved. The City's acceptance of the Phase One Facility and, if applicable, the Phase Two Facility and all subsequent PORP facilities, shall be contingent upon the City's verification of the test results for the Equipment and the Project following Substantial Completion. In the event that the test results show that either the Phase One Facility or the Phase Two Facility does not meet the Specifications or otherwise fails to conform to the terms of the Contract Documents, the City 01910/0001 104034.1 28 shall have the option of rejecting the entire Project or rejecting only the damaged Equipment. Contractor shall be responsible for all costs that may be incurred in connection with the rejection and replacement of the Project or the Equipment. Contractor's testing obligations are included in the Contract Sum. 9.5 Warranties. 9.5.1 Contractor's Warranty. Contractor warrants title to the Equipment purchased hereunder and any part thereof to be free of any claim of any security interest, lien or any encumbrance. This warranty shall survive the termination of this Agreement. Contractor warrants that all materials and Equipment will be new and free from defects in materials and workmanship, comply with the Contract Documents, and be of good quality and merchantability, and fit for their intended purposes; and that all Work will be of good quality, free from faults and defects, in conformance with the Contract Documents, and performed in a good and workmanlike manner. All Work not conforming to these requirements, including substitutions not properly approved and authorized, may be considered defective. If required by City or Project Manager, Contractor shall furnish satisfactory evidence as to the kind and quality of materials and equipment used on the Project. Contractor shall correct all construction performed under this Agreement which is defective in workmanship or materials during the Correction Period, as defined in Paragraph 11.1. The term of this warranty is shall survive any termination of this Agreement and be in full force and effect for the Correction Period described in Paragraph 9.5.2 Manufacturers' Warranties. Contractor shall obtain for the benefit of the City, and assign to the City, commercially reasonable manufacturers' warranties for parts and labor, which shall commence upon Substantial Completion. Contractor shall assist the City 01910/0001 104034.1 29 in the enforcement of all such warranties. Contractor shall collect all written warranties and equipment manuals and deliver them to the City in a format directed by the City. 9.5.3 Warranties re Inspections. Contractor shall secure all required certificates of inspection, testing, or approval, including stack emission tests and any other tests as required by applicable Permits and deliver them to the City. Contractor shall ensure that the Project complies with EPA Air Emission Limits. 9.6 Taxes. Contractor shall pay all sales, consumer, use, and other similar taxes for the Work or portions thereof provided by Contractor. 9.7 Permits, Fees and Notices. 9.7.1 Permits. Contractor shall secure all Permits; provided, however, the City shall pay for the costs involved in obtaining the Permits, as described in Paragraph 1.1.2(g). 9.7.2 Notices. Contractor shall give all notices and comply with all laws, ordinances, rules, regulations and lawful orders of any public authority bearing on the performance of the Work. If Contractor performs any Work knowing it to be contrary to such laws, ordinances, rules and regulations, and without such notice to Project Manager and City, Contractor shall assume full responsibility therefor and bear all costs attributable thereto. 9.8 Construction Progress Schedule. 9.8.1 Schedule. Within thirty (30) days after the execution of this Agreement, Contractor shall prepare and submit for City's and Project Manager's approval Contractor's construction schedule for the Work which shall be attached hereto and made a part hereof as Exhibit "G" (the "First Construction Progress Schedule"). If the parties are not able to reach agreement on the terms of the Construction Progress Schedule within the above -described 01910/0001 104034.1 30 time period, the City shall have the right to terminate this Agreement without cause, as described in Paragraph 14.2 below. 9.8.2 Meetinas. At City's request, from time to time, Contractor shall hold regular progress meetings with City and/or Project Manager at the Site (or Sites). At such meetings, Contractor shall report to City and/or Project Manager on the progress of the Work and such other matters relating to Contractor's performance under the Contract Documents as City may request. 9.9 Shop Drawings and Sam lames. Contractor shall review, stamp with its approval, and submit, with reasonable promptness and in orderly sequence so as to cause no delay in the Work or in the work of any other contractor, all Shop Drawings and Samples required by the Contract Documents or subsequently requested by Project Manager. 9.10 Use of Site. Contractor shall allow Project Manager and the City's authorized representatives access to the Site at all times. Contractor at all times shall keep the Site free from accumulation of waste materials or rubbish caused by its operations. At the end of each day and upon completion of the Work, Contractor shall remove all its waste materials and rubbish from and about the Project and the Site, as well as all its tools, construction equipment, machinery and surplus materials, and shall clean the Project and the Site, leaving it in a neat condition. If Contractor fails to clean up upon completion of the Work, City may do so and the cost thereof shall be charged to Contractor and deducted from the Contract Sum. 9.11 Indemnification. 9.11.1 Contractor's Indemnity. To the fullest extent permitted by law, Contractor shall defend, indemnify and hold harmless City and its elected officials, officers, agents, including Project Manager, and employees from all claims, suits, actions, demands, 01910/0001 104034.1 31 damages, liabilities, expenses, judgments, settlements and penalties, losses, fines, and all costs and expenses incurred in connection therewith, including reasonable attorneys' fees and all costs of defense, arising out of or attributable to the negligent or wrongful acts of Contractor or its subcontractors, employees or agents in the performance of Work or delivery and installation of Equipment under this Agreement, except to the extent arising from or caused by the sole negligence or willful misconduct of the City, its officers, agents or employees. The terms of this indemnity shall survive the termination of this Agreement. The obligations in this Paragraph are in addition to Contractor's duty to provide insurance and shall not be limited by any limitation on the amount or type of insurance coverage carried by Contractor. 9.11.2 Indemnity Process. The City shall notify Contractor in writing of any suits, claims or demands covered by this indemnity. Promptly after receipt of such notice, Contractor shall assume the defense of such claim with counsel reasonably satisfactory to City. If Contractor fails, within a reasonable time after receipt of such notice, to assume the defense with counsel reasonably satisfactory to City, or if, in the reasonable judgment of City, a direct or indirect conflict of interest exists between the parties with respect to the claim, or if in the sole judgment of City the assumption and conduct of the defense by Contractor would materially and adversely affect City in any manner or prejudice its ability to conduct a successful defense, then the City shall have the right to undertake the defense, compromise and settlement of such claim for the account and at.the expense of Contractor. Notwithstanding the above, if the City in its sole discretion so elects, City may also participate in the defense of such actions by employing counsel at its expense, without waiving the City's obligations to indemnify or defend. Contractor shall not settle or compromise any claim or consent to the entry of any judgment without the 01910/0001 104034.1 32 prior written consent of the City and without an unconditional release of all liability by each claimant or plaintiff to the City. 9.12 Payment and Performance Bond. Prior to commencement of its Work on the Phase One Facility, Contractor shall provide the City with a copy of a payment and performance bond in an amount equal to the Phase One Contract Sum that has been issued for the benefit of the City, and prior to commencement of its Work on the Phase Two Facility, Contractor shall provide the City with a copy of a payment and performance bond in an amount equal to the Phase Two Contract Sum. The requirement for the Payment and Performance Bond for subsequent PORP facilities may be waived by the City, at the City's option. 9.13 Personnel. Contractor shall minimize changes to its key project personnel. The City shall have the right to request reasonable Project personnel changes and to review and reasonably approve Project personnel changes proposed by Contractor. 10. Additional Services/Change Orders. 10.1 Change Orders. The City reserves the right to request changes in the Work, which changes are referred to as the "Additional Services". Additional Services may be authorized only by a Change Order signed by the Project Manager and Contractor. If the City requests Additional Services, Contractor shall prepare a proposal specifying a fixed fee adjustment to the Contract Sum, and, if necessary, an adjustment to the Contract Time for the requested modification. If Contractor believes Additional Services are appropriate, it shall request such modification in writing, again specifying the fixed fee adjustment to the Contract Sum and adjustment to the Contract Time before proceeding with the Additional Services. Contractor shall immediately identify (by written notice to the City) any work requested by the City which Contractor believes to be outside the scope of the Work, as defined in the Contract 01910MOI 104034.1 33 Documents, and such notice shall include a proposal specifying the fixed fee adjustment to the Contract Sum and Contract Time. Change Orders shall be effective on receipt of the executed fax copies with originals to follow thereafter as soon as possible, with the City to keep originals on file. Each Change Order shall set forth a commercially reasonable fixed fee. The fixed fee for each Change Order shall reflect the most expeditious and economical means of achieving the task consistent with the interests of the City. If a Change Order increases the Contract Sum, Contractor shall include the Work covered by such Change Orders in Applications for Payment as if such Work were originally part of the Contract Documents. The fee shall be negotiated in good faith and agreed to by the parties prior to the commencement of the Additional Services; provided, however, that if the parties are not able to reach agreement on the fee, Contractor shall provide the Additional Services pursuant to the City's written request, and payment shall be governed by the terms of Paragraph 6 of this Agreement. 10.2 The City's Directive/Notice of Intent to File Claim. If the parties cannot agree whether or to what extent the modification justifies adjustments to compensation or schedule, Contractor shall nonetheless timely perform the Additional Services, on the written direction of the Project Manager (the "City's Directive'), and Contractor shall submit a written "Notice of Intent to File Claim." The written Notice of Intent to File Claim shall reasonably detail the amount of and basis for adjustment to the Contract Sum and Contract Time and shall be submitted to the City (if at all) prior to commencing performance of the Additional Services. If the notice is timely given, Contractor shall keep and submit to the City on a daily basis a complete breakdown of all costs incurred for the Additional Services, including a labor breakdown by name of person, hours worked, and task performed, as well as a similar breakdown for all equipment used and copies of all invoices and delivery tickets for materials used. 01910/0001 104034.1 34 Contractor's failure to timely deliver a "Notice of Intent to File a Claim," or maintain and deliver an accurate cost breakdown and supporting documentation, shall constitute conclusive and nonrebuttable evidence that no adjustment to compensation or schedule is due for the Additional Services. If the cost breakdown and supporting documentation is delivered by Contractor, the parties shall endeavor, in good faith, to reach agreement on the increased cost of the Additional Services and the time adjustment, if any, to the Contract Time. If the parties are not able to reach agreement, the City shall pay to Contractor the undisputed portion of the charges. The basis for establishing the cost of Additional Services, if not otherwise agreed to by the parties, shall be the increased costs (taking into account any offset based on the change) of the following costs that are directly attributable to the change: costs of labor, costs of materials, supplies, and equipment, costs of premiums for all increases in bonds and insurance, and additional costs of supervision and field office personnel. 10.3 Validity of Claim for Chan es. No claim for additional compensation or extension of time shall be valid or recognized unless contained in a Change Order or City's Directive signed by the Project Manager. Accordingly, no course of conduct or dealings between the parties, nor express or implied acceptance of alterations or additions to the Work, and no claim that City has been unjustly enriched by any alteration or addition to the Work, shall be the basis of any claim to an increase in any amounts due under the Contract Documents or a change in any time period for the Work in the Contract Documents. 10.4 Minor Changes in the Work. Subject to City's prior approval, Project Manager will have authority to order minor changes in the Work not involving an adjustment in the Contract Sum or an extension of the Contract Time and not inconsistent with the intent of the 01910/0001 104034.1 35 Contract Documents. Such changes shall be effected by written order, and shall be binding on City and Contractor. Contractor shall carry out such written orders promptly. 10.5 Concealed Conditions. Contractor represents that it has (i) examined all available records and data regarding the Site and the Project, and has from such examination informed itself concerning any conditions to be encountered and all other pertinent matters and conditions in connection with the Work and Services to be performed hereunder, (ii) thoroughly inspected the Site and determined that it is satisfactory for the Work, and (iii) read the Contract Documents and is fully cognizant of and is familiar with all of the terms and conditions thereof. In the event any concealed conditions shall be encountered in the performance of the Work which (a) are not apparent from a thorough visual inspection of the Site, (b) are materially at variance with the conditions indicated by the aforesaid records and data and the Contract Documents, (c) differ materially from those generally recognized as inherent in work of the character provided for in this Contract, and (d) cause a material delay in the Work or a material increase of the cost of the Work which cannot be avoided (collectively, "Concealed Conditions"), Contractor shall deliver to City within five (5) days of discovery of the Concealed Conditions a written notice describing in detail the Concealed Conditions and estimating the delay in or increase in cost of the Work caused by such Concealed Conditions (the "Concealed Conditions Notice"). Contractor shall provide such supporting documentation for the Concealed Conditions Notice as the City may require. Any claims of Concealed Conditions not made as specified herein shall be deemed waived. Within fourteen (14) days after receipt of the Concealed Conditions Notice, the City shall either (x) authorize Contractor to proceed with the Work through Construction Change Directive or Change Order, in which case the Contract Sum and/or Contract Time shall be 01910/0001 104034.1 36 adjusted to reflect the increase in actual cost and/or delay caused by the Concealed Conditions, or (y) terminate the Contract in accordance with Paragraph 14.2. 11. Correction of Work. 11.1 Obligation to Correct Work and Correction Period. Contractor, at its cost, shall promptly correct all Work rejected by Project Manager or the City as defective or as failing to conform to the Contract Documents, if reported to Contractor before Substantial Completion, or within the later of (a) 24 months after Substantial Completion, (b) such longer period of time as may be prescribed by law, or (c) the terms of the applicable manufacturers' warranty (the "Correction Period"). The City shall give such notice promptly after discovery of the condition. The Correction Period shall be extended with respect to portions of Work first performed after Substantial Completion by the number of days between Substantial Completion and the actual performance of the Work, and a new 24- month Correction Period shall commence for all repaired or replaced items of Work on the date the repair or replacement was made. Contractor's obligations hereunder shall include the obligation to repair any damage to other property caused by the defective Work or the repair thereof. Contractor shall indemnify the City from and hold the City harmless against any and all claims, liabilities, liens, damages, losses, costs, and expenses, including reasonable attorneys' fees and all costs of defense, arising out of or relating (a) to any such Work found to be defective or not in accordance with the Contract Documents, or (b) the correction of any such Work. Contractor's obligations under this Paragraph 11.1 shall survive acceptance of the Work and the termination or expiration of this Agreement. 11.2 Compliance with Agengy Requirements and Law. Contractor's obligation to repair any defective Work shall include the obligation to make any repairs or replacements required to bring the Project into compliance with applicable law and all Permits. 01910MOOl 104034.1 37 11.3 City's Remedies. If Contractor fails to correct defective or nonconforming Work as provided in this Paragraphl 1, the City may correct it in accordance with Paragraph 8.3. This remedy is in addition to all other remedies available to the City. 12. Protection of Persons and Property_. 12.1 Safety of Persons and Property. Contractor shall take all reasonable precautions and conform to all safety provisions and practices for the safety of, and shall provide all reasonable protection to prevent damage, injury or loss to all employees on the Work and all other persons who may be affected thereby. 12.2 Fire Precautions and Protection. Contractor shall take necessary precautions to guard against and eliminate possible fire hazards and prevent damage to the Work, building materials, equipment, temporary field offices, and public and private property. 12.3 Environmental Control. 12.3.1 Compliance with Law. All materials and work procedures used on the Project shall comply with all environmental and air pollution control regulations in effect at the Site. Contractor shall be responsible for obtaining all necessary approvals and certification as to compliance of the materials and work procedures. 12.3.2 Use of Hazardous Materials. Contractor shall not use or cause to be used any hazardous materials, as defined under any applicable federal, state or local law, including asbestos, or asbestos -containing materials, where feasible alternatives exist. In the event that Contractor must use hazardous materials on the worksite or incorporate such materials into the Work, Contractor shall (a) provide the City with copies of all material safety data sheets, (b) use the utmost care in the use, storage, transportation and disposal of such materials, (c) obtain all necessary permits and approvals in connection therewith, and (d) at all times fully 01910K1001 104034.1 38 comply with all applicable federal, state or local laws in connection with the use, storage, transportation and disposal thereof. 13. Subcontractors. 13.1 Selection of Subcontractors. Those portions of the Work that Contractor does not perform with the Contractor's own personnel shall be performed under subcontracts or by other appropriate agreements with Contractor (the "Subcontract"). If the City has a reasonable objection to any subcontractor, Contractor shall submit a substitute to whom the City has no reasonable objection, and the City and Contractor will negotiate in good faith to increase or decrease the Contract Sum in order to reflect any change to the cost of Work resulting from the substitution of a new subcontractor. 13.2 Payment to Subcontractors. Contractor shall pay subcontractors based only on Work actually completed, shall make all payments due under each Subcontract at the time those payments become due, and shall hold the City harmless from any loss on account of Contractor's failure to do so. Neither the City nor Project Manager shall have any obligation to pay or to see to the payment of any sums so due to any subcontractor. 13.3- Subcontractor Relations. In each Subcontract, Contractor shall require each subcontractor, to the extent of the Work to be performed by the subcontractor, to be bound to Contractor by the terms of the Contract Documents, and to assume toward Contractor all the obligations and responsibilities which Contractor, by the Contract Documents, assumes toward the City. Each Subcontract shall (a) preserve and protect the rights of the City and Project Manager under the Contract Documents with respect to the Work to be performed by the subcontractor so that the subcontracting thereof will not prejudice such rights, (b) allow the City the benefit of Contractor's rights, remedies and redress against the subcontractor, (c) be 01910/0001 104034.1 39 assignable to the City in the event that the City takes over the Work or terminates this Agreement as provided hereunder and the City specifically accepts such assignment by notifying the subcontractor in writing, (d) entitle the City to at least fifteen (15) days' written notice from the subcontractor of any default by Contractor under the Subcontract and provide the City with the right to cure any such default within said fifteen (15) day period (or, if default is not susceptible of being cured within fifteen days, to commence curing the same and to continue to take action to do so with diligence until the same is cured), and (e) specifically provide that the City is an intended third party beneficiary of such Subcontract. Contractor shall require each subcontractor to enter into similar agreements with its sub -subcontractors. Contractor shall make available to each proposed subcontractor, prior to the execution of the Subcontract, copies of the Contract Documents to which the Subcontractor will be bound by this Paragraph 13.3, and identify to the subcontractor any terms and conditions of the proposed Subcontract which may be at variance with the Contract Documents. Each subcontractor shall similarly make copies of such Contract Documents available to its sub -subcontractors. 14. Termination of this Agxeement.. 14.1 Right of Termination. This Agreement may be terminated by the City or Contractor, with or without cause, upon at least fifteen days written notice to the other party. 14.2 Termination by City Without Cause. In the event of termination by the City without cause, Contractor shall be compensated for all Work performed prior to the date of delivery of the termination notice, plus compensation for (i) necessary work performed during the notice period and authorized in the termination notice, and (ii) all costs reasonably and necessarily incurred by Contractor directly attributable to termination which could not reasonably have been avoided and for which Contractor is not otherwise compensated that are incurred 01910/0001 104034.1 40 through the date of the termination and in effectuating the termination (the "Termination Expenses"). Termination Expenses shall not include lost profits, lost opportunities, consequential damages, or the like. 14.3 Termination by the City for Cause or by Contractor without Cause. In the event that Contractor commits a breach of a material condition of this Agreement, the City shall notify Contractor in writing of said breach and if Contractor has not cured or begun reasonable efforts to cure after fifteen (15) days of receipt of said notice, and fails to diligently pursue corrective action, the City shall have the right to cancel this Agreement for cause based on Contractor's default. Contractor shall be responsible for all direct and indirect costs due to the City's re -procurement of the equivalent of the Equipment or Services cancelled from Contractor. If this Agreement is terminated by the City with cause, or terminated by Contractor without cause, the City shall pay Contractor for all Work performed prior to the date of delivery of the termination notice, subject to the right of the City to withhold such unpaid amounts pending resolution of damages incurred by the City as a result of Contractor's default. 14.4 Actions Subsequent to Termination. Following the termination date, regardless of whether the Agreement is terminated with or without cause, and subject only to the payments described in Paragraphs 14.2 or 14.3, as applicable, the City shall have no further rights, duties, liabilities or obligations whatsoever under this Agreement. Upon a termination of this Agreement, except for its obligations under Paragraph 14.5 below, Contractor shall have no further rights, duties, liabilities or obligations whatsoever under this Agreement. Notwithstanding anything in this Agreement, including the foregoing, to the contrary, Paragraphs 2.2, 9.3.3, 9.5, 9.11,11, 14.4, 14.5, 15.1, 16, and 17 (except that 17.6 shall require only "tail" coverage) shall survive the termination of this Agreement. 01910AMI 104034.1 ` 41 t . 14.5 Delivery of Work Product. Within three (3) business days after any termination of this Agreement, Contractor shall deliver to the City all Work Product (as defined in Paragraph 15.1) pertaining to this Agreement or to the Project and any and all copies thereof, whether in the possession of Contractor or a party engaged by Contractor; provided, however, that solely for its internal auditing purposes, Contractor may, at its sole expense, make and retain copies of Work Product materials, subject to the confidentiality provisions of Paragraph 16. Contractor shall also furnish all such information, take all such other action and shall cooperate with the City as the City shall reasonably require in order to effectuate an orderly and systematic termination of Contractor's duties and activities hereunder. 15. Work Product. 15.1 Work Product Propggy of City. All documents, plans, designs, drawings, data, databases, studies, reports and other materials, in whatever form or medium, prepared by or for Contractor, its officers, employees, agents and subcontractors in the course of performing the Work under this Agreement (collectively, the "Work Product"), but excluding working notes and internal documents, shall be the property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Contractor or to any other party. Work Product materials shall be delivered to City by Contractor as they are generated. 15.2 Form of Work Product. Work Product produced by Contractor shall conform to the best standards of that profession. Information shall be organized in a logical and systematic manner. Drawings shall contain as much information on a single drawing as can be done without impairing clarity and quality. All drawings shall be in Autocad 2000 or higher. All design documents shall be in Microsoft Word format. 01910/0001 104034.1 42 16. Confidential Information. 16.1 Access to the City's Confidential Information. The City may provide Contractor and/or its subcontractors with, or allow Contractor access to, certain information not available to the public concerning the City or businesses located in the City. The information may include information regarding companies located in the City, tax information, and information concerning various company's sales, value of assets, or other confidential information about companies dealing with the City. All such non-public information shall be known as "City's Confidential Information" and may not be used or disclosed by Contractor for any purpose other than to perform its duties hereunder. 16.2 Access to Contractor's Confidential Information. The City shall treat as confidential any of Contractor's developments, confidential information, know-how, discoveries, production methods and the. like that may be disclosed to the City by the Contractor in connection with this Agreement and the Project ("Contractor's Confidential Information'). Contractor's Confidential Information shall also include all of Contractor's estimating systems and historical and parameter cost data that may be disclosed to the City in connection with this Agreement and the -Project. 16.3 No Disclosure. Collectively, the City's Confidential Information and the Contractor's Confidential Information. Except as expressly permitted by prior written consent of the other party, the party receiving or obtaining the other party's Confidential Information, and such party's employees, agents, and subcontractors, shall not disclose, permit the disclosure of, release, disseminate, or transfer, whether orally or by any other means, any part of such Confidential Information to any other person or entity, without the express prior written consent of an authorized representative of the party that provided the Confidential Information. Each 01910/0001 104034.1 43 parry shall return any written Confidential Information and all copies made of such items to the other party upon the other parry's written request, but in any event not later than the date that Contractor has performed all Work to be performed pursuant to this Agreement. Each party hereby agrees that such Confidential Information and any documents provided may be used by the other party, and its employees, agents, and subcontractors only as authorized by the other party. Contractor shall include a provision in its agreements with subcontractors that binds the subcontractors to this non -disclosure requirement. 16.4 Court Ordered Disclosure. Each party shall immediately notify the other party of any court order or subpoena requiring disclosure of Confidential Information, and shall cooperate with the other party's legal counsel in responding to any such order or subpoena. Each party may only disclose Confidential Information required to be disclosed pursuant to court order or subpoena after legal counsel has exhausted any lawful and timely appeal or challenge. 16.5 Exceptions to Confidentiality_. The foregoing obligations shall not apply to any Confidential Information lawfully in a party's possession prior to its acquisition from the other party; received in good faith from a third party not subject to any confidential obligation to the party; or that now is or later becomes publicly known through no breach of confidential obligation by a party or its subcontractors. 16.6 Remedies. In addition to any other remedies that it may have at law or in equity, the party whose confidentiality has been breached shall be entitled to a temporary and permanent injunction by a court of competent jurisdiction against any breach or threatened breach of any of the provisions of this Paragraph 16. Each party acknowledges that in case of such breach or threatened breach of said provisions, the injured party would have no adequate 01910/0001 104034.1 44 remedy at law, and the injured party shall not be required to post a bond or other security or to prove damages. 17. General Provisions. 17.1 The Contract Documents. This Agreement, including Exhibits "A" through "G", and the Contract Documents represent the entire and integrated agreement between the parties hereto, and supersede and replace all prior and contemporaneous negotiations, representations, discussions, or agreements between the parties related to the matters set forth in the Contract Documents. This Agreement may be amended or modified only by a written amendment signed by the parties. Nothing contained in the Contract Documents shall create any contractual relationship between the City or Project Manager and any other party, including any contractor or subcontractor of Contractor. 17.2 Forum Selection. Any action brought relating to this Agreement shall be brought and held exclusively in a Court in or serving the County of Los Angeles, California. 17.3 Attorneys' Fees. If either party institutes an action or legal proceeding arising out of or related to the Contract Documents or the relationship of the parties or their rights or duties in connection with the matters set forth in the Contract Documents, whether sounding in tort, contract, or otherwise, the prevailing party in such action or proceeding shall be entitled to recover from the other party all costs and expenses, including all costs and reasonable attorneys' fees, in addition to any other remedy awarded by the court. 17.4 Notices. All notices required or permitted by this Agreement shall be in writing and may be delivered in person (by hand or by messenger or courier service) or may be sent by certified or registered mail, return receipt requested, or by facsimile transmission during normal business hours, if delivery is confirmed and provided a copy is also delivered via delivery 01910/0001 104034.1 45 or mail, and shall be deemed effective upon delivery or refusal to accept delivery, if served in a manner specified in'this Paragraph 17.4 to the recipient as set forth below. If a notice is delivered on a Saturday, Sunday, or holiday, it shall be deemed delivered on the next business day. Notices to the parties shall be sent to the addresses set forth below, or such other address as is provided by one party to the other in writing. CITY: THE CITY OF VERNON Attn: Bruce V. Malkenhorst City Administrator 4305 Santa Fe Avenue Vernon, CA 90058-0805 With a copy to: Jim Buchera, TRICO Construction Project Manager 445 Hampshire Street San Francisco, CA 94110 CONTRACTOR: NEW AGE FUEL, INC. 17.5 Status of Contractor. At all times during the term of this Agreement, Contractor shall be an independent contractor. Except as the City may specify in writing, . Contractor shall have no authority, express or implied, to act on behalf of the City in any capacity whatsoever as an agent. Contractor shall have no authority, expressed or implied, pursuant to this Agreement to bind the City to any obligation whatsoever. 17.6 Insurance. Contractor agrees to provide insurance in the amounts and forms specified in Exhibit "F", which is attached hereto and made a part hereof by reference. Comparable coverage shall be provided for each subcontractor used in the performance of this Agreement. Contractor shall submit to the City documentation indicating compliance with these 01910/0001 104034.1 46 minimum requirements no less than one (1) day prior to the beginning of performance under this Agreement. Contractor shall not commence performance of its Work under this Agreement until the above insurance has been obtained and proof of insurance has been filed with and approved by the City. 17.7 Assignment Prohibited. No party to this Agreement may assign any right or obligation except with the express written consent of the other party; provided, however, that Contractor may enter subcontracts to perform portions of the Work under the terms and conditions of this Agreement, and Contractor may by written request assign any right to receive monies earned hereunder. 17.8 Partial Invalidity. Wherever possible, each provision hereof will be interpreted in such manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein is held by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be limited to the extent required to make such provision valid and enforceable, and if necessary, severed from this Agreement. All other terms and conditions shall remain in full force and effect. 17.9 Time of the Essence. Time is of the essence in the performance of this Agreement and of each and every provision hereof. By executing this Agreement, Contractor confirms that the time set forth herein for completion of the Work, and of specific milestones identified herein, is a reasonable period for performing the Work and accomplishing the milestones. 17.10 Waiver. No action or failure to act by the City, Project Manager, or Contractor shall constitute a waiver of any right or duty afforded any of them under the Contract 01910,0001 104034.1 47 Documents, nor shall any such action or failure to act constitute an approval of any breach thereunder, except as may be specifically agreed in writing. 17.11 Rights and Remedies. The City's rights and remedies under the Contract Documents are cumulative with and in addition to all other legal and equitable rights and remedies which the City may have under applicable law. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by and through their authorized officers on the date, month and year first written above. ATTEST: By: Bruce V. Malkenhorst City Clerk APPROVED AS TO FORM Eric T. Fresch, City Attorney CITY OF VERNON By: Leonis C. Malburg Mayor NEW AGE FUEL, INC. By:_ Name: Title: EXHIBITS A Operator Agreement Terms B Contractor Rate Schedule (hourly rates for specified personnel obtaining the permits) C First Schedule D First Design Development Documents E First Construction Documents F Insurance to be carried by Contractor G First Construction Progress Schedule (milestones) 01910/0001 104034.1 48 EXHIBIT A MATERIAL TERMS OF OPERATING AGREEMENT Following the completion of the construction of the Phase One Facility, the City and Contractor shall enter into an Operating Agreement in which the City will contract with Contractor to operate the Phase One Facility. Contractor shall pay to the City a payment of [$1,077,570] per annum. Contractor shall also pay to the City a fee equal to one percent (1%) of the costs advanced by the City in consideration for land costs. The initial term of the Operating Agreement shall be for a ten (10) year period, with four (4) five (5) year options. The Operating Agreement will be a triple net lease, in which Contractor is liable for all costs and expenses, including taxes, insurance, maintenance, repairs, and all costs of operation. All operational and business expenses of managing and operating the Facility, including payments owing to vendors. Contractor shall be solely responsible for all aspects of the operation of the Facility, and pay all expenses incurred in the operation of the Facility. Contractor shall enter into all appropriate contracts with contractors and subcontractors relating to the operation of the Facilities. Contractor shall enter into all appropriate contracts with suppliers relating to the acquisition of the refined fuel oil feedstock and other related products for the Facilities. Contractor shall obtain all necessary liability equipment and workers compensation insurance policies for the Facilities, with limits to be agreed to by the City and Contractor. Any liability attributable to the operation and expenses of the Facilities and the output shall be borne exclusively by Contractor. 01910AM 1104034.1 49 May 06 04 08fo7a Archimedes 847-869-9202 p.2 VERNON #1 - RFO PROCESSING PLANT PROJECT SCHEDULE Item # Description Start Date Completion Date Funding 1 Mobilization & Project Startup 1/15/20005 1/29/05 4/30/05 215/05 $ $ $ 200,000 8,000 44,000 _ 2 Air Permit Filing1/15/20005 Design Drawings 1/15120005 4 Order PESCO Plant Fabracation 1/15/20005 5/4/05 $ 2,160,000 5 Construction Permits 2/5105 2/26105 16,000 6 Site Gradinq & Foolin s 2126/05 416/05 $ 165,000 7 Controf and Boiler Buildings 3123/05 10/4/04 $ 280,000 8 Tank Farm Assembly 3/23/05 10/4/04 $ 450,000 9 Process Piping 4/5/05 12/6/04 $ 360,000 10 Plant Shi in 5/4105 1111/04 $ 1,800,000 11 Plant Equipment Delivery & Set 6/1/05 11115/04 $ 130,000 12 Plant & Equipment Errection 6/1/05 12/6/04 $ 240,000 13 Plant Interconnect Piping & Wirin 6/1105 12/20/04 $ 350,000 14 Commissioning7127/05 1/10/05 $ 70,000 15 Startup & Testing 8/10/05 1/17/05 $ 40,000 16 Plant Acceptance & Retaina a 8117/05 1/18/05 $ 250,000 _-... _ Subtotal $ 6,563,000 VERNON #2 RFO PROCESSING PLANT PROJECT SCHEDULE Item # Description Start Date 1115105 Completion Date 1/15/05 $ Funding 100,000 1 2 Mobilization & Proie_ct Startup Air Permit Filing 1115/05 1115/05 1130/05 2/5105 $ $ - 3 4 _ Desiqn Drawings Order PESCO-Plant Fabracation 8115/05 2/5/05 _ 8/14/05 1014105 $ 2,100,000 5 Construction Permits 2/26/05 _ 8128/05 512105 10/4/04 $ - 6 Site Gracfinq & Footings $ 85,000 7 Control and Boiler Buildings 10/28/05 $ $ _ 105 000 - 8 Tank Farm Assembly 10/23/04 9 Process piping 9114/05 12/6/01 $ 280 000 10 Plant Shipping 1014/05 11/1/05 1800000 11 Plant Equipment Delivery & Set 11/1/05 11/15/05 130,000 12 Plant & Equipment Errection 11/1/05 12/6/05 240,000 13 Plant Interconnect Piping & Wiring 11/1105 12/20/05 $ 210,000 14 Commissioning 12/27/05 1/10/05 $ 70,000 15 Startup & Testin 1112/06 1/17/05 $ 40,000 16 Plant Acceptance & Retaina a 1119/06 1/18/05 $ 250,000 _ Subtotal S 5,410,000 Project Total s 11,973,000 Gen0n- P.O. Box 4455 Houston, TX 77210-4455 December 6, 2010 Attention: Contract Administration or Legal Department Re: Notice of Merger and Name Change. Effective December 3, 2010, RRI Energy, Inc. and Mirant Corporation completed a merger to form GenOn Energy, Inc. ("GenOn"). In connection with the closing of the merger, RRI Energy, Inc., Mirant Corporation, and their respective subsidiaries, including but not limited to those listed on the attached schedule, have changed their name. This letter is intended to comply with all applicable notice requirements contained within the purchase, sales, transportation, and various other contract(s) to which your company is a party with any of the GenOn companies listed on the attached schedule. Documentation evidencing the name change is attached for your records. We ask that you note our new corporate name in your address book. The company's Federal Tax ID numbers will remain the same. Addresses for notices and banking information, will remain unchanged until further notice. Invoices and payment information, confirmations and scheduling details will change and the updated information is attached hereto. You can find additional information about GenOn Energy, Inc. on its new website address at www.GenOn.com. RRI Energy and Mirant email addresses have changed to reflect the new name. The new email addresses include the first and last name of the user, with the domain name of GenOn.com, shown as first.last@GenOn.com. Further, please note that the name of RRI Energy Services, Inc. remains unchanged at this time. While our name has changed, our commitment to your existing contracts with us remains unchanged. Our goal into make this transition period seamless. If you have any questions, please contact me at (832) 357-4151. Sincerely, Rhonda Alphin Manager, Contract Administration NAME CHANGE SCHEDULE OLD NAME NEW NAME RRI Energy, Inc. GenOn Energy, Inc. RRI Energy Asset Management, LLC GenOn Asset Management, LLC RRI Energy Corporate Services, LLC GenOn Energy Services, LLC RRI Energy Key/Con Fuels, LLC GenOn Key/Con Fuels, LLC RRI Energy Mid -Atlantic Power Holdings, LLC GenOn REMA, LLC RRI Energy Mid -Atlantic Power Services, Inc. GenOn RF,MA Services, Inc. RRI Energy Northeast Management Company GenOn Northeast Management Company RRI Energy Sabine (Delaware), Inc. GenOn Sabine (Delaware), Inca RRI Energy Sabine (Texas), Inc. GenOn Sabine (Texas), Inc. Orion Power Midwest, L.P. GenOn Power Midwest, LP Orion Power Operating Services MidWest, Inc. GenOn Power Operating Services Midwest, Inc. Mirant Corporation GenOn Energy Holdings, Inc. Mirant Americas Generation, LLC GenOn Americas Generation, LLC Mirant Americas Procurement, Inc. GenOn Americas Procurement, Inc. Mirant Americas, Inc. GenOn Americas, Inc. Mirant Bowline, LLC GenOn Bowline, LLC Mirant California, LLC GenOn California North, LLC Mirant Canal, LLC GenOn Canal, LLC Mirant Capital Inc. GenOn Capital Inc. Mirant Delta, LLC GenOn Delta, LLC Mirant Energy Trading, LLC GenOn Energy Management, LLC Mirant Fund 2001 LLC GenOn Fund 2001 LLC Mirant Gibbons Road, LLC GenOn Gibbons Road, LLC Mirant Kendall, LLC GenOn Kendall, LLC Mirant Lovett, LLC GenOn Lovett, LLC Mirant New York, LLC GenOn New York, LLC Mirant North America, LLC GenOn North America, LLC Mirant Potrero, LLC GenOn Potrero, LLC Mirant Special Procurement, Inc. GenOn Special Procurement, Inc. Mirant Tank Farm, LLC GenOn Tank Farm, LLC Mirant Willow Pass, LLC GenOn Willow Pass, LLC Gas Scheduling for GenOn Energy Management, LLC and RRI Energy Services Inc. Louis Tran Phone: (832) 357-1493 Email: Louis.Tran@GenOn.com Power Scheduling for GenOn Energy Management, LLC and RRI Ener Services Inc. GenOn Real Time East Desk Phone: (832) 357- 1215 GenOn Real Time West Desk Phone: (832) 357- 1214 Coal Scheduling for GenOn Energy Management, LLC and RRI Energy Services Inc. Attention: Ken Chaney Phone: (678) 579-3539 Email: ken.chaney@GenOn.com Fuel Oil Scheduling for GenOn Energy Management, LLC and RRI Energy Services Inc. Attention: Mike Parker Phone: (678) 579-3026 Email: mike.parker@GenOn.com Invoices and Payments for GenOn Energy Management, LLC and RRI Energy Services Inc. Coal, Emissions, Fuel Oil, and Crude Oil Agreements: Attention: Amy Ifland P.O. Box 4455 Houston, TX 77210-4455 Physical: 1000 Main Street Houston, TX 77002 Phone: 832-357-2625 Fax: 832-357-9344 qmy.ifland@GenOn.com Invoices and Payments for GenOn Energy Management, LLC and RRI Energy Services Inc. Gas Agreements: Attention: Jeanne Fore, Gas Accounting P.O. Box 4455 Houston, TX 77210-4455 Physical: 1000 Main Street Houston, TX 77002 Phone: 832-357-7384 Fax: 832-357-9344 jeanne.fore@GenOn.com Invoices and Payments for GenOn Energy Management, LLC Power Agreements effective until January 1, 2010: Invoices: Attention: Accounting Phone: 678.579.5036 Facsimile: 678.579.5769 Payments: Attention: Accounting Phone: 678.579.5036 Facsimile: 67 8.579.5769 November 10 flow that settles December 20th Shineza Davenport Phone: 678.579.7612 Facsimile: 678.579.5829 Shineza.d,tvenport@mirant.com 1155 Perimeter Center West Atlanta, GA 30338 December 10 flow that settles January 20th Attention: Chuck Jacobs, Power Accounting P.O. Box 4455 Houston, TX 77210-4455 Physical: 1000 Main Street Houston, TX 77002 Phone: 832-357-4105 Fax: 832-357-9663 Invoices and Payments for GenOn Energy Management, LLC Power Agreements effective after January 1, 2010: Attention: Chuck Jacobs, Power Accounting P.O. Box 4455 Houston, TX 77210-4455 Physical: 1000 Main Street Houston, TX 77002 Phone: 832-357-4105 Fax: 832-357-9663 Invoices and Pavments for RRI Enerev Services. Inc. Power Agreements: Attention: Chuck Jacobs, Power Accounting P.O. Box 4455 Houston, TX 77210-4455 Physical: 1000 Main Street Houston, TX 77002 Phone: 832-357-4105 Fax: 832-357-9663 Confirmations for GenOn Energy Management, LLC Agreements Stephanie Flint 678-579-3141 Ste-Dhanie.flint@GenOn.com. Gas Fax-- 678-579-5810 Power Fax-- 678-579-5933 Emissions, Coal, Fuel Oil, Crude-- 678-579-5818 Confirmations for RRI Energy Services, Inc. Agreements Kelly Frick Email: kelly.frick@GenOn.com P.O. Box 4455 Houston, TX 77210-4455 Physical: 1000 Main Street Houston, TX 77002 Phone: 832-357-3639 Fax: 832-357-1005 Residual Oil: Robert Gaudette John Strickland Mike Parker Vicki Lynch Josh Tolchin Emissions: Robert Gaudette Bill Evans Vicki Lynch Josh Tolchin Brian Lewis Financial Coal: Robert Gaudette Ken Chaney Doug Tinkler Sean Murphy John Olson Brian Lewis Doug Tinkler Ed Young Sean Murphy Tom Fletcher Doug Tinkler Ed Young Valerie Wooley Sean Murphy John Stickland RRI ENERGY SERVICES, INC. AUTHORIZED TRADER LIST Natural Gas: Michael Purdes Greg Thompson Robert Gaudette Sean Murphy Tom Fletcher John Olson Paul Hank Terry Wilson Duane Balusek Craig Carley (transition through 12/25/2010) George Pettyjohn (transition through 9/30/2011) Crude Oil: Robert Gaudette Sean Murphy Tom Fletcher John Olson Mike Parker Doug Tinkler Residual Oil: Robert Gaudette Sean Murphy John Olson Doug Tinkler Mike Parker Emissions: Robert Gaudette Sean Murphy Bill Evans Tom Fletcher Doug Tinkler Power: Robert Gaudette Sean Murphy Doug Tinkler Vafa Mohtashami Trent Lewis Hazel Velasquez Wesley Wilder n Delaware t,ststate PAGE 1 I, JEFFREY At. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRITE AND CORRECT COPY OF TER CERTIFICATE OF AMENDMENT OF 'rRRI ENERGY, INC.", CHANGING ITS NAME FROM "RRI ENERGY, INC." TO "GENON ENERGY, INC.", FILED IN THIS OFFICE ON THE THIRD DAY OF DECEMBER, A_D_ 2010, AT 10 :17 O'CLOCK A.M. A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS. 3271660 8100 101144948 You may verify this Certificate ontxno at Corp.de2aware.gov/authver.shtm1 c Jeffrey W. Bullock. Secretary of State AUTHEN TION: 8396496 DATE: 12-03-10 State of Deiawaxle Secretary of State Division o ataons Delivered 10:1�210312010 FILLD 10:17 AM 1210312010 SRV 101144948 - 3271860 FILL C 3UMCATE OF AMENDMENT'!' TO THE THM It=ATFD CERTMCATS off' mcmpowm OF RRI ENERGY, INC. Pargod to Sadioa 242 oftba Owaai Carporatjou Law of &a Stft of Maw= RiI Emu, Inc., a Deiawarc oarporadon ow*W fter called the, *C.oxpo &(m,% does hereby certify as foliaws: = Ardck, FU=of the Cagmation s Ce ftx to of bw*7 ration is hcnby awarded to read in its ontitaty ass set f & bdow: The name of the corporation is (knon Bnmu, bc. (ham the'ICarporation'). U : 7U for+epM aundmag was duly adoptai w acmdam with Sec hm 242 of the GwaW Cwpau dad Law of dw Stets of Ddov ra IN WYMM WHMMM, Ow COTPOntion lea c WMW No Catifaic aW to be duly cx= tediu its oaxporabe V WO 3rd day of December . 2010. r {� .L F .f e I Fs . h . I:r 147'750dMiaaa bm 3eM fA um-UMNO"W" 17, 2010 •mn nil Delaware qheFirst State PAGE 1 I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAKARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "RRI ENERGY CORPORATE SERVICES, LLC", CHANGING ITS NAME FROM "RRI ENERGY CORPORATE SERVICES, LLC" TO "GENON ENERGY SERVICES, LLC", FILED IN THIS OFFICE ON THE THIRD DAY OF DECEMBER, A.D. 2010, AT 12:24 O'CLOCK P.M. 3667'463 6100 101145192 You may verify this certificate oniiae at carp.delaware.gov/aurhver.shtmI Jeffrey W. Bullock Secretary or State AOTHEN ION: 8399142 DATE: 12-03-10 12/03/2010 12:06 SKARDEL LLC 3 913027393673 N0.062 D02 State of Delaware Secret of State Division o Corporataans Delivered 12:24 , 12/03/2010 KUM 12:24 PX 12/03/2010 SRV 101145192 - 3667463 F= CERTIFICATE OF AMENDMENT . TO CERTIFICATE OF FORMATION OF RRI 1 RGY ComRATE SERVICES, LLC pursuant to Scotion 18-202 of the Delaware✓ Limited Liability Company Act 1. The1 name of the limited liability company is RRI Energy Corporate Services, LLC (the "Company" j. 2. The Certificate of Voimation of the Compmy is hereby amended to change the name of the Company to CycnOa Energy Services, LLC. 3. Accordingly, Article 1, of the Certitioate ofForulation shall., as amend4 read as follows: "l, The name of the limited liability company is GenOn Energy Services, LLC." IN WI'l:'1 MS WTTEREOP, the undersigned authorized person has executed this Certificate of Amendment this day of December, 201 D, RRI ENERGY CORPORATE SERVICES, LLC y, Nazaec A s C Wi:—� Title; Authorized Person 1094115.01-D.4. Salver l A • MSW A Defaware PAGE I die .first State I, OEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "RR2 ENERGY MID -ATLANTIC POWER HOLDINGS, LLC", CHANGING ITS NAME FROM "RRX ENERGY MID -ATLANTIC POWER HOLDINGS, LLC" TO "GENON RENA, LLC", FILED IN THIS OFFICE ON THE THIRD DAY OF DECEAMER, A.D. 2010, AT 12:26 O'CLOCK P.M. 2985509 8100 101145196 Yau may verify thin certificate an�j,aa at corp.de24ware.gov/authver.ahtm], �� - L�ac�7 Jeffrey W. Bullock, Secretary of State AUTHEN ION: 8399146 DATE: 12-03-10 12/03/2010 12.06 SKRRDEL LLC a 9130Z73936?3 CERTMCA.TE OF AMENDMENT TO CERRTInCATE OF FORMATION OF NO.064 B02 State of Delay Secretary of State o Division ations Delivered 12:2�210319010 Prrw�n 12:26 PM 1210312010 SRV 101145196 - 2985509 Frrrr. R.NFRGY MD -ATLANTIC POWR. HOLDINGS, LLC pursuant to Section 1s-202 of the Delaware Limited Liability Company Act f . The nine of the limited liability c©rnpazxy is RRI Energy Mid -Atlantic Power Holdings, LLC (the "COMPany"). 2. The Certificate Of F0=40n of the Company is hereby amended to change the nme, of the Company to GenOn REMA, LLC. 3. Awordingly, Article 1. of the Certificate of Formation Shull, as amended, read as follows: "1. The name of the limited liability company is CxenOn REMA, LLC," IN Wn NWS WjMOF, the undersigned authorized person has executed this Certificate of Arnendnmt this day of December, 2010, RRI ENERGY Mil]-A'TF.ANTIC POWER HOLDINGS, LLC F. ..— —X Name; Alliso QZV Title: Authorized Person 1044127.UI-W Swim 1A - MBW Defaware PAGE 1 q e Tim date I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "ORION POWER MIDWEST, Z.P.", CHANGING ITS NAME FROM "ORION POWER MIDWEST, Z.P." TO "GENON POWER MIDWEST, LP", FILED .IN THIS OFFICE ON THE THIRD DAY OF DECEMBER, A.D. 2010, AT 12:21 O'CLOCK P.M. 3122001 8100 101145190 You may verify this Corti Cate onzane at corg.ds]awars.gov/authver.shtm7 ��f5ac�7 feffrey W. Bullock, Secretary of State AUTHEN C TION: 8399140 DATE: 12-03-10 12/03/2010 12.05 SKARDEL LLC -> 913027393673 State of Delaware Sea mtAly of State Division of Corporations Delivered 12:21 PM 12/03/2010 F= 12:21 R4 121 312010 SRV 101145190 - 3122001 FILE CERTIFICATE Or- AMENDMENT . TO nm . CERTIFICATE OF LMTBD PARTNERSHIP OF OFj0N.PO'WRR ME)WEST, L1 ?- Orion Power Midwest, L.P., a Delaware limited partnership, does }xereby certir+ as follows: 1. The name of the limited partnership is Arian Power Midwest, L.P. 2. Article FIRST ofthe Certificate of Limited PartnaOWP (the „Certificate") is hereby amended to read 1z1 its entirety as set forth below: 9. The name of the limited partnership is GenOn Power Midwest, LP." 3. Except as amended hereby, all of the provisions of the Certificate shah continue in full force and effect. By: Orion Power D4dwest GP, Inc. (General Partner) A B� Name: Allison Title: AssisWt Secretary Dated: December a!� 201.0 I a%L41.A 1-13.C. S=Cr IA M5W •Draft lkcemhtr y.2�10 -1:38 PM