HomeMy WebLinkAboutCOM 1062.002 2006-2008
Harry Kim F. William Takaba
Mayor Finance Director
Nancy Crawford
Deputy Finance Director
fir, oiMn1
County of Hawaii
25 Aupuni Street, Room 215 • Hilo, Hawaii 96720
(808) 961-8234 • Fax(808)961-8248 era
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March 4, 2008 n
CO
Pete Hoffmann, Chairman and
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Members of the Hawai'i County Council 3
Hawaii County Council
25 Aupuni Street
Hilo, Hawaii 96720
Re: Resolution for multi-year contract
Waste Reduction Facility RFP #2210
Enclosed are the following documents related to the Resolution for multi-year contract that we
transmitted to you on February 27, 2008:
• Draft Service Contract for the Design, Construction and Operation of the County of Hawaii
Solid Waste Reduction Facility (12/26/07).
• Executive Summary of the Service Contract for the Design, Construction and Operation of
the County of Hawaii Solid Waste Reduction Facility (3/4/08). This Executive Summary
incorporates terms of the Best and Final Offer recently negotiated with Wheelabrator
Technologies, Inc., and will be included in the final Service Contract.
• Letter to Mark A. Weidman, President, Wheelabrator Technologies (3/4/08), notifying
Wheelabrator that they have been awarded the contract, subject to County Council approval.
• Notice of Award (3/4/08)
• Waste Reduction Facility RFP #2210 report of major RFP activities to date.
I would also like to take this opportunity to correct the letter transmitting the multi-year
agreement to you on February 27, 2008. The letter references a multi-year lease. It should
reference a multi-year contract instead. We are sorry for the error and confusion that it may have
caused.
Our consultants will be attending the meeting of the Finance Committee on March 11, 2008 to
respond to questions you may have and discuss the contract in greater detail.
William Takaba
Director of Finance 19; ?r •
Gomm, No,
cc: Bobby Jean Leithead-Todd Ref. TO: ~e604
Ref. Dote MAR 1 12 M4
Final Stage 2 RFP Draft of 12/26/07
DRAFT SERVICE CONTRACT
FOR THE
DESIGN, CONSTRUCTION AND OPERATION
OF THE
COUNTY OF HAWAII
SOLID WASTE REDUCTION FACILITY
between
COUNTY OF HAWAII, HAWAII
AND
WHEELABRATOR TECHNOLOGIES INC.
Dated
2008
487571.8 028493 AGMT
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS ..........................................................................................3
SECTION 1.2 INTERPRETATION .................................................................................27
(A) References Hereto .........................................................................27
(B) Gender and Plurality ....................................................................28
(C) Persons ........................................................................................28
(D) Headings ......................................................................................28
(E) Entire Agreement ..........................................................................28
(F) Design Requirements ....................................................................28
(G) Standards of Workmanship and Materials .....................................28
(H) Technical Standards and Codes ....................................................29
(I) Liquidated Damages .....................................................................29
(J) Causing Performance ....................................................................29
(K) Party Bearing Cost of Performance ................................................29
(L) Assistance ....................................................................................29
(M) Interpolation ................................................................................30
(N) Applicability and Stringency of Contract Standards 30
(O) Delivery of Documents in Digital Format .......................................30
(P) Severability ..................................................................................30
(Q) No Third-Party Rights ...................................................................31
(R) References to Days .......................................................................31
(S) References to Including .................................................................31
(T) References to Knowledge ...............................................................31
(U) Counterparts ................................................................................31
M Governing Law .............................................................................31
(W) Defined Terms ..............................................................................31
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF THE COUNTY ......................32
(A) Existence and Powers ...................................................................32
(B) Due Authorization and Binding Obligation ....................................32
(C) No Conflict ...................................................................................32
(D) No Approvals Required .................................................................32
(E) No Litigation .................................................................................32
(F) County Ownership Interests in the Site .........................................32
(G) Information Pertaining to the Site .................................................33
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ...................33
(A) Existence and Powers ...................................................................33
(B) Due Authorization and Binding Obligation ....................................33
(C) No Conflict ...................................................................................33
(D) No Approvals Required .................................................................33
(E) No Litigation .................................................................................34
(F) Claims and Demands ...................................................................34
(G) Applicable Law Compliance ...........................................................34
(I) Patents and Licenses ....................................................................34
(J) Information Supplied by the Company ..........................................34
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SECTION 2.3. KNOWLEDGE-BASED REPRESENTATIONS ............................................34
ARTICLE III
TERM
SECTION 3.1. EFFECTIVE DATE AND INITIAL TERM 36
SECTION 3.2. RENEWAL AND EXTENSION OPTION .....................................................36
ARTICLE IV
DEVELOPMENT PERIOD
SECTION 4.1. SITE SUITABILITY CONFIRMATION ........................................................37
(A) Site Familiarity .............................................................................37
(B) County-Supplied Information ........................................................37
(C) Site Access During Development Period .........................................37
(D) Discovery of Hazardous Materials or Other Regulated
Substances ..................................................................................38
SECTION 4.2. DEVELOPMENT PERIOD RESPONSIBILITIES OF THE PARTIES ..............38
(A) Initial County Development Period Responsibilities .......................38
(B) Initial Company Development Period Responsibilities ....................38
(C) No County Obligation to Proceed ...................................................38
(D) Balance of County Development Period Responsibilities .................39
(E) Balance of Company Development Period Responsibilities .............39
(F) Payment for Company Development Period Work ..........................42
SECTION 4.3. CONSTRUCTION COMMENCEMENT DATE CONDITIONS .......................42
SECTION 4.4. CLOSING THE DEVELOPMENT PERIOD .................................................44
(A) Establishment of the Construction Commencement Date ..............44
(B) Failure of Conditions ....................................................................44
SECTION 4.5. COUNTY TERMINATION OPTION DURING THE DEVELOPMENT
PERIOD 45
(A) County Convenience Termination Option Prior to
Construction Commencement Date ...............................................45
(B) Delivery of Development Period Work Product to the County 45
(C) Costs, Records and Reporting .......................................................46
ARTICLE V
DESIGN AND PERMITTING OF THE DESIGN/ BUILD IMPROVEMENTS
SECTION 5.1. DESIGN WORK ......................................................................................47
(A) Performance of the Design Work ...................................................47
(B) Design Risk ..................................................................................47
(C) Changes to Design Requirements ..................................................47
(D) Licensing Requirements ................................................................48
SECTION 5.2. PERMIT CONDITIONS ............................................................................48
(A) Negotiation of Permit Conditions ...................................................48
(B) Proposed Conditions and Company Evaluation .............................48
(C) Permit Acceptance - Conditions of Lesser Stringency Than
Environmental Guarantee .............................................................48
SECTION 5.3. PERMITTING WORK ...............................................................................48
(A) Company Permitting Responsibilities ............................................48
(B) County Permitting Responsibilities ................................................49
(C) Company Assumption of Permitting Risk for Facility .....................50
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(D) Failure of Company to Obtain Governmental Approval in a
Timely Manner .............................................................................50
SECTION 5.4. COMPLIANCE WITH APPLICABLE LAW ...................................................51
(A) Compliance with Applicable Law and Equipment Operating
Requirements 51
(B) Compliance with Conditions in Governmental Approvals ...............51
(C) Governmental Approvals Necessary for Continued
Construction 51
(D) Fines, Penalties and Remediation ..................................................51
ARTICLE VI
FINANCING AND POWER PURCHASE AGREEMENT
SECTION 6.1. COUNTY FINANCING .............................................................................52
SECTION 6.2. POWER PURCHASE AGREEMENT ..........................................................52
(A) General Terms ..............................................................................52
(B) Company Responsibilities .............................................................52
ARTICLE VII
CONSTRUCTION OF THE FACILITY
SECTION 7.1. AGREEMENT TO CONSTRUCT ...............................................................54
(A) Commencement of Construction ...................................................54
(B) Construction Practice ...................................................................54
(C) Measurements ..............................................................................55
(D) Engagement of Authorized Representative .....................................55
(E) Title and Risk of Loss ...................................................................55
(F) Encumbrances .............................................................................56
(G) Utilities ........................................................................................56
(H) Payment of Costs ..........................................................................56
(1) Notice of Default ...........................................................................56
(J) Compliance With Law ...................................................................56
SECTION 7.2. COMMENCEMENT OF WORK .................................................................57
(A) Notice to Proceed ..........................................................................57
(B) Time .............................................................................................57
(C) Effect of Progress Schedule ...........................................................57
SECTION 7.3. DESIGN REVIEW, OBSERVATIONS, TESTING AND UNCOVERING OF
WORK ...................................................................................................57
(A) Observations and Design Review Protocol ......................................57
(B) Tests ............................................................................................58
(C) County Observations, Inspections and Tests .................................58
(D) Certificates and Reports ................................................................59
(E) Taking Apart, Uncovering and Replacing Design/Build Work......... 59
(F) Monthly On-Site Meetings and Design and Construction
Review .........................................................................................60
SECTION 7.4. CORRECTION OF DESIGN/BUILD WORK ...............................................60
(A) Correction of Non-Conforming Design/Build Work ........................60
(B) Costs of Correction .......................................................................61
(C) Elective Acceptance of Defective Design/Build Work ......................61
(D) Relation to Other Obligations ........................................................61
(E) Payments of Amounts Owed .........................................................61
SECTION 7.5. DAMAGE TO THE FACILITY ...................................................................61
(A) Damage Prevention .......................................................................61
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(B) Restoration ...................................................................................61
(C) Notice and Reports .......................................................................62
SECTION 7.6. CHANGE ORDERS AND EXTRA DESIGN/BUILD WORK 62
(A) Right to Issue Change Orders .......................................................62
(B) Extra Design/ Build Work .............................................................62
(C) Extra Design/ Build Work Caused by Company Fault ....................62
(D) Cost Reductions from Change Orders ............................................63
(E) Proposal for Extra Design/Build Work ..........................................63
(F) Conditions to Obligation to Proceed ..............................................63
(G) Obligation to Proceed Notwithstanding Dispute .............................64
(H) Disputed Work .............................................................................64
(I) Notice; Waiver ..............................................................................64
SECTION 7.7. PATENT, COPYRIGHT AND OTHER PROTECTED MATERIAL ...................64
(A) Property of the County ..................................................................64
(B) Delivery of Deliverable Material .....................................................64
(C) Use of Deliverable Material, Processes and Equipment ..................64
(D) Substitutes for Deliverable Material, Process or Equipment 65
SECTION 7.8. COUNTY TERMINATION OPTIONS DURING THE CONSTRUCTION
PERIOD .................................................................................................65
(A) County Termination for Cause ......................................................65
(B) Cost Records and Reporting ..........................................................65
(C) Delivery of Construction Period Work Product to the County .........65
SECTION 7.9. PERSONNEL ..........................................................................................65
(A) Personnel Performance .................................................................65
(B) Construction Manager ..................................................................66
(C) County Rights With Respect to Key Personnel ...............................66
(D) Labor Disputes .............................................................................67
(E) Prevailing Wages ...........................................................................67
SECTION 7.10. WARRANTIES ........................................................................................67
ARTICLE VIII
ACCEPTANCE OF THE FACILITY
SECTION 8.1. START-UP OPERATIONS ........................................................................68
(A) Notices .........................................................................................68
(B) Commissioning .............................................................................68
(C) Deliveries for Start-Up and Commissioning; Payment ....................68
(D) Failure of Deliveries for Start-Up and Commission Operations 69
(E) Operations Following Start-Up/Commissioning and Prior to
Acceptance Testing .......................................................................69
(F) Personnel Training .......................................................................70
(G) Residue Sampling and Analysis ....................................................70
SECTION 8.2. SUBSTANTIAL COMPLETION .................................................................71
(A) Conditions to Substantial Completion ...........................................71
(B) Final Punch List ...........................................................................72
SECTION 8.3. CONDUCT OF ACCEPTANCE TEST .........................................................73
SECTION 8.4. ACCEPTANCE DATE CONDITIONS .........................................................73
SECTION 8.5. PROVISIONAL ACCEPTANCE; ACCEPTANCE AT REDUCED
ACCEPTANCE STANDARD; THROUGHPUT CAPACITY LIQUIDATED
DAMAGES 74
(A) Provisional Acceptance at Full Acceptance Standard .....................74
(B) Option to Establish Acceptance Date .............................................75
(C) Unexcused Non-Compliance .........................................................75
(D) Acceptance Re-testing ...................................................................76
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(E) Uncontrollable Circumstances ......................................................76
SECTION 8.6. DISPOSAL UPON UNEXCUSED DELAY IN ACCEPTANCE DATE ...............76
(A) Interim Service .............................................................................76
(B) Payment for Interim Service ..........................................................77
(C) Interim Service Does Not Constitute Acceptance ............................78
(D) Operations During Extension Period .............................................78
SECTION 8.7. TEST REPORT .......................................................................................78
SECTION 8.8. CONCURRENCE OR DISAGREEMENT WITH TEST RESULTS ..................78
(A) Acceptance Date Concurrence .......................................................78
(B) Acceptance Date Disagreement .....................................................78
SECTION 8.9. REPETITION OF ACCEPTANCE TEST; EXTENSION PERIOD ....................79
SECTION 8.10. FAILURE TO MEET ACCEPTANCE STANDARD .......................................79
SECTION 8.11. FINAL COMPLETION ..............................................................................80
(A) Requirements ...............................................................................80
(B) Final Certificate and Claims Statement .........................................80
(C) Payment for Punchlist Items .........................................................81
SECTION 8.12. NO ACCEPTANCE, WAIVER OR RELEASE ..............................................81
SECTION 8.13. NO SERVICE FEE PAYMENT DURING START-UP AND TESTING ..............82
ARTICLE IX
PAYMENT OF THE DESIGN/ BUILD PRICE
SECTION 9.1. DESIGN/BUILD PRICE ..........................................................................83
(A) Design/Build Price Generally ........................................................83
(B) Fixed Design/Build Price ..............................................................83
(C) Fixed Design/Build Price Adjustments ..........................................83
(D) Limitation on Payments for Costs of the Design/Build Work.......... 83
SECTION 9.2. PAYMENT FOR THE DEVELOPMENT PERIOD WORK ..............................84
(A) Fixed Development Price ...............................................................84
(B) Milestone Schedule .......................................................................84
(C) Conditions of Payment ..................................................................84
(D) Disbursement Procedure ..............................................................84
(E) Disbursement Dispute Procedures ................................................85
(F) Limitation on Payment for Initial Company Development
Period Responsibilities ..................................................................86
SECTION 9.3. PAYMENT PROCEDURE FOR CONSTRUCTION PERIOD WORK ...............86
(A) Fixed Construction Price ...............................................................86
(B) Milestone Schedule .......................................................................86
(C) Construction Disbursement Procedure ..........................................86
(D) Disbursement Dispute Procedures ................................................88
(E) Retainage .....................................................................................88
SECTION 9.4. CONDITIONS OF PAYMENT ....................................................................89
(A) Information Supporting Requisition ..............................................89
(B) Permissible Withholdings ..............................................................89
SECTION 9.5. FINAL REQUISITION AND PAYMENT ......................................................90
(A) Final Requisition ..........................................................................90
(B) Final Payment ..............................................................................90
SECTION 9.6. PAYMENT OF SUBCONTRACTORS .........................................................92
SECTION 9.7. AUDIT BOOKS AND RECORDS ...............................................................92
(A) Audit ............................................................................................92
(B) Construction Books and Records ..................................................92
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ARTICLE X
DELIVERY AND RECEIPT OF WASTE
SECTION 10.1. DELIVERY OF PROCESSIBLE WASTE BY THE COUNTY ..........................93
(A) Annual Waste Delivery Commitment .............................................93
(B) Charges to Registered Haulers ......................................................93
(C) Source Separation ........................................................................93
(D) Shortfall Damages ........................................................................94
SECTION 10.2. RECEIPT OR REJECTION OF WASTE BY THE COMPANY ........................94
(A) Receiving and Processing of Solid Waste ........................................94
(B) Annual Facility Throughput Guarantee .........................................94
(C) Billing Period Throughput Guarantee ............................................95
(D) Determination of Billing Period Throughput Surpluses and
Deficiencies 95
(E) Determination of Tonnage Combusted ..........................................96
(F) Billing Period Processing Record ...................................................96
(G) Disposal of Bypass Processible Waste ...........................................96
(H) Alternative Waste Disposal Site .....................................................96
(1) Segregation of Non-Processible Waste ...........................................97
(J) Storage .........................................................................................97
SECTION 10.3. DELIVERY SCHEDULES, PROCEDURES AND REQUIREMENTS .............97
(A) Annual Operating Plan .................................................................97
(B) Registered Haulers .......................................................................98
(C) Delivery Procedures ......................................................................98
(D) Spillage of Solid Waste ..................................................................98
(E) Release of Hazardous Substances .................................................98
SECTION 10.4. RECEIVING AND OPERATING HOURS ....................................................98
(A) Receiving Time .............................................................................98
(B) Operating Hours ...........................................................................99
SECTION 10.5. WEIGHING RECORDS ...........................................................................99
(A) Measurement Devices and Procedures ..........................................99
(B) Estimates During Incapacitation ...................................................99
(C) Weight Records 100
(D) Representative to Monitor Compliance 100
SECTION 10.6. NON-COUNTY PROCESSIBLE WASTE ..................................................100
(A) Prohibition on Receipt of Non-County Processible Waste ..............100
(B) Waiver of Prohibition ..................................................................100
SECTION 10.7. TEMPORARY SHUTDOWNS .................................................................100
(A) Notice .........................................................................................100
(B) Effect of Temporary Shutdown ....................................................100
SECTION 10.8. HAZARDOUS MATERIAL 100
SECTION 10.9. LIMITATION ON FOSSIL FUELS OR COMPANY-SUPPLIED MATERIAL 101
ARTICLE XI
OPERATION AND MANAGEMENT
SECTION 11.1. COMPANY OBLIGATIONS GENERALLY .................................................102
(A) Operation and Management Responsibility ..................................102
(B) Transfer and Application of Industry Experience .........................102
SECTION 11.2. COUNTY OBLIGATIONS GENERALLY ...................................................102
SECTION 11.3. SERVICE COORDINATION AND CONTRACT ADMINISTRATION .............102
(A) Company's Facility Manager .......................................................102
(B) Company's Senior Supervisors ....................................................103
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(C) County's Contract Representative ...............................................103
(D) County Approvals and Consents .................................................104
(E) Communications and Meetings ...................................................104
SECTION 11.4. OPERATION AND MAINTENANCE MANUAL ..........................................105
(A) Company Responsibility 105
(B) Supplements for Capital Modifications ........................................105
SECTION 11.5. STAFFING AND PERSONNEL TRAINING ...............................................105
(A) Staffing ......................................................................................105
(B) Training .....................................................................................105
SECTION 11.6. ELECTRICITY SUPPLY AND CONSUMPTION .........................................106
SECTION 11.7. SAFETY AND SECURITY ......................................................................106
(A) Safety .........................................................................................106
(B) Security .....................................................................................107
SECTION 11.8. COMPLIANCE WITH APPLICABLE LAW .................................................107
(A) Compliance Obligation ................................................................107
(B) Sampling, Testing and Laboratory Work 107
(C) Investigations of Non-Compliance 107
(D) Fines, Penalties and Remediation ................................................108
(E) No Nuisance Covenant ................................................................108
SECTION 11.9. OPERATING GOVERNMENTAL APPROVALS .........................................109
(A) Applications and Submittals .......................................................109
(B) Data and Information .................................................................109
(C) Non-Compliance and Enforcement ..............................................110
(D) Reports to Governmental Bodies .................................................110
(E) Potential Regulatory Change .......................................................110
SECTION 11.10. COUNTY ACCESS TO FACILITY ............................................................110
SECTION 11.11. ASSET AND FINANCIAL RECORDS .......................................................111
(A) Facility Records ..........................................................................111
(B) Availability of Facility Records to County 111
(C) Record Documents .....................................................................111
(D) Financial Records .......................................................................111
(E) Company Financial Reports ........................................................112
(F) Inspection, Audit and Adjustment ...............................................112
SECTION 11.12. PERIODIC REPORTS ............................................................................113
(A) Monthly Operations ....................................................................113
(B) Annual Operations and Maintenance Reports 113
(C) Default Reports ..........................................................................113
(D) Permit Communications and Reports ..........................................113
(E) Periodic Audits ...........................................................................113
SECTION 11.13. EMERGENCIES ...................................................................................113
(A) Emergency Plan ..........................................................................113
(B) Emergency Action .......................................................................114
SECTION 11.14. CONTRACT ADMINISTRATION .............................................................114
(A) Administrative Communications .................................................114
(B) Contract Administration Memoranda ..........................................114
(C) Procedures .................................................................................115
(D) Effect .........................................................................................115
SECTION 11.15. COST REDUCTION AND SERVICE IMPROVEMENT 115
ARTICLE XII
PERFORMANCE
SECTION 12.1. FACILITY PERFORMANCE GENERALLY ...............................................116
(A) Reliance .....................................................................................116
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(B) Curtailments and Shutdowns .....................................................116
(C) Limitations on Company Rights ..................................................116
SECTION 12.2. ANNUAL FACILITY THROUGHPUT GUARANTEE ...................................116
SECTION 12.3. ANNUAL ELECTRICITY PRODUCTION GUARANTEE .............................116
SECTION 12.4. ENVIRONMENTAL GUARANTEE ...........................................................116
(A) General ......................................................................................116
(B) Company Non-Compliance with Environmental Guarantee 117
(C) Environmental Guarantee, Permits and Uncontrollable
Circumstances ...........................................................................117
SECTION 12.5. RESIDUE GUARANTEE ........................................................................117
(A) General ......................................................................................117
(B) Residue Performance Liquidated Damages ..................................118
(C) Procedures for Determining Compliance with Residue
Guarantee ..................................................................................118
SECTION 12.6. ENVIRONMENTAL TESTING .................................................................119
SECTION 12.7. COUNTY REMEDIES FOR NON-COMPLIANCE WITH PERFORMANCE
GUARANTEES .....................................................................................119
(A) Remedies ....................................................................................119
(B) Performance Testing ...................................................................120
SECTION 12.8. RESIDUE REMOVAL, TRANSPORT AND DISPOSAL; PAYMENT ..............120
SECTION 12.9. ACCEPTABLE RESIDUE DISPOSAL SITE AND DESIGNATED DISPOSAL
SITE ....................................................................................................121
(A) Acceptable Residue Disposal Site ................................................121
(B) Required Disposal and County Approval; Designated Residue
Disposal Site ..............................................................................121
(C) Changes in Designated Residue Disposal Site .............................121
SECTION 12.10. TESTING .............................................................................................122
SECTION 12.11. ACCIDENTS DURING TRANSPORT .......................................................122
ARTICLE XIII
MAINTENANCE, REPAIR AND REPLACEMENT
SECTION 13.1. MAINTENANCE, REPAIR AND REPLACEMENT GENERALLY ..................123
(A) Ordinary Maintenance ................................................................123
(B) Repair and Maintenance of Site Grounds ....................................123
(C) Major Maintenance, Repair and Replacements by the
Company ...................................................................................123
SECTION 13.2. FACILITIES EVALUATIONS ..................................................................124
(A) Initial and Final Inventory of Vehicles, Rolling Stock, Spare
Parts and Consumables ..............................................................124
(B) Baseline Facility Record ..............................................................124
(C) Final Evaluation of the Facility ...................................................124
(D) Required Condition of Facility Structures Upon Return to the
County .......................................................................................125
(E) Required Condition of Facility Equipment Upon Return to the
County .......................................................................................125
(F) Capital Modifications ..................................................................125
(G) Effect of County Election to Renew ..............................................126
(H) Disputes ....................................................................................126
SECTION 13.3. PERIODIC MAINTENANCE INSPECTIONS .............................................126
(A) Annual Maintenance Inspection ..................................................126
(B) Full-Scale Inspections ................................................................127
(C) Remediation ...............................................................................127
(D) Unscheduled Inspections ............................................................127
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SECTION 13.4. COMPUTERIZED MAINTENANCE MANAGEMENT SYSTEM ...................127
SECTION 13.5. MAINTENANCE, REPAIR AND REPLACEMENT PLAN .............................128
SECTION 13.6. WARRANTIES ......................................................................................128
SECTION 13.7. LOSS, DAMAGE OR DESTRUCTION TO THE FACILITY ..........................128
(A) Prevention and Repair ................................................................128
(B) Insurance and Other Third-Party Payments ................................129
(C) Uninsured Costs .........................................................................129
(D) Repair of County and Private Property .........................................129
ARTICLE XIV
CAPITAL MODIFICATIONS
SECTION 14.1. CAPITAL MODIFICATIONS GENERALLY ...............................................130
(A) Purpose ......................................................................................130
(B) County Approval .........................................................................130
(C) Party Responsible for Costs ........................................................130
(D) Cost Savings ..............................................................................130
SECTION 14.2. CAPITAL MODIFICATIONS AT COMPANY REQUEST .............................130
SECTION 14.3. CAPITAL MODIFICATIONS DUE TO UNCONTROLLABLE
CIRCUMSTANCES ...............................................................................131
SECTION 14.4. CAPITAL MODIFICATIONS AT COUNTY DIRECTION .............................131
SECTION 14.5. PRIMARY PROCEDURE FOR IMPLEMENTING CAPITAL
MODIFICATIONS .................................................................................131
(A) Primary Implementation Procedure .............................................131
(B) Preliminary Company Plan and County Review ...........................131
(C) Company Implementation Proposal .............................................132
(D) Negotiation and Finalization of Company Implementation
Proposal .....................................................................................133
(E) Implementation Procedures ........................................................133
SECTION 14.6. ALTERNATIVE PROCEDURES FOR IMPLEMENTING CAPITAL
MODIFICATIONS .................................................................................133
SECTION 14.7. FINANCING CAPITAL MODIFICATIONS .................................................134
SECTION 14.8. COMPANY NON-IMPAIRMENT RIGHTS .................................................134
ARTICLE XV
SERVICE FEE AND OTHER PAYMENTS
SECTION 15.1. SERVICE FEE GENERALLY ..................................................................135
SECTION 15.2. SERVICE FEE FORMULA .....................................................................135
SECTION 15.3. BASE OPERATION FEE ........................................................................135
SECTION 15.4. EXCESS OPERATION FEE ...................................................................135
SECTION 15.5. PASS THROUGH COSTS ......................................................................136
SECTION 15.6. ENERGY REVENUE CREDIT ................................................................137
SECTION 15.7. EXTRAORDINARY ITEMS CHARGE OR CREDIT ....................................138
SECTION 15.8. CPI ADJUSTMENT FACTOR .................................................................138
SECTION 15.9. COMPANY NON-PERFORMANCE - THROUGHPUT ................................139
(A) Company Non-Compliance ..........................................................139
(B) Billing Period Throughput Performance Debits ............................139
(C) Billing Period Throughput Performance Credits ...........................140
(D) Establishment of Record-Keeping Accounts .................................140
(E) Throughput Performance Damages Account ................................140
(F) Throughput Performance Credit Account ....................................140
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(G) Billing Period Debits and Throughput Performance
Liquidated Damages ...................................................................141
(H) Billing Period Throughput Performance Credits ...........................142
(I) Annual Facility Throughput Liquidated Damages ........................142
(J) Annual Lapse of Unused Billing Period Throughput
Performance Credits ...................................................................144
SECTION 15.10. COMPANY NON-PERFORMANCE - ELECTRICITY PRODUCTION ...........144
(A) Billing Period Determination of Performance ...............................144
(B) Billing Period Electricity Production Debits .................................144
(C) Billing Period Electricity Production Credits ................................145
(D) Establishment of Record-Keeping Accounts .................................145
(E) Electricity Production Damages Account .....................................145
(F) Electricity Production Credit Account ..........................................145
(G) Billing Period Debits and Annual Electricity Production
Liquidated Damages ...................................................................145
(H) Billing Period Electricity Production Credits ................................146
(I) Annual Electricity Production Liquidated Damages .....................147
SECTION 15.11. DAMAGE ADJUSTMENTS TO ACCOUNT FOR WASTE BTU CONTENT
OUTSIDE DESIGN RANGE AND WASTE SHORTFALLS ..........................148
(A) Waste Btu Content Outside Design Range ...................................148
(B) Waste Shortfalls .........................................................................149
(C) Delivery Shortfall; County Non-Performance ................................149
SECTION 15.12. BILLING AND PAYMENT .......................................................................149
(A) Billing ........................................................................................149
03) Payment .....................................................................................150
SECTION 15.13. ESTIMATES AND ADJUSTMENTS ........................................................150
(A) Pro Rata Adjustments .................................................................150
(B) Budgeting ...................................................................................150
(C) Adjustment to Service Fee ...........................................................150
SECTION 15.14. ANNUAL SETTLEMENT ........................................................................150
SECTION 15.15 BILLING STATEMENT DISPUTES .........................................................151
SECTION 15.16. TAXES .................................................................................................151
ARTICLE XVI
BREACH, DEFAULT, REMEDIES AND TERMINATION
SECTION 16.1. REMEDIES FOR BREACH ....................................................................152
SECTION 16.2. EVENTS OF DEFAULT BY THE COMPANY ............................................152
(A) Events of Default Not Requiring Previous Notice or Further
Cure Opportunity for Termination ...............................................152
(B) Events of Default Requiring Previous Notice and Cure
Opportunity for Termination .......................................................153
(C) Other Remedies Upon Company Event of Default ........................154
SECTION 16.3. LIMITATION OF LIABILITY BY COMPANY ..............................................154
(A) Monetary Limit, Generally ........................................................154
(B) Exclusions
SECTION 16.4. EVENTS OF DEFAULT BY THE COUNTY ...............................................155
(A) Events of Default Permitting Termination ....................................155
(B) Notice and Cure Opportunity ......................................................155
(C) Termination Liquidated Damages During the Operation
Period ........................................................................................156
SECTION 16.5. COUNTY CONVENIENCE TERMINATION DURING THE OPERATION
PERIOD ...............................................................................................156
(A) Termination Right and Fee ..........................................................156
(x)
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(B) Uncontrollable Circumstances ....................................................156
(C) Payment of Amounts Owing Through the Termination Date .........157
(D) Termination Fee Payment Contingent Upon Surrender of
Possession .................................................................................157
(E) Adequacy of Termination Payment ..............................................157
(F) Consideration for Convenience Termination Payment ..................157
(G) Completion or Continuance by County ........................................157
SECTION 16.6. OBLIGATIONS OF THE COMPANY UPON TERMINATION OR
EXPIRATION ........................................................................................15 7
(A) Company Obligations .................................................................157
(B) Hiring of Company Personnel ......................................................159
(C) Continuity of Service and Technical Support ...............................159
(D) Company Payment of Certain Costs ............................................160
(E) County Payment of Certain Costs ................................................160
(F) Exit Test .....................................................................................160
SECTION 16.7. SURVIVAL OF CERTAIN PROVISIONS UPON TERMINATION ..................161
SECTION 16.8 NO WAIVERS .......................................................................................161
SECTION 16.9. NO CONSEQUENTIAL OR PUNITIVE DAMAGES ....................................161
SECTION 16.10. FORUM FOR DISPUTE RESOLUTION ...................................................161
SECTION 16.11. NON-BINDING MEDIATION ..................................................................162
(A) Rights to Request and Decline ....................................................162
(B) Procedure ...................................................................................162
(C) Non-Binding Effect .....................................................................162
(D) Relation to Judicial Legal Proceedings .........................................162
ARTICLE XVII
INSURANCE, UNCONTROLLABLE CIRCUMSTANCES
AND INDEMNIFICATION
SECTION 17.1. INSURANCE ........................................................................................163
(A) Company Insurance ...................................................................163
(B) Insurers, Deductibles and County Rights ....................................163
(C) Certificates, Policies and Notice ...................................................163
(D) Maintenance of Insurance Coverage ............................................164
SECTION 17.2. UNCONTROLLABLE CIRCUMSTANCES ................................................164
(A) Relief from Obligations ................................................................164
(B) Notice and Mitigation ..................................................................164
(C) Conditions to Performance, Design/Build Price, Service Fee
or Schedule Relief .......................................................................165
(D) Capital Modifications ..................................................................166
(E) Acceptance of Adjustment Constitutes Release ............................166
SECTION 17.3. INDEMNIFICATION BY THE COMPANY .................................................167
SECTION 17.4. INDEMNIFICATION BY THE COUNTY ...................................................167
ARTICLE XVIII
SECURITY FOR PERFORMANCE
SECTION 18.1. GUARANTOR .......................................................................................169
(A) Guaranty Agreement ..................................................................169
(B) Material Decline in Guarantor's Credit Standing .........................169
(C) Credit Enhancement ...................................................................169
(D) Annual Reports ..........................................................................169
SECTION 18.2. BONDS ................................................................................................169
(xi)
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(A) Construction Payment and Performance Bond .............................169
(B) Monitoring of Sureties ................................................................170
SECTION 18.3. LETTER OF CREDIT .............................................................................170
(A) Requirements .............................................................................170
(B) Drawings for Non-Renewal or Bankruptcy ...................................170
(C) Drawings for Termination ...........................................................171
(D) Drawings for Material Breach ......................................................171
(E) Effect of Final Determination of Damages ....................................171
SECTION 18.4. COSTS OF PROVIDING SECURITY FOR PERFORMANCE ......................172
(A) Inclusion in Service Fee ..............................................................172
ARTICLE XIX
MISCELLANEOUS PROVISIONS
SECTION 19.1. RELATIONSHIP OF THE PARTIES .........................................................173
SECTION 19.2. [RESERVED] ........................................................................................173
SECTION 19.3. PROPERTY RIGHTS .............................................................................173
(A) Protection from Infringement ......................................................173
(B) Intellectual Property Developed by the Company .........................173
SECTION 19.4. PROPRIETARY INFORMATION .............................................................174
(A) Non-Disclosure ...........................................................................174
(B) Authorized Disclosures ...............................................................174
SECTION 19.5. INTEREST ON OVERDUE OBLIGATIONS ..............................................174
SECTION 19.6. COST SUBSTANTIATION ......................................................................175
(A) Substantiating Non-Fixed Costs ..................................................175
(B) Cost Substantiation Certificate ...................................................175
(C) Technical Services ......................................................................175
(D) Mark-Up ....................................................................................176
(E) Evidence of Costs Incurred .........................................................176
SECTION 19.7. SUBCONTRACTORS ............................................................................176
(A) Use Restricted ............................................................................176
(B) Limited County Review and Approval of Permitted
Subcontractors ...........................................................................176
(C) Subcontract Terms and Subcontractor Actions ............................177
(D) Indemnity for Subcontractor Claims ...........................................177
(E) Assignability, ............................................................................177
SECTION 19.8. ACTIONS OF THE COUNTY IN ITS GOVERNMENTAL CAPACITY 177
(A) Rights as Government Not Limited ..............................................177
(B) No County Obligation to Issue Governmental Approvals ..............177
SECTION 19.9. ASSIGNMENT ......................................................................................178
(A) By the Company .........................................................................178
(B) By the County ............................................................................178
SECTION 19.10. PRACTICABILITY OF PERFORMANCE OF THE FACILITY .......................178
SECTION 19.11. FACILITYTOURS .................................................................................179
SECTION 19.12. COMPLIANCE WITH MATERIAL AGREEMENTS ....................................179
SECTION 19.13. BINDING EFFECT ................................................................................179
SECTION 19.14. AMENDMENT AND WAIVER .................................................................179
SECTION 19.15. NON-DISCRIMINATION ........................................................................179
SECTION 19.16. NOTICES .............................................................................................179
(A) Procedure ...................................................................................179
(B) Company Notice Address ............................................................180
(C) County Notice Address ................................................................180
SECTION 19.17. NOTICE OF LITIGATION .......................................................................180
SECTION 19.18. FURTHER ASSURANCES .....................................................................180
(xii)
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APPENDICES
1. Governmental Approvals
2. Performance Guarantees [To be Developed and Finalized Based on Final
Technical Proposals]
3. Technical Specifications
4. Construction Requirements
5. Design/ Build Quality Management Plan [To be Developed and Finalized Based
on Final Technical Proposals]
6. Pre-Acceptance Testing Requirements and Acceptance Test Procedures and
Standards
7. Design/Build Work Review Procedures and Submittals
8. Facility Operation, Maintenance, Repair and Replacement (Operation and
Maintenance Plan)
[To be Developed and Finalized Based on Final Technical Proposals]
9. Project Schedules
10. Milestone Payment and Construction Progress
[To be Developed and Finalized Based on Final Proposals]
11. Maximum Electricity Utilization Guarantee (from Price Proposal Form 18)
[To be Developed and Finalized Based on Final Technical Proposals]
12. Construction Period and Operation Period Price Escalation Indices
13. Staffing Plan and Subcontractors [To be Developed and Finalized Based on
Final Business Proposals]
14. Required Insurance
15. Prevailing Wages
16. Asset Evaluation Protocol
17. Exit Test Procedures and Standards
18. Description of Site
(Xiii)
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REFERENCE DOCUMENTS
1. EISPN/DEIS
2. [RESERVED]
3. [RESERVED]
TRANSACTION FORMS
A. Form of Guaranty Agreement
B. Form of Construction Payment and Performance Bond
C. Form of Letter of Credit
D. Form of Technology Supply Agreements
E. Form of Confidentiality Agreement
(xiv)
487571.8 028493 AGMT
SERVICE CONTRACT
FOR THE
DESIGN, CONSTRUCTION AND OPERATION
OF THE
COUNTY OF HAWAII SOLID WASTE REDUCTION FACILITY
THIS SERVICE CONTRACT FOR THE DESIGN, CONSTRUCTION AND
OPERATION OF THE COUNTY OF HAWAII SOLID WASTE REDUCTION FACILITY is made and
entered into as of this _ day of , 2008 between the County of Hawaii, a body politic
and corporate of the State of Hawaii (the "County") and Wheelabrator Technologies Inc., a
corporation organized and existing under the laws of the State of Delaware and authorized to
do business in the State of Hawaii (the "Company").
RECITALS
(A) The County of Hawaii (the "County") currently utilizes two County-owned
landfills to dispose of all municipal solid waste generated within the geographic boundaries of
the County. The South Hilo Landfill which services waste generation on the east side of the
County and the Pu uanahulu Landfill which provides disposal capacity for waste generated on
the west side of the County.
(B) It is currently anticipated that the South Hilo Landfill will exhaust its
capacity by the end of 2010 or shortly thereafter.
(C) The County desires to minimize the transportation of waste generated on
the east side of the County to the Pu'uanahulu Landfill upon the closure of the South Hilo
Landfill due to the environmental and social impacts that would result from such
transportation activity.
(D) The County undertook an extensive evaluation and planning process to
determine the disposal methodology that was most advantageous for the County upon closure
of the South Hilo Landfill.
(E) The County's Integrated Solid Waste Management Plan which was
amended in 2000 provides that the most advantageous disposal methodology for the County is
to develop a solid waste reduction facility in the County.
(F) The County has determined that it is in the County's best interests to
contract with a private entity to permit, design, construct, start up, acceptance test, operate,
maintain and repair a new solid waste reduction facility.
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County of Hawaii Solid Waste Reduction Facility Article III - Conditions Precedent
(G) Pursuant to Division 1, Title 9, Chapter 103D of the Hawaii Revised
Statutes (the "Act"), the County is authorized to conduct a procurement process to select a
private entity to provide the Contract Services.
(H) The first phase of the procurement process was the issuance of a Stage I
Request for Proposals ("RFP") by the County in December 28, 2005. Following an evaluation of
the statements of qualifications submitted in response to the Stage I RFP based upon the
criteria set forth in the Stage I RFP, the County selected three firms to whom it would issue a
Stage II RFP.
(I) On October 16, 2006, the County undertook the second phase of the
competitive process by issuing to the proposers a Stage II RFP with respect to the desired
services. Stage II RFP Addenda were issued on January 19, 2007; February 8, 2007; and
March 15, 2007.
(J) Proposals submitted in response to the Stage II RFP were received on
April 15, 2007 from two firms.
(K) The County requested and received written clarifications of the proposals
in accordance with the Stage II RFP.
(L) The final proposals were reviewed by the County's evaluation committee.
(M) The evaluation committee determined that the proposal submitted by
Wheelabrator Technologies, Inc. was the most advantageous proposal received in response to
the County's Stage II RFP.
(N) Waste Management, Inc., a company that owns 100% of the Company's
stock, will guarantee the payment and performance of the obligations of the Company under
the Service Contract pursuant to a guaranty agreement executed concurrently herewith.
(O) The County desires to receive, and the Company desires to provide, the
Contract Services under the terms of this Service Contract.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto, intending to be legally bound, agree as follows:
2
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS. As used in this Service Contract the following
terms shall have the meanings set forth below:
"Acceptable Residue Disposal Site" has the meaning specified in Section 12.9.
"Acceptance" means demonstration by the Company in accordance with
Article VIII hereof and Appendix 6 that the Acceptance Tests have been conducted, the
Acceptance Test Procedures and Standards have been achieved and the other Acceptance Date
Conditions set forth in Section 8.4 have been achieved.
"Acceptance Date" means the date on which the Acceptance has occurred or is
deemed to have occurred under Section 8.5.
"Acceptance Date Conditions" has the meaning specified in Section 8.4.
"Acceptance Test Plan" has the meaning specified in Appendix 6.
"Acceptance Test Procedures and Standards" or "Acceptance Standard" means
the test procedures and standards for Acceptance as set forth in Appendix 6.
"Acceptance Tests" or "Acceptance Testing" means the tests required for
Acceptance as set forth in Appendix 6.
"Act" means Division 1, Title 9, Chapter 103D of the Hawaii Revised Statutes, as
amended, supplemented, superseded and replaced from time to time.
"Affiliate" means any person directly or indirectly controlling or controlled by
another person, corporation or other entity or under direct or indirect common control with
such person, corporation or other entity.
"Aggregate Billing Period" means, as of any date of determination during the
Term hereof, all Billing Periods from the first Billing Period hereunder through the end of the
Billing Period ending on or most recently prior to such date of determination.
"Alternative Waste Disposal Site" has the meaning specified in Section 10.2(H).
"Annual Electricity Price" means, for any Contract Year, the average price
(expressed in dollars/kWh) for electricity which is actually payable by the Power Purchaser
during such Contract Year for electricity purchased under the Power Purchase Agreement,
calculated by dividing the total sum payable thereunder for purchased electricity during the
Contract Year (prior to any deductions, offsets, holdbacks, damages, or other reductions
allowed under the Power Purchase Agreement) by the total amount (kWh) of electricity actually
delivered to the Power Purchaser during the Contract Year.
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County of Hawaii Solid Waste Reduction Facility Article I - Definitions and Interpretation
"Annual Electricity Production" means, for any Contract Year, the per-Ton
average amount of exportable electricity actually produced by the Facility during such Contract
Year, calculated by dividing (1) the total amount of electricity produced by the Facility during
such Contract Year and available, after use in the Facility, for sale to the Power Purchaser, by
(2) the Annual Facility Throughput.
"Annual Electricity Production Guarantee" means, for any Contract Year, the
production of electricity available for sale, after use in the Facility, of [the annual average
kWh/ton specified in the BAFO], as adjusted for Btu content in accordance with Appendix 2.
"Annual Electricity Production Liquidated Damages" means the amounts so
designated which are calculated in accordance with Section 15.10.
"Annual Facility Throughput" means, for any Contract Year, the Tonnage
actually combusted by the Facility in accordance with this Service Contract.
"Annual Facility Throughput Guarantee" has the meaning specified in
Section 12.2.
"Annual Facility Throughput Liquidated Damages" has the meaning specified in
Section 15.9(I).
"Annual Operating Plan" means the annual operating plan established, adopted
and revised in accordance with Section 10.3(A).
"Annual Settlement Statement" has the meaning specified in Section 15.14.
"Annual Waste Delivery Commitment" has the meaning specified in
Section 10.1.
"Appendix" means any of the Appendices attached to this Service Contract and
identified as such in the Table of Contents, as the same may be amended or modified from time
to time in accordance with the terms hereof.
"Applicable Law" means: (1) any federal, state or local law, code or regulation;
(2) any formally adopted and generally applicable rule, requirement, determination, standard,
policy, implementation schedule or other order of any Governmental Body having appropriate
jurisdiction; (3) any established interpretation of law or regulation utilized by an appropriate
Governmental Body if such interpretation is documented by such Governmental Body and
generally applicable; (4) any Governmental Approval; and (5) any Governmental Approval, in
each case having the force of law and applicable from time to time to: (a) to the siting, design,
acquisition, construction, equipping, financing, ownership, possession, start up, testing,
operation, maintenance, repair, replacement or management of municipal solid waste
reduction systems, including the Facility; (b) to the air and odor emissions therefrom; (c) to the
4
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County of Hawaii Solid Waste Reduction Facility Article I - Definitions and Interpretation
transfer, handling, processing, transportation or disposal of Non-Processible Waste, residue
i
and other by-products produced thereby; or (d) to any other transaction or matter
contemplated hereby (including, without limitation, any of the foregoing which pertain to solid
waste reduction, waste disposal, health, safety, fire, environmental protection, labor relations,
building codes, the payment of prevailing or minimum wages and non-discrimination).
"Authorized Representative" means the authorized representative for either party
designated pursuant to subsection 7.1(D).
"Available Billing Period Processible Waste" means the sum of (1) the amount of
Processible Waste delivered to the Facility and accepted by the Company in any Billing Period,
plus (2) the amount of Processible Waste which the Company wrongfully refuses to accept at
the Facility in any Billing Period as provided in Section 10.2.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. 101 et
sue., as amended from time to time and any successor statute thereto. "Bankruptcy Code"
shall also include (1) any similar state law relating to bankruptcy, insolvency, the rights and
remedies of creditors, the appointment of receivers or the liquidation of companies and estates
that are unable to pay their debts when due, and (2) in the event the Guarantor is incorporated
or otherwise organized under the laws of a jurisdiction other than the United States, any
similar insolvency or bankruptcy code applicable under the laws of such jurisdiction.
"Baseline Facility Record" has the meaning specified in subsection 13.2(B).
"Base Operation Fee" means the annual amount payable to the Company,
pursuant to Section 15.3, for the operation and maintenance (including repair and
replacement) of the Facility and the combustion of Processible Waste in amounts up to 73,000
Tons per year in accordance with the requirements hereof.
"Billing Period" means each calendar month. With respect to the Facility, the
first Billing Period shall begin on the Acceptance Date and shall continue to the last day of the
month in which the Acceptance Date occurs and the last Billing Period shall end on the last
day of the Term of this Service Contract. Any computation made on the basis of a Billing
Period shall be adjusted on a pro rata basis to take into account any Billing Period of less than
the actual number of days in the month to which such Billing Period relates.
"Billing Period Electricity Price" means, for any Billing Period, the average price
(expressed in dollars/kWh) for electricity which is actually payable by the Power Purchaser
during such Billing Period for electricity purchased under the Power Purchase Agreement
(including capacity and the value of renewable energy credits or certificates if purchased by the
Power Purchaser in accordance with the Power Purchase Agreement), calculated by dividing the
total sum payable thereunder for purchased electricity during the Billing Period (prior to any
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County of Hawaii Solid Waste Reduction Facility Article I - Definitions and Interpretation
deductions, offsets, holdbacks, damages, or other deductions allowed under the Power
Purchase Agreement) by the total amount (kWh) of electricity actually delivered to the Power
Purchaser during the Billing Period.
"Billing Period Electricity Production" means, for any Billing Period, the per-Ton
average amount of exportable electricity actually produced by the Facility during the Billing
Period, calculated by dividing (1) the total amount of electricity produced by the Facility during
such Billing Period and available, after use in the Facility, for sale to the Power Purchaser, by
(2) the Billing Period Throughput.
"Billing Period Electricity Production Credit" has the meaning specified in
subsection 15.10(C).
"Billing Period Electricity Production Debit" has the meaning specified in
subsection 15.10(B).
"Billing Period Electricity Production Deficiency" has the meaning specified in
subsection 15.10(A).
"Billing Period Electricity Production Surplus" has the meaning specified in
subsection 15.10(A).
"Billing Period Throughput" means, for any Billing Period, the Tonnage actually
combusted by the Facility in accordance with this Service Contract.
"Billing Period Throughput Performance Credit" has the meaning specified in
Section 15.9(C).
"Billing Period Throughput Performance Debit" has the meaning specified in
Section 15.9(B).
"Billing Period Throughput Deficiency" has the meaning specified in
Section 10.2(D).
"Billing Period Throughput Guarantee" has the meaning specified in
Section 10.2(C).
"Billing Period Throughput Surplus" has the meaning specified in
Section 10.2(D).
"Bypass Processible Waste" means Processible Waste delivered or available for
delivery to the Facility which the Company wrongfully refuses to accept or combust at the
Facility as provided in Section 10.2.
"Capital Modification" means any material change to the Facility including the
installation of new structures, equipment, systems or technology following Acceptance. If a
6
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replacement of any part of the Facility made by the Company pursuant to its obligations under
i
Article XIV results in a material change to the Facility, such replacement shall be considered to
be a Capital Modification.
"CEM" means continuing emissions monitoring using the equipment provided
therefore in the Design Requirements.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. 9601 et se , and applicable regulations promulgated thereunder,
each as amended from time to time.
"Change in Law" means any of the following acts, events or circumstances to the
extent that compliance therewith materially interferes with or materially increases the cost of
performance of its obligations hereunder or materially increases the scope of a party's
obligations hereunder:
(a) the adoption, amendment, promulgation, issuance, modification, repeal
or written change in (i) administrative or (ii) judicial interpretation of any Applicable Law on or
after the Contract Date, unless such Applicable Law was on or prior to the Contract Date duly
adopted, promulgated, issued or otherwise officially modified or changed in interpretation, in
each case in final form, to become effective without any further action by any Governmental
Body; or
(b) the order or judgment of any Governmental Body issued on or after the
Contract Date (unless such order or judgment is issued to enforce compliance with Applicable
Law which was effective as of the Contract Date) to the extent such order or judgment is not
the result of willful or negligent action, error or omission or lack of reasonable diligence of the
Company or of the County, whichever is asserting the occurrence of a Change in Law;
provided, however, that the contesting in good faith or the failure in good faith to contest any
such order or judgment shall not constitute or be construed as such a willful or negligent
action, error or omission or lack of reasonable diligence; or
(c) except with respect to any Governmental Approval required for the
construction and operation of the Facility as provided within (i) - (ii) below pertaining to
exclusions from "Change in Law", the denial of an application for, a delay in the review,
issuance or renewal of, or the suspension, termination, or interruption of any Governmental
Approval, or the imposition of a term, condition or requirement which is more stringent or
burdensome than the Contract Standards in connection with the issuance, renewal or failure
of issuance or renewal of any Governmental Approval, to the extent that such occurrence is not
the result of willful or negligent action, error or omission or a lack of reasonable diligence of the
Company or of the County, whichever is asserting the occurrence of a Change in Law;
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County of Hawaii Solid Waste Reduction Facility Article I - Definitions and Interpretation
provided, however, that the contesting in good faith or the failure in good faith to contest any
such occurrence shall not be construed as such a willful or negligent action or lack of
reasonable diligence.
It is specifically understood, however, that none of the following shall constitute
a "Change in Law":
(i) a change in the nature or severity of the actions typically taken by a
Governmental Body to enforce compliance with Applicable Law which was effective as of the
Contract Date;
(ii) acts, events and circumstances with respect to which the Company has
assumed the permitting risk relating to the Facility under Sections 5.2 and 7.3; or
(iii) a change in any tax or similar law regarding taxes or similar charges not
included as Fixed Design/Build Price Adjustments or Pass Through Costs under Sections 9.1
or 15.5, except that a change in any tax law that is specific to operators of waste-to-energy
facilities (and not other types of operators), shall constitute a Change in Law.
"Change Order" means a written order to the Company issued and signed by the
County after execution of this Service Contract, authorizing or requiring:
(i) Extra Design/Build Work, or a deletion or omission from or modification
to the Design/Build Work, pursuant to Section 7.6;
(ii) an increase or reduction in the Fixed Design/Build Price; or
(iii) any other change in this Service Contract prior to the Acceptance Date
(including any change in the Design Requirements).
"Closeout Requirements" means the Company's obligations for closing out the
Construction Period Work and completing documentation of the Construction Period Work
pursuant to this Service Contract (including such matters as submittal of record drawings,
surveys, and manuals; cleanup and removal of construction materials and debris; and all other
matters which this Service Contract requires the Company to do and perform as part of the
completion of the Company's Construction Period Work obligations.
"CMMS" has the meaning specified in subsection 11.4(A).
"Communication Plan" means the document that describes, in detail, the
Company's approach to communicating and coordinating with the County's technical staff, as
well as the County's on-site project management staff during each project phase.
"Company" means Wheelabrator Technologies Inc., a corporation organized and
existing under the laws of Delaware, and its permitted successors and assigns.
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County of Hawaii Solid Waste Reduction Facility Article I - Definitions and Interpretation
"Company Fault" means any breach (including the untruth or breach of any
Company representation or warranty herein set forth), failure, non-performance or non-
compliance by the Company with respect to its obligations and responsibilities under this
Service Contract to the extent not directly attributable to any Uncontrollable Circumstance or
County Fault, and which materially and adversely affects the County's right and obligations or
ability to perform under this Service Contract.
"Construction Commencement Date" means the first date on which all of the
Construction Commencement Date Conditions set forth in Section 4.2 shall be satisfied or
waived, as agreed to in writing by the parties pursuant to Section 4.3 and the Notice to Proceed
with construction of the Facility is issued.
"Construction Commencement Date Conditions" has the meaning set forth in
Section 4.3 hereof.
"Construction Manager" has the meaning specified in subsection 7.9(B).
"Construction Payment and Performance Bond" means the surety bond which
shall be provided for in accordance with Section 18.2 and substantially in the form set forth in
the Transaction Forms.
"Construction Period" means the period from and including the Construction
Commencement Date to the Acceptance Date.
"Construction Period Work" means all work required to be conducted during the
Construction Period, including successful completion of design, construction, Acceptance
Testing, preparation of Operation and Maintenance Manual and other plans, and completion of
Company staff training.
"Consumables" means those materials, supplies and similar consumables used
in connection with the operation of the Facility, which may include fuel oil, diesel fuel, liquid
chlorine, liquid sulfur dioxide, liquid defoament, quick lime, activated carbon, lubricants,
polymers, office supplies and other chemicals, fuels, materials, supplies and similar
consumables.
"Consumer Price Index" or "CPI" means the final non-seasonably adjusted
Consumer Price Index as reported by the U.S. Department of Labor, Bureau of Labor Statistics,
for All Urban Consumers, for the Hawaii Region.
"Contract Administration Memorandum" has the meaning set forth in
subsection 11.14(B).
"Contract Date" means the date this Service Contract is executed and delivered
by the parties hereto.
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"Contract Representative" means, in the case of the Company, the individual
specified in writing by the Company as the representative of the Company from time to time for
all purposes of this Service Contract and, in the case of the County, the Director of
Environmental Management Services or such other representative as shall be designated in
writing by the Director of Environmental Management Services from time to time.
"Contract Services" means the Design/Build Work and the Operation Services.
"Contract Standards" means the standards, terms, conditions, methods,
techniques and practices imposed or required by: (1) Applicable Law; (2) the Design
Requirements; (3) the Performance Guarantees; (4) Good Engineering and Construction
Practice; (5) Good Industry Practice; (6) the Design/Build Quality Management Plan; (7) the
Operation and Maintenance Manual; (8) applicable equipment manufacturers' specifications
(provided, however, that once equipment is beyond the warranty period, the Company shall not
be required to comply with equipment manufacturers' specifications upon receiving the written
approval of the County, which approval shall not be unreasonably withheld); (9) applicable
Insurance Requirements; and (10) any other standard, term, condition or requirement
specifically provided in this Service Contract to be observed by the Company.
Subsection 1.2(N) shall govern issues of interpretation related to the applicability and
stringency of the Contract Standards.
"Contract Year" means the County's fiscal year commencing on July 1 in any
year and ending on June 30 of such year; provided, however, that with respect to operations of
the Facility, the first Contract Year shall commence on the Acceptance Date and shall end on
the following June 30, and the last Contract Year shall commence on July 1 prior to the date
this Service Contract expires or is terminated, whichever is appropriate, and shall end on the
last day of the Term of this Service Contract or the effective date of any termination, whichever
is appropriate. Any computation made on the basis of a Contract Year shall be adjusted on a
pro rata basis to take into account any Contract Year of less than 365 or 366 days, whichever
is applicable.
"Cost Substantiation" has the meaning specified in Section 19.6.
"County" means County of Hawaii, Hawaii.
"County Engineer" means either (1) an engineer employed by the County or (2) a
qualified consulting engineer or firm of consulting engineers, having experience with respect to
the design, construction, testing, operation, maintenance, repair, replacement and
management of solid waste reduction facilities, in either case designated as the County
Engineer from time to time in writing by the County.
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"County Fault" means any breach (including the untruth or breach of any
County representation or warranty herein set forth), failure, non-performance or non-
compliance by the County under this Service Contract with respect to its obligations and
responsibilities under this Service Contract to the extent not directly attributable to any
Uncontrollable Circumstance or Company Fault, and which materially and adversely affects
the Company's rights, obligations or ability or costs to perform under this Service Contract.
"County Indemnitee" has the meaning specified in Section 17.3.
"County Landfill" means the County-owned Pu uanahulu Landfill.
"County Property" means any structures, improvements, equipment, fire alarm
systems, valves, pumping systems, hydrants, hydrant connections, duct lines, lamps,
lampposts, monuments, sidewalks, curbs, trees, lawns, roadways, utilities or any other
systems, fixtures, or real or personal property owned, leased, operated, maintained, or
occupied by the County including the scales and Reload Building.
"CPI Adjustment Factor" has the meaning specified in Section 15.8.
"Deliverable Material" means all documents, reports, warranties, manuals,
submittals, licenses and other materials required to be delivered by the Company to the
County pursuant to this Service Contract.
"Delivery Shortfall Liquidated Damages" has the meaning specified in subsection
15.11(C).
"Designated Residue Disposal Site" means the Pu'uanahulu Landfill, or such
other site designated by the County.
"Design/Build Period" means the period of time from the Contract Date through
the Acceptance Date and includes, both, the Development Period and the Construction Period.
"Design/Build Price" means the Fixed Design/Build Price as adjusted pursuant
to subsection 9.2(C) (which includes, both, the Fixed Development Price and the Fixed
Construction Period Price).
"Design/Build Quality Management Plan" means the quality assurance and
quality control requirements set forth in Appendix 5.
"Design/Build Work" means the employment and furnishing of all labor,
materials, equipment, supplies, tools, scaffolding, transportation, Utilities, insurance,
temporary facilities and other things and services of every kind whatsoever necessary for the
full performance and completion of the Company's design, engineering, construction, start-up,
shakedown, Acceptance Testing, obtaining Governmental Approvals and related obligations
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County of Hawaii Solid Waste Reduction Facility Article I - Definitions and Interpretation
with respect to the construction of the Facility during the Development Period and the
Construction Period under this Service Contract, including all completed structures,
assemblies, fabrications, acquisitions and installations, all commissioning and testing, and all
of the Company's administrative, accounting, record-keeping, notification and similar
responsibilities of every kind whatsoever under this Service Contract pertaining to such
obligations. A reference to Design/Build Work shall mean any part and all of the Design/Build
Work unless the context otherwise requires (and shall include all Extra Design/Build Work
authorized by Change Order).
"Design Package" has the meaning specified in Appendix 7.
"Design Requirements" means the design requirements for the Facility set forth
in Appendices 2 and 3, as the same may be changed or modified in accordance herewith.
"Development Period" means the period from and including the Contract Date to
the Construction Commencement Date.
"Development Period Responsibilities" means the Company's responsibilities
and/or the County's responsibilities with respect to the Development Period under Section 4.2
hereof.
"Development Period Work" means everything required to be furnished and done
for and relating to the Facility by the Company pursuant to this Service Contract during the
Development Period. Development Period Work shall mean any part and all of the
Development Period Work unless the context otherwise requires.
"Disputed Work" has the meaning set forth in subsection 7.6(H).
"DOH" means the Hawaii State Department of Health or any predecessor or
successor agency.
"Electricity Production Credit Account" has the meaning specified in subsection
15.10(D).
"Electricity Production Damages Account" has the meaning specified in
subsection 15.10(E).
"Encumbrances" means any Lien, lease, mortgage, security interest, charge,
judgment, judicial award, attachment or encumbrance of any kind with respect to the Facility,
other than Permitted Encumbrances.
"Energy Revenue Credit" has the meaning specified in Section 15.6.
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"Engineer of Record" means the registered professional engineer (persons or
i
entities) employed by the Company and under whose direction the design of the Facility is
prepared.
"Environmental Guarantee" means the Company's guarantee that, in the
performance of the Contract Services, it will comply with all odor, noise, lighting, dust, air
quality, traffic, run-off and other environmental requirements under Applicable Law and
environmental mitigation measures, as further described in Section 12.4 and Appendix 2.
"Environmental Performance Obligations" has the meaning specified in
Section 12.4(B).
"EPA" or "USEPA" means the United States Environmental Protection Agency
and any successor agency.
"Event of Default" means, with respect to the Company, those items specified in
Section 16.2 and, with respect to the County, those items specified in Section 16.4.
"Excess Operation Fee" means [To be provided in BAFO]] per Ton of
Processible Waste, the amount payable to the Company for the combustion of Processible
Waste in excess of [73,000] Tons per year.
"Excess Processible Waste" has the meaning specified in Section 10.2(A).
"Exit Test Procedures and Standards" means the test procedures and standards
regarding the Facility to be conducted by the Company prior to termination or expiration of this
Service Contract as set forth in Appendix 17.
"Extension Period" means the period commencing on the day after the
Scheduled Acceptance Date and ending 360 days following the Scheduled Acceptance Date, or
in the event of one or more delays caused by Uncontrollable Circumstances, County-requested
Change Orders or County Fault occurring during such period, the date which is the next
business day following the date calculated by adding to the Scheduled Acceptance Date the
aggregate number of days of such delay.
"Extra Design/Build Work" means any Design/Build Work ordered by the
County pursuant to Section 7.6 in addition to the Design/ Build Work originally required
hereunder.
"Extraordinary Items" has the meaning specified in Section 15.7.
"Extra Payment" has the meaning specified in subsection 7.6(B).
"Facility" means the solid waste reduction facility to be designed, constructed
and acceptance tested by the Company in accordance with the Design Requirements,
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consisting generally of (i) the receiving pit, waste feed systems, combustion units, boilers,
electric generation equipment, Residue handling equipment, air pollution control equipment,
auxiliary and control equipment, all other components of the combustion train; (ii) all other
buildings, structures, fixtures and equipment appurtenant thereto, utilized for Solid Waste
reduction, processing of Non-Processible Waste, treatment of ash, and disposal of Residue;
(iii) all roads, grounds, fences and landscaping appurtenant thereto, utilized for Solid Waste
processing; and (iv) administration and management of the Facility, including any Capital
Modifications made thereto from time to time.
"Facility Equipment" means all manufactured equipment, property or assets,
whether or not constituting personal property or fixtures other than Facility Structures,
constituting part of the Facility, including, without limitation, the waste feed systems,
combustion units, boilers, electric generation equipment, Residue handling equipment, air and
pollution control equipment.
"Facility Manager" has the meaning specified in Section 11.3.
"Facility Performance Obligations" means the Facility Throughput Performance
Liquidated Damages, Annual Electricity Production Liquidated Damages, Residue Performance
Liquidated Damages and Environmental Performance Obligations.
"Facility Registry" has the meaning specified in subsection 13.2(C).
"Facility Structures" means all structures, buildings and all appurtenances,
other than Facility Equipment, constituting part of the Facility.
"Facility Throughput Performance Liquidated Damages" has the meaning
specified in subsection 15.10(G).
"Federal Energy Regulatory Commission" means the U.S. Federal Energy
Regulatory Commission.
"Fees and Costs" means reasonable fees and expenses of employees, attorneys,
architects, engineers, expert witnesses, contractors, consultants and other persons, and costs
of transcripts, printing of briefs and records on appeal, copying and other reimbursed
expenses, and expenses reasonably incurred in connection with investigating, preparing for,
defending or otherwise appropriately responding to any Legal Proceeding.
"Final Completion" means completion of the Design/Build Work in compliance
with the Design Requirements and the requirements of Section 8.11.
"Final Design" means the detailed plans and specifications necessary and
sufficient to allow complete construction of the Facility in conformance with the requirements
of this Service Contract.
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"Final Punch List" has the meaning specified in subsection 8.2(B).
i
"Fixed Construction Period Price" means [AS
PROPOSED ON PRICE PROPOSAL FORM 16 OF THE BAFO] (as such amount may be
adjusted in accordance with 9.1(Q.
"Fixed Construction Period Price Adjustment Factor" has the meaning set forth
in Appendix 12.
"Fixed Design/ Build Price" has the meaning specified in subsection 9.1(B).
"Fixed Design/Build Price Adjustments" has the meaning specified in
subsection 9.1(C).
"Fixed Development Price" means [AS PROPOSED ON
PRICE PROPOSAL FORM 16 OF THE BAFO]
"General Bond Resolution" means the general bond resolution to be adopted by
the County, pursuant to which the County shall issue indebtedness described therein in the
amount of the Design-Build Price to finance the capital costs of the Facility.
"Good Engineering and Construction Practice" means those methods,
techniques, standards and practices which, at the time they are to be employed and in light of
the circumstances known or reasonably believed to exist at such time, are generally recognized
and accepted as good design, engineering, equipping, installation, construction and
commissioning practices for the design, construction and improvement of capital assets in the
municipal solid waste reduction industry in the United States and taking into consideration
good design, engineering, equipping, installation, construction and commissioning practices for
industrial processing and power facilities as observed in the Hawaii region of the United States.
"Good Industry Practice" means the methods, techniques, standards and
practices which, at the time they are to be employed and in light of the circumstances known
or reasonably believed to exist at such time, are generally recognized and accepted as good
operation, maintenance, repair, replacement and management practices in the municipal solid
waste reduction industry in the United States and taking into consideration good operation,
maintenance, repair, replacement, and management practices for industrial processing and
power facilities as observed in the Hawaii region of the United States.
"Governmental Approvals" means all orders of approval, permits, licenses,
authorizations, consents, certifications, exemptions, rulings, entitlements and approvals issued
by a Governmental Body of whatever kind and however described which are required under
Applicable Law to be obtained or maintained by any person with respect to the Contract
Services.
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County of Hawaii Solid Waste Reduction Facility Article I - Definitions and Interpretation
"Governmental Authority" has the meaning specified in subsection 19.4(B).
"Governmental Body" means any federal, state, regional or local legislative,
executive, judicial or other governmental board, agency, authority, commission,
administration, court or other body, or any official thereof having jurisdiction.
"Guaranteed Maximum Electricity Consumption" has the meaning specified in
Appendix 11. [AS PROPOSED ON BUSINESS PROPOSAL FORM 181
"Guaranteed Maximum Electricity Demand" has the meaning specified in
Appendix 11. [AS PROPOSED ON BUSINESS PROPOSAL FORM 18]
"Guaranteed Maximum Electricity Utilization" means Guaranteed Maximum
Electricity Consumption and Guaranteed Maximum Electricity Demand. [AS PROPOSED ON
BUSINESS PROPOSAL FORM 18]
"Guarantor" means Waste Management, Inc., a corporation organized and
existing under the laws of Delaware, and its successors and assigns permitted thereunder.
"Guaranty Agreement" or "Guaranty" means the Guaranty Agreement entered
into concurrently with this Service Contract from the Guarantor to the County in the form set
forth in the Transaction Forms, as the same may be amended from time to time in accordance
therewith.
"Hazardous Material" means any waste, substance, object or material deemed
hazardous under Applicable Law including, without limitation, "hazardous substance" as
defined under CERCLA and "hazardous waste" as defined under RCRA.
"Higher Heating Value" or "HHV" means the heat generated during complete
combustion of a fuel including the heat of vaporization of water vapor formed during
combustion and expressed in "British Thermal Units Per Pound" (Btu/lb).
"Independent Engineer" means a nationally-recognized qualified consulting
engineer or firm of consulting engineers, not otherwise associated with the transactions
contemplated hereby and not under contract with either party, having experience with respect
to permitting, design, construction, testing, operation, maintenance, repair, replacement and
management of solid waste reduction facilities.
"Independent Evaluator" means a qualified independent evaluator or evaluation
firm with demonstrated skill and experience in the evaluation of utility property, not otherwise
associated with the transactions contemplated hereby, selected with the mutual consent of the
parties for the purpose of evaluating and determining the condition of the Facility pursuant to
Section 13.2. The Independent Evaluator may be an engineer or other technical professional
competent to perform such services.
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"Initial Company Development Period Responsibilities" has the meaning set forth
in subsection 4.2(B).
"Initial Term" has the meaning specified in Section 3.1.
"Insurance Requirement" means any rule, regulation, code, or requirement
issued by any insurance company which has issued a policy of Required Design/Build Period
Insurance or Required Operation Period Insurance under this Service Contract, as in effect
during the Term hereof, compliance with which is a condition to the effectiveness of such
policy.
"Interim Electricity Production Performance Liquidated Damages" has the
meaning specified in Section 15.10.
"Legal Proceeding" means every action, suit, litigation, arbitration,
administrative proceeding, and other legal or equitable proceeding having a bearing upon this
Service Contract, and all appeals therefrom.
"Letter of Credit" has the meaning specified in Section 18.3.
"Lien" means any and every lien against the Facility or against any monies due
or to become due from the County to the Company under this Service Contract, for or on
account of the Contract Services, including mechanics', materialmen's, laborers' and lenders'
liens.
"Loss-and-Expense" means, and is limited to, any and all actual losses,
liabilities, forfeitures, obligations, damages, fines, penalties, judgments, deposits, costs,
expenses, charges, Taxes, or expenses, including all Fees and Costs, except as explicitly
excluded or limited under any provision of this Service Contract, relating to third party claims
for which the Company is obligated to indemnify the County pursuant to this Service Contract.
"Loss-and-Expense" for the purpose of any provision hereunder requiring indemnification of
the County by the Company for third party claims shall mean and include any special,
incidental, consequential, punitive or similar damages incurred by the County for third party
claims.
"Maintenance, Repair and Replacement Plan" has the meaning specified in
Section 13.5.
"Major Equipment" means [all major equipment and systems required by the
Company for the performance of the Contract Services as specified in Appendix 3.].
"Material Decline in Guarantor's Credit Standing" has the meaning specified in
Section 18.1.
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County of Hawaii Solid Waste Reduction Facility Article I - Definitions and Interpretation
"Mediator" means any person serving as a mediator of disputes hereunder
pursuant to Sections 8.8 and 16.11.
"Minimum Acceptance Standard" means the Minimum Acceptance Standard for
Acceptance of the Facility set forth in Appendix 6.
"Monthly Progress Report" has the meaning specified in subsection 7.3(F).
"Non-Binding Mediation" means the voluntary system of dispute resolution
established by Sections 16.10 and 16.11 for the resolution of any dispute arising under this
Service Contract.
"Non-Processible Waste" means (a) Hazardous Material; (b) dirt, concrete and
other construction material and demolition debris; (c) refrigerators, washing machines, large
appliances and similar "white goods"; (d) large items of machinery, equipment and mechanical
parts, such as motor vehicles and major components thereof, agricultural equipment, trailers
and marine vessels, or any other large item of waste; (e) sludge, sewage, wastewater and septic,
cesspool, human, animal, offal and liquid waste; (f) incinerator residue, ashes, foundry sands,
and large concentrations of plastics disposed of as wastes; (g) oil, paints, acids, caustics,
poisons, asbestos, chemicals, highly ignitable substances, explosives and ordinance materials;
(h) bulk loads of whole tires; and (i) any other materials the receipt and combustion of which is
likely to cause damage to or otherwise materially and adversely affect the operation of the
Facility, constitute a material threat to health or safety, or violate or cause the violation of any
Applicable Law.
"Notice to Proceed" means a notice issued by the County for the Company to
commence construction of the Facility as set forth in Sections 4.4 and 7.2.
"Operating Protocol" means the protocol governing operation of the Facility,
including all interface, coordination, and solid waste reduction policies, procedures and
protocols established, adopted and revised in accordance with Section 8.1 and Appendix 8.
"Operation and Maintenance Manual" means the manual and related computer
programs prepared by the Company containing detailed standard operating and maintenance
procedures and other specific instructions, policies, directives, routines, schedules and other
matters relating to the Operation Services, developed and maintained as required by Article XI
and Appendix 8.
"Operation Period" means the period from the Acceptance Date to and including
the last day of the Term.
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"Operation Services" means everything required to be furnished and done for
I
and relating to the Facility by the Company pursuant to this Service Contract during the
Operation Period.
"OSHA" means both the Hawaii Occupational Safety and Health Act,
Chapter 396 of the Hawaii Revised Statutes, including all applicable regulations promulgated
thereunder, and the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 650 et
sec l., including the applicable regulations promulgated thereunder, each as amended or
supplemented from time to time.
"Overall Critical Path Schedule" has the meaning specified in Appendix 10.
"Overdue Rate" means the maximum rate of interest permitted by the laws of the
State, if applicable, or the Prime Rate, whichever is lower.
"Pass Through Costs" has the meaning specified in Section 15.5.
"Performance Guarantees" means the guarantees of performance relating to the
Annual Facility Throughput Guarantee, the Annual Electricity Production Guarantee, the
Environmental Guarantee and the Residue Guarantee made by the Company specifically set
forth in Sections 12.2, 12.3, 12.4 and 12.5, respectively.
"Permitted Encumbrances" means, as of any particular time, any one or more of
the following:
(i) encumbrances for Utility charges, taxes, rates and assessments not yet
delinquent or, if delinquent, the validity of which is being contested diligently and in good
faith by the Company and against which the Company has established appropriate
reserves in accordance with generally accepted accounting principles;
(ii) any encumbrance arising out of any judgment rendered which is being
contested diligently and in good faith by the Company, the execution of which has been
stayed or against which a bond or bonds in the aggregate principal amount equal to such
judgments shall have been posted with a financially-sound insurer and which does not
have a material and adverse effect on the ability of the Company to construct the Facility
or operate the Facility;
(iii) any encumbrance arising in the ordinary course of business imposed by
law dealing with materialmen's, mechanics', workmen's, repairmen's, warehousemen's,
landlords', vendors' or carriers' encumbrances created by law, or deposits or pledges
which are not yet due or, if due, the validity of which is being contested diligently and in
good faith by the Company and against which the Company has established appropriate
reserves; and
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(iv) servitudes, licenses, easements, encumbrances, restrictions, rights-of-
way and rights in the nature of easements or similar charges which will not in the
aggregate materially and adversely impair the construction of the Facility and operation
of the Facility by the Company.
"Power Purchase Agreement" means the agreement to be entered into by the
County and the Power Purchaser providing for the purchase by the Power Purchaser of
electricity produced by the Facility, as the same may be amended from time to time in
accordance therewith; or any other agreement between the County and the Power Purchaser
providing for the purchase of electricity from the Facility which is applicable in the event a
prior Power Purchaser is terminated for cause or fails to purchase all or a portion of the
electricity produced by the Facility, as such other agreement may be amended from time to
time in accordance with therewith.
"Power Purchaser" means Hawaii Electric Light Company or any other purchaser
of electricity from the Facility under a Power Purchase Agreement.
"Prime Rate" means the prime rate as published in The Wall Street Journal, or a
mutually agreeable alternative source of the prime rate if it is no longer published in The Wall
Street Journal or the method of computation thereof is substantially modified.
"Processible Waste" means Solid Waste which can be combusted by the Facility
in compliance with Applicable Law, including but not limited to the types of solid waste
identified in Hawaii County Code Section 20-31. Processible Waste does not include any waste
included in the definition of "Non-Processible Waste", except for Non-Processible Waste which
can be processed in small quantities when mixed with other Processible Waste.
"Provisional Acceptance" has the meaning specified in Section 8.5.
"Provisional Acceptance Date" has the meaning specified in subsection 8.1(E).
"Qualified Commercial Bank" means a domestic commercial bank whose long-
term debt is rated "A" or higher by Moody's Investors Service, Inc., rated "A" or higher by Fitch,
Inc. or rated "A" or higher by Standard & Poor's Ratings Services, Inc. (if there is a split rating,
the lowest of the three shall apply), and which is a bank organized and existing under the laws
of the United States, is subject to federal and State banking regulatory jurisdiction and
maintains an office in the State of Hawaii.
"Quality Assurance Program" has the meaning specified in Appendix 5.
"Rating Service" means Moody's Investors Service Inc., Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies, Inc. or Fitch Ratings, or any of their
respective successors and assigns and, if such corporations shall be dissolved or liquidated or
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shall no longer perform the functions of a securities rating agency, "Rating Service" shall be
i
deemed to refer to any other nationally-recognized securities rating agency designated by the
County.
"RCRA" or "Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C.A. §6901 et §eq., and applicable regulations
promulgated thereunder, each as amended from time to time.
"Receiving Time" has the meaning specified in subsection 10.4(A)
"Reference Document" means any of the documents appended to this Service
Contract or incorporated by reference.
"Reference Fuel" means waste with a Higher Heating Value of 4,800 BTUs per
pound.
"Registered Hauler" means any person registered with the County and
authorized to deliver waste to the Facility or who is otherwise approved by the County to deliver
Processible Waste to the Facility from any source within the County, and whose authorization
is made evident to the Company by a pass, vehicle sticker or other method designated by the
County to identify commercial waste haulage vehicles that are reasonably acceptable to the
Company.
"Regulated Substance" means (1) any oil, petroleum or petroleum product and
(2) any pollutant, contaminant, hazardous substance, hazardous material, toxic substance,
toxic pollutant, solid waste, municipal waste, industrial waste or hazardous waste that is
defined as such by and is subject to regulation under any Applicable Law. Regulated
Substances include Hazardous Materials and contaminated soils requiring special handling or
disposal.
"Reload Building" means the facility currently part of the planned Reload Facility
that will be used to screen, separate and transfer waste into containers for shipment to a
landfill or any waste disposal/ reduction facility, prior to startup of the Facility. Subsequent to
commercial operation of the Facility, the Reload Building is anticipated to be used to receive,
screen, and separate Processible Waste from Non-Processible Waste delivered by citizens, to
transfer Processible Waste for delivery to the Facility, for the receipt and processing of
recyclable materials and for storage.
"Reload Facility" means the County facilities currently under construction at the
South Hilo Landfill site (also called the East Hawaii Regional Sort Station) which will include
the Reload Building and associated roads, fencing and drainage features.
"Renewal Term" has the meaning specified in Section 3.1.
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"Required Design/Build Period Insurance" has the meaning specified in
f
Appendix 14.
"Required Insurance" means the Required Design/Build Period Insurance and
the Required Operation Period Insurance.
"Required Operation Period Insurance" has the meaning specified in
Appendix 14.
"Requisition" means a written submission by the Company on the form of
requisition as agreed to by the parties, together with accompanying submittals, requesting
payment with respect to the Fixed Design/Build Price as set forth in Section 9.4 hereof.
"Residue" means bottom ash, fly ash, grate siftings, scrubber residue, unspent
lime and other material which remains after combustion of waste in the Facility.
"Residue Guarantee" means the production of Residue (1) containing not more
than 4.0% (by dry weight) combustible matter and not more than 0.2% (by dry weight)
putrescible content, (2) having a moisture content of not more than 20.0°/x, and (3) which will
not constitute Hazardous Material.
"Residue Performance Liquidated Damages" has the meaning specified in
subsection 12.5(B).
"RFP" means the County's Stage II Request for Proposals for the Solid Waste
Reduction Facility, issued on October 16, 2006, as amended.
"Scheduled Acceptance Date" means the day [902] consecutive calendar days
following the Scheduled Construction Date or, in the event of one or more delays caused by
Uncontrollable Circumstances or County-directed Change Orders occurring during the
Construction Period, the date which is the next calendar day following the date calculated by
adding [902] days to the aggregate number of days of such delay. Any such extension in the
Scheduled Acceptance Date shall be evidenced by a Contract Administration Memorandum or
Change Order, as appropriate.
"Scheduled Construction Date" means the day [617] [AS PROPOSED IN BAFO]
consecutive calendar days following the Contract Date, or, in the event of one or more delays
caused by Uncontrollable Circumstances or County-directed Change Orders occurring during
the Development Period, the date which is the next calendar day following the date calculated
by adding [617] [AS PROPOSED IN BAFO] days to the aggregate number of days of such delay.
Any such extension in the Schedule Construction Date shall be evidenced by a Contract
Administrative Memorandum or a Change Order, as appropriate.
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"Securities and Exchange Commission" means the U.S. Securities and Exchange
Commission.
"Security Instruments" means the Guaranty Agreement, the Construction
Payment and Performance Bond and the Letter of Credit.
"Senior Supervisors" has the meaning specified in subsection 11.3(B).
"Service Contract" means this Service Contract for the Design, Construction and
Operation of the County of Hawaii Solid Waste Reduction Facility between the Company and
the County, including the Appendices, the Transaction Forms and the Reference Documents,
as the same may be amended or modified from time to time in accordance herewith.
"Service Fee" has the meaning specified in Article XV.
"Shutdown Operations" means any period, not to exceed 3 hours (per
occurrence), commencing with the suspension of feeding of Processible Waste to any
combustion unit of the Facility and ending when the combustion unit is void of Processible
Waste.
"Site" means the parcels of real property identified in Appendix 18 on which the
Facility is to be constructed.
i
"Site-Related Information" means (1) all site-related information provided to the
Company prior to the Contract Date including, but not limited to, the Reference Documents;
and (2) all site-related assumptions made by the Company in preparing its proposal as set forth
in [Appendix 18 to be developed based upon Section 2.3 of the proposal].
"Solid Waste" means all materials and substances discarded or rejected as being
spent, useless, worthless, or in excess to the owners at the time of such discard or rejection,
including, without limitation, waste, garbage, trash, rubbish and refuse that is normally
disposed of by, and collected from, residential, commercial, industrial, governmental or
institutional establishments.
"Start-up Operations" means any period, not to exceed 3 hours (per occurrence),
commencing when any combustion unit of the Facility begins the combustion of Processible
Waste following an appropriate warm-up period and ending when the Facility achieves steady-
state operations.
"State" means the State of Hawaii.
"Subcontract" means an agreement or purchase order by the Company, or a
Subcontractor to the Company, as applicable.
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"Subcontractor" means every person (other than employees of the Company)
I
employed or engaged by the Company or any person directly or indirectly in privity with the
Company (including all subcontractors and every sub-subcontractor of whatever tier) for any
portion of the Contract Services, whether for the furnishing of labor, materials, equipment,
supplies, services or otherwise.
"Substantial Completion" has the meaning specified in Section 8.2.
"Supplemental Technical Information" means those portions of Appendix 3 that
are expressly designated as "Supplemental Technical Information".
"Surety" means the surety company issuing the Construction Payment and
Performance Bond.
"Tax" means any tax, fee, levy, duty, impost, charge, surcharge, assessment or
withholding, or any payment-in-lieu thereof, and any related interest, penalty or addition to
tax.
"Technical Specifications" means the technical specifications set forth or
referenced in Appendix 3, which are comprised of the Design Requirements and the
Supplemental Technical Information.
"Technology Supply Agreements" means the agreement to be entered into
between [Von Roll] as owner of the combustion technology to be used at the Facility and the
County, substantially in the form set forth as Transaction Form D.
"Term" has the meaning set forth in Article IV.
"Termination Date" means the last day of the Term of this Service Contract.
"Throughput Capacity Liquidated Damages" has the meaning specified in
Section 8.5.
"Throughput Performance Credit Account" means the account so designated
which is established in accordance with Section 15.9(F).
"Throughput Performance Damages Account" means the account so designated
which is established in accordance with Section 15.9(E).
"Throughput Performance Liquidated Damages" means the damages payable by
the Company due to its failure to meet the Billing Period or Annual Facility Throughput
Guarantee, as determined pursuant to Section 15.9(G).
"Ton" means a short ton of 2,000 lbs.
"Tonnage" means Tons of Processible Waste.
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"TPD" means Tons per day.
"Transaction Form" means any of the Transaction Forms appended to this
Service Contract.
"Uncontrollable Circumstances" means any act, event or condition that is
beyond the reasonable control of the party relying thereon as justification for not performing an
obligation or complying with any condition required of such party under this Service Contract,
and that by itself or in combination with other acts, events or circumstances beyond the
control of such party, materially interferes with or materially increases the cost of performing
its obligations hereunder (other than payment obligations), to the extent that such act, event or
condition is not the result of the willful or negligent act, error or omission, failure to exercise
reasonable diligence, or breach of this Service Contract on the part of such party.
(1) Inclusions. Subject to the foregoing, Uncontrollable Circumstances may
include, but shall not be limited to, the following:
(a) a Change in Law;
(b) the discovery of Hazardous Material or Regulated Substances on or at
the Site to the extent not disclosed in the Referenced Documents set forth in Appendix 18 or
caused by Company Fault;
(c) naturally occurring events (except weather conditions normal for the
geographic region of the County) such as landslides, underground movement, earthquakes,
volcanic eruptions, tsunamis, tornadoes, floods, epidemics, and other acts of God;
(d) explosion, sabotage or similar occurrence, acts of a declared public
enemy, terrorism, extortion, war, blockade or insurrection, riot or civil disturbance;
(e) labor disputes, except labor disputes involving employees of the
Company, its Affiliates, or Subcontractors which affect the performance of the Contract
Services;
(f) the failure of any Subcontractor (other than the Company, the Guarantor
or any Affiliate of either, except as otherwise provided in the Service Contract), to furnish
services, materials, chemicals or equipment on the dates agreed to, but only if such failure is
the result of an event which would constitute an Uncontrollable Circumstance if it affected the
Company directly, and the Company is not able to timely obtain substitutes after exercising all
reasonable efforts;
(g) any failure of title to the Facility or any placement or enforcement of any
encumbrance on the Facility not consented to in writing by, or arising out of any action or
agreement entered into by, the party adversely affected thereby;
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(h) the preemption, confiscation, diversion or destruction of materials or
services by a Governmental Body in connection with a public emergency or any condemnation
or other taking by eminent domain of any material portion of the Facility;
(i) subsurface conditions at the Site which materially vary from the
conditions reasonably anticipated based upon the Site-Related Information in accordance with
Section 4.1;
6) the failure of any appropriate federal, State, county or local public agency
or private utility having operational jurisdiction in the area in which the Facility is located, to
provide and maintain utilities, services, water and sewer lines and power transmission lines to
the Site which are required for the construction, start-up, Acceptance Testing or operation of
the Facility, but only, with respect to electric power utility, to the extent provided in Section
8.1;
(k) any default by the Power Purchaser under the Power Purchase
Agreement other than a failure by such Power Purchaser to make payment when due, except
defaults attributable to unexcused non-performance by the Company or the County, as
applicable;
(1) a violation of Applicable Law by a person other than the affected party or
its subcontractors;
(m) with respect to the Company, any County Fault and County-requested
Change Orders not due to Company Fault; and
(n) with respect to the County, any Company Fault.
(2) Exclusions. It is specifically understood that none of the following acts,
events or circumstances shall constitute Uncontrollable Circumstances:
(a) any act, event or circumstance that would not have occurred if the
affected party had complied with its obligations hereunder;
(b) changes in interest rates, inflation rates, wage rates, insurance costs,
commodity prices, (except as provided in subsection 9.2(C)), currency values, exchange rates or
other general economic conditions;
(c) changes in the financial condition of the County, the Company, the
Guarantor, or their Affiliates or Subcontractors affecting the ability to perform their respective
obligations;
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(d) the consequences of error, neglect or omissions by the Company, the
Guarantor, any Subcontractor, any of their Affiliates or any other person utilized by the
Company or performing on behalf of the Company in the performance of the Contract Services;
(e) any impact of prevailing wage or similar laws, customs or practices on
the Company's costs (other than due to a Change in Law);
(f) weather conditions normal for the geographic region of the County;
(g) any surface or subsurface geotechnical or hydrological conditions,
including without limitation the existence of compressible soil layers, masses, unstable soils,
manmade deposits, and water table fluctuations, which conditions do not materially vary from
those reasonably anticipated based upon the Site-Related Information in accordance with
Section 4.1;
(h) mechanical failure of equipment to the extent not resulting from a
condition that is listed in the "Inclusions" section of this definition;
(i) failure of the Company to secure patents which it deems necessary for
the performance of the Contract Services;
(j) a Change in Law pertaining to taxes, except sales taxes;
i
(k) any Change in Law (including the issuance of any Governmental
Approval, the enactment of any statute, or the promulgation of any regulation) the terms and
conditions of which do not impose more stringent or burdensome requirements on the
Company than are imposed by the Contract Standards; or
(1) the discovery of Hazardous Materials or Regulated Substances on or at
the Site to the extent disclosed in the Reference Documents contained in Appendix 18 or
caused by Company Fault.
"Utilities" means any and all utility services and installations whatsoever
(including gas, water, electricity, telephone, internet, cable and any other telecommunications),
and all piping, wiring, conduit, and other fixtures of every kind whatsoever related thereto or
used in connection therewith.
SECTION 1.2. INTERPRETATION. In this Service Contract, notwithstanding
any other provision hereof.
(A) References Hereto. The terms "hereby," "hereof," "herein," "hereunder"
and any similar terms refer to this Service Contract; and the term "hereafter" means after, and
the term "heretofore" means before, the Contract Date.
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(B) Gender and Plurality. Words of the masculine gender mean and include
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correlative words of the feminine and neuter genders and words importing the singular number
mean and include the plural number and vice versa.
(C) Persons. Words importing persons include firms, companies,
associations, joint ventures, general partnerships, limited partnerships, limited liability
corporations, trusts, business trusts, corporations and other legal entities, including public
bodies, as well as individuals.
(D) Headings. The table of contents and any headings preceding the text of
the Articles, Sections and subsections of this Service Contract shall be solely for convenience of
reference and shall not affect its meaning, construction or effect.
(E) Entire Agreement. This Service Contract contains the entire agreement
between the parties hereto with respect to the transactions contemplated by this Service
Contract. Without limiting the generality of the foregoing, this Service Contract shall
completely and fully supersede all other understandings and agreements among the parties
with respect to such transactions, including those contained in the RFP, the proposal of the
Company submitted in response thereto, and any amendments or supplements to the RFP or
the proposal.
(F) Design Requirements. The Design Requirements are intended to include
the basic design principles, concepts and requirements for the Design/Build Work but do not
include the final, detailed designs, plans or specifications or indicate or describe each and
every item required for full performance of the physical Design/Build Work and for achieving
Acceptance. The Company agrees to prepare all necessary and required complete and detailed
designs, plans, drawings and specifications and to furnish and perform, without additional
compensation of any kind, all Design/Build Work in conformity with the Design Requirements
and the final designs, plans, drawings and specifications based thereon.
(G) Standards of Workmanship and Materials. Any reference in this Service
Contract to materials, equipment, systems or supplies (whether such references are in lists,
notes, specifications, schedules, or otherwise) shall be construed to require the Company to
furnish the same in accordance with the grades and standards therefor indicated in this
Service Contract. Where this Service Contract does not specify any explicit quality or standard
for construction materials or workmanship, the Company shall use only workmanship and new
materials of a quality consistent with that of construction workmanship and materials specified
elsewhere in the Design Requirements, and the Design Requirements are to be interpreted
accordingly.
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(H) Technical Standards and Codes. References in this Service Contract to
all professional and technical standards, codes and specifications are to the most recently
published professional and technical standards, codes and specifications of the institute,
organization, association, authority or society specified, all as in effect as of the Contract Date.
Unless otherwise specified to the contrary, (1) all such professional and technical standards,
codes and specifications shall apply as if incorporated in the Design Requirements and (2) if
any material revision occurs, to the Company's knowledge, after the Contract Date, and prior
to completion of the Design/Build Work, the Company shall notify the County. If so directed
by the County, the Company shall perform the Design/Build Work in accordance with the
revised professional and technical standard, code, or specification as long as the Company is
compensated, subject to Cost Substantiation, for any additional cost or expense attributable to
any such revision.
(I) Liquidated Damages. This Service Contract provides for the payment by
the Company of liquidated damages in certain circumstances of non-performance, breach and
default. Each party agrees that the County's actual damages in each such circumstance would
be difficult or impossible to ascertain (particularly with respect to the public harm that would
occur as a result of such non-performance, breach or default of the Company), and that the
liquidated damages provided for herein with respect to each such circumstance are intended to
place the County in the same economic position as it would have been in had the circumstance
not occurred. Except where additional remedies are otherwise specifically provided for herein,
such liquidated damages shall constitute the only damages payable by the Company to the
County in such circumstances of non-performance, breach or default, regardless of legal
theory.
(J) Causing Performance. A party shall itself perform, or shall cause to be
performed, subject to any limitations specifically imposed hereby with respect to
Subcontractors or otherwise, the obligations affirmatively undertaken by such parry under this
Service Contract.
(K) Party Bearing Cost of Performance. All obligations undertaken by each
party hereto shall be performed at the cost of the party undertaking the obligation or
responsibility, unless the other party has explicitly agreed herein to bear all or a portion of the
cost either directly, by reimbursement to the other party or through an adjustment to the
Service Fee.
(L) Assistance. The obligations of a party to cooperate with, to assist or to
provide assistance to the other party hereunder shall be construed as an obligation to use the
party's personnel resources to the extent reasonably available in the context of performance of
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their normal duties, and not to incur material additional overtime or third party expense unless
requested and reimbursed by the assisted party.
(M) Interpolation. If any calculation hereunder is to be made by reference to
a chart or table of values, and the reference calculation falls between two stated values, the
calculation shall be made on the basis of linear interpolation.
(N) Applicability and Stringency of Contract Standards. The Company shall
be obligated to comply only with those Contract Standards which are applicable in any
particular case. Where more than one Contract Standard applies to any particular
performance obligation of the Company hereunder, each such applicable Contract Standard
shall be complied with. In the event there are different levels of stringency among such
applicable Contract Standards, the most stringent of the applicable Contract Standards shall
govern.
(O) Delivery of Documents in Digital Format. In this Service Contract, the
Company is obligated to deliver reports, records, designs, plans, drawings, specifications,
proposals and other documentary submittals in connection with the performance of its duties
hereunder. The Company agrees that all such documents shall be submitted to the County
both in printed form (in the number of copies indicated) and, at the County's request, in digital
form. Digital copies shall consist of computer readable data submitted in Autocad, Microsoft
Word, Microsoft Access, and Microsoft Excel or in any other similar standard interchange
format which the County may reasonably request to facilitate the administration and
enforcement of this Service Contract. In the event that a conflict exists between the signed or
the signed and stamped hard copy of any document and the digital copy thereof, the signed or
the signed and stamped hard copy shall govern.
(P) Severability. If any clause, provision, subsection, Section or Article of
this Service Contract shall be ruled invalid by any court of competent jurisdiction, then the
parties shall: (1) promptly negotiate a substitute for such clause, provision, subsection,
Section or Article which shall, to the greatest extent legally permissible, effect the intent of the
parties in the invalid clause, provision, subsection, Section or Article; (2) if necessary or
desirable to accomplish item (1) above, apply to the court having declared such invalidity for a
judicial construction of the invalidated portion of this Service Contract; and (3) negotiate such
changes in substitution for or addition to the remaining provisions of this Service Contract as
may be necessary in addition to and in conjunction with items (1) and (2) above to effect the
intent of the parties in the invalid provision. The invalidity of such clause, provision,
subsection, Section or Article shall not affect any of the remaining provisions hereof, and this
Service Contract shall be construed and enforced as if such invalid portion did not exist.
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(Q) No Third-Party Rights. This Service Contract is exclusively for the benefit
of the County and the Company and shall not provide any third parties with any remedy,
claim, liability, reimbursement, cause of action or other rights.
(R) References to Days. All references to days herein are references to
calendar days.
(S) References to Including. All references to "including" herein shall be
interpreted as meaning "including without limitation".
(T) References to Knowledge. All references to "acknowledge", "knowing",
"know" or "knew" shall be interpreted as references to a party having actual knowledge.
(U) Counterparts. This Service Contract may be executed in any number of
original counterparts. All such counterparts shall constitute but one and the same Service
Contract.
(V) Governing I aw. This Service Contract shall be governed by and
construed in accordance with the applicable laws of the State.
(W) Defined Terms. The definitions set forth in Section 1.1 shall control in
the event of any conflict with any definitions used in the recitals hereto.
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ARTICLE II
1
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF THE COUNTY.
The County represents and warrants that:
(A) Existence and Powers. The County is a body politic and corporate of the
State of Hawaii (the "State"), with full legal right, power and authority to enter into and to
perform its obligations under this Service Contract.
(B) Due Authorization and Binding Obligation. This Service Contract has
been duly authorized, executed and delivered by all necessary action of the County.
(C) No Conflict. Neither the execution nor delivery by the County of this
Service Contract, nor the performance by the County of its obligations in connection with the
transactions contemplated hereby or the fulfillment by the County of the terms or conditions
hereof (1) conflicts with, violates or results in a breach of any constitution, law or governmental
regulation applicable to the County or (2) conflicts with, violates or results in the breach of any
term or condition of any order, judgment or decree, or any contract, agreement or instrument,
to which the County is a party or by which the County or any of its properties or assets are
bound, or constitutes a default under any of the foregoing.
(D) No Approvals Required. Other than those necessary to comply with the
requirements of [EIS statute], there is no approval, authorization, order or consent of, or
declaration, registration or filing with, any Governmental Body or referendum of voters is
required for the valid execution and delivery by the County of this Service Contract or the
performance by the County of its payment or other obligations hereunder except otherwise as
such have been duly obtained or made.
(E) No Litigation. There is no Legal Proceeding, at law or in equity, before or
by any court or Governmental Body, or proceeding for referendum or other voter initiative,
pending or, to the best of the County's knowledge, overtly threatened or publicly announced
against the County, in which an unfavorable decision, ruling or finding could reasonably be
expected to have a material and adverse effect on the execution and delivery of this Service
Contract or the validity, legality or enforceability of this Service Contract, or any other
agreement or instrument entered into by the County in connection with the transactions
contemplated hereby, or on the ability of the County to perform its obligations hereunder or
under any such other agreement or instrument, other than as disclosed previously to the
Company.
(F) County Ownership Interests in the Site. The County retains the control
of the Site through an executive order issued by the State of Hawaii so long as such Site is
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being used for the purposes specified in the executive order which purposes include
1
management of Solid Waste.
(G) Information Pertaining to the Site. To the best of its knowledge, the
County has made available to the Company all of the significant studies, reports and other
information pertaining to the Site which the County has developed in connection with its
planning and preparation work with respect to the RFP and the Facility and which, in the
County's opinion, may reasonably be material to the performance by the Company of the
Contract Services. The County makes no representation, however, as to the accuracy or
completeness of any such information except as expressly set forth in Section 4.1.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants that:
(A) Existence and Powers. The Company is a [corporation] duly organized,
validly existing and in good standing under the laws of Delaware and has the authority to do
business in the State and in any other state in which it conducts its activities, with the full
legal right, power and authority to enter into and perform its obligations under this Service
Contract.
(B) Due Authorization and Binding Obligation. This Service Contract has
been duly authorized, executed and delivered by all necessary corporate action of the Company
and constitutes a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent that its enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting creditors' rights from time to
time in effect and equitable principles of general application.
(C) No Conflict. Neither the execution nor delivery by the Company of this
Service Contract nor the performance by the Company of its obligations in connection with the
transactions contemplated hereby or the fulfillment by the Company of the terms or conditions
hereof (1) conflicts with, violates or results in a breach of any constitution, law or governmental
regulation applicable to the Company or (2) conflicts with, violates or results in a breach of any
order, judgment or decree, or any contract, agreement or instrument to which the Company is
a party or by which the Company or any of its properties or assets are bound, or constitutes a
default under any of the foregoing.
(D) No Approvals Required. No approval, authorization, order or consent of,
or declaration, registration or filing with, any Governmental Body is required for the valid
execution and delivery of this Service Contract by the Company or the performance of its
payment or other obligations hereunder except as such have been duly obtained or made.
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(E) No Litigation. There is no Legal Proceeding, at law or in equity, before or
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by any court or Governmental Body pending or, to the best of the Company's knowledge,
overtly threatened or publicly announced against the Company, in which an unfavorable
decision, ruling or finding could reasonably be expected to have a material and adverse effect
on the execution and delivery of this Service Contract by the Company or the validity, legality
or enforceability of this Service Contract against the Company, or any other agreement or
instrument entered into by the Company in connection with the transactions contemplated
hereby, or on the ability of the Company to perform its obligations hereunder or under any
such other agreement or instrument.
(F) Claims and Demands. Except as disclosed in writing to the County, to
the best of its knowledge, there are no material and adverse claims or demands based in
environmental tort law, or based on breach of contract, pending or threatened against the
Company with respect to any solid waste reduction facility providing service to the general
public designed, constructed, operated, maintained or managed by the Company, the
Guarantor or any Affiliate.
(G) Applicable Law Compliance. Except as disclosed in writing to the
County, to the best of its knowledge, neither the Company, the Guarantor nor any Affiliate is in
material violation of any law, order, rule or regulation applicable to any solid waste reduction
facility providing service to the general public designed, constructed, operated, maintained or
managed by the Company, the Guarantor or any Affiliate the violation of which may have a
material adverse affect on the ability of the Company, the Guarantor or any Affiliate to perform
their obligations hereunder or under the Guaranty Agreement.
(H) Patents and Licenses. The Company owns, or is expressly authorized to
use under patent rights, licenses, franchises, trademarks or copyrights, the technology
necessary for the Facility without any known material conflict with the rights of others.
(I) Information Supplied by the Corn . The information supplied and
representations and warranties made by the Company and the Guarantor in all submittals
made in response to the RFP and in all post-proposal submittals with respect to the Company
and the Guarantor (and to the best of its knowledge, all information supplied in such
submittals with respect to any Subcontractor) are true, correct and complete in all material
respects.
SECTION 2.3. KNOWLEDGE-BASED REPRESENTATIONS. Whenever a
representation or warranty hereunder is made to the best of the knowledge of the County or
the best of the knowledge of the Company, such representation or warranty hereunder shall be
deemed made, as the case may be, to the knowledge of the County's Director of Environmental
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Management or to the knowledge of the General Counsel and Chief Executive Officer of the
Company.
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ARTICLE III
TERM
SECTION 3.1. EFFECTIVE DATE AND INITIAL TERM. This Service
Contract shall become effective on the Contract Date, and shall continue in effect for 20 years
following the Acceptance Date (the "Initial Term") or, if renewed as provided in Section 3.2,
until the last day of the renewal term (the "Renewal Term"; the Initial Term and any Renewal
Term being referred to herein as the "Term"), unless earlier terminated pursuant to the
termination provisions of Article XVI hereof, in which event the Term shall be deemed to have
ended as of the date of such termination. All rights, obligations and liabilities of the parties
hereto shall commence on the Contract Date, subject to the terms and conditions hereof. The
County shall have no obligation to make Service Fee payments with respect to the Facility until
after the Acceptance Date. At the end of the Term of this Service Contract, all other obligations
of the parties hereunder shall terminate, except as provided in Sections 16.6 and 16.7.
SECTION 3.2. RENEWAL AND EXTENSION OPTION. This Service Contract
may be renewed and extended for an additional period of five years (subject to convenience
termination without cost to the County upon 90 days written notice) by mutual agreement of
the parties on the same conditions as are applicable during the Initial Term. The Company
shall give the County written notice of the approaching expiration of the Initial Term no later
than 270 days prior to such expiration.
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ARTICLE IV
DEVELOPMENT PERIOD
SECTION 4.1. SITE SUITABILITY CONFIRMATION. (A) Site Familiarity.
The Company acknowledges that the Company's agents and representatives have visited,
inspected and are familiar with the Site, its surface physical condition relevant to the
obligations of the Company pursuant to this Service Contract, including surface conditions,
normal and usual soil conditions, roads, utilities, topographical conditions and air quality
conditions; that the Company is familiar with all local and other conditions which may be
material to the Company's performance of its obligations under this Service Contract
(including, but not limited to transportation; seasons and climate; access, availability, disposal,
handling and storage of materials and equipment; and availability and quality of labor and
Utilities and anticipated Utilities based upon the design drawings for the Reload Facility), and
has received and reviewed all information regarding the Site provided to it as part of the
Site-Related Information or obtained in the course of performing its obligations hereunder; and
that based on the foregoing, the Site constitutes an acceptable and suitable site for the
construction and operation of the Facility in accordance herewith, and subject to the
occurrence of Uncontrollable Circumstances, the Facility can be constructed on the Site within
the Fixed Design/Build Price and by the Scheduled Acceptance Date.
(B) County-Supplied Information. Except as set forth below, the Company
shall be responsible for the independent verification and confirmation of all information
supplied to it by or on behalf of the County and upon which it elects to rely in connection
herewith. Except as set forth below, no error or omission in any such information shall
constitute an Uncontrollable Circumstance, or relieve the Company from any of its obligations
or entitle the Company to any increase in compensation hereunder. Notwithstanding the
above, the Company shall not be required to verify and confirm the actual subsurface condition
of the Site, and the Company shall be entitled to relief if the actual subsurface condition of the
Site vanes from that reasonably anticipated based upon the information set forth in
Appendix 18 and the Company's assumptions regarding such information as set forth in
Appendix 18.
(C) Site Access During Development Period. The execution of this Service
Contract shall be deemed to constitute the granting of a license to the Company to access the
Site for the purposes of. (1) performing engineering, analysis and such additional subsurface
and geotechnical studies or tests as deemed necessary by the Company; and (2) performing all
necessary onsite activities pursuant to Section 4.2. Such access shall be subject to the
County's prior approval, which shall not be unreasonably withheld, as to time and scope. On
and after the Construction Commencement Date, the County shall also provide to the
Company licenses in, over, or to the Site and other lands owned or controlled by the County, as
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may be necessary to permit the Company to perform its obligations hereunder for the Term of
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this Service Contract. The Company shall assume all risks associated with such activities and
indemnify, defend and hold harmless the County and the County Indemnitees in accordance
with Section 17.3.
(D) Discovery of Hazardous Materials or Other Regulated Substances. The
discovery after the Contract Date of Hazardous Materials or Regulated Substances at the Site,
except for any Hazardous Materials or Regulated Substances which have been disclosed to the
Company prior to the Contract Date, shall be treated as an Uncontrollable Circumstance.
SECTION 4.2. DEVELOPMENT PERIOD RESPONSIBILITIES OF THE PARTIES.
(A) Initial County Development Period Responsibilities. Promptly following the Contract Date,
the County shall undertake to perform and complete the following responsibilities (the "Initial
County Development Period Responsibilities"):
(1) Environmental Impact Statement. The County shall comply with the
requirements of [Cite].
(2) [Power Purchase Agreement. the County shall negotiate the Power
Purchase Agreement with the Power Purchaser.]
(B) Initial Company Development Period Responsibilities. Promptly following
the Contract Date, the Company shall undertake to perform and complete the following
responsibilities (the "Initial Company Development Period Responsibilities"):
(1) Environmental Impact Statement and Certain Governmental Approvals.
The Company shall perform the scope of work set forth in Appendix 1.
(2) [Power Purchase Agreement. The Company shall provide assistance to
the County in the negotiation of the Power Purchase Agreement as set forth in
Appendix 11.]
(C) No County Obligation to Proceed. The County has not completed the
environmental review required by [cite]. The parties acknowledge that in authorizing and
executing the Service Agreement, the County is not irrevocably committing to the construction
of the Facility, and that during the process of compliance with [cite] and following compliance
with [cite], the County has the right to terminate this Service Agreement for its convenience in
accordance with Section 4.5 hereof. [In addition, in order to ensure that the County has
adequate time to consider the information developed during the [cite] process, the parties shall
not undertake any Development Period Work for [30] days following certification of the
environmental impact statement in accordance with [cite].
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(D) Balance of County Development Period Responsibilities. Beginning on
i
the 31st day following the certification of the environmental impact statement in accordance
with [cite], the County shall use good faith efforts to satisfy the following County
responsibilities:
(1) General Bond Resolution. The County shall adopt the General Bond
Resolution and issue bonds pursuant to the County's plan of finance for the financing
of the Facility; provided, however, that the issuance of bonds shall not occur until all
other Commencement Date Conditions have been achieved or waived.
(2) Power Purchase Agreement. The County shall execute the Power
Purchase Agreement with the Power Purchaser.
(3) Technology Supply Agreement. The County shall execute the Technology
Supply Agreements delivered by the Company.
(4) Environmental and Governmental Approvals. The County shall obtain
the approvals for which the County is responsible in accordance with Appendix 1 and
shall provide the Company reasonable assistance with obtaining all applicable
environmental and other governmental permits, licenses, approvals and authorizations
in accordance with the requirements of subsection 5.3(B) hereof.
j
(5) Certification of the Facility. The County shall obtain certification of the
Facility as a "qualifying facility" from the Federal Energy Regulatory Commission or
shall self-certify the Facility as a "qualifying facility" to the extent permitted by
Applicable Law.
(6) Site. The County shall obtain good and marketable title to the Site free
and clear of any encumbrances material to the performance of any party's obligation
hereunder.
(7) Easements. The County shall obtain all easements, or other interests in
real property as may be necessary in order to provide utilities and enable the Company
to perform the Design/Build Work and Operation Services hereunder.
(8) Representations. The County shall deliver to the Company a certificate
of an authorized officer to that effect that the representations of the County set forth in
Section 2.1 hereof are correct in all material respects as of the Construction
Commencement Date as if made on and as of such date.
(E) Balance of Company Development Period Responsibilities. Beginning on
the 31st day following the certification of the environmental impact statement in accordance
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with [cite], the Company shall use good faith efforts to satisfy the following Company
responsibilities:
(1) Representations. The Company shall deliver to the County a certificate
of an authorized officer of both the Company and the Guarantor to that effect that the
representations of the Company set forth in Section 2.2 and of the Guarantor set forth
in the Guaranty Agreement shall be true and correct in all material respects as of the
Construction Commencement Date as if made on and as of the Construction
Commencement Date.
(2) Confirmation of Chances. The Company shall deliver to the County a
certificate as of the Contract Date to the effect that since the Contract Date, there shall
not have occurred any change, financial or otherwise, in the condition of the Company
or the Guarantor that would materially and adversely affect the ability of the Company
or the Guarantor to perform this Service Contract or any agreement or instrument
entered into or to be entered into by the Company or the Guarantor pursuant to this
Service Contract.
(3) Site Conditions. The Company shall make all further soil test borings
and conduct analyses of subsurface conditions, inspections and applicable site history
reviews of the Site, in each case as necessary under Good Engineering and
Construction Practice to prepare for excavation and construction hereunder in
accordance with Applicable Law and to obtain all required Governmental Approvals,
and shall notify the County if any such findings constitute an Uncontrollable
Circumstance.
(4) Design and Approvals. The Company shall perform all design work and
other work necessary to obtain, and shall obtain, all applicable Governmental Approvals
which are required to be issued under Applicable Law for the commencement of
construction of the Facility, except for those Governmental Approvals specified in
Appendix 1 hereto to be obtained by the County, in a form and in substance
satisfactory to the County. With respect to construction work, the commencement of
which does not require a Governmental Approval, the Company shall have submitted
design drawings (50 percent) to the County in compliance with Appendix 7 unless
waived by the County. In addition, the Company shall cooperate with and assist the
County in obtaining Governmental Approvals which the County is responsible for
obtaining, if any. The Company shall provide the County with any final design
documents and copies of any Government Approvals.
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(5) Site Related Plans. The Company shall prepare and submit to the
appropriate Governmental Body, as required under Appendix 7 and as needed to
support any permit applications or meet permit conditions, all Site-related plans.
(6) Information to Support Site Easements. In the event the County is
required to grant Utility easements on the Site in connection with the Design/Build
Work, the Company shall provide complete descriptions of all Utility connections and
surface features within 10 feet of both sides of the easement and routes on the Site
necessary for such purposes.
(7) Utilities. The Company shall make all arrangements necessary to secure
the availability of all Utilities required to construct and operate the Facility in the
capacities required hereunder, and shall evidence such availability by letters from the
providers of such Utilities; provided, however, that the County will be responsible for
extending the existing water and electricity lines to the Site boundary.
(8) Critical Path Method Schedule. The Company shall prepare and provide
to the County an updated "critical path method" schedule for the Design/Build Work.
(9) Construction Payment and Performance Bond. The Company shall
obtain and deliver to the County the Construction Payment and Performance Bond as
required by Section 18.2. Such bond shall be substantially in the form set forth in the
Transaction Forms.
(10) Applicable Law Compliance. The Company shall comply with all other
requirements of Applicable Law pertaining the activities constituting the
Construction Commencement Date Conditions.
(11) Company Law Compliance. The Company shall certify to the County as
of the Construction Commencement Date that it is in substantial compliance with all
laws, regulations, rules and orders applicable to its business, non-compliance with
which would have a material and adverse effect upon its business or its ability to
perform its obligations under this Service Contract.
(12) Financial Condition. The Company shall provide audited financial
statements of the Company and the Guarantor for the most recently completed fiscal
year and quarterly period. Since the Contract Date, there shall not have occurred any
change, financial or otherwise, in the condition of the Company or the Guarantor that
would materially and adversely affect the ability of the Company or the Guarantor to
perform their respective obligations under this Service Contract and the Guaranty
Agreement. The Company shall cooperate with and assist the County by providing any
information, certifications or documents which may be reasonably required in
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connection with the issuance of County debt obligations or otherwise obtaining the
funds necessary to pay the Fixed Design/Build Price, including the County's application
for any available grant funds, loans or special appropriations (which shall be prepared
by the County).
(13) Documents Evidencing Required Activities. The Company shall have
provided to the County copies of all filings and reports conducted, prepared or obtained
with respect to or evidencing the Company's activities pursuant to this Section and
Section 4.3.
(14) Required Design/Build Period Insurance. The Company shall have
submitted to the County certificates of insurance for all Required Design/Build Period
Insurance specified in Appendix 14 hereto.
(15) Confirmation of Guaran ty. The Guarantor shall execute and deliver a
confirmation to the County that the Guaranty Agreement remains in full force and
effect.
(16) Notice of Default. The Company shall provide to the County, promptly
following the receipt thereof, copies of any notice of default, breach or non-compliance
received under or in connection with any Governmental Approval or Subcontract
i
pertaining to the Development Period.
(17) Technology Supply Agreement. The Company shall have caused to be
delivered to the County a Technology Supply Agreement executed by the technology
licensor.
(18) Survey and Property Description. The Company shall deliver to the
County a metes and bounds property description and survey with respect to the Site.
(F) Payment for Company Development Period Work. The Company shall be
paid for its Development Period Work in accordance with Section 9.2.
SECTION 4.3. CONSTRUCTION COMMENCEMENT DATE CONDITIONS. The
obligations of the Company and the County to proceed with their respective obligations
hereunder following the Development Period shall not commence until all of the following
conditions necessary for the construction of the Facility (the "Construction Commencement
Date Conditions") are satisfied (or waived by the party or parties to whom the benefit of the
satisfaction of such responsibility would inure):
(1) Company Development Period Responsibilities. The Company shall have
fulfilled all of its responsibilities with respect to the Development Period under
Section 4.2.
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(2) County Development Period Responsibilities. The County shall have
I
fulfilled all of its responsibilities with respect to the Development Period under
Section 4.2.
(3) Designation of Authorized Representative. The parties shall each
designate an authorized representative for coordination of matters arising during the
Design/Build Period.
(4) Acceptability and Effectiveness of Documents. All of the documents and
instruments identified in this Article shall be in form and substance reasonably
satisfactory to both parties, and shall be valid, in full force and effect and enforceable
against each party thereto on the Construction Commencement Date. It is understood
that any such document, instrument or agreement the form of which is set forth in a
Transaction Form, that is executed and delivered in substantially such form is and shall
be deemed to be in form and substance satisfactory to each party. No such document,
instrument or agreement shall be subject to the satisfaction of any outstanding condition
precedent except those expressly to be satisfied after the Construction Commencement
Date. No party to any such document, instrument or agreement shall have repudiated or
be in default or imminent default thereunder, and each party shall have received such
certificates or other evidence reasonably satisfactory to it of such facts as such party
shall have reasonably requested.
(5) Legal Proceedings. There shall be no Legal Proceeding, at law or in
equity, before or by any court or Governmental Body, pending or threatened, which:
(a) challenges, or might challenge, directly or indirectly, (i) the authorization, execution,
delivery, validity or enforceability of this Service Contract or the Guaranty, or (ii) the
interests of the County in the Site; (b) seeks to enjoin or restrict the use of the Site for
the purposes contemplated by this Service Contract; or (c) seeks damages, fines,
remediation or any other remedy in connection with the environmental condition or any
other factor pertaining to the Site, in any such case which can reasonably be expected to
materially and adversely affect the County's or the Company's ability to comply with its
obligations hereunder.
(6) No Change in Law Affecting the Service Contract. No Change in Law
shall have occurred after the Contract Date and before the Construction Commencement
Date that would make the authorization, execution, delivery, validity, enforceability or
performance of this Service Contract a violation of Applicable Law. Furthermore, since
the Contract Date, there shall been no Change in Law (other than a Change in Law made
by the County) or other Uncontrollable Circumstance which would (after giving effect to
any provisions of this Service Contract which may require the County to bear the burden
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of such Change in Law or other Uncontrollable Circumstance) (a) impose permit
conditions or other legal requirements governing air emissions or Facility operations
which, in the good faith judgment of the County, cannot reasonably be expected to be
complied with, (b) materially and adversely affect the availability of solid waste disposal
service to the County hereunder or the ability of the County to perform its obligations
hereunder or under any other Transaction Agreement entered or to be entered into by
the County pursuant to this Service Contract, or (c) increase the total cost to the County
of waste disposal utilizing the Facility (including without limitation costs associated with
the Service Fee, construction costs and Residue disposal) in the first full Contract Year
by more than 50% of such total costs expected as of the Contract Date to be paid by the
County hereunder in the first full Contract Year, as determined by the County in good
faith.
(7) Favorable Opinions of Counsel. The parties shall have received such
favorable opinions of counsel to the agreements to be entered into in connection with
the transactions contemplated hereby, in customary form for financing transactions, as
to the matters of law covered by the representations set forth in Sections 2.1 and 2.2
hereof and similar matters of law with respect to such other agreements and as to such
other matters of law as the party may reasonably request, together with appropriate
certified authorizing resolutions and incumbency certificates to the extent reasonably
available.
SECTION 4.4. CLOSING THE DEVELOPMENT PERIOD. (A) Establishment of
the Construction Commencement Date. The parties shall give each other prompt notice when
each Construction Commencement Date Condition has been achieved. Upon the satisfaction
or waiver of all of such Construction Commencement Date Conditions, the parties shall hold a
formal closing on a date and at a location determined by the County, acknowledging such
satisfaction, delivering copies of all relevant documents, and certifying that the Construction
Commencement Date has occurred. The date of such closing shall be deemed to be the
Construction Commencement Date hereunder, and thereupon the County shall issue its
Notice to Proceed and the Construction Period shall commence. Written documents or
instruments constituting or evidencing satisfaction of the Construction Commencement Date
Conditions shall be furnished to each party prior to or on the Construction Commencement
Date to the extent practicable.
(B) Failure of Conditions. If by the fourth anniversary of the Contract Date
(as such date may be extended day-for-day by any Legal Proceeding which has a material
bearing upon the ability of the parties to proceed with the transactions contemplated hereby,
but not later than the sixth anniversary of the Contract Date), or such later date upon which
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the County and the Company may agree, any Construction Commencement Date Conditions in
I
Section 4.3 hereof is not satisfied or waived as a result of an Uncontrollable Circumstance,
either party hereto may, by notice in writing to the other party, terminate this Service Contract.
Neither party shall be liable to the other for the termination of this Service Contract pursuant
to this subsection, and each of the parties shall bear its respective costs and expenses incurred
in seeking to satisfy the Construction Commencement Date Conditions set forth in Section 4.3
hereof except as otherwise expressly provided herein.
SECTION 4.5. COUNTY TERMINATION OPTION DURING THE
DEVELOPMENT PERIOD. (A) County Convenience Termination Option Prior to Construction
Commencement Date. The County shall have the right any time prior to the Construction
Commencement Date, exercisable in its sole discretion for any reason upon seven days' written
notice to the Company, to terminate this Service Contract. Upon any such termination, the
County shall reimburse the Company for 100% of its Cost-Substantiated costs incurred
directly by the Company and any expenses paid or incurred to third parties from the Contract
Date to the termination date hereunder not previously compensated by the County, which are
directly related to the performance of the Company's obligations, and which are necessary to be
performed prior to the Construction Commencement Date subject to a maximum amount of
the Fixed Development Price; and provided, that upon a termination pursuant to this Section
prior to the 31~ day following the certification of the environmental impact statement in
accordance with [cite], the County will reimburse the Company for 100% of its Cost-
Substantiated costs incurred directly by the Company and any expenses paid or incurred to
third parties from the Contract Date to the termination date hereunder not previously
compensated by the County, which are directly related and necessary to the performance of the
Company's Initial Development Period Responsibilities, subject to a maximum amount of $ [To
be provided in B"01.
(B) Delivery of Development Period Work Product to the County.
Concurrently with payment by the County to the Company of the amount due upon any
termination of this Service Contract under this Section, the Company shall deliver to the
County all of its Development Period Work product. Such work product shall include, without
limitation, all plans, specifications, designs (including CADD files in [Roger to propose
software]), drawings, rendering, blueprints, manuals, equipment layouts, and Governmental
Approvals and related applications, submittals and other information prepared for the purpose
of planning, designing, constructing and operating the Design/Build Work or operating the
Design/Build Work and securing Governmental Approvals and financial security for the
Company's obligations pursuant hereto. In the event the County utilizes any incomplete
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design provided by the Company following a convenience termination, the Company shall have
no liability with respect thereto.
(C) Costs. Records and Reportine. Prior to the Construction Commencement
Date, the Company shall prepare and maintain proper, accurate and complete books and
records of the cost and description of the permitting and other developmental work which the
Company has performed since the Contract Date which is directly related to the Company's
obligations under this Service Contract, the cost of which would be the responsibility of the
County if the County were to elect to terminate this Service Contract pursuant to subsection
(A) of this Section.
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ARTICLE V
DESIGN AND PERMITTING OF THE DESIGN/ BUILD IMPROVEMENTS
SECTION 5.1. DESIGN WORK. (A) Performance of the Design Work. The
Company agrees to undertake, perform, and complete the designs and plans in accordance
with the Contract Standards and all other provisions and requirements of this Service
Contract. The Company shall make design submittals to the County in accordance with
Appendix 7.
(B) Design Risk. The Company shall have sole and exclusive responsibility
for the design of the Facility hereunder and the preparation of all plans, specifications,
drawings, blueprints and other design documents necessary or appropriate to complete the
Facility. All such design documents shall comply in all respects with the Contract Standards
including Design Requirements and shall ensure that the Facility is constructed to a standard
of quality, durability and reliability which is equal to or better than the standard established by
the Contract Standards. The County and its Authorized Representative shall have the right to
review and provide comment with regard to compliance with Contract Standards, but shall
have no approval rights or other responsibilities or obligations with respect to, such design
documents.
(C) Changes to Design Requirements. The Company acknowledges the
County's material interest in each provision of the Design Requirements and agrees that no
change shall be made to the Design Requirements pertaining to the Facility hereto without the
prior written approval of the County, which approval may be withheld in the sole discretion of
the County. The Company, following written notice to the County, may make changes to
certain items (as expressly designated in Appendix 3) (the "Supplemental Technical
Information") of the Technical Specifications without the prior consent of the County; provided,
however, that the Company shall not make any change which the County determines to be
material and provides the Company notice thereof. In the event that during the performance of
the design work, the Company determines that a requirement in Appendix 3 would prevent the
Company from meeting the Acceptance Standards, the Company shall promptly notify the
County of such determination. If the County agrees with the Company's determination, the
Company shall propose a modification to the applicable Appendix 3 requirement that would
enable it to meet the Acceptance Standards. No such modification shall be made without the
prior written approval of the County. Any modification shall be made as a Change Order and
shall be made at the Company's sole cost unless any such modification is required as a result
of an Uncontrollable Circumstance.
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(D) Licensing Requirements. Architects and engineers engaged by the
Company for Facility design services shall be licensed to practice in the State and shall be
experienced and qualified to perform such services.
SECTION 5.2. PERMIT CONDITIONS. (A) Negotiation of Permit Conditions. The
parties shall use all reasonable efforts in applying for any permit, license or approval required
to commence construction hereunder to assure that the terms and conditions thereof are
consistent with the Company's obligations hereunder.
(B) Proposed Conditions and Company Evaluation. Within 10 days of the
receipt of information as to proposed conditions or requirements to be contained in any draft or
final permit, license or approval, the Company shall provide the County with written notice of
its determination and reasoning as to whether and why the terms and conditions of any such
draft or final permit, license or approval are more stringent than those of the Environmental
Guarantee or any other obligation contained in this Service Contract. In the event the
Company claims that such permit, license or approval contains conditions or requirements
which are more stringent than those of the Environmental Guarantee or any other obligation
contained in this Service Contract and constitutes a Change in Law or Uncontrollable
Circumstance, the Company shall provide the County with notice and information required
pursuant to Section 17.2 hereof.
(C) Permit Acceptance - Conditions of Lesser Stringency Than Environmental
Guarantee. If any permit, license or approval proffered as final by the DOH or USEPA contains
terms and conditions which are no more stringent than those set forth in the Environmental
Guarantee or any other obligation contained in this Service Contract, the County (without
limiting its rights under Sections 4.4 and 4.5 hereof) shall accept such permit, license and
approval, and the condition precedent to this Service Contract provided in subsection 4.2(A)
shall be deemed to be satisfied.
SECTION 5.3. PERMITTING WORK. (A) Company Permitting
Responsibilities. The Company shall make all applications and take all other action necessary
to obtain, and shall obtain and maintain all Governmental Approvals, necessary to commence,
continue and complete the Facility including payment of all fees except for building permit fees
which will be paid for by the County, costs and charges due in connection therewith except
with respect to those approvals for which the County is obligated to obtain, maintain and/or
pay for in accordance with Appendix 1. Where required under Applicable Law, such
applications shall be made in the name of the County, subject to the County's rights
hereunder. The Company shall manage the process of obtaining the Governmental Approvals
on behalf of the County for which it is responsible hereunder in a manner which affords the
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County a reasonable opportunity to review and comment upon such submittals and all
material documentation submitted to and issued by any Governmental Body in connection
therewith as provided in Appendix 7. The Company shall not knowingly take any action in any
application, data submittal or other communication with any Governmental Body regarding
Governmental Approvals or the terms and conditions thereof that would impose any
unreasonable cost or burden on the County or that would contravene any County policies with
respect to the matters contained therein. The County reserves the right to reject, modify, alter,
amend, delete or supplement any information supplied, or term or condition proposed, by the
Company which would have the effect described in the preceding sentence. The Company, at
its cost and expense, shall cooperate with and assist the County, including by providing to the
County and all involved regulatory agencies all data and information that is within its
possession and its control (including proprietary information and all information specific to the
Facility which may exist or be required by the involved regulatory agencies to be developed by
the Company) which may be required in order to properly apply for and obtain such permits,
licenses and approvals. All such data and information shall be correct and complete in all
material respects.
(B) County Permitting Responsibilities. The County shall make all
applications and take all other action necessary to obtain, and shall obtain, maintain and pay
for those approvals for which the County is obligated to obtain, maintain and pay for in
accordance with Appendix 1. In addition, the County shall be responsible for paying the
application fees (and no other associated costs) for certain Government Approvals set forth in
Appendix 1 which are to be obtained and maintained by the Company, as indicated in
Appendix 1. In addition, the County shall provide reasonable assistance to the Company in
connection with the Company's obligation to obtain and maintain the Governmental Approvals
which it is required to obtain under this Section, including signing permit applications,
attending public hearings and meetings of the Governmental Bodies charged with issuing such
Governmental Approvals, and providing the Company with existing relevant data and
documents that are within its custody or control and which are reasonably required for such
purpose. Any such assistance shall be provided upon the reasonable request of the Company
made directly to the County. This covenant shall not obligate the County to staff the
Company's permitting efforts, to undertake any new studies or investigations with respect to
the Facility, or to affirmatively seek to obtain the issuance of the Governmental Approvals
required under this Section. The County, however, shall not take any action which seeks to
cause the denial or delay of any application for a Governmental Approval. Any agreement by
the County to cooperate does not in any way obligate the County with respect to usual and
customary County permitting, code compliance and other regulatory reviews as they may relate
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to the Company or the Company's requirements hereunder. The outcome of any regulatory
review or action undertaken by the County involving the Company will be independent of and
in no way biased, prejudiced, or predetermined in any way by this Service Contract. Nothing in
this Service Contract is intended or shall be construed to require that the County exercise its
discretionary authority under its regulatory ordinances in a manner favorable to the Company.
(C) Company Assumption of Permitting Risk for Facility. The Company
explicitly assumes the risk of obtaining and maintaining all Governmental Approvals for which
it is responsible pursuant to Appendix 1 that are required for the Facility, including the risk of
delay (except as otherwise set forth in paragraph (D) below), non-issuance or imposition of any
term or condition in connection therewith by a Governmental Body. In assuming this risk, the
Company acknowledges in particular that the delay (except as otherwise set forth in
paragraph (D) below) or non-issuance of any Governmental Approval required pursuant to
subsection 4.2(B) beyond the Schedule Construction Date will give the County the right to
terminate this Service Contract for an Event of Default in accordance with Article XVI. In the
event the County elects not to terminate this Contract pursuant to such an Event of Default,
the Company acknowledges that the delay or non-issuance of any Governmental Approval
required pursuant to subsection 4.2(B) beyond the Schedule Construction Date will delay the
occurrence of the Construction Commencement Date and will have the effect of (i) eliminating
any escalation of the Fixed Design/Build Price pursuant to Section 9.2(C) and (ii) compressing
the period within which the completion of construction, acceptance testing and all other
Design/Build Work will need to be completed hereunder in order to avoid delay liquidated
damages pursuant to Section 8.9.
(D) Failure of Company to Obtain Governmental Approval in a Timely
Manner. In the event the Company fails to obtain any Governmental Approval necessary to
commence construction for which it is responsible for obtaining prior to the Scheduled
Construction Date and (i) the Company has diligently taken all measures to obtain such
approval, (ii) such failure is not the result of the quality or completeness of the submittal
application or of the nature of the design or approach reflected in such submittal, and (iii) the
issuing Governmental Body has failed to respond to the Company submittal(s) in a reasonably
timely manner taking into consideration the nature of the required review and the reasonable
review period for similarly situated applicants, such failure shall not constitute an Event of
Default, the Scheduled Acceptance Date shall be extended by the number of days by which
such delay materially adversely affects the Company's critical path schedule and the Company
will be entitled to escalation of the Fixed Design/Build Price in accordance with Section 9.2.
No other relief shall be afforded the Company as a result of such delay. [Under review by
Wheelabrator]
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SECTION 5.4. COMPLIANCE WITH APPLICABLE LAW. (A) Compliance
with Applicable Law and Equipment Operating Requirements. In designing, constructing,
commissioning, starting up and testing the Facility, the Company shall comply with Applicable
Law, shall construct and operate all equipment and systems comprising the Facility in
accordance with the Contract Standards and applicable equipment manufacturer's
specifications and recommendations, and shall observe the same safety standards as are set
forth in Section 11.8 with respect to the operation of the Facility and such other safety
requirements set forth in Appendix 8.
(B) Compliance with Conditions in Governmental Approvals. The Company
shall comply with all conditions and requirements of all Governmental Approvals required to be
made, obtained or maintained under Applicable Law in connection with the continuance of the
Design/Build Work.
(C) Governmental Approvals Necessary for Continued Construction. The
Company shall make all necessary filings, applications and reports necessary to obtain and
maintain all Governmental Approvals required to be made, obtained or maintained under
Applicable Law in connection with the continuance of the Design/Build Work once
commenced. The County shall cooperate with the Company in connection with the foregoing
undertaking.
(D) Fines. Penalties and Remediation. Except to the extent excused by
Uncontrollable Circumstances, in the event that the Company or any Subcontractor fails at
any time to comply with Applicable Law with respect to the Design/Build Work, the Company
shall, without limiting any other remedy available to the County upon such an occurrence and
notwithstanding any other provision of this Service Contract: (1) immediately take steps to
correct such failure and continue to implement a plan to correct such failure so that the failure
is remedied as soon as possible and resume compliance with Applicable Law; (2) bear all Loss-
and-Expense of the Company and the County resulting therefrom; (3) pay or reimburse the
County for any resulting damages, fines, assessments, levies, impositions, penalties or other
charges; (4) make all changes in performing the Design/Build Work which are necessary to
assure that the failure of compliance with Applicable Law will not recur; and (5) comply with
any corrective action plan filed with or mandated by any Governmental Body in order to
remedy a failure of the Company to comply with Applicable Law.
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ARTICLE VI
FINANCING AND POWER PURCHASE AGREEMENT
SECTION 6.1. COUNTY FINANCING. The County shall secure the
availability of all funds necessary to pay the Design/Build Price in a timely manner, whether
through the authorization or issuance of debt obligations of the County or otherwise as
determined by the County. Payments of the Design/Build Price shall be made by the County to
the Company in the manner provided in Article IX and Appendix 10.
SECTION 6.2. POWER PURCHASE AGREEMENT. (A) General Terns. The
Power Purchase Agreement shall provide for the purchase by the Power Purchaser of all of the
electrical output of the Facility net of Facility usage, subject to reasonable exceptions, with an
"all in" price of $0.15 per kWh for a term of at least 5 years.
(B) Company Responsibilities. The Company shall carry out and perform all
of the construction and maintenance responsibilities assumed by the County as seller under
the Power Purchase Agreement relating to the electrical interconnection and related equipment
and to the supply of electricity to the Power Purchaser and the operation of the Facility in
accordance with the terms of the Power Purchase Agreement. In addition, the Company shall
coordinate operational communications with the Power Purchaser, provide reasonable
assistance in generating data for submission to the Power Purchaser, any of its Affiliates, the
DOH, and the Federal Energy Regulatory Commission, and plan scheduled maintenance in
conjunction with the requirements of the Power Purchaser, subject to the requirements of the
DOH. The Company shall not be responsible for any other obligations under the Power
Purchase Agreement, including the required security deposit or for administrative matters
other than that of operational communications. In the event the Company fails to perform its
obligations hereunder, unless excused by Uncontrollable Circumstances or County Fault, and
such failure causes any reduction in revenues or additional expense to the County under the
Power Purchase Agreement, the Company shall promptly reimburse the County for the amount
of any such reduction in revenues or additional expense; provided, however, that if any such
Company failure of performance hereunder would not have caused any such reduction in
revenues or additional expense except for the occurrence of an Uncontrollable Circumstance,
County Fault or the failure of the County to deliver Processible Waste in amounts necessary to
allow the generation of electricity (based on the Company's Performance Guarantees) at levels
sufficient to avoid reduction in revenues or additional expense to the County under the Power
Purchase Agreement, then the Company shall have no liability for any such reduction in
revenues or additional expense. The standard of performance for determining compliance by
the Company with its obligation to generate electricity hereunder, insofar as such obligation
relates to liability for any such reduction in revenues or additional expense, shall be the full
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Purchase Agreement
Acceptance Standard for energy recovery determined as provided in Appendix 6 hereto;
provided, however, that available Facility operating data and records including the compliance
monitoring forms contained in Appendix 6 hereto, rather than a special energy recovery
performance test, shall be used to determine such compliance; and provided further, that if
such failure to perform results only in a reduction in exportable electricity below the
Company's Annual Electricity Production Guarantee, the damages set forth in Article XII with
respect to such shortfall shall be the County's remedy. The Power Purchase Agreement shall
not be amended in a manner that would materially adversely affect the Company's rights and
responsibilities without the consent of the Company.
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ARTICLE VII
CONSTRUCTION OF THE FACILITY
SECTION 7.1. AGREEMENT TO CONSTRUCT. (A) Commencement of
Construction. The Company shall commence the preparation of those portions of the Site on
which the Design/Build Work will be performed or which will be utilized for laydown and
staging, the disposal of any debris thereon, and the construction of the Facility in accordance
with the Design Requirements promptly after the Construction Commencement Date, and shall
proceed with due diligence to cause the Facility to be started up and tested for Acceptance in
accordance with this Service Contract. All excavated soil and other debris or waste generated
from the Facility shall be used or disposed of properly by the Company at its expense (except
for Hazardous Material which the County has not identified in Appendix 18; provided, however,
the County shall use good faith efforts to provide for the disposal at the South Hilo Landfill of
soil excavated from the Site if such soil meets County specifications for landfill cover or
constitutes Processible Waste and to otherwise identify areas on County-owned land
surrounding the Site on which the Company may dispose of such materials. Subcontracts
entered into by the Company for the construction of the Facility shall neither supersede nor
abrogate any of the terms or provisions of this Service Contract. Laydown and staging areas
for construction materials shall be located on the Site or at other locations agreed to by the
parties.
(B) Construction Practice. The Company shall perform the Design/Build
Work in accordance with the Contract Standards and shall have exclusive responsibility for all
construction means, methods, techniques, sequences, and procedures necessary or desirable
for the correct, prompt, and orderly prosecution and completion of the Facility as required by
this Service Contract. The responsibility to provide the construction means, methods
techniques, sequences and procedures referred to above shall include, but shall not be limited
to, the obligation of the Company to provide the following construction requirements as further
set forth in Appendix 4: (1) temporary power and light, (2) temporary offices and construction
trailers, (3) required design certifications, (4) required approvals, (5) weather protection, (6) site
clean-up and housekeeping, (7) construction trade management, (8) temporary parking (beyond
the parking provided by the County as described in Appendix 18), (9) safety and first aid
facilities, (10) correction of defective work or equipment, (11) Subcontractors' insurance,
(12) staging areas (beyond the storage areas provided by the County as described in
Appendix 18), (13) workshops and warehouses, (14) temporary fire protection, (15) site
security, (16) potable water (the Company is permitted to use the County's water supply for
domestic use only), (17) telecommunications, (18) sanitary facilities, (19) fuel,
(20) Subcontractor and vendor qualification, (21) receipt and unloading of delivered materials
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and equipment, (22) erection rigging, (23) temporary supports, (24) temporary utilities,
(25) propane gas and (26) construction coordination.
(C) Measurements. The Company shall be responsible for all measurements
required for execution of the Facility to the exact position and elevation as required by this
Service Contract.
(D) Engagement of Authorized Representative. The County may designate a
representative ("Authorized Representative") to assist it in connection with this Service
Contract. The services of the Authorized Representative may include but shall not be limited to
the following:
(1) review and monitor construction progress, payments and procedures;
(2) determine the completion of specified portions of the Facility and review
the release of funds to the Company pursuant hereto;
(3) review proposed changes to the Design Requirements;
(4) review Facility drawings, plans and specifications available to the County
hereof for compliance with the Design Requirements;
(5) monitor the Acceptance Tests undertaken by the Company to determine
whether any Acceptance Standard has been satisfied;
(6) review the validity of the Company's written notice that an
Uncontrollable Circumstance has occurred; and
(7) review and advise the County with respect to material changes to the
Facility during the Term of this Service Contract.
It is understood that the services intended to be provided by the Authorized Representative
shall be of an observational nature only, unless additional inspection, testing or monitoring
services are requested by the County pursuant to subsection 7.6(C) hereof. The Company
agrees to cooperate with all reasonable requests made by the Authorized Representative in
connection with the performance of such duties for the County. The fees of the Authorized
Representative shall be paid by the County, except that the Company shall reimburse the
County, on a Cost Substantiated basis, for any services performed by the Authorized
Representative in connection with each repetition of all or any portion of the initial Acceptance
Tests unless and to the extent any such additional Acceptance Tests are required as a result of
Uncontrollable Circumstances or County Fault.
(E) Title and Risk of Loss. Title to the structures, improvements, fixtures,
machinery, equipment and materials constituting the Facility shall pass to the County upon
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incorporation in the Facility or payment therefor by the County, whichever first occurs, free
and clear of all Liens as provided in subsection (F) of this Section. The Company shall,
however, bear all risk of loss (except deductibles to the extent the loss is due to an
Uncontrollable Circumstance) concerning such structures, improvements, fixtures, machinery,
equipment and materials until Acceptance, regardless of the extent to which the loss was
insured or the availability of insurance proceeds.
(F) Encumbrances. The Company shall not directly or indirectly, without
the County's consent, create or permit to be created or to remain, and shall promptly discharge
or bond any Encumbrance arising in relation to the Facility, Site or Design/Build Work, other
than Permitted Encumbrances, arising out of the Company's construction of the Facility.
(G) Utilities. The Company shall make all arrangements necessary to secure
the availability of all Utilities required to construct the Project and operate the Facility in the
capacities required hereunder. In the event the County is required to grant Utility easements
on the Site in connection with the Design/Build Work, the Company shall provide complete
descriptions of all Utility connections and routes on the Site necessary for such purposes. The
Company shall also be required to connect all Utilities at a point located at the Site boundary,
as more particularly described in Appendix 3.
(H) Payment of Costs. The Company shall pay directly all costs and
expenses of the Design/Build Work of any kind or nature whatsoever, including all costs of
permitting (regardless of permittee); regulatory compliance and Legal Proceedings brought
against the Company; obtaining and maintaining the Security Instruments and Required
Insurance; payments due under the Subcontracts with Subcontractors or otherwise for all
labor and materials; legal, financial, engineering, architectural and other professional services
of the Company; sales, use and similar Taxes on building supplies, materials and equipment;
general supervision by the Company of all Design/Build Work; Company preparation of
schedules, budgets and reports; keeping all construction accounts and cost records; and all
other costs required to achieve Final Completion.
(I) Notice of Default. The Company shall provide to the County, promptly
following the receipt thereof, copies of any notice of default, breach or non-compliance received
under or in connection with any Governmental Approval or Subcontract pertaining to the
Design/Build Period.
(J) Compliance With Law. In designing, constructing, starting up and
testing the Facility, the Company shall comply with Applicable Law, shall construct and
operate all equipment and systems constituting the Facility in accordance with good
engineering practice and applicable equipment manufacturers' specifications and
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recommendations, and shall observe all applicable safety standards with respect to the
operation of the Facility.
SECTION 7.2. COMMENCEMENT OF WORK. (A) Notice to Proceed. The
County shall give the Company a Notice to Proceed upon the satisfaction or waiver of all of the
Construction Commencement Date Conditions as set forth in Section 4.2. Thereafter, the
Company shall undertake the Design/Build Work so as to achieve Acceptance on or before the
Scheduled Acceptance Date.
(B) Time. The Company's failure to achieve Acceptance on or before the
Scheduled Acceptance Date will result in assessment of damages under Section 8.9 hereof.
(C) Effect of Progress Schedule. As part of the Monthly Progress Report
required under subsection 7.3(F) hereof, the Company shall submit to the Authorized
Representative a progress schedule completed with corresponding dates of completion. The
Company agrees that the Company's submission of any such progress schedule is for the
County's information only; and the County's acceptance of any such progress schedule shall
not bind the County or the Company in any manner. Thus, the Authorized Representative's
acceptance of any such progress schedule shall not imply that the County:
(1) approves the Company's proposed staffing or scheduling of the
Design/Build Work;
(2) agrees or guarantees to the Company or any other person that the
Company has the capacity or ability to complete the Facility in accordance with the progress
schedule, or that the Facility can or will be completed in accordance with the monthly progress
schedule; or
(3) consents to any changes in scheduling, or agrees to any extension of
time, unless the County agrees specifically in writing to the applicable change.
SECTION 7.3. DESIGN REVIEW, OBSERVATIONS. TESTING AND
UNCOVERING OF WORK. (A) Observations and Design Review Protocol. During the progress
of the Design/Build Work through Acceptance, the Company shall at all times during normal
working hours afford the County, appropriate regulatory agency representatives, the
Authorized Representative and all County consultants every reasonable opportunity for
observing all Design/Build Work at the Site, and shall comply with the requirements of
Appendix 7 and the Design/Build Quality Management Plan contained in Appendix 5. During
any such observation, all representatives of the County and the County's consultants and
regulatory body representatives shall comply with all reasonable safety and other rules and
regulations applicable to presence in or upon the Site or the Facility, and shall in no material
way interfere with the Company's performance of any Design/Build Work.
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(B) Tests. The Company shall conduct all tests of the Facility (including
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shop tests) or inspections required by Appendix 6, the Design Requirements or by Applicable
Law or Insurance Requirements. The Company shall give the County, the Authorized
Representative, the appropriate construction code enforcement agency, and County
consultants designated by the County Authorized Representative reasonable advance notice (at
least 10 business days for those tests which must be witnessed by third parties in accordance
with Applicable Law) of tests or inspections prior to the conduct thereof. In no event shall the
inability, failure, or refusal of the Authorized Representative or any County consultant or State
representative to attend or be present at or during any such test or inspection, delay the
conduct of such test or inspection or the performance of the Design/Build Work. If required by
Applicable Law or Insurance Requirements, the Company shall engage a licensed engineer or
architect to conduct or witness any such test or inspection. All analyses of test samples shall
be conducted by persons appearing on lists of laboratories authorized to perform such tests by
the State or federal agency having jurisdiction or, in the absence of such an authorized list in
any particular case, shall be subject to the approval of the County, which shall not be
unreasonably withheld. Acceptance Testing of the performance of the completed Facility shall
be conducted in accordance with Appendix 6 hereto.
(C) County Observations, Inspections and Tests. The County, its employees,
agents, representatives and contractors (which may be selected in the County's sole discretion),
and all Governmental Bodies, may at any reasonable time conduct such on-site observations
and inspections, and such civil, structural, mechanical, electrical, chemical, or other tests as
the County, the Authorized Representative or Governmental Body deems necessary or desirable
to ascertain whether the Facility complies with this Service Contract. The Company shall not
restrict the ability of the County or the Authorized Representative to take progress photographs
of the Facility construction. The County will pay for any test, observation or inspection
requested by the Authorized Representative and incur any costs directly resulting from a delay
in performing the Design/Build Work caused by such test or inspection (and not required
under subsection 7.6(B) hereof or as Extra Design/Build Work under Section 7.9 hereof). The
test, observation or inspection shall be treated as an Uncontrollable Circumstance hereunder,
the cost of which shall be borne by the County, unless such test, observation or inspection
reveals a material failure of the Facility to comply with this Service Contract or Applicable Law,
in which event the Company shall bear all reasonable costs and expenses of such observation,
inspection or test and of any such delays. If the test, observation and inspection is requested
by a Governmental Body (other than the County) the cost and delay resulting from such test,
observation or inspection shall be treated as an Uncontrollable Circumstance, unless the test,
observation or inspection reveals a material failure of the Facility to comply with this Service
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Contract or Applicable Law, in which event the Company shall bear all reasonable costs and
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expenses of such observation, inspection or test and of any such delays.
(D) Certificates and Reports. The Company shall secure and deliver to the
Authorized Representative promptly, at the Company's sole cost and expense, all required
certificates of inspection, test reports, work logs, or approvals with respect to the Facility as
and when required by the Design Requirements or by Applicable Law or Insurance
Requirements. The Company shall provide to the County, immediately after the receipt thereof,
copies of any notice of default or noncompliance received by the Company under or in
connection with any Governmental Approval, Subcontract, or other transaction agreement
pertaining to the Construction Period.
(E) Taking Apart. Uncovering and Replacing Design/Build Work. The
Company shall give the County reasonable notice (at least 10 business days for those events
which must be witnessed by third parties in accordance with Applicable Law) of its upcoming
schedule with respect to the covering and completion of any Design/Build Work. The County
shall give the Company reasonable notice of any intended inspection or testing of such
Design/Build Work in progress prior to its covering or completion, which notice shall be
sufficient to afford the County and the Authorized Representative a reasonable opportunity to
conduct a full inspection of such Design/Build Work, including, but not limited to, at least 5
business days' advance notice with respect to all final visual inspections and tests of all
mechanical equipment and Design/Build Work. At the County's written request, the Company
shall take apart or uncover for inspection or testing any previously covered or completed
Design/Build Work; provided, however, that the County's right to make such requests shall be
limited to circumstances where there is a reasonable basis for concern by the County that the
disputed Design/Build Work conforms with the requirements of this Service Contract. The
cost of uncovering, taking apart, or replacing such Design/Build Work along with the costs
related to any delay in performing Design/Build Work caused by such actions, shall be borne
as follows:
(1) by the Company, if such Design/Build Work has been covered prior to
any observation or test required by the Design Requirements or by Applicable Law or Insurance
Requirements or if such Design/Build Work has been covered prior to any observation or test
as to which the County has provided reasonable advance notice of its intent to conduct; and
(2) in all other cases, as follows:
(a) by the Company, if such observation or test reveals that the
Design/Build Work does not comply with this Service Contract; or
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(b) by the County, if such observation or test reveals that the
Design/ Build Work does comply with this Service Contract.
In the event such Design/Build Work is revealed to comply with this Service Contract, the
delay caused by such observation or test shall be treated as having been caused by an
Uncontrollable Circumstance and any costs incurred with respect to such observation or test
shall be borne solely by the County.
(F) Monthly On-Site Meetings and Design and Construction Review. During
the Construction Period, the Company, the County and the Authorized Representative shall
conduct management meetings on at least a monthly basis, and shall conduct construction
progress meetings on a weekly basis as set forth in Appendix 8. Such meetings shall take
place on the Site in a field office to be provided by the Company. At such meetings,
discussions will be held concerning all aspects of Design/Build Work construction including,
but not limited to, construction schedule, progress payments, Extra Design/Build Work, shop
drawings, progress photographs to the extent available, and any soil boring data and shop test
results. A monthly progress report, (the "Monthly Progress Report") containing all relevant
information as required by Appendix 8, shall be prepared by the Company and provided to the
County and the Authorized Representative at least five (5) days prior to each monthly meeting.
It is the desire of the parties to resolve disputes arising out of monthly on-site meetings or the
Monthly Progress Report without third party intervention and, therefore, prior to instituting the
dispute resolution methods set forth in Article XVI, senior officials from the Company and the
County shall meet to attempt to resolve any such dispute.
SECTION 7.4. CORRECTION OF DESIGN/BUILD WORK. (A) Correction of
Non-Conforming Design/Build Work. The Company at its sole cost and expense shall repair,
restore, rebuild or replace and correct promptly, any Design/Build Work which does not
conform with the requirements of this Service Contract. If the Company fails to repair, restore,
rebuild or replace and correct promptly, any such Design/Build Work, the County may give to
the Company written notice of the need to correct such non-conforming Design/Build Work.
The Company shall have the right to object to the County's determination within five (5) days of
receipt of the County notice, and the matter may be submitted for dispute resolution pursuant
to Section 16.11 hereof. Notwithstanding the Company's right of objection, upon receipt of
County notice pursuant to this subsection, the Company shall, without being deemed to have
waived such objection, at its cost and expense, complete, repair, replace, restore, rebuild and
correct promptly the non-conforming Design/Build Work. The failure of the Company to do so
shall constitute a Company Fault under the terms of this Service Contract. Failure of the
County to provide a notice of non-compliance shall not constitute a waiver of any rights
hereunder.
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(B) Costs of Correction. The costs of correcting rejected or omitted
Design/Build Work shall be borne by the Company. If it is determined by the parties or
through dispute resolution pursuant to Section 16.11 hereof that the corrective action was not
necessary to conform the Design/Build Work with the requirements of this Service Contract,
the County shall reimburse the Company for its costs and expenses incurred in correcting the
Design/Build Work, subject to Cost Substantiation and the Scheduled Acceptance Date shall
be extended to reflect delays caused by such corrective work.
(C) Elective Acceptance of Defective Design/Build Work. The County may
elect, at the Company's request, to accept non-conforming Design/Build Work and charge the
Company, by Change Order, for the amount agreed upon by the parties, which amount shall
reflect the reduction in value of the Company's services or Design/Build Work has been
reduced.
(D) Relation to Other Obligations. The obligations specified in
subsection 7.4(A) hereof establish only the Company's specific obligation to correct the
Design/Build Work and shall not be construed to establish any limitation with respect to any
other obligations or liabilities of the Company under this Service Contract. This Section 7.4 is
intended to supplement (and not to limit) the Company's obligations under the Acceptance Test
Procedures and Standards and any other provision of this Service Contract or Applicable Law.
(E) Payments of Amounts Owed. Any amounts for which the Company is
responsible under this Section shall be deducted from the unpaid balance of the Design/Build
Price; and the Company shall pay to the County upon demand any amount owing under this
Section which exceeds the unpaid balance of the Design/Build Price.
SECTION 7.5. DAMAGE TO THE FACILITY. (A) Damage Prevention. In
performing the Design/Build Work, the Company shall use care and diligence, and shall take
precautions to protect the Facility. Prior to Acceptance, such care and diligence with respect to
such system shall include reasonable and appropriate security measures, fencing, protective
features (such as waterproof coverings and/or roofing, boards, boxing, frames, canvas guards,
and fireproofing), and other safeguards to the extent necessary and proper in the performance
of the Design/Build Work.
(B) Restoration. During the Construction Period, in case of damage to the
Facility, and regardless of the extent thereof or the estimated cost of restoration, and whether
or not any insurance proceeds are sufficient or available for the purpose, the Company shall
promptly undertake and complete restoration of the damage to Facility to the character and
condition existing immediately prior to the damage in accordance with the procedures set forth
herein, as applicable, regarding Uncontrollable Circumstances, Change Orders or Extra
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Design/Build Work. If the Company fails to undertake restoration of the damage, or having so
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commenced fails to complete restoration in accordance with this Section and the revised
progress schedule, the County may (but shall not be obligated to) undertake or complete
restoration at the Company's expense to the extent applicable.
(C) Notice and Reports. The Company shall notify the County, any other
appropriate Governmental Body, and the insurers under any applicable Required Insurance of
any damage to the Facility, or any accidents on the Site related to the Facility or otherwise
caused by the Company, as promptly as reasonably possible after the Company learns of any
such damage or accidents; and, as soon as practicable after learning of any such occurrence
(but in no event later than 72 hours), the Company shall submit a full and complete written
report to the Authorized Representative and the County. Such report shall be updated on a
weekly basis and upon culmination of all tests, analysis and reviews, a final report
incorporating all of the test, analysis and reviews and the findings thereof shall be submitted to
the County. The Company shall also submit to the Authorized Representative and the County
copies of all accident and other reports filed with (or given to the Company by) any insurance
company, adjuster, or Governmental Body or otherwise prepared or filed in connection with the
damage or accident which does not constitute privileged information under Hawaii law, and
prior to resuming work, shall provide written releases of OSHA and other Governmental Bodies,
as applicable.
SECTION 7.6. CHANGE ORDERS AND EXTRA DESIGN/BUILD WORK.
(A) Right to Issue Change Orders. The County, subject to the provisions of subsection 7.9(F)
hereof, may issue Change Orders pertaining to any and all aspects of the Design/ Build Work at
any time and for any reason whatsoever, whether and however such Change Orders revise this
Service Contract, add Extra Design/Build Work or omit Design/Build Work.
(B) Extra Design/Build Work. The Company shall, except to the extent
excused under subsection 7.9(F) hereof, undertake and complete promptly all Extra
Design/Build Work authorized under this Section. The Company shall not perform any Extra
Design/Build Work without a Change Order authorized by the County. The Company shall be
entitled to additional compensation for Extra Design/Build Work, determined in accordance
with this Section ("Extra Payment").
(C) Extra Design/Build Work Caused by Company Fault. The Company
shall not be entitled to any Extra Payment for any Extra Design/Build Work, if and to the
extent required by reason of any Company Fault.
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(D) Cost Reductions from Change Orders. The Design/Build Price shall be
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reduced if and to the extent that any Change Order, whether for omitted Design/ Build Work or
otherwise, results in any reduction in the Company's cost of the Design/Build Work.
(E) Proposal for Extra Design/Build Work. If the County requires Extra
Design/Build Work involving items of Design/Build Work, the County may request the
Company to submit a lump-sum price for Extra Design/Build Work covered by any proposed
Change Order which price shall be broken out by the categories of work to be done and
corresponding costs. Within seven (7) days after receipt of any such request (unless a longer or
shorter period is specified or is reasonably required by the Company taking into account the
scope and complexity of the proposed Change Order), the Company shall submit a written
quotation on a lump-sum basis (or on a unit-price basis if unit prices for the items involved
were previously set forth in this Service Contract or are appropriate to the proposed Extra
Design/Build Work). With respect to any Extra Design/Build Work necessitated by
Uncontrollable Circumstances, the Company agrees to a reduced profit with respect thereto as
set forth in Appendix 10 hereto. The Company shall include with each quotation Cost
Substantiation therefore in accordance with the definition thereof and Appendix 10. Any such
quotation shall be deemed the Company's offer to the County, binding for 30 days, to perform
the Extra Design/Build Work at the price quoted. In addition, each quotation shall include the
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effect, if any, of the Extra Design/Build Work on the progress schedule, the ability to meet the
Acceptance Standards or standards more stringent than the Acceptance Standards, the
Scheduled Acceptance Date, the Design/Build Price and any of the other obligations of the
Company under this Service Contract. If the County does not accept the Company's quotation,
the County shall reimburse the Company its Cost-Substantiated third party costs associated
with the production of the quotation and the Company shall use reasonable efforts to procure
three quotations for the Extra Design/Build Work and any individual elements thereof, which
shall constitute the Company's offer to the County, binding for 30 days. Alternatively, the
County, as owner, may bid-out the work directly with another contractor, provided that the
Service Agreement is modified to reflect the effect, if any, of such Extra Design/Build Work on
the rights and obligations of the parties.
(F) Conditions to Obligation to Proceed. The parties shall promptly proceed
to negotiate in good faith to reach agreement on the price to be paid the Company for the Extra
Design/Build Work and on the effect of the Extra Design/Build Work on any other obligations
of the Company under this Service Contract. In order to receive payments for Extra
Design/Build Work, the Company shall submit Requisitions, which will include all Cost
Substantiation information (unless a lump sum price is agreed upon), to the County, with a
copy to the Authorized Representative on a monthly basis, for amounts specified in this
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subsection 7.6(F) as they are incurred. The Requisition and payment procedure shall be in
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accordance with Sections 9.3 and 9.4 hereof.
(G) Obligation to Proceed Notwithstanding Dispute. In the event the County
and the Company are unable to agree on a price and any adjustments to this Service Contract
which are occasioned by a Change Order for Extra Design/Build Work within a reasonable
period of time after conducting good faith negotiations with respect thereto pursuant to
subsection 7.6(F) hereof, the Company at the election of the County shall perform the Extra
Design/Build Work on a Cost Substantiation basis.
(H) Disputed Work. If the Company is of the opinion that any Design/Build
Work which it elects to perform in the absence of any agreement under subsection 7.6(F) is
Extra Design/Build Work and not original Design/Build Work ("Disputed Work"), the Company
shall give the County and the Authorized Representative a written notice of dispute before
commencing the Disputed Work.
(I) Notice: Waiver. The Company shall give reasonable advance notice to the
Authorized Representative in writing of the scheduling of all Extra Design/Build Work and all
Disputed Work. The Company's failure to give such written notice of Disputed Work under this
Section shall constitute a waiver of Extra Payment, any extension of time, and all other loss
and expenses whatsoever relating to the particular Disputed Work.
SECTION 7.7. PATENT. COPYRIGHT AND OTHER PROTECTED MATERIAL.
(A) Property of the County. The Design Requirements and all other documents forming part of
this Service Contract, the Deliverable Material, and all drawings, notes, studies, surveys,
computer programs, films, draft and final reports, and other documents issued by the County
or by the Company to the County in connection with this Service Contract or the Design/Build
Work shall be "works for hire" and remain the property of the County and the County will own
all copyrights thereto, whether or not the County undertakes the Design/Build Work or
subsequently terminates the Design/Build Work or this Service Contract.
(B) Delivery of Deliverable Material. As the Design/Build Work progresses
(or upon the termination of the Company's right to perform the Design/Build Work), the
Company shall deliver to the County all Deliverable Material as otherwise required herein.
(C) Use of Deliverable Material, Processes and Equipment. If any Deliverable
Material, process or equipment utilized in the Facility is patented or copyrighted by other
persons (or is or may be subject to other protection from use or disclosure), the County shall
have a royalty-free perpetual license to use the same with respect to the Facility. Subject to
Section 19.4, the County shall have the right to use (or permit use ol) all such Deliverable
Material, process or equipment, all oral information whatsoever received by the County in
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County of Hawaii Solid Waste Reduction Facility Article VII - Construction of the Facility
connection with the Facility, and all ideas or methods represented by such Deliverable
Material, process or equipment, at any time without additional compensation, but solely for
purposes of the ownership, construction and operation of the Facility.
(D) Substitutes for Deliverable Material. Process or Equipment. If the
County is enjoined or otherwise legally prohibited from using any Deliverable Material, process
or equipment (or any affected portion of the Facility) for reasons other than Uncontrollable
Circumstances, or County Fault, the Company, at its expense, shall:
(1) acquire the right to legally use under infringed patents or copyrights; or
(2) modify or replace infringed Deliverable Materials, processes or equipment
(or any affected portion of the Facility) with uninfringed Deliverable
Materials, processes or equipment (or any affected portion of the Facility)
equivalent in quality, performance, useful life and technical
characteristics and development.
SECTION 7.8. COUNTY TERMINATION OPTIONS DURING THE
CONSTRUCTION PERIOD. (A) County Termination for Cause. The County shall have the right
during the Construction Period to terminate this Service Contract for cause and to pursue all
remedies available pursuant to Article XVI, without cost or liability to the County, based upon
the occurrence of any Event of Default by the Company during the Construction Period.
(B) Cost Records and Reporting. During the Construction Period, the
Company shall prepare and maintain proper, accurate and complete books and records of the
cost and description of the permitting and other work which the Company has performed since
the Construction Commencement Date which is directly and solely related to the Company's
obligations during the Construction Period under this Service Contract, the cost of which
would be the responsibility of the County if the County were to elect to terminate this Service
Contract pursuant to this Section.
(C) Delivery of Construction Period Work Product to the County.
Concurrently with payment by the County to the Company of the amount due upon any
termination of this Service Contract under this Section, the Company shall deliver to the
County all of its Construction Period work product produced during the period commencing on
the Contract Date to the Termination Date hereunder, which work product immediately shall
become the property of the County. The County's use of any such work product for any
purpose other than the Design/Build Work shall be at its own risk and the Company shall
have no liability therefor.
SECTION 7.9. PERSONNEL. (A) Personnel Performance. The Company
shall enforce discipline and good order at all times among the Company's employees and all
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County of Hawaii Solid Waste Reduction Facility Article VII - Construction of the Facility
Subcontractors. All persons engaged by the Company for Design/Build Work shall have
requisite skills for the tasks assigned. The Company shall employ or engage and compensate
engineers and other consultants to perform all engineering and other services required for the
Design/Build Work. All firms and personnel performing Design/Build Work, including
Subcontractor firms and personnel, shall meet the licensing and certification requirements
imposed by Applicable Law.
(B) Construction Manager. The Company shall designate an employee of the
Company, any Affiliate of the Company, or the Company's construction subcontractor as the
construction manager (the "Construction Manager"), who shall be present on the Site with any
necessary assistants on a full-time basis when the Company or any Subcontractor is
performing the Design/Build Work. The Construction Manager shall, among other things:
(1) be familiar with the Design/Build Work and all requirements of
this Design/Build Contract;
(2) coordinate the Design/Build Work and give the Design/Build
Work regular and careful attention and supervision;
(3) maintain a daily status log of the Design/ Build Work; and
(4) attend all monthly management meetings, weekly construction
meetings and applicable design-related meetings with the County and the
County Authorized Representative.
The Company may change the person assigned as Construction Manager, subject to the
provisions of subsection (C) of this Section.
(C) County Rights With Respect to Key Personnel. The Company
acknowledges that the identity of the key management and supervisory personnel proposed by
the Company and its Subcontractors in its proposal submitted in response to the RFP was a
material factor in the selection of the Company to perform this Service Contract. The
Company's key management and supervisory personnel and their affiliations are set forth in
Appendix 13. The Company shall utilize such personnel to perform such services unless such
personnel are unavailable for good cause shown. "Good cause shown" shall not include
performing services on other projects for the Company or any of its Affiliates, but shall include
termination for cause, employee death, disability, retirement or resignation. In the event of any
such permissible unavailability, the Company shall utilize replacement key management and
supervisory personnel of equivalent skill, experience and reputation. Any change to key
personnel shall be proposed to the County for its review, consideration and approval (not to be
unreasonably withheld).
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(D) Labor Disputes. The Company shall furnish labor that can work in
harmony with all other elements of labor employed for the performance of the Design/Build
Work. The Company shall have exclusive responsibility for disputes or jurisdictional issues
among unions or trade organizations representing employees of the Company or its
Subcontractors, whether pertaining to organization of the Design/Build Work, arrangement or
subdivision of the Technical Specifications, employee hiring, or any other matters. The County
shall have no responsibility whatsoever for any such disputes or issues and the Company shall
indemnify, defend and hold harmless the County and the County Indemnitees in accordance
with Section 17.3 from any and all Loss-and-Expense resulting from any such labor dispute.
(E) Prevailing Wages. The Company shall pay or cause to be paid by its
Subcontractors prevailing wages for all labor engaged in connection with the Design/Build
Work.
SECTION 7.10. WARRANTIES. The Company warrants to the County that
the structures, improvements, fixtures, machinery, equipment and materials incorporated in
the Facility, and in all Capital Modifications, will be new, of recent manufacture, of good
quality, free from faults and defects, suitable for its intended purpose and in conformity with
Appendix 3 and the Contract Standards. Such warranties shall stay in effect until 5 years
following the Acceptance Date, except for the warranty against latent defects, which shall
terminate upon the expiration of this Service Agreement. The Company shall, for the protection
of the County, obtain from all Subcontractors, vendors, suppliers and other persons from
which the Company procures structures, improvements, fixtures, machinery, equipment and
materials such warranties and guarantees as are normally provided with respect thereto, each
of which shall be assigned to the County to the full extent of the terms thereof. No such
warranty or guarantee shall relieve the Company of any obligation hereunder, and no failure of
any warranted structures, improvements, fixtures, machinery, equipment or material shall be
the cause for any increase in the Service Fee or non-performance of the Contract Services
unless such failure is itself attributable to an Uncontrollable Circumstance or County Fault.
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ARTICLE VIII
ACCEPTANCE OF THE FACILITY
SECTION 8.1. START-UP OPERATIONS. (A) Notices. (1) Submittal of
Acceptance Test Plan. At least 180 days before the earlier of any Scheduled Acceptance Date
or the date upon which the Company plans to begin any Acceptance Testing, the Company
shall prepare and submit to the County for its approval a detailed Acceptance Test Plan for
such Facility, which shall conform to the requirements of Appendix 6 in all respects. If the
Company and County are unable to agree upon an acceptable Acceptance Test Plan for such
Facility within 90 days of such submission, their inability to agree may be mediated as
provided in Section 16.11.
(2) Notice of Substantial Completion. The Company shall give the County's
Authorized Representative at least 30 days prior written notice of the expected date of
any Substantial Completion and of commencement of start-up operations at such
Facility in preparation for conducting the Acceptance Test.
(3) Notice of Commencement of Acceptance Test. The Company shall also
provide the County with at least 30 days prior written notice of the expected initiation of
the Acceptance Test in accordance with the requirements of Appendix 6. At least 10
days prior to the actual commencement of any Acceptance Testing, the Company shall
certify in writing that it is ready to begin Acceptance Testing in accordance with the
Acceptance Test Plan and Appendix 6.
(B) Commissioning. The Company may start-up and commission the
Facility, test equipment and systems, and, subject to paragraph (C) below, conduct post-
commission operations at its election at any time. The Company's cost of all such
commissioning-related activities, regardless of their extent or duration, shall be included in the
Fixed Design/Build Price.
(C) Deliveries for Start-Up and Commissioning; Payment. The County shall
deliver or cause to be delivered to the Facility Processible Waste in such quantities and upon
such schedules as may reasonably be requested by the Company for the purposes of
conducting start-up and commission operations. During the period of start-up and
commission operations through the earlier of the Provisional Acceptance Date and the
Scheduled Acceptance Date, the County shall retain all energy revenue generated from
combusting waste, and the Company shall not receive the Service Fee but shall receive
[$100.00] for each Ton of waste combusted which shall be the only payment to which the
Company is entitled; provided, however, that no payment shall be due the Company with
respect to any Processible Waste combusted during start-up and commission operations from
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County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
which Residue is produced that fails to meet the Residue Guarantee. The Company agrees to
minimize to the extent practicable the return to the County of Processible Waste delivered to
the Facility for start-up and commission operations purposes. The County shall dispose of any
such returned waste, Residue, Non-Processible Waste and rejects during start-up and
commission operations at its cost and expense. The provisions of this subsection shall apply
only until the Scheduled Acceptance Date or the Acceptance Date (whether established on a
provisional or permanent basis), whichever first occurs. In the event the Acceptance Date has
not occurred by the Scheduled Acceptance Date, regardless of whether or to what extent the
Company has commenced start-up and commission operations of the Facility, the rights and
obligations of the parties shall be governed by the provisions of subsection 8.6(A) hereof.
(D) Failure of Deliveries for Start-Up and Commission Operations. Prior to
the Scheduled Acceptance Date or the Acceptance Date, whichever occurs first, the County's
obligation to deliver Processible Waste for start-up and commission operations shall extend
only to substantially all of the actual quantities of Processible Waste which would otherwise be
delivered to the South Hilo Landfill (if in operation, or historically delivered to the South Hilo
Landfill if not operational) for disposal on each day on which start-up and commission
operations are conducted. Upon any failure of the County to provide such deliveries, unless
excused by Uncontrollable Circumstances or Company Fault, the Scheduled Acceptance Date
shall be extended by the number of days of any such failure which occurs prior to the Schedule
Acceptance Date. In addition, upon a failure by the County to deliver any Processible Waste at
all to the Facility for start-up and commission operations, the County shall be obligated to pay
the costs incurred by the Company in preparation for start-up and commission operations
which it would not have otherwise incurred if the County had delivered such Processible Waste
to the Facility.
(E) Operations Following Start-Up/Commissioning and Prior to Acceptance
Testing. Upon successful completion of start-up and commissioning testing (check-out testing
necessary to demonstrate that such system is likely to pass the Acceptance Test) of systems
which comprise the Facility (not individual pieces of equipment), such systems necessary for
the normal and proper operation of the Facility will be integrated into the Facility. Prior to
integration of systems into the Facility, the Company shall, pursuant to the provisions of
Appendix 6, (i) demonstrate to the satisfaction of the County that such system has been
properly installed and tested in accordance with the manufacturers' recommendations and
requirements and operates properly and that integration of any such system will not adversely
affect the ability of the Facility to meet any requirement of Applicable Law and that the
Company is authorized to occupy and operate the Facility under Applicable Law, (ii) provide
training to Company personnel in accordance with the Company's comprehensive training
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County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
program to enable Company personnel to properly operate and maintain such system, and
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(iii) in the event the final Operation and Maintenance Manual has not been delivered to the
County, provide a detailed operation and maintenance protocol to the County with respect to
such system. Following satisfaction of the preceding, as acknowledged in writing by both
parties, and prior to Acceptance, the Company, will operate and maintain the Facility in
accordance with the Operation and Maintenance Manual or protocols provided by the Company
and in accordance with Sections 8.5 and 8.6. The Company will be responsible, at its cost, for
performing all repairs and replacements and other non-routine maintenance on Company-
installed malfunctioning equipment, systems and improvements to the Facility which may be
necessary prior to Acceptance. Prior to commencing the Acceptance Tests, the Company shall
inspect all equipment and systems which constitute the Facility, including those which have
been previously integrated into the Facility and operated by the Company, to ensure that all
such improvements are ready for Acceptance Testing. The Company shall certify to the
County, in accordance with Section 8.3, that the Facility has been designed and constructed in
accordance with this Service Contract and that the Facility in its then existing condition is
ready to undergo the Acceptance Tests. The Company shall not commence the Acceptance
Tests until Substantial Completion has occurred.
(F) Personnel Training. Prior to the Acceptance Date, the Company shall
submit to the County for its review and approval a personnel training protocol which the
Company proposes to institute in order to ensure that the Facility is operated in accordance
with this Service Contract and with good operating standards prevailing in the waste-to-energy
industry. Such personnel training protocol shall include any personnel training guidelines,
policies or procedures set forth as of the Acceptance Date in (1) any permit or operator's
certificate issued by the DOH, (2) the new source performance standards or (3) any other
Applicable Law, and shall include standards for operator and supervisor background, training
and experience, instruction on identifying potential Hazardous Material and Non-Processible
Waste; safety and emergency response training; general security procedures; and requirements
for operator certification by the American Society of Mechanical Engineers or another
equivalent certifying body. All costs of complying with the personnel training protocol shall be
borne by the Company.
(G) Residue Sampling and Analysis. Upon the occurrence of the first firing of
waste at the Facility through the first eight weeks of the Residue characterization program
described in Appendix 6 hereto, the Company shall be responsible for the sampling and
laboratory analysis of the Residue and data evaluation in connection with such
characterization. The costs of such sampling, analysis and data evaluation shall be the
responsibility of the Company. In the event such Residue characterization program is required
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County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
by the DOH to be extended beyond such eight week period due to the unexcused failure of the
Company to correctly follow the Residue characterization procedures or due to other Company
Fault, the Company shall remain responsible for all costs associated with the Residue
characterization program during such additional period. In the event such Residue
characterization program is required by the DOH to be extended for any other reason, the
Company shall pay the costs of Residue sampling and the County shall pay the costs of
laboratory analysis and shall be responsible for data evaluation. The County will provide
storage capacity for all Residue requiring storage under the Residue characterization program
described in Appendix [6 hereto], and all costs thereof shall be borne by the County except that
the Company shall bear all costs of storage (but not disposal) of such Residue resulting from
the unexcused failure to correctly follow such Residue characterization procedures or from
other Company Fault.
SECTION 8.2. SUBSTANTIAL COMPLETION. (A) Conditions to Substantial
Completion. Substantial Completion shall occur only when all of the following conditions has
been satisfied (unless otherwise agreed by the parties in writing):
(1) a preliminary or temporary certificate of occupancy has been issued, if
required by Applicable Law;
(2) the Company is authorized to conduct an Acceptance Test and to operate
the Facility under Applicable Law, and such authorization has not been withdrawn,
revoked, superseded, suspended, or materially impaired or amended;
(3) all Utilities specified or required under this Service Contract to be
arranged for by the Company are connected and functioning properly;
(4) the Company and the County have agreed in writing upon the Final
Punch List (or, if they are unable to agree, the County shall have prepared and issued
the Final Punch List to the Company within 15 business days of the Company having
submitted its Final Punch List to the County);
(5) the County has approved in writing, such approval not to be
unreasonably withheld or delayed, the certification by the Company that all
Design/Build Work pertaining to the Facility, excepting the items on the Final Punch
List, is complete and in all respects is in compliance with this Service Contract;
(6) the Company has delivered to the County written certification from the
equipment manufacturers that all major items of machinery and equipment included
in such Facility have been properly installed and tested in accordance with the
manufacturers' recommendations and requirements and in accordance with the start-
up protocol to be agreed to by the parties;
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County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
(7) all warranties required to be obtained under subsection 8.4 have been
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delivered to the County;
(8) the Company has delivered to the County a claims statement setting
forth in detail all claims of every kind whatsoever of the Company connected with, or
arising out of, the Design/Build Work pertaining to such Facility, and arising out of or
based on events prior to the date when the Company gives such statement to the
County;
(9) the Company has delivered to the County the initial Operating Protocol
and the draft Operation and Maintenance Manual in accordance with Appendix 8;
(10) all spare parts and Consumables required by the Design Requirements
have been delivered and are in storage at such Facility;
(11) the Company has submitted to the County and the County has reviewed
and approved the plan for Acceptance Testing as required by Appendix 6;
(12) if required by Applicable Law, the DOH has approved the plan for
Acceptance Testing and has caused a notice of permission to conduct the Acceptance
Tests; and
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(13) the Company has submitted written certification that all of the foregoing
conditions have been satisfied and the County has approved the Company's certification
such approval not to be unreasonably withheld or delayed, which approval shall be
effective as of the date of the Company's certification.
Alternatively, Substantial Completion shall occur on any date certified by the County, which
shall have discretion to waive any of the foregoing conditions.
(B) Final Punch List. The Company shall submit a proposed Final Punch
List to the County and the County Engineer when the Company believes that the Facility has
been substantially completed in compliance with this Service Contract. The "Final Punch List"
shall be a statement of repairs, corrections and adjustments to the Facility, and incomplete
aspects of the Facility, which in the Company's opinion:
(1) the Company can complete before the Company's agreed date for Final
Completion and with minimal interference to the occupancy, use and lawful operation
of the Facility; and
(2) would represent, to perform or complete, a total cost of not more than
2.5% of the portion of the Fixed Design/Build Price applicable to the Facility (unless the
County determines that a higher percentage is acceptable).
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Completion of the Final Punch List work shall be verified by a final walk-through of the Facility
conducted by the County and the County Engineer with the Company and the Company
engineer. The existence and approval of the Final Punch List shall in no way either limit the
Company from performing additional repairs, corrections and adjustments to the Facility as
may be necessary to comply with this Service Contract or limit the County's ability to enforce
the Company obligation to complete the Facility in accordance with the Design Requirements.
If the Company fails to complete any Final Punch List-related Design/Build Work, the County
shall have the right to withhold twice the value of such work as part of the retainage amount.
SECTION 8.3. CONDUCT OF ACCEPTANCE TEST. The Company shall
conduct all Acceptance Tests in accordance with Appendix 6 and the Acceptance Test Plan,
and shall notify the County when any such test shall occur. The Company shall permit the
designated representatives of the County to inspect the preparations for any Acceptance Test
and to be present for the conducting of any Acceptance Test for purposes of ensuring
compliance with the Acceptance Test Plan and the integrity of the Acceptance Test results.
SECTION 8.4. ACCEPTANCE DATE CONDITIONS. The following conditions
shall constitute the "Acceptance Date Conditions," each of which must be satisfied in all
material respects by the Company in order for an Acceptance Date to occur, and each of which
must be and remain satisfied as of the Acceptance Date (unless otherwise agreed by the parties
in writing):
(1) Construction Commencement Date Conditions. Each of the
Construction Commencement Date Conditions shall be and remain satisfied as of the
Acceptance Date;
(2) Achievement of Acceptance Standards. The Company shall have
completed the required Acceptance Tests and such tests shall have demonstrated that
the Facility has met the Acceptance Test Procedures and Standards;
(3) Final Operation and Maintenance Manual. The Company has delivered
to the County the final Operation and Maintenance Manual in accordance with
Appendix 8;
(4) Required Operation Period Insurance. The Company shall have
submitted to the County certificates of insurance for all Required Operation Period
Insurance specified in Appendix 14 and made available to the County all insurance
policies for its review;
(5) Operating Governmental Approvals. All applicable Governmental
Approvals required under Applicable Law which are necessary for the continued routine
operation of the Facility shall have been duly obtained by the Company and shall be in
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County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
full force and effect. Copies of all such Governmental Approvals, to the extent not in
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the County's possession, certified by the Company shall have been delivered to the
County;
(6) Equipment Warranties and Manuals. The Company shall be in
possession of, and shall have delivered to the County, copies of the warranties of
machinery, equipment, fixtures and vehicles constituting a part of such Facility,
together with copies of all related operating manuals supplied by the equipment
supplier; and
(7) No Default. There shall be no Event of Default by the Company under
this Service Contract or by the Guarantor under the Guaranty Agreement, or event
which with the giving of notice or the passage of time would constitute an Event of
Default by the Company hereunder or an Event of Default by the Guarantor under the
Guaranty Agreement.
SECTION 8.5. PROVISIONAL ACCEPTANCE; ACCEPTANCE AT REDUCED
ACCEPTANCE STANDARD; THROUGHPUT CAPACITY LIQUIDATED DAMAGES. (A) Provisional
Acceptance at Full Acceptance Standard. The Facility shall be deemed to have achieved
Acceptance, and the Acceptance Date shall be established, on a provisional basis on the date of
certification by the Company to the County in good faith that (1) all Acceptance Tests have
been conducted and completed in accordance with this Service Contract, (2) to the Company's
best knowledge at the time of the certification, based on due inquiry and all available
information, Acceptance has been achieved, (3) the Required Operating Period Insurance is in
effect, (4) such certification shall have the effect provided in this subsection 8.5(A) hereof, and
(5) no information has come to the Company's attention as of the date of such certification
which would lead it to believe that it will not be able to comply with the terms of the permits,
applicable to the operation of the Facility for the period governed by the permits except as such
compliance may be affected by Uncontrollable Circumstances or County Fault. In the event
that Acceptance is certified at less than the full Acceptance Standard, the Acceptance Date
shall not be deemed to have occurred except upon compliance with the provisions of this
Section. Upon such certification, the terms and provisions of this Service Contract (including
without limitation the Processible Waste delivery and processing obligations of the parties, the
Service Fee payment obligation of the County, and the obligation of the Company to pay
performance liquidated damages for failure to meet the Performance Guarantees) shall apply,
and the Company and the County shall be bound, as if the Acceptance Date had been
permanently established and shall be effective for the Term of this Service Contract, except as
provided in Section 8.8 hereof in the event that the County disputes such certification. The
establishment of the Acceptance Date on a provisional basis shall not operate to lengthen the
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County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
Extension Period in the event that such provisional establishment expires and the parties are
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restored to their former positions pursuant to Section 8.8 hereof.
(B) Option to Establish Acceptance Date. The Company shall have the
option to establish the Acceptance Date notwithstanding the failure of the Facility to meet the
full Acceptance Standard if, at any time during the Extension Period, (1) the Company, in
accordance with the procedures set forth in Section 8.8 hereof, certifies and calls for
concurrence by the County that the Acceptance Tests have demonstrated that the Facility
meets or exceeds the Minimum Acceptance Standard, and, (2)(i) if the Facility failed to meet the
full Acceptance Standard due to reasons of Uncontrollable Circumstance or a Capital
Modification undertaken at the request of the County pursuant to Section 14.4, the provisions
of Section 8.5(D) shall apply, or (ii) in all other cases, the Company immediately pays
Throughput Capacity Liquidated Damages to the County, and (3) the Company certifies to the
County and the Authorized Representative in good faith that (a) all Acceptance Tests have been
conducted and completed in accordance with this Service Contract, (b) to the Company's best
knowledge at the time of the certification, based on due inquiry and all available information,
the Minimum Acceptance Standard has been achieved, (c) the Required Operation Period
Insurance is in effect, and (d) no information has come to the Company's attention as of the
date of such certification which would lead it to believe that it will not be able to comply with
the terms of the permits applicable to the operation of the Facility for the period governed by
the permits except as such compliance may be affected by Uncontrollable Circumstances or
County Fault. Throughput Capacity Liquidated Damages payable to the County shall be equal
to (1) the full Acceptance Standard for throughput minus the actual demonstrated throughput
capacity of the Facility concurred in or deemed to be concurred in by the County Engineer or
resolved by dispute resolution, divided by (2) the full Acceptance Standard for throughput, all
multiplied by (3) the Design/Build Price. If the Company meets the Minimum Acceptance
Standard with respect to any Acceptance Standard other than the throughput standard, the
Company shall not be obligated to make any one time damage payment to the County but shall
be obligated to pay to the County ongoing Facility Performance Obligations if the Company fails
to meet its Performance Guarantees. The Acceptance Date shall be established under this
subsection 8.5(B) as of the date of the Company's certification pursuant to item (1) in the first
sentence of this subsection 8.5(B). The exercise by the Company of its option under this
subsection 8.5(B) shall have the consequences on the rights, duties and obligations of the
parties hereto set forth in this Section 8.5.
(C) Unexcused Non-Compliance. To the extent that (i) Acceptance occurs at
a reduced standard pursuant to Section 8.5(B) here of upon a failure of the Facility to meet the
full Acceptance Standard due to reasons other than Uncontrollable Circumstances, and (ii) the
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Company elects to pay Throughput Capacity Liquidated Damages to the County at the time of
I
such Acceptance at a reduced standard, pursuant to Sections 8.5(B) or 8.5(E) as the case may
be, (1) the Annual Facility Throughput Guarantee and the periodic delivery limits pursuant to
Section 10.2, as well as the County's Annual Waste Delivery Commitment, shall be reduced, for
all purposes of the Service Contract, in direct proportion to the reduction in throughput below
the full Acceptance Standard for throughput concurred in or deemed to be concurred in by the
County Engineer or pursuant to dispute resolution, (2) the Base Operation Fee shall be
reduced in the same direct proportion, (3) there shall be no reduction in the Residue Guarantee
and the Environmental Guarantee, and (4) there shall be no reduction in the Annual Electricity
Production Guarantee, and the Company shall continue to be obligated to pay Facility
Performance Obligations throughout the Term of this Service Contract.
(D) Acceptance Re-testine. In the event that Acceptance at a reduced
throughput standard occurs pursuant to subsection 8.5(B) hereof, the Company shall have the
right to re-test the Facility in accordance with Appendix 6 hereto at any time during the three-
year period following Acceptance at its sole cost, expense and liability. If any such re-test
demonstrates that the throughput capacity of the Facility exceeds the reduced throughput
standard on which Acceptance occurred, then all calculations and adjustments called for by
subsections 8.5(B) and (C) hereof (including those relating to the Base Operation Fee) shall be
reperformed so as henceforth to place the parties in the position each would have been in had
the throughput standard on which Acceptance occurred been the throughput standard on
which demonstrated in the re-test.
(E) Uncontrollable Circumstances. If Acceptance occurs at a reduced
standard pursuant to subsection 8.5(B) hereof, (1) the Company shall not be liable for
Throughput Capacity Liquidated Damages to the extent Acceptance occurred at a reduced
standard due to Uncontrollable Circumstances, (2) the Annual Facility Throughput Guarantee
and the periodic delivery limits pursuant to Section 10.2 shall be adjusted, for all purposes of
this Service Contract, as appropriate to reflect the impact thereon of the Uncontrollable
Circumstances, (3) the Annual Electricity Production Guarantee shall be reduced, for all
purposes of this Service Contract, as appropriate and to the extent necessary to reflect the
impact of the Uncontrollable Circumstance thereon, (4) the Base Operation Fee shall be
decreased to the extent the Company's actual costs of operation can reasonably be reduced or
increased to the extent of any increase in costs due to the Uncontrollable Circumstance
(subject to Cost Substantiation), and (5) there shall be no reduction in the Residue Guarantee
and the Environmental Guarantee.
SECTION 8.6. DISPOSAL UPON UNEXCUSED DELAY IN ACCEPTANCE
DATE. (A) Interim Service. The County and the Company acknowledge that the intent of this
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Design, Construction and Operation of the Service Contract
County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
Service Contract is to provide for waste disposal through waste reduction, to minimize the
social and environmental impacts associated with off-site disposal and to maximize the
remaining useful life of the County Landfill. It is therefore agreed that, notwithstanding any
right under Applicable Law which the Company may have to compel the County to mitigate the
Company's damages through the use of the County Landfill, in the event the Acceptance Date
is delayed beyond the Scheduled Acceptance Date, the County Landfill shall not be used for the
disposal of Processible Waste which the Facility is unable to process as long as an alternative
disposal method is available to the County, and (1) the Company may utilize the Facility to the
extent of its processing and combustion capacity in accordance with Applicable Law, (2) the
County shall transport and dispose of at an alternative waste disposal facility all of the Solid
Waste which is not combusted at the Facility, and (3) the Company shall indemnify the County,
in the manner provided in Section 17.3 hereof, for all Loss-and-Expense incurred in connection
with the transportation and disposal of Processible Waste by the County in such
circumstances. In the event that the County is precluded from disposing of such waste at any
other disposal site or is required by Applicable Law to dispose of all or any portion of such
waste at the County Landfill, the cost of disposal of such waste at the County Landfill shall be
an amount equal to 2.0 times the tipping fee then applicable for each such Ton. Such
alternate service and payment obligations (as discussed in (B) below) shall continue until
(1) the Acceptance Date is achieved (whether on a provisional or permanent basis), or (2) the
expiration of the Extension Period, or (3) termination of this Service Contract pursuant to
Article XVI hereof and payment by the Company or County of any damages payable upon such
termination, whichever first occurs. If the Extension Period expires and the Acceptance Date
has not occurred for reasons other than Uncontrollable Circumstances or County Fault, the
County shall have the right to terminate this Service Contract as provided in Section 8.10
hereof.
(B) Payment for Interim Service. The County shall pay to the Company for
the alternate disposal service provided under this Section an interim service fee with respect to
each month of the Extension Period equal to (1) the Base Operating Fee portion of the Service
Fee that would have been payable with respect to such month had such month occurred after
the Acceptance Date, minus (2) an amount equal to the County's costs of transfer,
transportation and disposal of the Tonnage handled by the County, (provided that the disposal
costs will be calculated at 200% of the actual tipping fee if the County Landfill is utilized). The
Company also shall be responsible during any period of interim service for all of the Facility
Performance Guarantees for which it would have been responsible had Acceptance occurred.
Therefore, in the event the Facility is unable to combust any waste in a month during the
Extension Period, the Company would be responsible for payment of Throughput Performance
Liquidated Damages based upon a monthly delivery of 6,083 Tons (i.e. 73,000 divided by 12). If
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County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
the Company combusts 3,000 Tons in a month during the Extension Period and produces 450
KWh per Ton of Acceptable Waste combusted, the Company would be responsible for the
payment of Throughput Performance Liquidated Damages based upon a shortfall of 3,083
Tons, and would be responsible for Electricity Production Liquidated Damages based upon the
difference between the Annual Electricity Production Guarantee and 450 with respect to the
3,000 Tons combusted. In the event any calculation of payment for interim service is a negative
number, such amount shall be paid by the Company to the County.
(C) Interim Service Does Not Constitute Acceptance. Notwithstanding
anything contained or implied in this Section to the contrary, the receipt by the County of
interim service pursuant to this Section does not constitute Acceptance of the Facility. Such
Acceptance may only be achieved pursuant to the provisions of Section 8.4 hereof.
(D) Operations During Extension Period. During any interim operations
conducted pursuant to this Section, the Company shall operate the Facility in accordance with
the provisions of Articles X and XI hereof.
SECTION 8.7. TEST REPORT. Within 30 days following conclusion of any
required Acceptance Test, the Company shall furnish the County and the County Engineer
with ten copies of a certified written report describing and certifying (1) the Acceptance Test
conducted, (2) the results of the Acceptance Test, and (3) the level of satisfaction of the
Acceptance Tests Procedures and Standards relating thereto and all other requirements
specified in Appendix 6. The written test report shall include copies of the original data sheets,
log sheets and all calculations used to determine performance during the Acceptance Test, and
copies of laboratory reports conducted in conjunction with the Acceptance Test, including all
laboratory sampling and test results.
SECTION 8.8. CONCURRENCE OR DISAGREEMENT WITH TEST RESULTS.
(A) Acceptance Date Concurrence. The "Acceptance Date" shall be the day on which the
Acceptance Date Conditions have been achieved. If the Company certifies in its written report
delivered pursuant to Section 8.4 that such full Acceptance Test Procedures and Standards
have been achieved, the County shall determine, within 60 days of its receipt of such report,
whether it concurs in such certification. If the County states in writing that it concurs with the
Company's certification, amounts retained by the County pursuant to subsection 9.4(D) shall
be released to the Company to the extent set forth in Section 8.11(C).
(B) Acceptance Date Disagreement. If the County determines at any time
during such 60-day review period that it does not concur with such certification, the County
shall immediately send written notice to the Company of the basis for its disagreement. In the
event of any such non-concurrence by the County, either party may elect to refer the dispute to
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County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
Non-Binding Mediation for resolution pursuant to Section 16.11. The Mediator shall issue a
decision within 60 days of the dispute referral unless both parties agree that more time is
appropriate. In the event that the Mediator fails to issue a decision within 60 days, then either
party may initiate judicial proceedings. The parties acknowledge and agree that any decision
rendered by the Mediator as to whether any Acceptance has occurred shall be non-binding.
Acceptance shall not be deemed to have been achieved unless the Acceptance Test, conducted
in a unified and continuous manner as provided in the Acceptance Test Plan and in
Appendix 6, demonstrates that all of the Acceptance Test Procedures and Standards have been
met. In the event the Company, in conducting the Acceptance Test, does not successfully meet
the Acceptance Test Procedures and Standards, the County shall have the right, in its sole
discretion, to permit the Company to re-test such Facility for compliance only with the
Acceptance Test and Procedures Standards not previously achieved through an earlier
Acceptance Test; provided, however, the County shall not require re-testing of components or
performance of the Facility that had previously passed tests to the extent such testing is not
reasonably related to the components or performance of the Facility that needs to be re-tested
because it previously failed such test. Nothing in this Section shall prevent the Company from
bringing an action or from repeating any Acceptance Test in order to establish the achievement
of Acceptance.
SECTION 8.9. REPETITION OF ACCEPTANCE TEST; EXTENSION PERIOD.
It is agreed that time is of the essence in the performance of the Design/Build Work. If
Acceptance shall not have occurred on or before the Scheduled Acceptance Date, the Company
shall be entitled to conduct or repeat such Acceptance Test as often as it desires in order to
secure Acceptance of such Facility during the Extension Period. During the Extension Period,
the Company shall be responsible for and shall pay any fines and penalties assessed by a
Governmental Body against the County or the Company due to the failure to achieve
Acceptance by the Scheduled Acceptance Date. In addition, the Company shall be responsible
for reimbursing the County for the costs associated with monitoring the re-tests of the Facility ;
provided, however, that such re-test was not due to County Fault or an Uncontrollable
Circumstance.
SECTION 8.10. FAILURE TO MEET ACCEPTANCE STANDARD. If, as of the
last day of any Extension Period, any Acceptance Tests have not been conducted or have failed
to demonstrate that the Facility operates at a standard equal to or greater than the full
Acceptance standard, an Event of Default by the Company shall be deemed to have occurred
under Section 16.2 notwithstanding any absence of notice, further cure opportunity or other
procedural rights accorded the Company thereunder, and the County shall thereupon have the
right to terminate this Service Contract upon written notice to the Company. Upon any such
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Design, Construction and Operation of the Service Contract
County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
termination, the County shall have all of the rights provided in Article XVI upon a termination
I
of the Company for cause.
SECTION 8.11. FINAL COMPLETION. (A) Requirements. The Company
shall achieve Final Completion within 90 days after the Acceptance Date. Unless otherwise
agreed to by the parties in writing, "Final Completion" shall occur when all of the following
conditions have been satisfied:
(1) Certificate of Occupancy Issued. A certificate of occupancy has been
issued for the Facility, if required;
(2) Acceptance Achieved. The Acceptance Test has been conducted, the
Acceptance Test Procedures and Standards have been achieved, and Acceptance has
occurred;
(3) Design/Build Work Completed. All Design/Build Work (including all
items on the Final Punch List and all clean up and removal of construction materials
and demolition debris) is complete and in all respects is in compliance with this Service
Contract;
(4) Spare Parts In Storage. All spare parts required by the applicable Design
Requirements have been delivered and are in storage at the Facility;
(5) Deliverable Material Furnished. The Company has furnished to the
County all Deliverable Material required to be delivered prior to Acceptance;
(6) Record Drawings. The Company shall have delivered to the County a
final and complete reproducible set of record drawings, together with six copies thereof,
in a size and form required by the County and as required by the Design Requirements
and shall certify that such Facility was constructed in accordance with the Design
Requirements, including any Change Orders. The Company shall also provide an
electronic file in AutoCad format to the extent drawings are prepared in such format;
and
(7) Equipment Warranties and Manuals. The Company shall be in
possession of, and shall have delivered to the County, copies of the warranties of
machinery, equipment, fixtures and rolling stock constituting a part of such Facility,
together with copies of all related operating manuals supplied by the equipment
supplier.
(B) Final Certificate and Claims Statement. The Company shall also prepare
and submit to the County as soon as practicable following the Acceptance Tests, for purposes
of demonstrating Final Completion: (1) a certificate of the Company's Contract Representative
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Design, Construction and Operation of the Service Contract
County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
certifying (a) that all the Design/Build Work (including all items on the Final Punch List) has
been completed in accordance herewith and with the Design Requirements, and (b) that
Acceptance and Final Completion of the Facility have occurred; and (2) a claims statement
setting forth a detailed, itemized description, related dollar amount and grounds for all claims
of every kind whatsoever against the County in connection with or arising out of the
Design/Build Work the Company may have. The County shall review the certificate and the
claims statement and shall verify or dispute them in writing within 30 days of receipt.
(C) Payment for Punchlist Items. Upon Final Completion, all amounts
retained to pay for punch list items following Acceptance pursuant to Section 9.4(D) shall be
released to the Company.
SECTION 8.12. NO ACCEPTANCE WAIVER OR RELEASE. Unless other
provisions of this Service Contract specifically provide to the contrary, none of the following,
without limitation, shall be construed as the County's acceptance of any Design/Build Work
which is defective, incomplete, or otherwise not in compliance with this Service Contract, as
the County's release of the Company from any obligation under this Service Contract, as the
County's extension of the Company's time for performance, as an estoppel against the County,
or as the County's acceptance of any claim by the Company:
(1) the County's payment to the Company or any other person with respect
to the Facility;
(2) the County's review or acceptance of any drawings, submissions, punch
lists, other documents, certifications (other than certificates relating to completion or
Acceptance of the Facility), or Design/Build Work of the Company or any
Subcontractor;
(3) the County's review of (or failure to prohibit) any construction
applications, means, methods, techniques, sequences, or procedures for the
Design/ Build Work;
(4) the County's entry at any time on the Site (including any area in which
the Design/Build Work is being performed);
(5) any inspection, testing, or approval of any Design/Build Work (whether
finished or in progress) by the County or any other person;
(6) the failure of the County or any County consultant to respond in writing
to any notice or other communication of the Company; or
(7) any other exercise of rights or failure to exercise rights by the County
hereunder.
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County of Hawaii Solid Waste Reduction Facility Article VIII - Acceptance of the Facility
SECTION 8.13. NO SERVICE FEE PAYMENT DURING START-UP AND
i
TESTING. During start-up, commissioning and testing, the Company shall not be entitled to
payment of the Service Fee. All costs for design, construction, permitting, start-up,
commissioning and testing for any Acceptance, and any operations prior to the Acceptance
Date, including costs for labor, materials, chemicals and Utilities, shall be borne by the
Company without reimbursement by the County except to the extent set forth in Section
8.1(C).
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ARTICLE IX
PAYMENT OF THE DESIGN/BUILD PRICE
SECTION 9.1. DESIGN/BUILD PRICE. (A) Design/Build Price Generally.
The Company shall be entitled to receive the Design/Build Price for the Contract Services on a
progress basis in accordance with the terms of this Section. The Design/Build Price shall be
the Fixed Design/Build Price as adjusted by the Fixed Design/Build Price Adjustments set
forth in Section 9.2(C).
(B) Fixed Design/Build Price. The Fixed Design/Build Price shall be the
sum of the Fixed Development Price and the Fixed Construction Period Price, and shall be
equal to $[AS PROPOSED IN BAFO ON PROPOSAL FORM 16]. Except as provided in
subsection (C) of this Section, the Fixed Design/Build Price shall not be subject to adjustment
in any manner whatsoever.
(C) Fixed Design/Build Price Adiustments. The following items shall
constitute the Fixed Design/Build Price Adjustments:
(1) An adjustment for the cost of any Change Orders issued by the County
with respect to the Design/Build Work pursuant to Section 7.9;
(2) An adjustment for the cost of any Uncontrollable Circumstances required
pursuant to Section 17.2; and
(3) The Fixed Construction Period Price [AS PROPOSED IN BAFO ON
BUSINESS PROPOSAL FORM 16] portion of the Fixed Design/Build Price will be
adjusted from [BAFO SUBMITTAL DATE] to the earlier of the Scheduled
Construction Commencement Date or the Notice to Proceed date by multiplying (i) the
Fixed Construction Period Price, by (ii) the Fixed Construction Period Price Adjustment
Factor as set forth in Appendix 12; provided, however, that the Fixed Construction
Period Price shall not escalate beyond the Schedule Construction Commencement Date
due to either the Company's failure to use good faith efforts to achieve the Construction
Commencement Date or, notwithstanding its good faith efforts, the Company has failed
to obtain all Governmental Approvals required for the Construction Commencement
Date to occur as set forth in Section 4.1 and such failure is not excused pursuant to
Section 5.2.
(D) Limitation on Payments for Costs of the Design/Build Work. The
Company agrees that the Design/Build Price shall be the Company's entire compensation and
reimbursement for the performance of the Design/Build Work, including obtaining all Utilities
that the Company will require to perform the Design/Build Work, commissioning and starting
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Design, Construction and Operation of the Service Contract
County of Hawaii Solid Waste Reduction Facility Article IX - Payment of the Design/Build
Price
up the Facility, and operating the Facility during the Acceptance Tests and prior to the
Acceptance Date and performing all repairs and replacements. In no event shall the Company
be entitled to any payment for Design/Build Work costs in excess of the Design/Build Price,
notwithstanding any cost overruns the Company may incur. The Company shall finance and
pay for any such excess cost of the Design/Build Work in any manner it chooses without
reimbursement from or other claim upon the County.
SECTION 9.2. PAYMENT FOR THE DEVELOPMENT PERIOD WORK. (A)
Fixed Development Price. The Company shall be paid the Fixed Development Price for its
Development Period Work on a milestone basis in accordance with the terms of this Section.
The Fixed Development Price shall be the sum of $ [AS PROPOSED ON PRICE
PROPOSAL FORM 16 OF BAFO] and any adjustments under the terms of this Service
Contract, including any County-approved Change Orders.
(B) Milestone Schedule. The Company shall be entitled to payment for
Development Period activities hereunder in accordance with the milestones set forth in
Appendix 10, which payments are and shall be considered to be partial payments of the Fixed
Design/Build Price to the Company. Such payments shall be based on the Company's final
completion of each such Development Period activity and shall not exceed the individual and
aggregate maximum Development Period payments therefor. All other costs and expenses
incurred by the Company in performing its obligations during the Development Period shall be
for the account of the Company and shall not be reimbursable until and unless the
Construction Commencement Date occurs or the County exercises its right to terminate this
Service Contract during the Development Period as provided in Section 4.5.
(C) Conditions of Payment. Notwithstanding any provision of this Service
Contract to the contrary, the Company shall not be entitled to receive any payments for
Development Period Work until the later of (i) July 1, 2008 and (ii) the date that the Company
has provided the County the executed Guaranty Agreement and the Required Design/Build
Period Insurance as set forth in Appendix 14.
(D) Disbursement Procedure. The Company shall be entitled to submit
requisitions and receive from the County the payments, which (1) shall be made on a milestone
basis in accordance with Appendix 10 and (2) shall be subject to the maximum payments set
forth in Appendix 10. Each Requisition must be submitted monthly and be accompanied by a
monthly requisition report, which shall include:
(1) a certificate of an authorized officer of the Company certifying (1) the
portion of the Fixed Development Price which is payable to the Company,
(2) that the Company is neither in default under this Service Contract
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Design, Construction and Operation of the Service Contract
County of Hawaii Solid Waste Reduction Facility Article IX - Payment of the Design/Build
Price
nor in breach of any material provision of this Service Contract such that
the breach would, with the giving of notice or passage of time, constitute
an Event of Default, and (3) that all milestones which the Company has
identified in Appendix 10 have been completed in accordance therewith;
(2) notice of any liens which have been filed together with evidence that the
Company has discharged or bonded against any such liens; and
(3) any other documents or information relating to the Development Period
Work or this Service Contract reasonably requested by the County or the
Authorized Representative or as may be required by Applicable Law or
this Service Contract.
The Authorized Representative shall review the Company's certified Requisitions to the County
for each Fixed Development Price payment and within 10 business days of receipt of the
Company's written report, shall verify or dispute in writing (or by telecommunication promptly
confirmed in writing) the Company's certification that the Company has achieved the level of
progress indicated and is entitled to payment. If the Authorized Representative determines
that the work has progressed to the milestone indicated in the Company's certified Requisition
and the Authorized Representative provides written notice thereof to the Company and the
County, thereupon the Company shall be entitled to payment within 30 days of such
determination. Disputes regarding payments of the Fixed Development Price shall be resolved
in accordance with subsection 9.3(E) hereof. In any event, any undisputed amounts shall be
paid within 40 days of receipt of the Company's certified requisition.
(E) Disbursement Dispute Procedures. If the Authorized Representative
determines pursuant to subsection 9.3(E) hereof that the milestone required for any payment
has not been reached as indicated by the Company, or otherwise disputes any Requisition, the
Authorized Representative shall provide prompt written notice to the Company and the County
as to the Authorized Representative's reasons, in reasonable detail, for such determination or
the basis for such dispute. After receiving such determination notice, the Company may make
the necessary corrections and resubmit a certified Requisition to the Authorized
Representative. If the Company is unable to reach agreement with the Authorized
Representative as to the completion of the milestone, the Company may exercise its right to
contest the Authorized Representative's determination in accordance with the dispute
resolution procedures set forth in Section 16.11 hereof. Any proceedings undertaken to resolve
a dispute arising under this subsection 9.3(E) shall immediately terminate if (1) the Company
demonstrates to the Authorized Representative that the milestone has been completed as
indicated in the certified Requisition giving rise to the dispute or that any disputed certified
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County of Hawaii Solid Waste Reduction Facility Article IX - Payment of the Design/Build
Price
Requisition is correct, and (2) the Authorized Representative concurs with such demonstration.
The Company shall not be entitled to payment of the amount so requisitioned and disputed
except upon resolution of the dispute in accordance with this subsection 9.3(E). Payment shall
be made only upon the submission of a certified Requisition indicating that a particular
milestone has been reached and no partial payments will be made for Requisitions involving
milestones which are in dispute or not otherwise fully completed. In the event that upon
resolution of any such dispute, it is determined that the Company was properly entitled to the
disputed amount as of a date earlier than the date on which payment is actually made, the
Company shall be entitled to receive promptly following such resolution such disputed amount
plus interest on such disputed amount for the period of dispute calculated at the base rate.
(F) Limitation on Payment for Initial Company Development Period
Responsibilities. The Company agrees that the maximum compensation for the performance of
the Initial Company Development Period Responsibilities shall be $ [To be provided in BAFO].
In no event shall the Company be entitled to any payment for the Initial Company Development
Period Responsibilities in excess of $ [To be provided in BAFO], notwithstanding any cost
overruns the Company may incur. The Company shall finance and pay for any such excess
cost for the Initial Company Development Period Responsibilities in any manner it chooses
without reimbursement from or other claim upon the County.
SECTION 9.3. PAYMENT PROCEDURE FOR CONSTRUCTION PERIOD
WORK. (A) Fixed Construction Price. The Company shall be paid the Fixed Construction Price
on a milestone basis in accordance with the terms of this Section. The Fixed Construction
Price shall be the sum of $ [AS PROVIDED ON PRICE PROPOSAL FORM 16 OF
BAFO] and any adjustments under the terms of this Service Contract, including any County-
approved Change Orders.
(B) Milestone Schedule. The milestone schedule established in Appendix 10
will serve as the basis for progress payments and will be incorporated into a form of Requisition
acceptable to the County.
(C) Construction Disbursement Procedure. The Company shall be entitled to
submit monthly Requisitions and receive from the County the payments, which (1) shall be
made (only when completion of the milestone required to be completed as a basis, as such
payment) as set forth in Appendix 10, (2) shall be subject to the maximum drawdown
limitations specified in Appendix 10 hereto, and (3) shall be subject to the conditions of
payment set forth in Section 9.5 hereof; provided, however, that on the date that the
Acceptance Date is permanently established under Section 8.8, the Company shall be entitled
to receive all payments due for completed work (which is unencumbered) which remain unpaid
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as of such date except for the payment conditioned on Final Completion. Each Requisition
must be accompanied by a monthly requisition report, which shall include:
i. a reasonably detailed description of all Design/Build Work actually
completed to date;
ii. revisions to the progress schedule (or a revised progress schedule) which
shall reflect changes in the Company's construction schedule since the date of the last
requisition;
iii. revisions to the cost-loaded critical path schedule which shall reflect
changes in the critical path schedule since the date of the last Requisition;
iv. construction progress photographs;
V. a certificate of an authorized officer of the Company certifying (1) the
portion of the Fixed Design/Build Price which is payable to the Company, (2) that the
Company is neither in default under this Service Contract nor in breach of any material
provision of this Service Contract such that the breach would, with the giving of notice
or passage of time, constitute an Event of Default, and (3) that all items applicable to
the work entitling the Company to requested payment under the schedule in
Appendix 10 have been completed in accordance therewith and with the Design
Requirements;
vi. a verified statement setting forth the information required under any
Applicable Law pertaining to prevailing wages;
vii. notice of any liens which have been filed together with evidence that the
Company has discharged or bonded against any such liens; and
viii. any other documents or information relating to the Design/Build Work
or this Service Contract requested by the County or the Authorized Representative or as
may be required by Applicable Law, this Service Contract or generally accepted
accounting practices or principles.
The Authorized Representative shall review the Company's certified Requisitions to the County
for each Design/Build Price payment and within 10 business days of receipt of the Company's
written report delivered pursuant to Section 9.5 hereof, shall verify or dispute in writing (or by
telecommunication promptly confirmed in writing) the Company's certification that the
Company has achieved the level of progress indicated and is entitled to payment. If the
Authorized Representative determines that the work has progressed to the milestone indicated
in the Company's certified Requisition and the Authorized Representative provides written
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notice thereof to the Company and the County, thereupon the Company shall be entitled to
payment within 30 days of such determination. Disputes regarding payments of the Fixed
Design/Build Price shall be resolved in accordance with subsection 9.4(D) hereof. In any
event, any undisputed amounts shall be paid within 40 days of receipt of the Company's
certified requisition.
(D) Disbursement Dispute Procedures. If the Authorized Representative
determines pursuant to subsections 9.4(B) and 9.4(C) hereof that the work required for any
payment has not progressed as indicated by the Company, or otherwise disputes any
Requisition, the Authorized Representative shall provide prompt written notice to the Company
and the County as to the Authorized Representative's reasons, in reasonable detail, for such
determination or the basis for such dispute. After receiving such determination notice, the
Company may make the necessary corrections and resubmit a certified Requisition to the
Authorized Representative, or the Authorized Representative may agree on a revised amount,
Requisition or estimate, as applicable, in which case the Company shall promptly notify the
County of such agreement. If the Company is unable to reach agreement with the Authorized
Representative as to the progress of work, the Company may exercise its right to contest the
Authorized Representative's determination in accordance with the dispute resolution
procedures set forth in Section 16.11 hereof. Any proceedings undertaken to resolve a dispute
arising under this subsection 9.4(C) shall immediately terminate if (1) the Company
demonstrates to the Authorized Representative that the work has proceeded as indicated in the
certified Requisition giving rise to the dispute or that any disputed certified Requisition is
correct, and (2) the Authorized Representative concurs with such demonstration. The
Company shall not be entitled to payment of the amount so requisitioned and disputed except
upon resolution of the dispute in accordance with this subsection 9.4(D); provided, however,
that the Company shall be entitled to all requisitioned amounts which are not in dispute. In
the event that upon resolution of any such dispute, it is determined that the Company was
properly entitled to the disputed amount as of a date earlier than the date on which payment is
actually made, the Company shall be entitled to receive promptly following such resolution
such disputed amount plus interest on such disputed amount for the period of dispute
calculated at the Prime Rate.
(E) Retainage. Each construction drawdown payment will be subject to a 5%
retainage holdback. The County shall release to the Company the accumulated funds retained
upon receipt of certification from the Company and confirmation by the Authorized
Representative that Acceptance has occurred pursuant to Section 8.8 hereof; provided,
however, that to the extent items are contained on the Final Punch List, the County or the
Authorized Representative shall reasonably estimate the cost to make each correction or to
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complete each such item and the County shall be entitled to withhold from payment of the
retained funds an amount equal to two times the aggregate value of such items, in addition to
the amount of unresolved or unbonded claims or liens by third parties in connection with the
Design/Build Work and earned interest on the retained funds. Upon certification by the
Authorized Representative that Final Completion has occurred and so long as authority
contained in the Governmental Approvals to operate the Facility remains unimpaired, the
County shall release to the Company all remaining retained funds, including the amount equal
to the interest actually received on the retainage holdback. The County may, in its sole
discretion, release retained funds upon the completion of individual Final Punch List items but
shall at all times retain an amount equal to 200 percent of the value of unfinished work.
SECTION 9.4. CONDITIONS OF PAYMENT. (A) Information Supportin¢
Requisition. The Company shall submit to the County, with a copy to the Authorized
Representative, with each Requisition all information required in subsection 9.4(C) hereof.
(B) Permissible Withholdings. The County may disapprove and withhold and
retain all or any portion of any payment requested to any Requisition in an amount equal to
the sum of:
(1) any amounts which are permitted under Section 9.5 hereof to be
withheld from any payment requested in any Requisition;
(2) any amounts which are due the County under Section 7.7 hereof,
(3) any liquidated damages which are payable;
(4) any indemnification amounts which are agreed to by the parties, or after
judicial review are found to be due and owing to the County under Section 17.3 hereof;
(5) any amounts which are due from the Company under Section 7.8 hereof;
(6) any other deductions which are required by Applicable Law;
(7) any payments with respect to which documents to be delivered in
connection therewith are not materially correct and complete;
(8) any payments with respect to which the Design/Build Work covered by
such Requisition (or any previous Requisition) does not comply with this Service
Contract;
(9) any payments with respect to which any person has asserted a Lien
resulting from the acts or omissions of the Company in performing the Design/Build
Work and such Lien remains unreleased or unbonded;
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(10) all requisitioned payments, if an Event of Default of the Company has
occurred under Section 16.2 hereof; and
(11) as necessary to avoid liens in the event the Company fails to pay any
Taxes, assessments, penalties or fees imposed by any Governmental Body, including a
court of law, then the Company authorizes the County to deduct and withhold or pay
over to the appropriate Governmental Body those unpaid amounts upon demand by the
Governmental Body.
SECTION 9.5. FINAL REQUISITION AND PAYMENT. (A) Final Requisition.
The Company shall prepare and submit to the County for purposes of demonstrating Final
Completion:
(1) a certificate certifying (a) that all applicable Design/Build Work has been
completed in accordance herewith and with the Design Requirements, (b) that
Acceptance of the Facility has occurred, and (c) all other conditions of Final Completion
have occurred or been achieved; and
(2) a final Requisition.
The final Requisition shall enclose:
i. AIA Document G707 (Consent of Surety Company to Final Payment)
certifying the Surety agrees that final payment of the Fixed Design/Build Price shall not
relieve the Surety of any of its obligations under the Construction Payment and
Performance Bond;
u. a contractor's affidavit regarding settlement of claims and complete and
legally effective releases or waivers acceptable to the County in the full amount of the
Design/Build Price, or if any Subcontractor refuses or fails to furnish such release or
waiver, a bond or other security acceptable to the County to indemnify the County
against any payment claim; and
iii. a list of all pending property damage and personal injury or death
insurance claims arising out of or resulting from the Design/Build Work, identifying the
claimant and the nature of the claim.
(B) Final Payment. If based on the Authorized Representative's
(1) observation of the Design/Build Work, (2) final inspection, and (3) review of the final
Requisition and other documents required by subsection (A) of this Section, the Authorized
Representative is satisfied that conditions for Final Completion have been satisfied, the
Authorized Representative shall, within 30 days after receipt of the final Requisition, furnish to
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the County and the Company the Authorized Representative's recommendation of final
payment and Final Completion. If the Authorized Representative is not satisfied, the
Authorized Representative shall return the final Requisition to the Company, indicating in
writing the reasons for not recommending final payment, in which case the Company shall
make the necessary corrections and resubmit the final Requisition.
(1) County Concurrence. If the County concurs with the Authorized
Representative's recommendation of final payment, the County will, within 15 days, file
a written notice of final completion of the Facility and notify the Company and the
Authorized Representative of such acceptance. Within 60 days after filing such notice,
the County shall pay to the Company the balance of the Design/Build Price, subject to
any withholdings and those other provisions governing final payment specified herein.
(2) County Non-Concurrence. If the County does not concur with the
Authorized Representative's determination, the County will return the Requisition to the
Company, through the Authorized Representative, indicating in writing its reasons for
refusing final payment and Final Completion. The Company shall promptly make the
necessary corrections and resubmit the Requisition to the Authorized Representative.
The County's written determination shall bind the Company, unless the Company
delivers to the County, through the Authorized Representative, written notice of claim
within 30 days after receipt of that determination.
(3) Partial Release of Final Payment. If recommended by the Authorized
Representative, the County may, upon receipt of the Company's final Requisition and
without terminating the Construction Period, make payment of the balance due for that
portion of the Design/Build Work fully completed and accepted, if Final Completion is
significantly delayed due to Uncontrollable Circumstances. If the balance to be held by
the County for the Design/Build Work not fully completed or corrected is less than the
retainage on that work, the affidavits specified in subsection (A) of this Section and the
release or waiver, or Construction Payment and Performance Bond, shall be furnished
as required and submitted by the Company. Payment of the balance due shall be made
under the provisions for final payment, but shall not constitute a wavier of claims. The
County shall pay with reasonable promptness any amounts deducted from the final
payment, upon resolution of the claims for which the amounts were withheld.
Final payment does not constitute a waiver by the County of any rights relating to the
Company's obligations under the Service Contract. Final payment constitutes a wavier of all
claims by the Company against the County other than those previously filed in writing with the
County on a timely basis and still unsettled.
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County of Hawaii Solid Waste Reduction Facility Article IX - Payment of the Design/ Build
Price
SECTION 9.6. PAYMENT OF SUBCONTRACTORS. The Company shall pay
its Subcontractors in accordance with Applicable Law.
SECTION 9.7. AUDIT BOOKS AND RECORDS. (A) Audit. All payments
whatsoever by the County to the Company and all Design/Build Work of the Company shall be
subject to audit at any time by the County.
(B) Construction Books and Records. The Company shall prepare and
maintain proper, accurate and complete books and records regarding the Design/Build Work
and all other transactions related to the design, permitting, construction, shakedown and
testing of the Design/Build Work, including all books of account, bills, vouchers, invoices,
personnel rate sheets, cost estimates and bid computations and analyses, Subcontracts,
purchase orders, time books, daily job diaries and reports, correspondence, and any other
documents showing all acts and transactions in connection with or relating to or arising by
reason of the Design/Build Work, this Service Contract, any Subcontract or any operations or
transactions in which the County has or may have a financial or other material interest
hereunder. All financial records of the Company shall be maintained in accordance with
generally accepted accounting principles. The Company and its Subcontractors shall comply
with state audit requirements and federal audit requirements to the extent that the County
receives federal funding for this project. The Company shall produce such construction books
and records (except for the Company's financial ledgers and statement) for examination and
copying in connection with the costs of Change Orders, Extra Design/Build Work,
Uncontrollable Circumstance costs, or other costs in addition to the Fixed Design/Build Price
under circumstances in which such costs are required to be Cost Substantiated pursuant to
this Service Contract, for which the County may be responsible hereunder with respect to work
performed prior to Acceptance except with respect to costs incurred in connection with work
performed on a fixed price basis. The Company shall keep and maintain all such construction
books and records for the Facility separate and distinct from other records and accounts, and
shall maintain such books and records for at least six years after Acceptance.
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ARTICLE X
DELIVERY AND RECEIPT OF WASTE
SECTION 10.1. DELIVERY OF PROCESSIBLE WASTE BY THE COUNTY. (A)
Annual Waste Delivery Commitment. Beginning on the Acceptance Date and throughout the
Term of this Service Contract, the County shall deliver or cause to be delivered to the Facility
73,000 Tons of Processible Waste each Contract Year (prorated for partial Contract Years) (the
"Annual Waste Delivery Commitment"). The County will be credited toward its Annual Waste
Delivery Commitment, any quantity of Processible Waste which it had available for delivery to
the Facility (up to the amount of the Company's Billing Period Throughput Guarantee) but
which was either not delivered or not accepted as a result of the Facility's not being able to
accept such waste for any reason other than County Fault, including Uncontrollable
Circumstances; provided, however, that any quantity above the Company's rejection rights set
forth in item (2) of subsection 10.2(A) shall not be so credited. In the event the Facility is
unable to accept Processible Waste as a result of Uncontrollable Circumstances, the County
shall use reasonable efforts to work with the Company to schedule deliveries of Processible
Waste once the Facility is able to receive such quantities such that the actual annual deliveries
are maximized; provided, however, that the County has no obligation to deliver Processible
Waste in excess of its Annual Waste Delivery Commitment. Deliveries shall be made, without
cost to the Company, as and when Processible Waste is generated and collected for disposal
within the County. The County shall cooperate with and assist the Company in preparing
anticipated, non-binding annual delivery schedules under Section 10.3 hereof.
(B) Charges to Registered Haulers. For the disposal service provided
hereunder the Company shall be paid the Service Fee by the County as provided in Article XV
hereof. The County may from time to time establish fees or charges to be imposed upon
Registered Haulers for the right to deliver Processible Waste to the Facility. Any such fee or
charge shall be collected by the County through a billing system under which the County shall
be responsible for collection enforcement.
(C) Source Separation. Nothing in this Service Contract shall be deemed to
restrict the right of the municipalities, residents, businesses or organizations in the County to
practice source separation for the recovery, recycling or composting of waste nor the right of
the County to conduct, sponsor, encourage or require such source separation. No reduction in
the amount of Processible Waste generated in the County and delivered to the Facility by or on
behalf of the County which may result from any such source separation or recycling program
shall cause the County any liability hereunder except as set forth in paragraph (D) below. The
existence of such a source separation or recycling program shall not limit or otherwise affect
any Performance Guarantee of the Company hereunder, notwithstanding (1) any change in the
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recoverable energy content of the Processible Waste delivered to the Facility which may result
i
from any such program, except to the extent provided in Section 15.11 hereof, or (2) any other
change in the composition of Processible Waste delivered to the Facility which may result from
such a program.
(D) Shortfall Damages. In the event the County fails to deliver or cause to be
delivered the Annual Waste Delivery Commitment in any Contract Year (after taking into
consideration any credits described in Section 10.1(A)), the County shall pay waste delivery
shortfall damages calculated in accordance with Section 15.11(C).
SECTION 10.2. RECEIPT OR REJECTION OF WASTE BY THE COMPANY. (A)
Receiving and Processing of Solid Waste. The Company shall receive and process at the
Facility all Processible Waste delivered to the Facility by or on behalf of the County in each
Contract Year; provided, however, that the Company may refuse delivery of (i) any Non-
Processible Waste, (ii) any Processible Waste delivered at hours outside the Receiving Time and
mutually agreed upon times of delivery; (iii) any Processible Waste which cannot be combusted
or stored at the Facility on account of a partial or complete shutdown caused by Uncontrollable
Circumstances or County Fault, and (iv) any Processible Waste delivered by or on behalf of the
County in any Billing Period or in any Contract Year in excess of the applicable Billing Period
Throughput Guarantee or the Annual Facility Throughput Guarantee (the "Rejection Rights").
Notwithstanding the foregoing, the Company shall use commercially reasonable efforts to
accept and combust all Processible Waste delivered to the Facility by or on behalf of the
County. The Company shall provide for the transportation and disposal of any Processible
Waste which the Company is permitted to reject and fails to combust at the Facility under this
Section ("Excess Processible Waste"). Cost of such transportation and disposal of Excess
Processible Waste shall be included as a reimbursable fee in accordance with Article XV.
(B) Annual Facility Throughput Guarantee. The "Annual Facility
Throughput Guarantee" for the first Contract Year shall be [76,200] Tons of Processible Waste
per Contract Year for Processible Waste with an average annual Higher Heating Value of 4,800
Btu per pound (as adjusted due to variation in annual average Higher Heating Value in
accordance with Appendix 2). Following the end of each Contract Year the actual Higher
Heating Value of the processed Processible Waste will be calculated pursuant to Appendix 2
and such Higher Heating Value will be used to determine the Annual Facility Throughput
Guarantee for purposes of settling any damage payments for the preceding year and
determining Interim damage payments for the following Contract Year. For any Contract Year
in which the average annual Higher Heating Value of combusted Processible Waste is less than
3,800 Btu per pound or is greater than 7,000 Btu per pound as determined by using all
available data, the provisions of Section 15.11 hereof shall apply in determining the Annual
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County of Hawaii Solid Waste Reduction Facility Article X - Delivery and Receipt of Waste
Facility Throughput Guarantee and whether and to what extent any Facility Performance
Obligations shall be payable.
(C) Billing Period Throughput Guarantee. The Billing Period Throughput
Guarantee for each Billing Period in each Contract Year shall be as follows:
Billing Billing Period
Period Throughput Guarantee (Tons)
January [ ]
February
[ ]
March [ ]
April [ ]
May [ ]
June [ j
July [ ]
August [ ]
September [ ]
October [ ]
November [ ]
December [ ]
TOTAL [ ]
The Billing Period Throughput Guarantee with respect to any Billing Period may be changed at
the request of either party subject to the approval of the other party which, with respect to
changes requested prior to the commencement of the applicable Contract Year, may not
unreasonably be withheld and with respect to changes requested during the applicable
Contract Year may be withheld in the sole discretion of the approving party. In any event, the
sum of the Billing Period Throughput Guarantees in each Contract Year shall be equal to the
Annual Facility Throughput Guarantee.
(D) Determination of Billing Period Throughput Surpluses and Deficiencies.
If in any Billing Period the Billing Period Throughput exceeds the Billing Period Throughput
Guarantee, the amount of the excess shall constitute a "Billing Period Throughput Surplus"
hereunder. If in any Billing Period the Billing Period Throughput is less than both the
Available Billing Period Processible Waste and the Billing Period Throughput Guarantee, and
the failure of the Company to process the Available Billing Period Processible Waste in amounts
up to the Billing Period Throughput Guarantee is due to reasons other than Uncontrollable
Circumstances or County Fault, there shall be a Billing Period Throughput Deficiency. The
"Billing Period Throughput Deficiency" shall be an amount equal to (1) the lesser of (a) the
Billing Period Throughput Guarantee or (b) the Available Billing Period Processible Waste,
minus (2) the Billing Period Throughput. For any Billing Period in which the Available Billing
Period Processible Waste is equal to or less than the Billing Period Throughput Guarantee, and
the Company processes all of the Available Billing Period Processible Waste, there shall be
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County of Hawaii Solid Waste Reduction Facility Article X - Delivery and Receipt of Waste
neither a Billing Period Throughput Surplus nor a Billing Period Throughput Deficiency. The
i
determinations under this subsection as to Billing Period Throughput Surpluses and Billing
Period Throughput Deficiencies shall be used to calculate Throughput Performance Liquidated
Damages under Section 15.9 hereof.
(E) Determination of Tonnage Combusted. As a convention for determining
the Tonnage combusted by the Facility for the purposes of this Section, the weighing records
pertaining to the receipt of Solid Waste at the Facility and the removal of any non-processed
Processible Waste, Non-Processible Waste and Residue from the Facility shall be utilized. The
difference between the amounts so received and removed shall be deemed to constitute the
Tonnage combusted by the Facility during such period.
(F) Billing Period Processing Record. The County shall furnish the Company
with a record, within 15 days after each Billing Period, of the Available Billing Period
Processible Waste, the Billing Period Throughput, the Billing Period Throughput Guarantee for
such Billing Period, and any Billing Period Throughput Deficiency or Billing Period Throughput
Surplus for such Billing Period.
(G) Disposal of Bypass Processible Waste. The Company agrees after the
Acceptance Date to transfer and transport all Bypass Processible Waste from the Facility to an
Alternative Waste Disposal Site selected by the Company from time to time and to dispose of all
such Bypass Processible Waste at the Alternative Waste Disposal Site. The Company shall pay
all costs and expenses incurred in connection with the transfer, transportation and disposal of
such Bypass Processible Waste to or at an Alternative Waste Disposal Site, regardless of the
transportation distance and cost and regardless of the disposal cost involved. In the event the
Alternative Waste Disposal Site is the County Landfill, the disposal costs charged to the
Company will be 200 percent of the tipping fee in effect from time to time. In the event of a
protracted shutdown of the Facility for any reason, the Company shall exercise its
commercially reasonable efforts to use the Facility to provide transfer station operations in
order to facilitate the disposal of Bypass Processible Waste.
(H) Alternative Waste Disposal Site. An "Alternative Waste Disposal Site", as
used herein, means a sanitary landfill, waste-to-energy facility or other solid waste
management facility which as applicable (1) is operated in accordance with good engineering
practice, (2) if a landfill, is constructed of a double liner or, with the County's consent, a single
composite liner, (3) is located in the United States, (4) is not, without the consent of the County
given in its absolute discretion, located in the County, (5) does not appear on any federal or
State list of sites, such as but not limited to the National Priority List or the CERCLIS list
under CERCLA, maintained for the purpose of designating landfills which are reasonably
expected to require remediation on account of the release or threat of release of Hazardous
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County of Hawaii Solid Waste Reduction Facility Article X - Delivery and Receipt of Waste
Material, (6) is being operated at the time of disposal or delivery in accordance with Applicable
Law as evidenced by the absence of any regulatory sanctions, notices of violations or significant
enforcement actions with respect to material environmental matters, (7) has committed by
agreement or obligation of the owner or operator to receive Processible Waste originating in the
County, and (8) is not under any executive or judicial order, barring receipt of waste from any
region which includes the County. No waste-to-energy facility shall qualify as an Alternative
Waste Disposal Site unless the site at which the ash residue therefrom is disposed also
qualifies as an Alternative Waste Disposal Site hereunder. The Company shall provide
evidence satisfactory to the County, prior to the use of any Alternative Waste Disposal Site and
from time to time as requested thereafter, that the intended disposal location (and any related
ash residue site) conforms with the requirements of this subsection. Any Alternative Waste
Disposal Site shall be selected by the Company and, except as specifically provided herein,
shall not require the approval of the County so long as the site conforms with each of the
criteria set forth in this subsection.
(I) Segregation of Non-Processible Waste. The Company shall be
responsible for segregating the Processible Waste from Non-Processible Waste received at the
Facility. Non-Processible Waste shall be handled, used or sold for beneficial re-use, or
disposed of by the Company in accordance with Applicable Law. The Company shall use its
best reasonable efforts to dispose of such material in a manner that will result in the least cost
to the County, unless the County consents otherwise, in writing, in order to promote recycling
or a beneficial use of such material. The Company shall receive payment for the disposition of
Non-Processible Waste as set forth in Article XV. To the extent that Hazardous Material is
delivered to the Facility, such waste will be handled in accordance with Section 10.8 herein
and Applicable Law.
(J) Storage. No Processible Waste may be stored outside the tipping floor (if
permitted by Applicable Law) and the receiving pit of the Facility, except during an emergency
and then only in conformity with Applicable Law. The Company will expeditiously remedy any
nuisance conditions caused by its operation, including, without limitation, any noise or odor
constituting a nuisance.
SECTION 10.3. DELIVERY SCHEDULES. PROCEDURES AND
REQUIREMENTS. (A) Annual Operating Plan. At least 60 days prior to the commencement of
each Contract Year, the County and the Company shall establish an Annual Operating Plan for
the delivery, receipt and processing of Solid Waste at the Facility. The Annual Operating Plan
also shall provide for such matters as the parties may mutually deem necessary or desirable in
the implementation of this Service Contract. The County and the Company may revise the
Annual Operating Plan for the current Contract Year at any time by mutual consent. The
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County of Hawaii Solid Waste Reduction Facility Article X - Delivery and Receipt of Waste
Annual Operating Plan shall not limit the Company's obligation to receive and process Solid
i
Waste delivered by the County in accordance with this Service Contract.
(B) Registered Haulers. The County will compile and provide the Company
with the following information about all Registered Haulers: name and address; identification
number; area of collection and transportation; and status as a contract operator or municipal
or district hauler for the County. The County shall require that all Registered Haulers be
reasonably bonded or insured and follow reasonable safety procedures developed by the
Company with respect to activities at the Facility.
(C) Delivery Procedures. Deliveries of Solid Waste hereunder shall be
substantially in accordance with written procedures established by mutual consent of the
parties. Such delivery procedures shall reflect the waste transportation and disposal practices
within the County and the Facility's design and operating requirements, as in effect at the time
of delivery, and shall not unreasonably either impede the ability of the County to deliver or
cause the efficient delivery of all Solid Waste which the Company is obligated to receive from
the County hereunder or impair the ability of the Company to receive and process such Solid
Waste in accordance with this Service Contract. The delivery and receipt of Solid Waste shall
be arranged by the parties so as to avoid, delivery vehicle stacking on roadways outside the
Site.
(D) Spillage of Solid Waste. The Company shall carry on its activities in the
Facility in such manner that solid waste will not blow, leak or spill onto the Site or elsewhere,
and the Company shall bear the cost of cleaning up and correcting any damage resulting from
any blowing, leakage or spillage caused by its employees, agents or Subcontractors and shall
make and file any reports with respect thereto required under this Service Contract and
Applicable Law. Nothing in this subsection 10.3(E) shall limit the right of the Company to
recover such costs from any Registered Hauler causing any spillage or damage.
(E) Release of Hazardous Substances. The Company, after first notifying the
County, shall be responsible to fulfill all notification or reporting requirements associated with
any release of any substance into the environment (from the Facility or the Site) as required by
Applicable Law or by any licenses, permits and approvals issued by any regulatory agencies for
the Facility, including, but not limited to, the notification or reporting of releases of Hazardous
Material. The Company shall prepare a memorandum evidencing such notification or reporting
and provide copies thereof to the County, along with any documents provided to the relevant
regulatory agency regarding such release.
SECTION 10.4. RECEIVING AND OPERATING HOURS. (A) Receiving Time.
On and after the Acceptance Date, the Company shall keep the Facility open for receiving
Processible Waste (1) from 7:00 A.M. until 4:15 P.M. Monday through Sunday (other than New
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County of Hawaii Solid Waste Reduction Facility Article X - Delivery and Receipt of Waste
Year's Day, Thanksgiving Day and Christmas Day) for general deliveries, and (2) during such
additional hours as may be required to accommodate the usual special collection practices of
the County on account of any holiday or to accommodate the County's disposal requirements
on account of a special event, a natural disaster, or an emergency condition (the "Receiving
Time"). The Company shall, based on the operating history at the Facility, provide the County
with reasonable notice of anticipated additional hours of operation which may be necessary
and cost associated with such additional hours of operations. The County shall reimburse the
Company for any additional labor costs, including overtime charges, incurred as a result of
extending the Receiving Time in accordance with item (2) above, except in the event of the
extension of the Receiving Time is made at the request of the Company.
(B) Operating Hours. On and after the Acceptance Date, the Company shall
operate the Facility on a continuous basis in a manner which is consistent with the
Performance Guarantees and sound operating practice, except as affected by Uncontrollable
Circumstances.
SECTION 10.5. WEIGHING RECORDS. (A) Measurement Devices and
Procedures. The County shall operate and maintain truck scales, installed in accordance with
Appendix 8 hereto and calibrated to the accuracy required by Applicable Law, to weigh all
vehicles delivering waste to and removing waste from the Facility. The County shall require
that each vehicle delivering or removing waste hereunder shall have a current and accurate
tare weight permanently indicated and conspicuously displayed on the exterior of the vehicle in
a location designated by the Company. The Company in its reasonable discretion may require
the revalidation of the tare weight of any vehicle or the reweighing of unloaded vehicles. Each
loaded vehicle shall be weighed, indicating gross weight, tare weight, date and time and vehicle
identification on a weight record. The Company shall have the right to monitor weighing
activities and to review scale records upon reasonable request and shall have the right to
request a retesting of the scales. If the scales are found to be accurate within the requirements
of Applicable Law, the Company shall pay for the cost of such retesting. If, upon conclusion of
testing, the test indicates that the scale did not meet the accuracy requirements required by
Applicable Law, adjustments of scale records actually recorded since the previous test will be
negotiated by the County and the Company, and payments due hereunder shall be adjusted
consistent with such adjustments of scale records.
(B) Estimates During Incapacitation. To the extent that weighing facilities
are incapacitated or are being tested, the County shall estimate the quantity of waste delivered
on the basis of truck volumes and estimated data obtained through historical information.
These estimates shall take the place of actual weighing and shall be the basis for records
during the scale outage.
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County of Hawaii Solid Waste Reduction Facility Article X - Delivery and Receipt of Waste
(C) Weight Records. The County shall maintain daily records of the number
of Tons of Solid Waste delivered to the Facility, the number of Tons of Processible Waste
processed, rejected or removed (rightfully or wrongfully) by the Company, Non-Processible
Waste removed from the Facility and Residue, indicating, in each case in and to the extent
practicable, the date and time of arrival or departure of each vehicle transporting such Solid
Waste or Residue, with appropriate identification of each vehicle, and the disposition of all
such materials. All such records shall be in such form as the Company shall reasonably
request for billing and statistical purposes, and the County shall maintain copies of all
individual vehicle delivery weight records for a period of at least six years.
(D) Representative to Monitor Compliance. Each of the County and the
Company shall have the right, at its expense, to station its representative at any weighing
facilities maintained by the other to monitor the other's compliance with the provisions of this
Section 10.5.
SECTION 10.6. NON-COUNTY PROCESSIBLE WASTE. (A) Prohibition on
Receipt of Non-County Processible Waste. Non-County Processible Waste shall not be
knowingly received at the Facility without the consent of the County, notwithstanding the
periodic capacity of the Facility to process such waste.
(B) Waiver of Prohibition. The County shall have the right to deliver or
arrange for the delivery of non-County Processible Waste to the Facility. In the event the
County exercises the right to deliver or arrange for the delivery of such waste, any non-County
Processible Waste delivered to the Facility will be deemed to constitute County Processible
Waste for all purposes of this Service Contract.
SECTION 10.7. TEMPORARY SHUTDOWNS. (A) Notice. If the operation of
the Facility is temporarily reduced, curtailed or shut down for any reason so that the Company
is unable to receive, process and combust all or any portion of the Processible Waste scheduled
to be received, processed and combusted in accordance with Section 10.2 hereof, the Company
shall at the earliest possible time advise the County as to the nature and probable duration
thereof and the expected effect thereof on operations at the Facility.
(B) Effect of Temporary Shutdown. During any period in which combustion
operations of the Facility is temporarily reduced, curtailed or shut down, the obligations of the
parties hereto to deliver and to receive, process and combust waste, and to pay the Service Fee
therefor, shall continue, subject to the provisions hereof, including, without limitation,
Section 10.2 and Articles XIV, XV and XVI hereof, as applicable.
SECTION 10.8. HAZARDOUS MATERIAL. The parties acknowledge that the
Facility has not been designed and is not intended to be used in any manner or to any extent
as a facility for the handling, transportation, storage or disposal of Hazardous Material.
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Neither the Company nor the County shall countenance or knowingly permit the delivery of
I
Hazardous Material to the Facility or the Site or the storage of Hazardous Material at the
Facility for more than 90 days. The Company shall comply with the waste screening practices
and procedures set forth in subsection 10.2(J) hereof and Appendix 8 hereto. The County and
the Company shall use their best reasonable efforts to identify any person responsible for
delivery to or abandonment at the Facility of any Hazardous Material and to require such
person to bear all costs and liabilities associated with the removal, transportation and disposal
thereof. The County shall diligently enforce all Applicable Laws of the County prohibiting the
delivery of Hazardous Material to the Facility and both the County and the Company shall take
all reasonable steps necessary to seek the enforcement of all other Applicable Law regarding
such delivery. If the Company discovers that Hazardous Material has been delivered to the
Facility, it shall give immediate notice of such discovery to the County and the County shall
immediately notify all other appropriate governmental authorities as required by Applicable
Law. If the Company is unable to immediately notify the appropriate County officials of the
discovery of Hazardous Material at the Site, then the Company shall immediately notify all
other appropriate governmental authorities as required by Applicable Law. Immediately upon
receipt of such notification, the Company shall, in the most expeditious manner possible in the
circumstances cause such Hazardous Material to be cleaned up, removed from the Facility and
transported to and disposed of at a landfill or other disposal site selected by the Company in its
sole discretion, and lawfully permitted to receive and dispose of such Hazardous Material.
Unless the presence of such Hazardous Material at the Facility is due to Company Fault, the
reasonable costs associated with the removal, transportation and disposal of such Hazardous
Material shall be passed through to the County pursuant to Section 15.5(B).
SECTION 10.9. LIMITATION ON FOSSIL FUELS OR COMPANY-SUPPLIED
MATERIAL. No material other than Processible Waste delivered by or on behalf of the County
shall be combusted by the Facility, except (1) other waste arranged for by the Company with
the consent of the County, (2) fossil fuels combusted to maintain furnace temperature in
compliance with Applicable Law, and (3) fossil fuel necessary to conduct Start-up Operations
and Shutdown Operations; provided, however, that no fossil fuel firing shall be conducted at
levels which would cause the Facility to lose its qualifying facility status under the Public
Utility Regulatory Policies Act or to cause the provisions of 40 CFR 60 Subpart Db (Standards
of Performance for Industrial-Commercial-Institutional Steam Generating Units) to apply to the
Facility.
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ARTICLE XI
OPERATION AND MANAGEMENT
SECTION 11.1. COMPANY OBLIGATIONS GENERALLY. (A) Operation and
Management Responsibility. Commencing on the Acceptance Date, the Company shall operate
and manage the Facility on a 24-hour per day, 7-day per week basis, and shall receive Solid
Waste delivered, separate Non-Processible Waste from Processible Waste, combust Processible
Waste and transport and dispose of Non-Processible Waste and Residue, and otherwise operate
and manage the Facility so as to comply with the Contract Standards applicable to such
activities, each of the plans pertaining thereto set forth in the Appendices, and the other terms
and conditions of this Service Contract.
(B) Transfer and Application of Industry Experience. The Company shall use
all reasonable efforts to transfer to and apply at the Facility the benefit of the advances and
improvements in technology, management practices and operating efficiencies which are
developed by the Company, the Guarantor and their Affiliates through the operation of their
solid waste reduction businesses and industry research and development activities conducted
over the full Term of this Service Contract, and which are useful and appropriate in the good
faith judgment of the Company for carrying out the Contract Services in a manner which
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improves upon the Contract Standards. The Company and the County shall meet annually to
discuss technological advances which could be utilized at the Facility. Implementation of
technological advances requested by the County which are proprietary in nature or which
require capital modifications to the Facility shall be subject to reasonable compensation by the
County.
SECTION 11.2. COUNTY OBLIGATIONS GENERALLY. The County, in
addition to the obligations it has accepted elsewhere in this Service Contract, shall:
(1) Make available to the Company upon request all information relating to
the Facility which is in the possession of the County and material to the Company's
performance hereunder;
(2) Grant and assure the Company access to the Facility and the Reload
Building for the performance of its obligations hereunder; and
(3) Pay the Service Fee and any other amounts due the Company in
accordance with the terms and conditions of this Service Contract.
SECTION 11.3. SERVICE COORDINATION AND CONTRACT
ADMINISTRATION. (A) Company's Facility Manager. The Company shall appoint a full-time
manager of the Facility (the "Facility Manager") who shall be licensed, trained, experienced and
proficient in the management and operation of solid waste reduction systems comparable to
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the Facility, shall have an operator's certification and be otherwise appropriately certified under
Applicable Law, and whose sole employment responsibility shall be managing the Company's
performance of the Operation Services. The Company acknowledges that the performance of
the individual serving from time to time as the Facility Manager will have a material bearing on
the quality of service provided hereunder, and that effective cooperation between the County
and the Facility Manager will be essential to effectuating the intent and purposes of this
Service Contract. Accordingly, not fewer than 30 days prior to the date on which any candidate
for Facility Manager from time to time during the Term of this Service Contract is proposed by
the Company to assume managerial responsibility for the Facility, the Company shall:
(1) provide the County with a comprehensive resume of the candidate's licenses, training,
experience, skills and approach to management and customer relations; and (2) afford the
County an opportunity to interview the candidate with respect to such matters. The County
shall have the right within 7 days following such interview to disapprove the hiring of the
proposed candidate, which right of disapproval shall not be exercised unreasonably. The
Company shall replace the Facility Manager at the request of the County, after notice and a
reasonable opportunity for corrective action, in the event the County determines and
demonstrates that the Facility Manager has acted incompetently or unprofessionally. The
Company acknowledges that the County has an interest in the Company maintaining stability
at the Facility Manager position and the Company agrees to utilize commercially reasonable
efforts to maintain such stability.
(B) Company's Senior Supervisors. The Company shall appoint and inform
the County from time to time of the identity of the corporate officials of the Company and
Wheelabrator Technology, Inc. with senior supervisory responsibility for the Facility and the
performance of this Service Contract (the "Senior Supervisors"). The Company shall promptly
notify in writing to the County of the appointment of any successor Senior Supervisors. The
Senior Supervisors shall cooperate with the County in any reviews of the performance of the
Facility Manager which the County may undertake from time to time, and shall give full
consideration to any issues raised by the County in conducting such performance reviews.
(C) County's Contract Representative. The County shall designate an
individual or firm to administer this Service Contract and act as the County's liaison with the
Company in connection with the Operation Services (the "Contract Representative"). The
Company understands and agrees that the Contract Representative has only limited authority
with respect to the implementation of this Service Contract, and cannot bind the County with
respect to any Service Contract amendment or to incurring costs in excess of the amounts
appropriated therefor. Within such limitations, the Company shall be entitled to rely on the
written directions of the Contract Representative.
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(D) County Approvals and Consents. When this Service Contract shall
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require any approval or consent by the County to a Company submission, request or report,
the approval or consent shall be given by the County's Contract Representative in writing and
such writing shall be conclusive evidence of such approval or consent, subject only to
compliance by the County with the Applicable Law that generally governs its affairs. Unless
expressly stated otherwise in this Service Contract, and except for requests, reports and
submittals made by the Company that do not, by their terms or the terms of this Service
Contract, require a response or action, if the County does not find a request, report or
submittal acceptable, it shall provide written response to the Company describing its objections
and the reasons therefor within 30 days of the County's receipt thereof. If no response is
received, the request, report or submittal shall be deemed rejected and the Company may
resubmit the same, with or without modification. Requests, reports and submittals that do not
require a response or other action by the County pursuant to some specific term of this Service
Contract shall be deemed acceptable to the County if the County shall not have objected
thereto within 30 days of the receipt thereof.
(E) Communications and Meetings. On or before the Acceptance Date, the
Company shall inform the County of the telephone, cellular telephone, fax and beeper
numbers, e-mail address and other means by which the Facility Manager and Senior
Supervisors may be contacted. The Facility Manager shall be reachable 24 hours a day, seven
days a week and shall, at the County's request, attend weekly meetings with the County's
Department of Environmental Management staff. The County shall furnish to the Company
comparable communications information with respect to the County's Contract Representative.
The Company shall meet with the County each month to review the contents of the operations
reports required to be prepared pursuant to Section 11.13. The Facility Manager shall
personally attend the monthly operations meetings with the County, and the Facility Manager,
and if requested by the County, the Senior Supervisors and representatives of the Guarantor
shall personally attend all special meetings which the County may reasonably request from
time to time, to review management, operational, performance and planning matters arising
with respect to the Facility and this Service Contract. It is the desire of the parties to resolve
disputes without third party intervention and, therefore, prior to instituting the dispute
resolution methods set forth in Article XVI, senior officials from the Company and the County
shall meet to attempt to resolve any such dispute. Any issue in dispute which the parties are
unable to resolve at such monthly and special meetings may be referred to Non-Binding
Mediation, as provided for in Section 16. 11, and the resolution of any issues resolved at such
meetings or through Non-Binding Mediation shall be reflected in a Contract Administration
Memorandum,
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SECTION 11.4. OPERATION AND MAINTENANCE MANUAL. (A) Company
Responsibili ty. The Operation Services shall be performed substantially in compliance with the
Operation and Maintenance Manual and the Company's computerized maintenance
management system ("CMMS"). The Company shall keep the Operations and Maintenance
Manual current and shall supply the County with appropriate updates, supplements or
revisions thereto annually or at any earlier time that a material change to the Operation and
Maintenance Manual is made, to be reviewed and commented on in accordance with
Appendix 8. Such updates shall preserve the standards set forth in the initial Operation and
Maintenance Manual. Notwithstanding any such review and comment by and discussion with
the County, the Operation and Maintenance Manual shall remain, at all times, the
responsibility of the Company. Neither the review of or comment upon, nor the failure of the
County to comment upon, the Operation and Maintenance Manual shall: (1) relieve the
Company of any of its responsibilities under this Service Contract; (2) be deemed to constitute
a representation by the County that operating the Facility pursuant to the Operation and
Maintenance Manual will cause the Facility to be in compliance with this Service Contract or
Applicable Law; or (3) impose any liability upon the County.
(B) Supplements for Capital Modifications. The Company shall prepare
supplements and revisions to the Operation and Maintenance Manual which are required due
to the design, construction and installation of all Capital Modifications. Such supplements and
revisions shall be provided, reviewed and approved in the same manner as provided in this
Section with respect to the initial Operation and Maintenance Manual. The cost and expense
of such supplements and revisions shall be borne by the Company, except with respect to
supplements and revisions necessitated by Capital Modifications directed by the County or
required by a Change in Law or other Uncontrollable Circumstance.
SECTION 11.5. STAFFING AND PERSONNEL TRAINING. (A) Staffine. The
Company shall staff the Facility during the Term of this Service Contract with qualified
personnel who meet the licensing and certification requirements of the State in accordance
with the Contract Standards. The Company shall discipline or replace, as appropriate, any
employee of the Company or any Subcontractor engaging in unlawful, unruly or objectionable
conduct. The Company shall notify the County of any material change in staffing levels and
positions from time to time, and shall not make any such material change if the new staffing
level would adversely affect the ability of the Company to provide the Contract Services.
(B) Trainin¢. The Company shall be responsible for training the Facility
Manager, operations supervisors and other Company personnel. No later than 90 days prior to
Substantial Completion, the Company shall submit to the County for its review and comment a
personnel training program which the Company proposes to institute in order to ensure that
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the Facility is managed and operated in accordance with this Service Contract. Such personnel
training program shall include, at a minimum, the personnel training guidelines, policies and
procedures established: (1) by the DOH and the EPA; (2) in any Governmental Approval or
operator's certificate required or issued by any Governmental Body; and (3) in any other
Applicable Law.
SECTION 11.6. ELECTRICITY SUPPLY AND CONSUMPTION. The County
shall have the exclusive right to arrange for the supply of electricity to the Facility, and to
negotiate and establish electric rates with the supplier. The Company shall cooperate with and
assist the County in making such arrangements, and the County shall give reasonable
consideration to any requests and recommendations made by the Company as to the terms
and conditions of electricity supply. The Company shall pay all electricity bills and the County
shall reimburse the Company for all electricity costs up to the Guaranteed Maximum
Electricity Utilization as set forth in Section 15.15. The Company shall operate the Facility in a
manner which minimizes, to the maximum extent reasonably practicable in light of its
obligation to provide the Contract Services, charges for electricity use, demand, transmission
and collection which are reimbursable by the County hereunder.
SECTION 11.7. SAFETY AND SECURITY. (A) Safetv. The Company shall
maintain the safety of the Facility at a level consistent with the Contract Standards. Without
limiting the foregoing, the Company shall: (1) take all reasonable precautions for the safety of,
and provide all reasonable protection to prevent damage, injury or loss by reason of or related
to the operation of the Facility to, (a) all employees working at the Facility and all other persons
who may be involved with the operation, construction, maintenance, repair and replacement of
the Facility, (b) all visitors to the Facility, (c) all materials and equipment under the care,
custody or control of the Company on the Site, (d) other property constituting part of the
Facility, and (e) County Property located on or in the immediate vicinity of the Facility Site;
(2) establish and enforce all reasonable safeguards for safety and protection, including posting
danger signs and other warnings against hazards and promulgating safety regulations; (3) give
all notices and comply with all Applicable Laws relating to the safety of persons or property or
their protection from damage, injury or loss; (4) designate a qualified and responsible employee
whose duty shall be the supervision of Facility safety, the prevention of fires and accidents and
the coordination of such activities as shall be necessary with federal, State and County
officials; (5) operate all equipment in a manner consistent with the manufacturer's safety
recommendations; (6) provide for safe and orderly vehicular movements; and (7) develop and
carry out a Site-specific safety program, including employee training and periodic inspections,
designed to implement the requirements of this Section.
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(B) Securi . The Company shall be responsible for the security of the
Facility, and shall maintain suitable fences, gates and locks at the Facility in accordance with
the Design Requirements. The Company shall guard against and be responsible for all damage
or injury to such properties caused by trespass, negligence, vandalism or malicious mischief of
third parties. The Company shall comply with EPA and DOH guidelines regarding security
measures for terrorist threats and activities.
SECTION 11.8. COMPLIANCE WITH APPLICABLE LAW. (A) Compliance
Obligation. The Company shall perform the Contract Services in accordance with Applicable
Law, and shall cause all Subcontractors to comply with Applicable Law. The Company shall
comply with the terms of all Governmental Approvals and other Applicable Law pertaining to
the Facility, air emissions and odor, and Residue notwithstanding the fact that the Company
may not be a permittee or co-permittee with respect to some or all of such Governmental
Approvals. The Company's obligations under this Section shall apply regardless of the extent
to which the County complied with Applicable Law with respect to the Facility prior to the
Construction Commencement Date.
(B) Sampling. Testing and Laboratory Work. The Company shall perform
and provide and bear the cost of, all sampling, laboratory testing and analyses, and quality
assurance and quality control procedures and programs required by the Contract Standards.
All testing laboratories shall be certified by the appropriate State agency and EPA, as
applicable, for the applicable test, shall be operated in accordance with Good Industry Practice,
and shall be audited and monitored by the Company for compliance with EPA standard test
methods. All sampling and test data shall be available for review by, and reported to, the
County in accordance with Section 11.13 and Appendix 8. The Company explicitly assumes
the risk of incorrect sampling, testing and laboratory work and any consequences thereof or
actions taken or corrections needed based thereon, whether such work is performed by itself or
third parties, both as to failures to detect and as to false detections. The Company shall permit
the County, at the County's expense, to perform any testing, sampling or analytical procedure
it deems appropriate, using the Facility or otherwise. To the extent County testing interferes
with Company performance, the Company shall be entitled to performance relief; provided,
however, if such testing determines that the Facility was not operating in accordance with the
Contract Standards, no relief will be afforded the Company and the Company shall reimburse
the County the cost of such tests. The County will make available to the Company all dates
and test results obtained through the County initiated testes.
(C) Investigations of Non-Compliance. In connection with any actual or
alleged event of non-compliance with Applicable Law, the Company shall, in addition to any
other duties which Applicable Law may impose: (1) fully and promptly respond to all inquiries,
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investigations, inspections, and examinations undertaken by any Governmental Body;
(2) attend all meetings and hearings required by any Governmental Body; (3) provide all
corrective action plans, reports, submittals and documentation required by any Governmental
Body; (4) in conjunction with the County, communicate in a timely and effective manner with
the general public as to the nature of the event, the impact on the public, and the nature and
timetable for the planned remediation measures; and (5) immediately upon receipt thereof,
provide the County with a true, correct and complete copy of any written notice of violation or
non-compliance with Applicable Law, and true and accurate transcripts of any verbal notice of
non-compliance with Applicable Law, issued or given by any Governmental Body. The
Company shall furnish the County with an immediate written notice describing the occurrence
of any event or the existence of any circumstance which does or may result in any such notice
of violation or non-compliance to the extent the Company has knowledge of any such event or
circumstance, and of any Legal Proceeding alleging such non-compliance.
(D) Fines, Penalties and Remediation. Except to the extent excused by
Uncontrollable Circumstances or County Fault, in the event that the Company or any
Subcontractor fails at any time to comply with Applicable Law with respect to the Facility, air
emissions, odor, Residue or other environmental or operating condition, the Company shall,
without limiting any other remedy available to the County upon such an occurrence and
notwithstanding any other provision of this Service Contract: (1) immediately correct such
failure and resume compliance with Applicable Law; (2) bear all Loss-and-Expense of the
Company and the County resulting therefrom; (3) pay or reimburse the County for any
resulting damages, fines, assessments, levies, impositions, penalties or other charges; (4) make
all Capital Modifications and changes in operating and management practices which are
necessary to assure that the failure of compliance with Applicable Law will not recur; and
(5) comply with any corrective action plan filed with or mandated by any Governmental Body in
order to remedy a failure of the Company to comply with Applicable Law.
(E) No Nuisance Covenant. The Company shall keep the Facility neat, clean
and litter-free at all times, ensure that the operation of the Facility does not create any odor,
litter, noise, fugitive dust, vector, excessive light or other adverse environmental effects
constituting, with respect to each of the foregoing, a nuisance condition under Applicable Law.
Should any such nuisance condition occur which is not caused by Uncontrollable
Circumstances, the Company shall immediately take appropriate steps to remedy the condition
and continue to implement a plan to fully remedy the condition so that the condition is fully
remedied as soon as possible, pay any fines or penalties relating thereto, make all Capital
Modifications and changes in operating and management practices necessary to prevent a
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recurrence of the nuisance condition, and indemnify and hold harmless the County from any
Loss-and-Expense relating thereto in the manner provided in Section 17.3.
SECTION 11.9. OPERATING GOVERNMENTAL APPROVALS.
(A) Applications and Submittals. Except as otherwise expressly set forth in Appendix 1, the
Company shall make all filings, applications and reports necessary to obtain and maintain all
Governmental Approvals required to be made, obtained or maintained by or in the name of the
Company or the County under Applicable Law in order to operate the Facility. With respect to
Governmental Approvals which are required to be obtained in the name of the County, the
Company shall: (1) prepare the application and develop and furnish all necessary supporting
material; (2) supply all data and information which may be required; (3) familiarize itself with
the terms and conditions of such Governmental Approvals; (4) attend all required meetings and
hearings; and (5) take all other action necessary in obtaining, maintaining, renewing, extending
and complying with the terms of such Governmental Approvals. All permit and filing fees
required in order to obtain and maintain Governmental Approvals for the Contract Services
shall be paid by the Company, except otherwise expressly set forth in Appendix 1, regardless of
the identity of the applicant, except Governmental Approvals required in connection with an
Uncontrollable Circumstance. The Company shall agree to be named as a co-permittee on any
Governmental Approval if so required by the issuing Governmental Body or the County. The
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Company shall not disadvantage the County in any application, data submittal or other
communication with any Governmental Body regarding Governmental Approvals. The final
terms and conditions of any Governmental Approval shall be subject to the County's approval,
exercisable in its sole discretion.
(B) Data and Information. All data, information and action required to be
supplied or taken in connection with the Governmental Approvals required for the Contract
Services shall be supplied and taken on a timely basis considering the requirements of
Applicable Law and the responsibilities of the County as the legal and beneficial owner of the
Facility and primary permittee. The data and information supplied by the Company to the
County and all regulatory agencies in connection therewith shall be correct and complete in all
material respects, and shall be submitted in draft form to the County sufficiently in advance to
allow full and meaningful review and comment by the County. The Company shall be
responsible for any schedule and cost consequences which may result from the submission of
materially incorrect or incomplete information supplied by the Company. To the extent a
Governmental Body requires the County to supply information, the County shall be responsible
for any schedule or cost consequences which may result from the submission of materially
incorrect or incomplete information supplied by the County.
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(C) Non-Compliance and Enforcement. The Company shall report to the
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County, immediately upon obtaining knowledge thereof, all violations of the terms and
conditions of any Governmental Approval or Applicable Law pertaining to the Facility. The
County shall have the right independently to enforce compliance with this Contract regarding
the requirements of any Governmental Approval regardless of whether a concurrent or different
regulatory enforcement action has been undertaken by any other Governmental Body. The
failure of the Company to comply with any Governmental Approval shall constitute an event of
non-compliance of this Service Contract as well as an event of non-compliance with the
Governmental Approval.
(D) Reports to Governmental Bodies. The Company shall prepare all periodic
and annual reports, make all information submittals and provide all notices to all
Governmental Bodies required by all Governmental Approvals and under Applicable Law with
respect to the Facility, including sampling and testing results and monthly discharge
monitoring reports. Such reports shall contain all information required by the Governmental
Body, and may be identical to comparable reports prepared for the County, if such are
acceptable to the Governmental Body. The Company first shall provide the County with copies
of such regulatory reports for review, comment and signature, as applicable, at least ten days
before their filing with the Governmental Body and, in any case, within 15 days after the end of
each month, and then with the Governmental Body. If the ten day time period set forth in the
preceding sentence cannot be practically complied with, the Company will provide such reports
as soon as possible and the County will provide comments as soon as possible thereafter.
(E) Potential Regulatory Change. The Company shall keep the County
regularly advised as to potential changes in regulatory requirements affecting the solid waste
reduction industry and the Facility, and provide recommended responses to such potential
changes so as to mitigate any possible adverse economic impact on the County should a
Change in Law actually occur.
SECTION 11.10. COUNTY ACCESS TO FACILITY. The County and any
regulatory body that has jurisdiction over the County and the Operation Services shall have the
right at any time, on a 24-hour per day, 365-day per year basis, to visit and inspect the Facility
and observe the Company's performance of the Contract Services without prior notice. The
Company shall permit and facilitate access to the Facility for such purposes by County
personnel and by agents and contractors designated by the County. Keys or passwords, as
applicable, for the facilities or structures comprising the Facility shall be provided to the
County's Contract Representative by the Company in accordance with the Company's physical
security plan and key control program. All visitors shall comply with the Company's
reasonable operating and safety procedures and rules, and shall not interfere with the
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Company's operations of the Facility. When visiting any portion of the Facility that is staffed
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by the Company at the time of the visit, all County employees, agents and contractors shall
announce themselves to the staff and Company employees may elect to accompany any County
employees, agents and contractors during the visit. The Company shall maintain a visitors' log
during the Term of this Service Contract and shall require that all visitors to the Facility (other
than visitors on organized tours or Company personnel) sign in and sign out in the visitors' log.
SECTION 11.11. ASSET AND FINANCIAL RECORDS. (A) Facility Records.
The Company, on and after the Acceptance Date, shall establish and maintain a computerized
information system with respect to the Facility for operations and maintenance data and
process control, including the information necessary to verify calculations made pursuant to
this Service Contract and demonstrate compliance with the Contract Standards. The Company
shall promptly provide the County, upon reasonable request, with copies of all operations and
maintenance data and other information kept by the Company in its performance of the
Contract Services.
(B) Availability of Facility Records to County. The Company shall make
available to the County upon County request all operations, maintenance, performance,
Residue management, process control and similar records and data as are available to the
Company's Facility Manager. The County shall have real time, continuous computer access to
continuous emissions monitoring data (and hard copy reproduction capability) through
information systems installed in accordance with the Design Requirements.
(C) Record Documents. The Company shall maintain at the Facility and
make available to the County upon request for review and copying: (1) all designs, drawings,
blueprints, plans, specifications and "as-built" or record drawings and documents pertaining to
the Facility copies of which were delivered to the County by the Company pursuant to
Appendix 7; and (2) similar documents relating to any Capital Modifications. The Company
shall keep current all such records to show any changes to the Facility made by the Company
in the performance of the Contract Services.
(D) Financial Records. The Company shall prepare and maintain proper,
accurate, complete and current financial books, records and accounts, in accordance with
generally accepted accounting principles, with respect to all aspects of the Facility and
Contract Services, including direct and indirect personnel expenses, Subcontractor costs, the
costs of material, equipment and supplies, maintenance, repair and replacement items,
operating expenses and overhead. These financial records shall be in form and substance
sufficient to support all financial reporting, including Cost Substantiation, required hereunder.
In the event the Company fails to prepare or maintain any books, records or accounts as
required under this Section, the Company shall not be entitled to any requested payments or
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adjustment for which Cost Substantiation was required hereunder to the extent such failure
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prevented Cost Substantiation. The Company shall keep the relevant portions of the books,
records and accounts maintained with respect to each Contract Year until at least the sixth
anniversary of the last day of each such Contract Year. For those circumstances that require
Cost Substantiation under Section 19.6, the Company shall make such books and records
available to the County for inspection, audit and copying upon reasonable notice during
business hours to the extent necessary to allow the County to determine to its reasonable
satisfaction the accuracy, completeness, currency and propriety of any charge or request for
payment hereunder. The Company shall not be required to provide the County any income
statement showing profit or loss, but recognizes that profit and loss information may become
discernible to the County through the Cost Substantiation process. The provisions of this
Section shall survive the termination of this Service Contract.
(E) Company Financial Reports. Unless the Company is organized as a sole
purpose company (dedicated to this project), the Company shall furnish the County, within 90
days after the end of each Contract Year, consolidating balance sheets and income statements
for the Company attached to the audited year and financial statements reported upon by the
Company's independent public accountant. If applicable, the Company shall also furnish the
County with copies of the quarterly and annual reports and other filings of the Company filed
with the Securities and Exchange Commission.
(F) Inspection, Audit and Adjustment. The County shall have the right to
perform or commission an inspection or independent audit of the financial information
required to be kept under this Section, subject to possible reimbursement as provided in this
Section. If an inspection or audit reveals that the Company has overstated the Service Fee,
then the Company shall, at the election of the County, either immediately reimburse to the
County or offset against future Service Fee payments, as a Service Fee adjustment, the
overstated amount, in addition to interest, from the time such amount was initially overpaid
until reimbursed or credited to the County, at the Prime Rate. If an inspection or audit
contemplated by this Section discloses an overpayment of the Service Fee to the Company of
1% or more of the total amount that should have been properly paid by the County during the
period audited, then the Company shall, in addition to the reimbursement or credit of such
overpaid amount, with interest, reimburse the County for any and all Fees and Costs incurred
in connection with the inspection or audit. The foregoing remedies shall be in addition to any
other remedies the County may have, including remedies for an Event of Default by the
Company. If an inspection or audit reveals that the Company has understated the Service Fee,
the County shall pay the Company the understated amount.
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SECTION 11.12. PERIODIC REPORTS. (A) Monthly Operations. The
Company shall provide the County with monthly operations reports no later than 15 days after
the end of each Billing Period in a form approved by the County, in accordance with the
provisions set forth in Appendix 8.
(B) Annual Operations and Maintenance Reports. The Company shall
furnish the County, within 30 days after the end of each Contract Year, an annual report in
accordance with the provisions set forth in Appendix 8, including a summary of the
information contained in the monthly operations reports. The Company shall also perform and
report to the County, as part of its annual operations report, the results of a comprehensive
performance evaluation which reviews and analyzes the administrative, operational and
maintenance practices employed in the management of the Facility.
(C) Default Reports. The Company shall provide to the County, immediately
after the receipt thereof, copies of any written notice of a material default, breach or non
compliance received or sent under or in connection with any material contract entered into by
the Company in connection with the Contract Services.
(D) Permit Communications and Reports. The Company shall provide to the
County copies of all communications and reports furnished to any Governmental Body
pursuant to this Section simultaneously with their submittal to the Governmental Body.
(E) Periodic Audits. The County, or the Independent Engineer selected by
the County, shall have the right, but not the obligation, to conduct periodic audits and annual
inspections of the Facility to assess whether (1) the Company has performed all necessary
maintenance, repairs and replacements (including major repairs and replacements), and (2) the
Facility is operating in compliance with Applicable Law and the performance standards
specified herein. Such inspections and audits may include, but shall not be limited to,
(1) walk-through inspections of the Facility, (2) useful life engineering audits of machinery,
equipment, vehicles, and structures constituting the Facility, and (3) actual performance tests
on equipment, processes, and the Facility. Any such audits and inspections shall not interfere
with the Company's performance obligations hereunder.
SECTION 11.13. EMERGENCIES. (A) Emergency Plan. Upon Substantial
Completion, the Company shall have provided the County with a plan of action to be
implemented in the event of an emergency, including fire, weather, environmental, health,
safety and other potential emergency conditions. The plan shall: (1) provide for appropriate
notifications to the County and all other Governmental Bodies having jurisdiction and for
measures which facilitate coordinated emergency response actions by the County and all such
other appropriate Governmental Bodies; (2) specifically include spill prevention and response
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measures; and (3) assure the timely availability of all personnel required to respond to any
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emergency (no later than two hours during nights, weekends or holidays). The emergency plan
shall be reviewed by the parties annually as part of the review of the annual operations report,
and updated when necessary.
(B) Emergency Action. Notwithstanding any requirement of this Service
Contract requiring County approval or consent to reports or submittals, if at any time the
Company determines in good faith that an emergency situation exists such that action must be
taken to protect the safety of the public or its employees, to protect the safety or integrity of the
Facility, or to mitigate the immediate consequences of an emergency event, then the Company
shall take all such action it deems in good faith to be reasonable and appropriate under the
circumstances. As promptly thereafter as is reasonable, the Company shall notify the County
of the event at an emergency phone number from a list supplied by the County, and the
Company's response thereto. The cost of the Company's response measures shall be borne by
the Company except to the extent the emergency event was caused by an Uncontrollable
Circumstance, in which case the County shall bear the cost.
SECTION 11.14. CONTRACT ADMINISTRATION. (A) Administrative
Communications. The parties recognize that a variety of contract administrative matters will
routinely arise throughout the Term of this Service Contract. These matters will by their
nature involve requests, notices, questions, assertions, responses, objections, reports, claims,
and other communications made personally, in meetings by phone, by mail and by electronic
and computer communications. The purpose of this Section is to set forth a process by which
the resolution of the matters at issue in such communications, once resolution is reached, can
be formally reflected in the common records of the parties so as to permit the orderly and
effective administration of this Service Contract.
(B) Contract Administration Memoranda. The principal formal tool for the
administration of matters arising under this Service Contract between the parties shall be a
"Contract Administration Memorandum". A Contract Administration Memorandum shall be
prepared, once all preliminary communications have been concluded, to evidence the
resolution reached by the County and the Company as to matters of interpretation and
application arising during the course of the performance of their obligations hereunder. Such
matters may include, for example: (1) claims for an increase or decrease of the Service Fee or
other demands for compensation or performance based on any provision of this Service
Contract; (2) issues as to the meaning, interpretation, application or calculation to be made
under any provision hereof; (3) the specific details and terms of any Change Order; (4) notices,
waivers, releases, satisfactions, confirmations, further assurances and approvals given
hereunder; and (5) other similar contract administration matters.
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(C) Procedures. Either party may request the execution of a Contract
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Administration Memorandum. When resolution of the matter is reached, a Contract
Administration Memorandum shall be prepared by or at the direction of the County reflecting
the resolution. The Contract Administration Memorandum shall be numbered, dated, signed
by the Contract Representative of each party, and co-signed by a Senior Supervisor for the
Company and by the County's Director of Environmental Management. The County and the
Company each shall maintain a parallel, identical file of all Contract Administration
Memoranda, separate and distinct from all other documents relating to the administration and
performance of this Service Contract.
(D) Effect. The executed Contract Administration Memoranda shall serve to
guide the ongoing interpretation and performance of this Service Contract. Any material
change, alteration, revision or modification of this Service Contract, however, shall be
effectuated only through a formal Service Contract amendment authorized, approved or ratified
by resolution of the governing body of the County and properly authorized by the Company.
SECTION 11.15. COST REDUCTION AND SERVICE IMPROVEMENT. In the
event either party offers the other party any idea, approach or concept for lowering the
Company's cost, reducing the County's Service Fee or total costs, or improving the Company's
service, the other party shall reasonably consider and explore the development and
implementation of the concept. Neither party shall be obligated to negotiate or to agree to
amend this Service Contract to effectuate any such idea, approach or concept except in its sole
discretion and upon terms and conditions acceptable to it.
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ARTICLE XII
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PERFORMANCE
SECTION 12.1. FACILITY PERFORMANCE GENERALLY. (A) Reliance. The
Company acknowledges that the County, in processing Solid Waste, is providing an essential
public service, and in complying with its obligations under Applicable Law is relying on the
performance by the Company of its obligations hereunder.
(B) Curtailments and Shutdowns. If the operation of the Facility for any
reason is temporarily reduced, curtailed or shut down so that the Company is unable to receive
and reduce any quantity of Solid Waste in accordance herewith, the Company shall
immediately advise the County as to the nature and probable duration thereof and the
expected effect on the operation of the Facility, and take all steps necessary to remedy the
curtailment or shutdown and to resume full performance hereunder as soon as possible.
(C) Limitations on Company Rights. The Company shall not accept Solid
Waste other than Solid Waste delivered to the Facility by or on behalf of the County and shall
not use the Facility for any purpose other than the purposes contemplated hereby. The
Company shall not impose a fee or charge on any third party for the processing of Solid Waste
or any other waste. The only compensation payable by the County to the Company for
providing the Operation Services shall be the Service Fee payable by the County hereunder.
SECTION 12.2. ANNUAL FACILITY THROUGHPUT GUARANTEE. The
Company shall operate the Facility at all times of operation subsequent to start-up and
Acceptance Testing so that it meets the Annual Facility Throughput Guarantee in accordance
with Section 10.2 and Appendix 2.
SECTION 12.3. ANNUAL ELECTRICITY PRODUCTION GUARANTEE. The
Company shall operate the Facility at all times of operation subsequent to start-up and
Acceptance Testing so that it meets the Annual Electricity Production Guarantee [AS
PROPOSED ON COMPANY'S PROPOSAL].
SECTION 12.4. ENVIRONMENTAL GUARANTEE. (A) General. The
Company shall operate the Facility at all times of operation subsequent to start-up and
Acceptance Testing so that it continuously meets the Environmental Guarantee,
notwithstanding periodic variations in the composition of Processible Waste which is
combusted by the Facility. In the event the Company fails to comply with the Environmental
Guarantee, it shall be obligated to perform the Environmental Performance Obligations set
forth in subsection 12.4(B) hereof. The County shall be entitled to enforce the Environmental
Performance Obligations as provided herein notwithstanding the provisional or final
Acceptance of the Facility at the Minimum Acceptance Standard.
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(B) Company Non-Compliance with Environmental Guarantee. If at any time
subsequent to the start-up and Acceptance Testing of the Facility, the Company fails to comply
with the Environmental Guarantee for any reason other than Uncontrollable Circumstances or
County Fault, the Company shall (except as provided in subsection 12.4(D) hereof), at its own
cost and expense and without relief under any other Performance Guarantee: promptly notify
the County of any such non-compliance; provide the County promptly with copies of any
notices sent to or received from the DOH or USEPA with respect to any permit violations; pay
any resulting damages, fines, assessments or other charges resulting therefrom; and take any
action (including without limitation making all repairs, replacements, Capital Modifications or
operating changes) necessary in order to (1) comply with the Environmental Guarantee and
continue or resume performance hereunder, (2) eliminate the cause of preventable recurrences
of non-compliance with the Environmental Guarantee, and (3) avoid or prevent substantial,
repeated occurrences of non-compliance with the Environmental Guarantee. Time shall be of
the essence in taking all such corrective action. The payment and performance obligations
described in this subsection (C) shall constitute the "Environmental Performance Obligations."
The Company shall continuously operate the equipment installed in the Facility pursuant to
the Design Requirements for the purpose of controlling emissions and measuring
environmental emissions on a continuous, computerized basis, and shall keep complete and
accurate records of such operations and measurements. The records so maintained shall be
used to determine-compliance by the Company with the Environmental Guarantee.
(C) Environmental Guarantee. Permits and Uncontrollable Circumstances.
The parties acknowledge that the Environmental Guarantee has been established prior to the
negotiation and issuance of permits, licenses and approvals by the appropriate regulatory
agencies, and that the Environmental Guarantee shall be complied with irrespective of the
terms and conditions contained in the required licenses, permits and approvals. In the event
any appropriate regulatory agency imposes conditions to the issuance of any such license,
permit or approval which are more stringent than those constituting the Environmental
Guarantee, and such conditions of greater stringency cannot be complied with without
additional expense or delay, then the imposition of such conditions shall be considered to be
an Uncontrollable Circumstance. If the Company seeks and the County grants relief from the
Environmental Guarantee in any respect in connection with the negotiation of permit terms
and conditions with appropriate regulatory agencies, the relief afforded by the County shall be
taken into account in the determination of any performance adjustments to be made hereunder
on account of such an Uncontrollable Circumstance.
SECTION 12.5. RESIDUE GUARANTEE. (A) General. The Company shall
operate the Facility at all times of commercial operation subsequent to shakedown and
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Acceptance Testing so that it continuously meets the Residue Guarantee, notwithstanding
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periodic variations in the composition of Processible Waste which is combusted by the Facility.
In the event the Company fails to comply with the Residue Guarantee, it shall be obligated to
perform the obligations set forth in subsections 12.5(B) and (C) hereof.
(B) Residue Performance Liquidated Damages. The Company shall pay the
incremental costs and expenses incurred by the County in any Billing Period in connection
with payment of any applicable fines and the disposal of Residue which costs and expenses
would not otherwise have been incurred, to the extent that (1) such incremental costs and
expenses are incurred as a result of a failure of the Residue to meet the Residue Guarantee
(including, without limitation, the costs of transporting and disposing of any additional
quantities of Residue which would not have been produced had the Residue Guarantee been
achieved) which failure is due to any reason other than Uncontrollable Circumstances or
County Fault, or (2) any Residue constitutes Hazardous Material as a result of the processing
by the Company of Hazardous Material which the Company discovered prior to processing or
did not discover due to its gross negligence or willful misconduct or its unexcused failure to
observe the waste screening protocol set forth in Appendix 8 hereto ("Residue Performance
Liquidated Damages"). In determining such incremental costs, the disposal costs of the
County Landfill shall be calculated at 200 percent of the then applicable tipping fee.
(C) Procedures for Determining Compliance with Residue Guarantee. The
parties hereto agree that if the County determines at any time that the Company has failed or
may have failed to comply with the Residue Guarantee, the County shall promptly notify the
Company of such determination. If the Company concurs in such determination or fails to
respond to the County within seven days from receipt of such notice, the Company shall be
deemed to have concurred in the Residue Performance Liquidated Damages payable with
respect thereto. If the Company does not so concur, it shall within such seven-day period
either provide the County and the County Engineer with Facility performance records
indicating compliance with the Facility Residue Guarantee or notify the County and the County
Engineer that it wishes to test the Facility' s Residue. Such test shall be conducted in
accordance with the procedures established with respect thereto described in Appendix 6
hereto, and the cost thereof shall be borne by the Company if the Residue does not meet the
Residue Guarantee upon testing for reasons other than Uncontrollable Circumstances or
County Fault. If the test indicates compliance with the Residue Guarantee or if the Company
fails to meet the Residue Guarantee upon testing due to Uncontrollable Circumstances or
County Fault, the, costs of the respective test shall be borne by the County. The Company
shall, within 15 days of completion of such test, furnish the County and the County Engineer
with a certified written report describing the results of such test, and the County shall
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determine, within five days of its receipt of such report, whether it concurs in the results of
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such test. If the County indicates that it concurs with the Company's conclusion, based either
on such performance records or test, then the County shall be deemed to have approved and
accepted the Company's certification. If the County indicates that it does not concur with such
certification and the County and the Company cannot agree within ten days thereafter as to
whether the Company's results were correct, either parry may elect to refer the dispute to the
Independent Engineer for non-binding mediation in accordance with Section 16.11 hereof.
SECTION 12.6. ENVIRONMENTAL TESTING. The County shall have the
right, at any time, to re-test the Facility or to require the Company to re-test the Facility for
compliance with the Environmental Guarantee and to require the Company to test the Residue
for compliance with the Residue Guarantee. Any such test shall be conducted in accordance
with the procedures established hereunder for the conduct of the Acceptance Tests and if such
test demonstrates that the Facility is operating in accordance with the Environmental
Guarantee or the Residue Guarantee or both, then the costs incurred by the Company in
performing the test showing such compliance shall be paid to the Company by the County as a
Facility Pass Through Cost. If such test shows that the Facility is operating out of compliance
with either the Environmental Guarantee or the Residue Guarantee or both, then the costs of
the test showing the inability to comply with the applicable guarantee shall be borne by the
Company unless such failure to comply is a result of an Uncontrollable Circumstance, in which
case the County shall pay to the Company the costs it incurred in performing the test as a
Facility Pass Through Cost. Testing shall be conducted in a manner which minimizes
interference with the Company's performance of its obligations under this Service Contract,
and the Performance Guarantees shall be adjusted appropriately to reflect any such
interference unless such testing shows non-compliance on the part of the Company which is
not excused by Uncontrollable Circumstances.
SECTION 12.7. COUNTY REMEDIES FOR NON-COMPLIANCE WITH
PERFORMANCE GUARANTEES. (A) Remedies. If the Company fails to comply with any
Performance Guarantee and is not excused from performance as provided in Section 17.2, the
Company shall, without relief under any other Performance Guarantee, and in addition to any
other remedy provided herein, allowed by Applicable Law or required by a Governmental Body:
(1) promptly notify the County within 24 hours of the Company's having knowledge of any such
non-compliance; (2) promptly provide the County within 24 hours with copies of any notices
sent to or received from the EPA, the DOH or any other Governmental Body having regulatory
jurisdiction with respect to any violations of Applicable Law; (3) pay liquidated damages or have
its Service Fee reduced in the amounts provided for herein, or if no liquidated damages are
provided for, reimburse the County for its Cost Substantiated third party costs incurred as a
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result of such non-compliance; (4) pay any other resulting damages, fines (discretionary or
mandatory in nature), levies, assessments, impositions, penalties or other charges resulting
therefrom; (5) take any action (including, without limitation, making all repairs and
replacements and operating and management practices changes) necessary in order to comply
with such Performance Guarantee, continue or resume performance hereunder and eliminate
the cause of, and avoid or prevent the recurrence of non-compliance with such Performance
Guarantee; (6) promptly prepare all public notifications required by Applicable Law, and
submit such notifications for publication; and (7) assist the County with all public relations
matters necessary to adequately address any public concern caused by such non-compliance,
including but not limited to, preparation of press releases, attendance at press conferences,
and participation in public information sessions and meetings.
(B) Performance Testing. The County, at any time, may require a
performance test to be conducted by the Company, at the County's cost and expense, to
demonstrate that the Facility is operating in compliance with Applicable Law and the
Performance Guarantees. The performance tests shall be conducted in the manner provided in
Appendix 6. If the test is not successfully passed, the Company shall reimburse the County
and, at its own cost and expense, make all necessary repairs and replacements, including
major repairs and replacements, and the test shall be re-performed at the Company's sole cost.
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The County Engineer will conduct or verify each test and inspection. The Company shall be
provided performance relief to the extent such testing interferes with the Company's
performance obligations herein; provided, however, that if such testing demonstrates that a
Performance Guarantee has not been met, no such relief shall be afforded the Company and
the Company shall be responsible for the cost of such testing.
SECTION 12.8. RESIDUE REMOVAL, TRANSPORT AND DISPOSAL;
PAYMENT. The Company shall store Residue at the Facility in enclosed containers in
accordance with the Design Requirements. The Company shall transport or cause to be
transported Residue to the Designated Residue Disposal Site designated by the County in a
safe and environmentally sound manner and in accordance with Applicable Law, and deposit
Residue at the Designated Residue Disposal Site or transfer Residue to the operator of the
Designated Residue Disposal Site for deposit therein by such operator. The costs of
transporting Residue for disposal at the County Landfill shall be borne by the Company. The
initial Designated Residue Disposal Site shall be the County's Pu'uanahulu Landfill. In the
event that the Company is required to deliver Residue to a Designated Residue Disposal Site
other than the Pu uanahulu Landfill, for reasons other than the Company's failure to comply
with its obligations hereunder, the Service Fee shall be adjusted to reflect the increased or
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decreased cost to the Company in connection with the transportation of Residue to such site.
Cost of disposal of Residue shall be borne by the County.
SECTION 12.9. ACCEPTABLE RESIDUE DISPOSAL SITE AND DESIGNATED
DISPOSAL SITE. (A) Acceptable Residue Disposal Site. No Residue shall be disposed of except
at an Acceptable Residue Disposal Site. An "Acceptable Residue Disposal Site", as used herein,
means either the County Landfill, a sanitary landfill, land application site or other waste
disposal or management facility, which, as applicable, (1) is operated in accordance with good
engineering practice, (2) is constructed of a single composite liner for monofilled Residue, or a
double liner (one liner of which is a composite liner) for disposal of mixed Residue and
municipal solid waste, (3) is located in the United States, (4) does not appear on any federal or
State list of sites, such as but not limited to the National Priority List or the CERCLIS list
under CERCLA, maintained for the purpose of designating landfills which are reasonably
expected to require remediation on account of the release or threat of release of Hazardous
Material, (5) is not under any executive or judicial order barring receipt of Residue from any
region which includes the County, and (6) does not otherwise expose the County or Company
to any material risk as a "generator" or "transporter" of waste under CERCLA or any similar
law, or to any material risk under product liability, tort, environmental impairment or any
similar law. "Acceptable Residue Disposal Site" also includes any means, method or process
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for the re-use or recycling of Residue employed consistently with Applicable Law. Any
Acceptable Residue Disposal Site shall be selected by the County and shall not require the
approval of the Company so long as the site conforms with each of the criteria set forth in this
subsection. If the Company objects to the Designated Residue Disposal Site on the ground
that the criteria of this subsection are not met, the County shall provide evidence satisfactory
to the Company prior to the commencement of any shipment of Residue (and from time to time
requested thereafter) to such Acceptable Residue Disposal Site that the intended disposal
location conforms with the requirements of this subsection.
(B) Required Disposal and County Approval; Designated Residue Disposal
Site. No Residue shall be disposed of except at a Designated Residue Disposal Site. A
"Designated Residue Disposal Site" shall be an Acceptable Residue Disposal Site that is
designated by the County.
(C) Changes in Designated Residue Disposal Site. The Company shall have
the right from time to time to change a Designated Residue Disposal Site and the Service Fee
will be adjusted to account for any additional or reduced costs to the Company as a result of
such change. The Company shall make a full information submittal to the County regarding
any such proposed change, and fully respond to all due diligence inquiries the County chooses
to make in the exercise of its right of approval.
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SECTION 12.10. TESTING. The Company shall conduct all sampling and
testing of Residue, air emissions and odor in accordance with the Contract Standards. The
tests shall be made at State certified laboratories to the extent required by the Contract
Standards and shall be conducted at the Company's sole cost and expense, except to the
extent such tests are required by a Change in Law or any other Uncontrollable Circumstance
and are not required under the terms hereof as of the Contract Date.
SECTION 12.11. ACCIDENTS DURING TRANSPORT. The Company shall give
notice to the County and all appropriate Governmental Bodies immediately upon the
occurrence of any accident involving transport of any Solid Waste for which the Company is
responsible hereunder (including Residue), and shall commence remedial action pursuant to
its contingency plan in accordance with Applicable Law and the Operating Protocol. In the
event of any such accident, the Company shall pay any resulting fines, assessments, penalties
or damages resulting therefrom.
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ARTICLE XIII
MAINTENANCE, REPAIR AND REPLACEMENT
SECTION 13.1. MAINTENANCE, REPAIR AND REPLACEMENT GENERALLY.
(A) Ordinary Maintenance. The Company shall perform all normal and ordinary maintenance
of the machinery, equipment structures, improvements and all other property constituting the
Facility, shall keep the Facility in good working order, condition and repair, in a neat and
orderly condition and in accordance with the Contract Standards, and shall maintain the
aesthetic quality of the Facility as originally constructed and in accordance with the Design
Requirements. The Company shall provide or make provisions for all labor, materials,
supplies, equipment, spare parts, Consumables and services which are necessary for the
normal and ordinary maintenance of the Facility and shall conduct predictive, preventive and
corrective maintenance of the Facility as required by the Contract Standards. The Company
shall keep maintenance logs in accordance with the Maintenance, Repair and Replacement
Plan set forth in Appendix 8.
(B) Repair and Maintenance of Site Grounds. The Company, in accordance
with the Contract Standards, shall keep the grounds of the Site in a neat and orderly condition
(including the cleanup of litter and debris on a daily basis or more frequently as required). The
Company shall also maintain and repair all Facility fencing and signage. In addition, the
Company shall provide lawn mowing, leaf raking, and brush cutting services for the Site.
(C) Major Maintenance. Repair and Replacements by the Comp The
Company shall perform all major maintenance, repairs and replacement of the machinery,
equipment, structures, improvements and all other property constituting the Facility during
the Term of this Service Contract required under the Contract Standards, including all
maintenance, repair and replacement which may be characterized as "major" or "capital" in
nature. The County's approval for any such maintenance, repair or replacement shall not be
required unless it constitutes a Capital Modification in which event the County shall have the
approval rights set forth in Article XIV. The obligations of the Company under this Article are
intended to assure that the Facility is fully, properly and regularly maintained, repaired and
replaced in order to preserve its long-term reliability, durability and efficiency, and that in any
event the Facility is returned to the County at the end of the Term in a condition which does
not require the County to undertake a significant overhaul or immediate replacements in order
to continue to provide reasonably priced and efficient solid waste reduction services. The
Company shall bear the cost and expense of all maintenance, repairs and replacements
required under this Article, including the cost and expense of any maintenance, repair or
replacement that may constitute a Capital Modification, unless otherwise provided in
Article XIV.
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SECTION 13.2. FACILITIES EVALUATIONS. (A) Initial and Final Inventory of
Vehicles, Rolling Stock, Snare Parts and Consumables. The Company shall, within 180 days
following the Acceptance Date, prepare an itemized inventory of all vehicles, rolling stock, spare
parts and Consumables having operational utility and present at the Facility as of the
Acceptance Date. In like manner, prior to the Termination Date, the Company shall prepare an
itemized inventory of all vehicles, rolling stock, spare parts and Consumables in stock at the
Facility and having operational utility at the Facility which are to be transferred to the County
on the Termination Date. The final inventory amount shall be compared to the initial
inventory. The value of any inventory shortfall shall be paid by the Company to the County on
or before the Termination Date. All rolling stock, spare parts and equipment must be turned
over in good working condition. Rolling stock, spare parts and equipment turned over in less
than good operating condition will not be included as part of the inventory as of the
Termination Date, and will be included in the calculation of the inventory shortfall. Rolling
stock, spare parts and Consumables which become obsolete during the course of the Term do
not have to be replaced provided that to the extent a functional replacement of such rolling
stock, spare parts or Consumables is utilized, such functional replacement rolling stock, spare
parts, or Consumables must be provided.
(B) Baseline Facility Record. Concurrently with the inventory and valuation
conducted pursuant to subsection (A) of this Section, the Company shall photograph and
prepare an itemized inventory of all property constituting the Facility, including records of
assets originally installed, manufacturer, identification number and original cost data. The
Baseline Facility Record shall reflect, based on the Fixed Design/Build Price and the Design
Requirements, the condition, functionality, value and useful life of the Facility as originally
constructed by the Company hereunder. The purpose of the Baseline Facility Record shall be
to establish an informational baseline for determining compliance by the Company with its
maintenance, repair and replacement obligations under this Article.
(C) Final Evaluation of the Facili ty. Not later than six months prior to the
Termination Date resulting from the expiration of this Service Contract or concurrently with
the Termination Date resulting from an early termination of this Service Contract, the
Company shall conduct a final evaluation of the Facility in accordance with the protocol
established in Appendix 16 and shall utilize standard utility property evaluation methods. In
connection with the final asset evaluation, the Company shall furnish the County with the
Facility Registry prepared pursuant to Appendix 16 and all data base information developed in
connection with the implementation of the Company's computerized maintenance management
system pursuant to Section 13.4. The evaluation of the Facility Structures shall determine and
establish the physical condition of the Facility Structures. The evaluation of the Facility
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Equipment shall determine and establish the weighted average useful life of the Facility
Equipment as of the date of evaluation (expressed as a single number of years, carried to one
decimal place), taking into account the performance capability and value of each piece of
Facility Equipment. The final evaluation shall exclude the value of any Capital Modifications to
the extent paid for by the County, directly or indirectly, other than those made on account of
Uncontrollable Circumstances.
(D) Required Condition of Facility Structures Upon Return to the County.
The Facility Structures shall be returned to the County in good condition, working order and
repair as when new, with ordinary wear and tear excepted as determined in light of the
Company's maintenance, repair and replacement obligations under Section 13.1. With respect
to the tipping floor, it shall be restored to within 1" of original grade with no cracking or
exposed rebar, and damaged or missing rebar shall be restored.
(E) Required Condition of Facility Equipment Upon Return to the County.
The Facility Equipment shall be returned to the County in a condition and state of repair such
that, in the aggregate, the weighted average useful life of the Facility Equipment at the end of
the Term is equal to or greater than five years. In the event the final audit establishes a
maintenance, repair and replacement weighted average useful life deficiency, the Company
shall, at the election of the County, either remedy the deficiency or make a cash payment to the
County sufficient to enable the County to remedy the deficiency. Notwithstanding any other
provision hereof, as of the Termination Date each piece of Major Equipment shall have a useful
life of not less than three years. For purposes of this Section 13.2, the useful life of equipment
shall be determined assuming industry standard maintenance cycles will be performed on the
equipment following the Termination Date. The parties acknowledge that the objective of this
Section 13.2 is to prevent the Company from deferring maintenance at the end of the Term. In
order to further this objective, the parties agree to meet prior to the end of the 17'x' Contract
Year to discuss and agree to an outgoing maintenance plan. Prior to such meeting, the
Company shall supply the County with all applicable maintenance records. The outgoing
maintenance plan shall be designed to ensure that when the Facility is turned over to the
County, it will be in good working order and in compliance with the requirements of this
Section 13.2(E).
(F) Capital Modifications. In the event that Capital Modifications
constituting Facility Structures are made during the Term, such assets shall be returned to the
County on the Termination Date in good condition, working order and repair, with ordinary
wear and tear excepted as determined in light of the Company's maintenance, repair and
replacement obligations under Section 13.1. In the event that Capital Modifications
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constituting Facility Equipment are made during the Term and are paid for by the County,
such Capital Modifications shall be disregarded in preparing the final evaluation of the Facility
pursuant to subsection (C) of this Section. The weighted average useful life of all such assets
as an aggregate which are paid for by the County, however, shall be separately determined in
the final asset evaluation, and shall be equal to or greater than the weighted average useful life
for Facility Equipment as provided in subsection (E) of this Section. Reasonable conventions
may be adopted in the weighting analysis to take account of the varying dates of installation.
Capital Modifications and other maintenance, repairs and replacements paid for by the
Company, including computer and other replacement systems installed based on advances in
technology, shall be included in the Facility evaluated in the final asset evaluation conducted
pursuant to subsection (C) of this Section, and their remaining useful life included in such
final evaluation.
(G) Effect of County Election to Renew. In the event the County elects to
renew this Service Contract at the end of the Initial Term, the final asset evaluation required by
this Section shall not be performed at the end of the Initial Term, but instead shall be
performed at the end of the Renewal Term. The standards established by this Section for the
condition of the Facility upon their return to the County shall apply notwithstanding any such
renewal.
(H) Disputes. In the event the County disputes any of the information or
conclusions presented by the Company pursuant to this Section, the County shall initially
notify the Company of such dispute and the parties shall use good faith efforts to resolve any
dispute. If the parties are unable to resolve the dispute within 30 days of the County's
notification, the County shall have the right to appoint an Independent Evaluator to review
such information or conclusions. The Company shall have the right to approve the County's
selection, the exercise of which shall not unreasonably be withheld or delayed. The expense of
the Independent Evaluator for all services performed pursuant hereto shall be borne equally by
the parties. The final determination by the Independent Evaluator as to any matter arising
under this Section which is in dispute between the County and the Company shall be final and
binding upon the parties.
SECTION 13.3. PERIODIC MAINTENANCE INSPECTIONS. (A) Annual
Maintenance Inspection. The County may, upon reasonable written notice, perform an
inspection of the Facility and relevant records of the Company each Contract Year to determine
compliance with the Contract Standards. The Company shall cooperate fully with the
inspections, which shall not interfere unreasonably with the Company's performance of the
i
Contract Services.
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(B) Full-Scale Inspections. Commencing upon the fourth year anniversary of
the Contract Date, there shall be a full-scale inspection and review of the state of repair,
working condition and performance capability of the Facility. The inspection and review shall
be performed by or on behalf of the County by the County Engineer at the County's expense,
and shall take place at such time as the County shall determine upon three months' written
notice to the Company. The principal purpose of the inspection and review shall be to permit
the County to ascertain on a comprehensive and focused basis the extent to which the Facility
is being properly maintained, repaired and replaced in accordance with the Contract
Standards. The inspection shall include a concurrent review of all relevant data, records and
reports. The Company shall cooperate fully with the inspections, which shall not interfere
unreasonably with the Company's performance of the Contract Services.
(C) Remediation. Based on the annual operations and maintenance reports
submitted by the Company pursuant to Section 11.13 or the annual or periodic inspections
and reviews conducted pursuant to this Section or any unscheduled inspection provided for
herein, the County may submit a statement to the Company detailing any deficiencies found
and requiring the Company to submit a plan of remediation. The remediation plan shall be
sufficient to reasonably demonstrate that, if implemented, the Facility will be promptly brought
into compliance with the requirements of this Article. If the County accepts the remediation
plan, the Company shall thereupon correct all deficiencies noted in accordance therewith.
Failing such corrective action within the schedule included in the plan, the Service Fee shall be
reduced by the amount of the County's estimated cost of remediation. Any disputes with
respect to the cause or amounts specified in the County's statement, not resolved to the
mutual satisfaction of the parties, shall be determined by Non-Binding Mediation as provided
in Section 16.11.
(D) Unscheduled Inspections. Nothing in this Section shall limit the
County's right, on an unscheduled basis, at any time to inspect the Facility and relevant
records of the Company to determine compliance with this Article.
SECTION 13.4. COMPUTERIZED MAINTENANCE MANAGEMENT SYSTEM.
The Company shall, in accordance with the Design Requirements, install, maintain, upgrade,
repair and replace, as appropriate throughout the Term, a computerized maintenance
management system capable of providing a record of repair and replacement of the Facility on
a detailed, item-by-item basis; scheduling, carrying out, monitoring and controlling predictive,
preventive and corrective maintenance programs; monitoring routine operations within the
Facility; issuing work orders and purchase orders; maintaining a spare parts inventory; and
issuing exception, equipment status and repair priority reports. The computerized
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maintenance management system shall be modified when appropriate during the Term to take
account of removals from and additions to the Facility. The Company shall utilize the
computerized maintenance management system to provide the County with documentation
which allows it to efficiently monitor compliance by the Company with its maintenance
obligations hereunder. The County shall have computer-based, read-only access to such
system. The Company shall permit all electronic data to be replicated and provided to the
County for review by the County. The Company shall provide a monthly disk to the County
which includes a download of the previous 3 months' activity and the maintenance
requirements to the upcoming 3 months.
SECTION 13.5. MAINTENANCE, REPAIR AND REPLACEMENT PLAN.
Appendix 8 contains the Company's plan for the maintenance, repair and replacement of the
Facility. This plan is intended to establish a minimum standard by which to measure the
Company's performance of its ongoing maintenance, repair and replacement obligations
hereunder, and to assure that no material deferred or sub-standard maintenance, replace and
replacement occurs. The Operation and Maintenance Manual shall incorporate a maintenance,
repair and replacement plan that is in substantial compliance with Appendix 8. The Company
shall adhere to the plan as incorporated in the Operation and Maintenance Manual, except
where it can demonstrate to the County that changes are reasonable under Goad Industry
Practice. The timing and extent of maintenance, repair and replacement activities performed
by the Company hereunder with respect to the Facility, taken as a whole, shall equal or exceed
the standard set for those activities by Appendix 8 as incorporated in the Operation and
Maintenance Manual. The Company shall also perform any additional maintenance, repair
and replacement work which is necessary in order to comply with the Contract Standards.
SECTION 13.6. WARRANTIES. During the Term of this Service Contract, the
Company shall be responsible for meeting the County's maintenance obligations under all
manufacturer's warranties on new equipment purchased and installed in the Facility by the
County or by the Company, and shall be the agent of the County in enforcing existing
equipment warranties and guarantees. The Company shall not be required to commence or
maintain any litigation with respect to such warranties or guarantees, but may do so in its
discretion. The Company shall cooperate with and assist the County if the County seeks to
enforce warranties and guarantees through litigation.
SECTION 13.7. LOSS, DAMAGE OR DESTRUCTION TO THE FACILITY. (A)
Prevention and Repair. The Company shall use care and diligence, and shall take all
appropriate precautions, to protect the Facility from loss, damage or destruction. The
Company shall report to the County and the insurers, immediately upon obtaining knowledge
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thereof, any damage or destruction to the Facility and as soon as practicable thereafter shall
submit a full report to the County. The Company shall also submit to the County within 24
hours of receipt copies of all accident and other reports filed with, or given to the Company by,
any insurance company, adjuster or Governmental Body. The parties shall cooperate so as to
promptly commence and proceed with due diligence to complete the repair, replacement and
restoration of the Facility to at least the character or condition thereof existing immediately
prior to the loss, damage or destruction, in accordance with and subject to the procedures set
forth in Article XIV and Article XVII, as applicable. The County shall have the right to monitor,
review and inspect the performance of any repair, replacement and restoration work by the
Company as if such work constituted Design/ Build Work hereunder.
(B) Insurance and Other Third-Party Payments. To the extent that any
repair, replacement or restoration costs incurred pursuant to this Section can be recovered
from any insurer or from another third-party, each party shall assist each other in exercising
such rights as it may have to effect such recovery. Each party shall provide each other with
copies of all relevant documentation at no cost to the County, and shall cooperate with and
assist the other party upon request by participating in conferences, negotiations and litigation
regarding insurance claims.
(C) Uninsured Costs. The County shall provide all funds necessary to pay
the costs of repairing, replacing and restoring the Facility in accordance with this Section and
all insurance proceeds and recoveries from third parties resulting from damage to or the loss or
destruction of the Facility shall be for the account of the County; provided, however, that such
costs not covered by insurance proceeds or third-party payments shall be borne by the
Company to the extent the loss, damage or destruction was not caused by Uncontrollable
Circumstances or County Fault.
(D) Repair of County and Private Property. The Company shall promptly
repair or replace all County and private property damaged by the Company or any officer,
director, employee, representative or agent of the Company in connection with the performance
of, or the failure to perform, the Contract Services. The repair and replacements shall restore
the damaged property, to the maximum extent reasonably practicable, to its character and
condition existing immediately prior to the damage.
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ARTICLE XIV
CAPITAL MODIFICATIONS
SECTION 14.1. CAPITAL MODIFICATIONS GENERALLY. (A) Purpose. The
parties acknowledge that it may be necessary due to an Uncontrollable Circumstance, or
desirable from the standpoint of either party, to make Capital Modifications. Capital
Modifications may be desirable, for example, to improve the performance or increase the
capacity of the Facility, to address or anticipate the obsolescence of portions of the Facility, to
reduce the cost to the Company of performing this Service Contract or to reduce the Service
Fee payable by the County as provided in subsection (D) of this Section. All Capital
Modifications shall become the property of the County upon installation.
(B) County Approval. The County shall have the right, in its sole discretion,
to approve all Capital Modifications. All Capital Modifications shall be made and implemented
in accordance with this Article. The County shall have the express right to condition its
approval of Capital Modifications upon the sharing of net cost savings expected to result
therefrom as provided in subsection (D) of this Section. Notwithstanding the above, to the
extent that following the Acceptance Date, the Company demonstrates that a Capital
Modification is necessary in order for it to meet a Contract Standard and the proposed Capital
Modification (i) meets the requirements of (1-4) in Section 14.2 and (ii) will be paid for by the
Company, the County shall not have the right to withhold approval of such Capital
Modification.
(C) Party Responsible for Costs. The Company shall bear the cast and
expense of all Capital Modifications and related operation, maintenance, repair and
replacement costs, unless the Capital Modification is directed by the County (other than as
part of an enforcement action taken in response to a breach hereof) or is necessary to address
an Uncontrollable Circumstance, in each case as provided in Sections 14.3 and 14.4.
(D) Cost Savings. In the event any Capital Modification is reasonably
expected to result in a net cost savings to the Company, the parties shall negotiate in good
faith the extent to which any such net cost savings shall be shared with the County, and the
Service Fee shall be reduced accordingly.
SECTION 14.2. CAPITAL MODIFICATIONS AT COMPANY REQUEST. The
Company shall give the County written notice of, and reasonable opportunity to review and
comment upon, any Capital Modification proposed to be made at the Company's request,
whether before or after Acceptance. The notice shall contain sufficient information for the
County to determine that the Capital Modification: (1) does not diminish the capacity of the
Facility to be operated so as to meet the Contract Standards; (2) does not impair the quality,
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integrity, durability and reliability of the Facility; (3) is reasonably necessary or is advantageous
for the Company to fulfill its obligations under the Service Contract; and (4) is feasible. The
Company shall not be entitled to any adjustment in the terms of this Service Contract as a
result of any such Capital Modification unless approved by the County or made a condition of
approval by the County in its sole discretion.
SECTION 14.3. CAPITAL MODIFICATIONS DUE TO UNCONTROLLABLE
CIRCUMSTANCES. Upon the occurrence of an Uncontrollable Circumstance, the County shall
promptly proceed, subject to the terms, conditions and procedures set forth in this Article and
Section 17.2, to make or cause to be made all Capital Modifications reasonably necessary to
address the Uncontrollable Circumstance. The Company shall consult with the County
concerning possible means of addressing and mitigating the effect of any Uncontrollable
Circumstance, and the Company and the County shall cooperate in order to minimize any
delay, lessen any additional cost and modify the Facility so as to permit the Company to
continue providing the Contract Services in light of such Uncontrollable Circumstance. The
design and construction costs of any such Capital Modification, and any related operation,
maintenance, repair and replacement costs, shall be borne by the County. The County shall
pay the Capital Modification costs and any such related costs for which it is responsible in the
manner established in accordance with the procedures set forth in Sections 14.5, 14.6 and
i
14.7.
SECTION 14.4. CAPITAL MODIFICATIONS AT COUNTY DIRECTION. The
County shall have the right to make Capital Modifications at any time and for any reason
whatsoever, whether and however the exercise of such rights affects this Service Contract so
long as the Company's rights are protected as provided in Section 14.8. The design and
construction costs of any such Capital Modification made at the County's direction under this
Section, unless paid for on a lump sum or other current basis, and any related operation,
maintenance, repair and replacement costs, shall be borne by the County, through an
adjustment to the Service Fee, pursuant to Sections 14.5, 14.7 and 14.8. The County shall
have no obligation to direct the Company to make any Capital Modification.
SECTION 14.5. PRIMARY PROCEDURE FOR IMPLEMENTING CAPITAL
MODIFICATIONS. (A) Primary Implementation Procedure. Unless the County determines
pursuant to Section 14.6 that an alternative implementation procedure be employed, the
implementation procedure set forth in this Section shall apply with respect to all Capital
Modifications for which the County has payment responsibility, which the Company may
implement by means of its own choosing.
(B) Preliminary Company Plan and County Review. At the request of the
County and the cost and expense of the Company, the Company shall prepare and deliver to
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the County a preliminary plan for the implementation of the Capital Modification. The
preliminary plan shall include recommendations as to technology, design, construction,
equipment, materials, and operating and performance impacts. Preliminary schedule and
capital and operating cost estimates shall be included, together with an assessment of possible
alternatives. The preliminary plan shall specifically evaluate reasonable alternatives to the mix
of Capital Modifications and changed operating and management practices which the Company
is recommending. The County shall review the Company's preliminary plan and
recommendations, and undertake discussions with the Company in order to reach agreement
on a basic approach to the Capital Modification. In the event the County determines to not
move forward with the Company's plan, the County will reimburse the Company for the Cost
Substantiated third party costs up to a pre-agreed upon maximum dollar amount.
(C) Company Implementation Proposal. Following agreement on a basic
approach to the Capital Modification, at the request of the County the Company shall submit a
formal implementation proposal to the County for its consideration. The implementation
proposal shall contain: (1) a Company services element; and (2) a third-party construction
services element, to be implemented through third-party contracting. The Company services
element shall contain: (i) the Company's offer to perform design, construction management
and acceptance testing services with respect to the Capital Modification for a fixed price, and
shall include a guarantee of the performance of the Capital Modification through an acceptance
test and a guaranteed maximum construction price if so requested by the County and agreed
to by the Company; and (ii) the Company's offer to operate, maintain, repair, replace and
manage the Capital Modification following construction and acceptance for a fixed fee to be
added to the Service Fee, and shall include long-term performance guarantees with respect to
the Capital Modification. The third-party construction services element shall be a proposal by
the Company to conduct, as allowed by Applicable Law, a bidding or competitive proposal
process for the construction work as the design/build work involved in completing the Capital
Modification. The bidding process shall include an advertisement for bids and a construction
contract award to the lowest responsible bidder, and shall be conducted in accordance with the
requirements of Applicable Law which govern construction projects undertaken by the County.
The resulting construction or design/build contract shall be held by and executed in the name
of the County or the Company, as determined by the County in compliance with Applicable
Law. A competitive proposal process shall include a request for proposals and a construction
or design/build contract award to the most advantageous proposer. The County shall be a
party to all such construction contracts or design/build contracts unless the County
determines otherwise as permitted by Applicable Law. In the event the County determines to
not move forward with the Company's plan, the County will reimburse the Company for the
Cost Substantiated third parry costs up to a pre-agreed upon maximum dollar amount.
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(D) Negotiation and Finalization of Company Implementation Proposal. The
parties shall proceed, promptly following the County's review of the Company's submittal and
quotation, to negotiate to reach an agreement on price and any adjustment to the terms and
conditions of this Service Contract required under Section 14.8. Any final negotiated
agreement for the implementation of a Capital Modification under this Section shall address, as
applicable: (1) Design Requirements; (2) construction management services; (3) Acceptance
Tests and procedures; (4) a guarantee of completion and Acceptance; (5) Performance
Guarantees; (6) any changes to the Performance Guarantees or other Contract Standards to
take effect as a consequence of the Capital Modification; (7) a payment schedule for the design
and construction management-related services; (8) provisions for County Engineer review;
(9) any adjustments to the Service Fee resulting from the Capital Modification, including any
related operation, maintenance, repair and replacement costs; (10) a financing plan; and
(11) any other appropriate amendments to this Service Contract. The Company shall not be
obligated to undertake any Capital Modification under Section 14.3 or 14.4 except following
agreement as to such negotiated adjustments, unless otherwise required on an emergency
basis. The County shall have no obligation to reimburse the Company for any costs incurred
pursuant to this Section except as part of a negotiated amendment to this Service Contract or,
in the event of an emergency, on a Cost-Substantiated basis.
(E) Implementation Procedures. With respect to each Capital Modification to
be made by the Company, the County shall have the same substantive and procedural rights
that it has with respect to the design, construction and acceptance of the Facility, as set forth
in Articles III, VII and VIII and in Appendices 2, 3, 4, 5, 6, 7 and 16.
SECTION 14.6. ALTERNATIVE PROCEDURES FOR IMPLEMENTING
CAPITAL MODIFICATIONS. The County shall be under no obligation to utilize the primary
implementation procedure for Capital Modifications set forth in Section 14.5, and may instead,
in its sole discretion, utilize any other implementation procedure available to it or required
under the Applicable Law. Alternative implementation procedures may include, without
limitation and to the extent permissible under Applicable Law: (1) contracting with the
Company on a sole source basis to implement the Capital Modification on a design/build basis;
(2) contracting with the Company to manage a competition for design/build services to
implement the Capital Modification; and (3) contracting with third parties for the
implementation of the Capital Modification on a traditional design/bid/build basis, with the
County rather than the Company responsible for the design and construction of the Capital
Modification, or with the Company acting as the County's agent in the design/bid/build
process. While it is the intention of the County to have the Company operate, maintain, repair,
replace and manage Capital Modifications on an integrated basis with the Facility, the County
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is not obligated to do so and may contract for such services with a third-party. The County
may determine to proceed with an alternative implementation procedure for Capital
Modification at any time, whether before or after entering into negotiations with the Company
under the primary implementation procedure specified under Section 14.5. No alternative
implementation procedure for Capital Modifications shall impair the Company's rights under
Section 14.8.
SECTION 14.7. FINANCING CAPITAL MODIFICATIONS. Unless otherwise
agreed to by the parties, the County shall provide financing for any Capital Modification for
which the County is financially responsible under this Article, and shall make the proceeds of
the financing available to the Company to pay the negotiated price on the milestone schedule
and subject to any retainage negotiated by the parties pursuant to this Section. The County in
its sole discretion may voluntarily, if requested by the Company, provide financing for the
Capital Modifications for which the Company is financially responsible hereunder, on terms
and conditions established by the County in its sole discretion.
SECTION 14.8. COMPANY NON-IMPAIRMENT RIGHTS. No Capital
Modification, other than a Company-requested Capital Modification, shall be made that by
itself, or in combination with other Capital Modifications, materially impairs any right,
materially impairs the ability to perform, imposes any material additional obligation or liability,
or materially increases the costs of the Company hereunder, including operating, maintenance,
repair and replacement costs related to such Capital Modification. The Company shall have no
right to object to any such Capital Modification, provided that, the County affords the Company
any price, schedule, performance and other relief necessary to avoid any such material effect.
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ARTICLE XV
SERVICE FEE AND OTHER PAYMENTS
SECTION 15.1. SERVICE FEE GENERALLY. From and after the Acceptance
Date, the County shall pay the Service Fee to the Company as compensation for the Company's
performing the operation services under this Service Contract. The Service Fee shall be
calculated according to this Article. Examples of the calculation of the Service Fee and the
application of the CPI Adjustment Factor are included in Appendix 12.
SECTION 15.2. SERVICE FEE FORMULA. The Service Fee shall be
calculated in accordance with the following formula:
SF = BOF + EOF + PTC + ERC El
Where
SF = Annual Service Fee
BOF = Base Operation Fee
EOF = Excess Operation Fee
PTC = Pass Through Costs
ERC = Energy Revenue Credit
El = Extraordinary Items
Each component of the Service Fee shall be determined in accordance with this Article.
SECTION 15.3. BASE OPERATION FEE. The Base Operation Fee represents
the Company's compensation for providing the Operation Services including the combustion of
[73,000] Tons of Processible Waste. The annual Base Operation Fee shall be ]
[PRICE PROPOSAL FORM 17 OF BAFO]. The Base Operation Fee for the initial Contract year
shall be adjusted at the beginning of the initial Contract Year by multiplying (1) the Base
Operation Fee times (2) the CPI Adjustment Factor. The Base Operation Fee for each
subsequent Contract Year throughout the Term shall be determined by multiplying (1) the Base
Operation Fee for the previous Contract Year, times (2) the CPI Adjustment Factor. The Base
Operation Fee for any particular month shall be an amount equal to one-twelfth of the then
applicable annual Base Operation Fee.
SECTION 15.4. EXCESS OPERATION FEE. The Excess Operation Fee
represents the Company's compensation for combusting Processible Waste in excess of 73,000]
Tons in any Contract Year. The Excess Operation Fee shall be [PRICE PROPOSAL
FORM 17 OF BAFO] per Ton of Processible Waste combusted above [73,000] Tons in any
Contract Year. The Excess Operation Fee for the initial Contract year shall be adjusted at the
beginning of the initial Contract Year by multiplying (1) the Excess Operation Fee times (2) the
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CPI Adjustment Factor. The Excess Operation Fee for each subsequent Contract Year
throughout the Term shall be determined by multiplying (1) the Excess Operation Fee for the
previous Contract Year times (2) the CPI Adjustment Factor. The Excess Operation Fee shall
be calculated and paid at the end of each Contract Year.
SECTION 15.5. PASS THROUGH COSTS. The Pass Through Costs for any
Contract Year shall be an amount equal to the actual and direct expenses (without markup for
profit, administration or otherwise) paid by the Company to unrelated third parties, equal to
the sum of the following items, to the extent paid or incurred by the Company in such Contract
Year and to the extent the Company provides Cost Substantiation therefor:
(1) Insurance. Any premium paid by the Company for the Required Operation
Period Insurance during such Billing Period. Notwithstanding the foregoing, Pass Through
Costs shall not include increases in premiums to the extent caused by extraordinary claims
(i.e., Company or Guarantor specific) under policies issued to the Company, Guarantor or any
of their Affiliates other than claims originating from Uncontrollable Circumstances or County
Fault. The amount of any such increases shall be for the account of the Company.
(2) Water Use. The cost of potable water required for use in the Facility, up to a
maximum of gallons per Contract Year.
(3) Certain Chemical Use. The cost of [lime reagent, carbon and urea] usage by
the Facility, up to a maximum of per Contract Year.
(4) Electricity Demand. The cost of electrical demand charges up to kW
per Contract Year not caused by Company Fault.
(5) Purchased Electricity. The cost of purchased electricity in amounts up to
kWh per Contract Year.
(6) Propane Gas Usage. The cost of propane gas usage for any Facility purpose
other than Start-up or Shut-down in amounts up to cf per Contract Year.
(7) Certain Taxes. Any sales, use, real and personal property, ad valorem,
excise, leasing or leasing use Tax, or any Tax to the extent measured by gross receipts, gross
income, gross operating income or gross earnings, paid by or on behalf of the Company
imposed by the United States, State, County or any other taxing authority or jurisdiction of the
United States or the State against the Company or the Facility or upon or with respect to the
design, construction or operation thereof by the Company, any Tax paid by or on behalf of the
Company which is imposed by the United States, the County or any other taxing authority or
jurisdiction of the United States or the State solely on the Company with respect to the Facility,
waste disposal, power generation or any Tax in respect of emissions from the Facility. Pass
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Through Costs shall not include any Taxes based on or measured by net income, any
unincorporated business, payroll, franchise (except to the extent measured by gross receipts,
gross income, gross operating income or gross earnings) or employment taxes, any taxes
imposed by a foreign government or any of their taxing agencies, or any sales Taxes paid by or
on behalf of the Company because of the failure of the Company or any Subcontractor to
comply with procedures required for the use of any available sales tax exemption.
(8) Hazardous Material. Any costs and expenses payable by the County to the
Company, to the extent provided in Section 10.8 hereof, on account of the delivery by the
County or the permitted haulers of Hazardous Material to the Facility.
(9) Excess Processible Waste Transportation and Disposal Costs. The cost of
transporting and disposing of the Excess Processible Waste that could not be combusted at the
Facility.
(10) Non-Processible Waste Transportation and Disposal Costs. The cost of
transporting and disposing of the Non-Processible Waste that can not be combusted at the
Facility.
(11) Other Costs. Any amounts payable by the County to the Company to the
extent that the County is legally precluded from paying such amounts directly to the Company
under Section 17.3 due to a Change in Law.
It is specifically understood and agreed that the cost of the following, to the extent not resulting
from Uncontrollable Circumstances or a County Fault, will be borne by the Company and shall
not constitute Pass Through Costs: (i) the cost of electricity purchased during turbine outages
above the Maximum Electricity Utilization Guarantee; (ii) the cost of gas required for Start-up
Operations or Shut-down Operations, except when due to an Uncontrollable Circumstance or
County Fault; and (iii) all other operation, maintenance, repair and replacement costs and
expenses incurred with respect to the Facility not expressly payable by the County as Pass
Through Costs or otherwise hereunder.
SECTION 15.6. ENERGY REVENUE CREDIT. The Energy Revenue Credit for
any Billing Period shall consist of an amount equal to [(1) the product of (i) 0. 10, (ii) $0.15 and
(iii) the number of kWh of electricity received by the Energy Purchaser during such Billing
Period up to and including that amount that would have been generated by the Company had
it met its Annual Electricity Production Guarantee for that Billing Period, plus (2) the product
of (i) 0.50, (ii) $0.15 and (iii) the number of kWh of electricity received by the Energy Purchaser
during such Billing Period in excess of the amount that would have been generated by the
Company had it met its Annual Electricity Production Guarantee for that Billing Period, if any,
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less (3) any amount which would have been received from the Power Purchaser under the
Power Purchase Agreement but was not received due to additional demand charges, excess
electricity consumption above the Guaranteed Maximum Electricity Consumption, or other
deductions, rebates, offsets or charges resulting in lost revenues under the Power Purchase
Agreement due to a Company Fault. In the event the County incurs any costs or charges from
the Power Purchaser due to a Company Fault (including, without limitation, electricity demand
charges), the amount of such cost or charges shall be deducted first from the Energy Revenue
Credit then from the Base Operation Fee. The Energy Revenue Credit "bonus" discussed in
item (2) above shall only apply to Billing Periods in which the Company combusted at least 100
percent of the lesser of (i) the Billing Period Throughput Guarantee and (ii) the Available Billing
Period Processible Waste in such Billing Period. The Company's Energy Revenue Credit shall
in no event be calculated based upon an energy price in excess of $0.15 per kWh.
SECTION 15.7. EXTRAORDINARY ITEMS CHARGE OR CREDIT. The
Extraordinary Items component of the Service Fee, which may be a charge or a credit, shall be
equal to the sum of (1) the amounts payable by the County for increased operation,
maintenance or other costs incurred on account of the occurrence of Uncontrollable
Circumstances which are chargeable to the County hereunder, net of any operation,
maintenance or other cost savings achieved by the Company in mitigating the effects of the
occurrence of such an Uncontrollable Circumstance, plus (2) the adjustments to the Service
Fee resulting from any Capital Modifications or the benefits of which accrue to the County,
under the provisions of the Service Contract, minus (3) any Service Fee reductions or liquidated
damages due to Company non-performance specifically provided for in the Service Contract,
plus or minus (4) any other increase or reduction in the Service Fee provided for under any
other Article of the Service Contract, and (5) minus utility costs paid by the County for utilities
usage beyond the amounts guaranteed by the Company.
SECTION 15.8. CPI ADJUSTMENT FACTOR. The "CPI Adjustment Factor"
for purposes of this Service Contract, when used with respect to any particular Contract Year,
shall be determined as follows:
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AF. = CPI.- = CPI.-2
where,
AF. = The CPI Adjustment Factor in any Contract Year.
CPI = The final non-seasonably adjusted Consumer Price Index, All
Urban Consumers, as reported by the U.S. Department of Labor,
Bureau of Labor Statistics, for all items, Hawaii Region.
CPI.-i = The average of the 12-monthly CPI values occurring in the
Contract Year preceding the Contract Year with respect to which
a calculation is to be made thereunder.
CPIn_2 = The average of the 12-monthly CPI values occurring in the
Contract Year two years preceding the Contract Year with respect
to which a calculation is to be made thereunder.
SECTION 15.9. COMPANY NON-PERFORMANCE - THROUGHPUT. (A)
Company Non-Compliance. The Company shall determine Billing Period Throughput
Deficiencies and Billing Period Throughput Surpluses with respect to each Billing Period in
accordance with Section 10.2 hereof, which shall be the basis of calculating Billing Period
Throughput Performance Debits and Billing Period Throughput Performance Credits for each
Billing Period as provided in subsections 15.9(B) and 15.9(C) hereof. The Billing Period
Throughput Performance Credits and Billing Period Throughput Performance Debits so
determined shall then be used in accordance with this Section to determine, on a Billing Period
basis, whether Facility Throughput Performance Liquidated Damages are payable by the
Company to the County or whether reimbursements to the Company by the County of
previously paid Facility Throughput Performance Liquidated Damages are payable, based on
the Company's cumulative throughput performance hereunder, subject to the lapsing
provisions of subsection 15.9p) hereof.
(B) Billing Period Throughput Performance Debits. If in any Billing Period
there is a Billing Period Throughput Deficiency, then the Billing Period Throughput
Performance Debit for such Billing Period (stated in dollars) shall be equal to the sum of. (1) an
amount calculated by multiplying (a) 1.0, times (b) the amount of the Billing Period Throughput
Deficiency, times (c) the Billing Period Electricity Price, times (d) the Annual Electricity
Production Guarantee; plus (2) all costs and expenses (if any) incurred by the County in
connection with the transfer, transportation and disposal of Processible Waste constituting the
Billing Period Throughput Deficiency to or at an Alternative Waste Disposal Site; provided,
however, that any such Processible Waste which is disposed of at Alternative Waste Disposal
Site shall be deemed to have been disposed of at a cost calculated by multiplying such
Processible Waste Tonnage times the Alternative Waste Disposal Site disposal fee (which shall
be 200 percent of the tipping fee if such disposal site is the County Landfill); minus (3) an
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imputed amount equal to the costs of disposing of the Residue which would have been
produced from such Processible Waste which would have been payable by the County had
such Processible Waste been processed at the Facility during such Billing Period, calculated by
multiplying the Tonnage amount of such Residue times the tipping fee.
(C) Billing Period Throughput Performance Credits. If in any Billing Period
there is a Billing Period Throughput Performance Surplus, then the Billing Period Throughput
Performance Credit for such Billing Period (stated in dollars) shall be equal to the sum of:
(1) an amount calculated by multiplying (a) 1.0, times (b) the amount of the Billing Period
Throughput Surplus, times (c) the Billing Period Electricity Price, times (d) the Annual
Electricity Production Guarantee; plus (2) an amount equal to the sum of all costs and
expenses avoided by the County as a result of the processing by the Company of the
Processible Waste constituting the Billing Period Throughput Surplus rather than disposing of
such Billing Period Throughput Surplus at the alternative waste disposal site, calculated by
multiplying the Tonnage amount of such Processible Waste times the Alternative Waste
Disposal Site disposal fee; minus (3) an amount equal to the costs of disposing of the Residue
from such Processible Waste deemed to have been paid by the County as a result of such
processing of Processible Waste at the Facility during such Billing Period and the disposal of
such Residue at the Alternative Waste Disposal Site, calculated by multiplying the Tonnage
amount of such Residue times the Alternative Waste Disposal Site disposal fee.
(D) Establishment of Record-Keeping Accounts. For recordkeeping purposes
in connection with determinations hereunder as to Facility Throughput Performance Liquidated
Damages, the Company shall maintain two non-cash accounts designated the "Throughput
Performance Damages Account" and the "Throughput Performance Credit Account." A
Throughput Performance Damages Account and a Throughput Performance Credit Account
shall be established separately for the Term of this Service Contract, and each shall have a
beginning balance of zero. The account balances shall be kept on a net basis, and there shall
be a zero balance at all times in at least one account. Balances shall be kept in dollar units.
(E) Throughput Performance Damages Account. The Throughput
Performance Damages Account shall be used to record the cumulative balance of all Facility
Throughput Performance Liquidated Damages which have been paid by the Company in the
Aggregate Billing Period preceding the Billing Period for which a determination is to be made
under this Section and which have not been reimbursed to the Company by the County during
such Aggregate Billing Period.
(F) Throughput Performance Credit Account. The Throughput Performance
Credit Account shall be used to record the cumulative balance of the Billing Period Throughput
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Performance Credits which have been earned by the Company in the Aggregate Billing Period
preceding the Billing Period for which a determination is to be made under this Section and
which have not been applied to offset the Facility Throughput Performance Liquidated
Damages paid by the Company during such Aggregate Billing Period.
(G) Billing Period Debits and Facility Throughput Performance Liquidated
Damages. If in any Billing Period there is a Billing Period Throughput Performance Debit:
(1) and if there is a zero balance in the Billing Period Throughput
Performance Credit Account, then the Company shall pay the County Facility
Throughput Performance Liquidated Damages in an amount equal to the Billing Period
Throughput Performance Debit, and such amount shall be added to any balance in the
Throughput Performance Damages Account. The Throughput Performance Credit
Account shall retain a zero balance;
(2) and if there is a positive balance in the Throughput Performance Credit
Account:
(a) and if the Throughput Performance Credit Account balance
exceeds the Billing Period Throughput Performance Debit, then the Company shall not
be required to make any payments with respect thereto. The balance in the Throughput
Performance Credit Account shall be reduced by the amount of the Billing Period
Throughput Performance Debit, and the Throughput Performance Damages Account
shall retain a zero balance;
(b) and if the Billing Period Throughput Performance Debit exceeds
the Throughput Performance Credit Account balance, the Company shall pay the
County Facility Throughput Performance Liquidated Damages in an amount equal to
the Billing Period Throughput Performance Debit less such Throughput Performance
Credit Account balance, and the Throughput Performance Credit Account shall be
reduced to a zero balance. The amount of such Facility Throughput Performance
Liquidated Damages payment shall be added to the balance in the Throughput
Performance Damages Account;
(c) and if the Billing Period Throughput Performance Debit is equal
to the Throughput Performance Credit Account balance, then the Company shall not be
required to make any Facility Throughput Performance Liquidated Damages payment
with respect thereto, the Throughput Performance Credit Account balance shall be
reduced to zero, and the Throughput Performance Damages Account shall retain a zero
balance.
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(H) Billing Period Throughput Performance Credits. If in any Billing Period
there is a Billing Period Throughput Performance Credit:
(1) and if there is a zero balance in the Throughput Performance Damages
Account then the balance in the Throughput Performance Credit Account shall be
increased by the amount of the Billing Period Throughput Performance Credit, and the
Throughput Performance Damages Account shall retain a zero balance;
(2) and if there is a positive balance in the Throughput Performance
Damages Account:
(a) and if the Throughput Performance Damages Account balance
exceeds the Billing Period Throughput Performance Credit, then the County with
respect to such Billing Period shall reimburse the Company an amount equal to such
Billing Period Throughput Performance Credit, the Throughput Performance Damages
Account balance shall be reduced by the amount of the Billing Period Throughput
Performance Credit, and the Throughput Performance Credit Account shall retain a zero
balance;
(b) and if the Billing Period Throughput Performance Credit exceeds
the Throughput Performance Damages Account balance, then the County with respect
to such Billing Period shall reimburse the Company an amount equal to the balance in
the Throughput Performance Damages Account, there shall be credited to the
Throughput Performance Credit Account an amount equal to the difference between the
Billing Period Throughput Performance Credit and such Throughput Performance
Damages Account balance; and the Throughput Performance Damages Account balance
shall be reduced to zero;
(c) and if the Billing Period Throughput Performance Credit is equal
to the Throughput Performance Damages Account balance, then the County with
respect to such Billing Period shall reimburse the Company an amount equal to the
balance in the Throughput Performance Damages Account, the Throughput
Performance Damages Account balance shall be reduced to zero, and the Throughput
Performance Credit Account shall retain a zero balance.
(I) Annual Facility Throughput Liquidated Damages. During the first
Contract Year Interim Facility Throughput Performance Liquidated Damages will be based
upon an Annual Facility Throughput Guarantee corresponding to the combustion of
Processible Waste with a Higher Heating Value of [4,800] BTU/pound as set forth in
Appendix 2. Immediately following each Contract Year, the Company shall compute the
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Annual Facility Throughput Guarantee applicable to such Contract Year pursuant to
Appendix 2. In the event that the Annual Facility Throughput exceeds the Annual Facility
Throughput Guarantee (based upon the actual heating value of the waste calculated pursuant
to Appendix 2) (1) no Annual Facility Throughput Liquidated Damages shall be payable to the
Company with respect to such Contract Year, and (2) any Interim Facility Throughput
Performance Liquidated Damages which have been paid by the Company with respect to such
Contract Year shall be reimbursed to the Company. In the event that the Annual Facility
Throughput is less than the Annual Facility Throughput Guarantee the Company shall pay
Annual Facility Throughput Liquidated Damages to the County. The amount of such Annual
Facility Throughput Liquidated Damages shall be calculated by multiplying (1) 1.0, times
(2) the Annual Electricity Production (not to exceed the Annual Electricity Production
Guarantee), times (3) the Annual Electricity Price, times (4) the difference (expressed on the
basis of Tons) between the Annual Facility Throughput Guarantee and the Annual Facility
Throughput for such Contract Year and then adding all costs and expenses (if any) incurred by
the County in connection with the transfer, transportation and disposal of Processible Waste
constituting the annual Facility throughput deficiency to or at an Alternative Waste Disposal
Site (provided, however, that any such Processible Waste which is disposed of at Alternative
Waste Disposal Site shall be deemed to have been disposed of at a cost calculated by
multiplying such Processible Waste Tonnage times the Alternative Waste Disposal Site disposal
fee, (which shall be 200 percent of the tipping fee if such disposal site is the County Landfill),
minus an imputed amount equal to the costs of disposing of the Residue which would have
been produced from such Processible Waste which would have been payable by the County had
such Processible Waste been processed at the Facility during such Contract Year, calculated by
multiplying the Tonnage amount of such Residue times the tipping fee. If Annual Facility
Throughput Liquidated Damages are payable with respect to any Contract Year, and the
Company has paid Interim Facility Throughput Performance Liquidated Damages with respect
to such Contract Year, the amount of such Interim Facility Throughput Performance
Liquidated Damages so paid shall be applied as a credit against the Annual Facility
Throughput Liquidated Damages so payable. The County shall reimburse the Company the
amount by which any such credit exceeds the Annual Facility Throughput Liquidated
Damages, and the Company shall pay the County the amount by which the Annual Facility
Throughput Liquidated Damages exceeds any such credit. If Annual Facility Throughput
Liquidated Damages are payable with respect to any Contract Year and the Company has not
paid any Interim Facility Throughput Performance Liquidated Damages to the County with
respect to such Contract Year, the Company shall pay the County the full amount of such
Annual Facility Throughput Liquidated Damages. The Company shall deliver to the County a
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report and accounting of all of the technical and financial calculations required under this
Section with the Annual Settlement Statement, and any amounts due one party from the other
shall be paid in conjunction therewith. The Annual Electricity Production Guarantee
determined for such Contract Year in accordance with Appendix 2 shall serve as the Annual
Electricity Production Guarantee for the following Contract Year for the purpose of calculating
Billing Period Electricity Production Debits and Credits.
(J) Annual Lapse of Unused Billing Period Throughput Performance Credits.
Any Billing Period Throughput Performance Credits which are not applied against Billing Period
Throughput Performance Debits in the Contract Year in which such Billing Period Throughput
Performance Credits accrue shall lapse at the end of such Contract Year.
SECTION 15.10. COMPANY NON-PERFORMANCE ELECTRICITY
PRODUCTION. (A) Billing Period Determination of Performance. If, in any Billing Period, the
Billing Period Electricity Production is less than the Annual Electricity Production Guarantee
(which, for the purposes of calculating interim non-performance damages shall be applied on a
Billing Period basis), there shall be a "Billing Period Electricity Production Deficiency" equal to
the amount of such deficiency, expressed on a kWh per ton basis. If, in any Billing Period, the
Billing Period Electricity Production is greater than the Annual Electricity Production
Guarantee (applied on the same basis), there shall be a "Billing Period Electricity Production
Surplus" equal to the amount of such surplus, expressed on a kWh per ton basis. Such
amounts shall be used as the basis for calculating Billing Period Electricity Production Debits
and Billing Period Electricity Production Credits as provided in subsections 15.10(B) and
15.10(C) hereof. The Billing Period Electricity Production Credits and Billing Period Electricity
Production Debits so determined shall then be used in accordance with this Section to
determine, on a Billing Period basis, whether Interim Electricity Production Performance
Liquidated Damages are payable by the Company to the County or whether reimbursements to
the Company by the County of previously paid Interim Electricity Production Performance
Liquidated Damages are payable, based on the Company's cumulative throughput performance
within each Contract Year.
(B) Billing Period Electricity Production Debits. If in any Billing Period there
is a Billing Period Electricity Production Deficiency, then the Billing Period Electricity
Production Debit for such Billing Period (stated in dollars) shall be an amount calculated by
multiplying (a) 1.0, times (b) the amount of the Billing Period Electricity Production Deficiency,
times (c) the Billing Period Electricity Price, times (d) the Billing Period Throughput, up to a
maximum of the Billing Period Throughput Guarantee.
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(C) Billing Period Electricity Production Credits. If in any Billing Period there
is a Billing Period Electricity Production Surplus, then the Billing Period Electricity Production
Credit for such Billing Period (stated in dollars) shall be equal to the sum of. (1) an amount
calculated by multiplying (a) 1.0, times (b) the amount of the Billing Period Electricity
Production Surplus, times (c) the Billing Period Electricity Price, times (d) the Billing Period
Throughput.
(D) Establishment of Record-Keening Accounts. For recordkeeping purposes
in connection with determinations hereunder as to Interim Electricity Production Performance
Liquidated Damages, the Company shall maintain two non-cash accounts designated the
"Electricity Production Damages Account" and "Electricity Production Credit Account". An
Electricity Production Damages Account and an Electricity Production Credit Account shall be
established separately for each Contract Year, and each shall have a beginning balance of zero.
The account balances shall be kept on a net basis, and there shall be a zero balance at all
times in at least one account. Balances shall be kept in dollar units.
(E) Electricity Production Damages Account. The Electricity Production
Damages Account shall be used to record the cumulative balance of all Interim Electricity
Production Performance Liquidated Damages which have been paid by the Company in the
Aggregate Billing Period preceding the Billing Period for which a determination is to be made
under this Section and which have not been reimbursed to the Company by the County during
such Aggregate Billing Period.
(F) Electricity Production Credit Account. The Electricity Production Credit
Account shall be used to record the cumulative balance of interim Electricity Production
Credits which have been earned by the Company in the Aggregate Billing Period preceding the
Billing Period for which a determination is to be made under this Section and which have not
been applied to offset the Interim Electricity Production Performance Liquidated Damages paid
by the Company during such Aggregate Billing Period.
(G) Billing Period Debits and Annual Electricity Production Liquidated
Damages. If in any Billing Period there is a Billing Period Electricity Production Debit,
(1) and if there is a zero balance in the Electricity Production Credit
Account, then the Company shall pay the County Interim Electricity Production
Performance Liquidated Damages in an amount equal to the Billing Period Electricity
Production Debit and such amount shall be added to any balance in the Electricity
Production Damages Account. The Electricity Production Credit Account shall retain a
zero balance;
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(2) and if there is a positive balance in the Electricity Production Credit
Account:
(a) and if the Electricity Production Credit Account balance exceeds
the Billing Period Electricity Production Debit, then the Company shall not be required
to make any payments with respect thereto. The balance in the Electricity Production
Credit Account shall be reduced by the amount of the Billing Period Electricity
Production Debit, and the Electricity Production Damages Account shall retain a zero
balance;
(b) and if the Billing Period Electricity Production Debit exceeds the
Electricity Production Credit Account balance, the Company shall pay the County
Interim Electricity Production Performance Liquidated Damages in an amount equal to
the Billing Period Electricity Production Debit less such Electricity Production Credit
Account balance, and the Electricity Production Credit Account shall be reduced to a
zero balance. The amount of such Interim Electricity Production Performance
Liquidated Damages payment shall be added to the balance in the Electricity Production
Damages Account;
(c) and if the Billing Period Electricity Production Debit is equal to
the Electricity Production Credit Account balance, then the Company shall not be
required to make any Interim Electricity Production Performance Liquidated Damages
payment with respect thereto, the Electricity Production Credit Account balance shall be
reduced to zero, and the Electricity Production Damages Account shall retain a zero
balance.
(H) Billing Period Electricity Production Credits. If in any Billing Period there
is a Billing Period Electricity Production Credit,
(1) and if there is a zero balance in the Electricity Production Damages
Account, then the balance in the Electricity Production Credit Account shall be
increased by the amount of the Billing Period Electricity Production Credit, and the
Electricity Production Damages Account shall retain a zero balance;
(2) and if there is a positive balance in the Electricity Production Damages
Account:
(a) and if the Electricity Production Damages Account balance
exceeds the Billing Period Electricity Production Credit, then the County with respect to
such Billing Period shall reimburse the Company an amount equal to such Billing
Period Electricity Production Credit, the Electricity Production Damages Account
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Balance shall be reduced by the amount of the Billing Period Electricity Production
Credit, and the Electricity Production Credit Account shall retain a zero balance;
(b) and if the Billing Period Electricity Production Credit exceeds the
Electricity Production Damages Account balance, then the County with respect to such
Billing Period shall reimburse the Company an amount equal to the balance in the
Electricity Production Damages Account, there shall be credited to the Electricity
Production Credit Account an amount equal to the difference between the Billing Period
Electricity Production Credit and such Electricity Production Damages Account balance,
and the Electricity Production Damages Account balance shall be reduced to zero;
(c) and if the Billing Period Electricity Production Credit is equal to
the Electricity Production Damages Account balance, then the County with respect to
such Billing Period shall reimburse the Company an amount equal to the balance in the
Electricity Production Damages Account, the Electricity Production Damages Account
balance shall be reduced to zero, and the Electricity Production Credit Account shall
retain a zero balance.
(I) Annual Electricity Production Liquidated Damages. During the first
Contract Year, Interim Electricity Production Performance Liquidated Damages will be based
upon an Annual Electricity Production Guarantee corresponding to the combustion of
Processible Waste with a Higher Heating Value of [4,800] Btu/pound as set forth in
Appendix 2. Immediately following each Contract Year, the Company shall compute the
Annual Electricity Production Guarantee applicable to such Contract Year pursuant to
Appendix 2. In the event that the Annual Electricity Production exceeds the Annual Electricity
Production Guarantee (based upon the actual heating value of the waste calculated pursuant
to Appendix 2) (1) no Annual Electricity Production Liquidated Damages shall be payable by
the Company with respect to such Contract Year, and (2) any Interim Electricity Production
Performance Liquidated Damages which have been paid by the Company with respect to such
Contract Year shall be reimbursed to the Company. In the event that the Annual Electricity
Production is less than the Annual Electricity Production Guarantee the Company shall pay
Annual Electricity Production Liquidated Damages to the County. The amount of such Annual
Electricity Production Liquidated Damages shall be calculated by multiplying (1) 1.0, times
(2) the Annual Facility Throughput (not to exceed the Annual Facility Throughput Guarantee),
times (3) the Annual Electricity Price, times (4) the difference (expressed on the basis of kWh
per Ton) between the Annual Electricity Production Guarantee and the Annual Electricity
Production for such Contract Year. If Annual Electricity Production Liquidated Damages are
payable with respect to any Contract Year, and the Company has paid Interim Electricity
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Production Performance Liquidated Damages with respect to such Contract Year, the amount
of such Interim Electricity Production Performance Liquidated Damages so paid shall be
applied as a credit against the Annual Electricity Production Liquidated Damages so payable.
The County shall reimburse the Company the amount by which any such credit exceeds the
Annual Electricity Production Liquidated Damages, and the Company shall pay the County the
amount by which the Annual Electricity Production Liquidated Damages exceeds any such
credit. If Annual Electricity Production Liquidated Damages are payable with respect to any
Contract Year and the Company has not paid any Interim Electricity Production Performance
Liquidated Damages to the County with respect to such Contract Year, the Company shall pay
the County the full amount of such Annual Electricity Production Liquidated Damages. The
Company shall deliver to the County a report and accounting of all of the technical and
financial calculations required under this Section with the Annual Settlement Statement, and
any amounts due one party from the other shall be paid in conjunction therewith. The Annual
Electricity Production Guarantee determined for such Contract Year in accordance with
Appendix 2 shall serve as the Annual Electricity Production Guarantee for the following
Contract Year for the purpose of calculating Billing Period Electricity Production Debits and
Credits.
SECTION 15.11. DAMAGE ADJUSTMENTS TO ACCOUNT FOR WASTE BTU
CONTENT OUTSIDE DESIGN RANGE AND WASTE SHORTFALLS. (A) Waste Btu Content
Outside Design Ranee. The parties acknowledge that the Throughput Performance Liquidated
Damages and the Annual Electricity Production Liquidated Damages have been established
based on the assumption that the Processible Waste processed by the Facility will have a Btu
content within an allowable range of 3,800 to 7,000 Btu per pound on an annual average basis
throughout the Term of this Service Contract. If with respect to any Billing Period or Contract
Year (1) Throughput Performance Liquidated Damages are payable pursuant to Section 15.9
hereof, or (2) Annual Electricity Production Liquidated Damages are payable pursuant to
Section 15.10 hereof, the Company may certify in a written report to the County and the
County Engineer that the Btu content of the Processible Waste processed by the Facility in
such Billing Period or Contract Year was outside the applicable allowable range and the extent,
if any, to which either of such liquidated damage payment obligations is attributable to such
Btu content variations. If the County concurs with such certification or fails to respond within
30 days of such certification, the Throughput Performance Liquidated Damages or Annual
Electricity Production Liquidated Damages which otherwise would have been payable pursuant
to Sections 15.9 or 15.10 hereof shall be adjusted appropriately to reflect the effect of the Btu
variation. If the County does not so concur, it shall notify the Company within such 30-day
period and shall describe in reasonable detail the basis of the County's rejection. Upon such
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notice of non-concurrence, thereupon either party may elect to refer the dispute to the
Independent Engineer for non-binding mediation in accordance with Section 16.11 hereof. The
burden of proof shall be on the Company in making any request under this Section to
demonstrate, solely on daily performance monitoring records maintained in accordance with
the requirements of this Service Contract, that the average annual Higher Heating Value of
Processible Waste processed in soh Contract Year was outside the range of [3.800 - 7,0001
Btu/lb range.
(B) Waste Shortfalls. In the event that there are insufficient quantities of
Processible Waste to maintain a Facility steaming rate of
[ ] pounds per hour ( lb/hour) to the
turbine generator, the Company may shut down the Facility until sufficient quantities of
Processible Waste are available; provided, however, any such shutdown will in no event provide
relief towards the Company's obligation to meet the Facility Performance Obligations (other
than the Annual Facility Throughput Guarantee if such shutdown results from a shortfall and
prevents the Company from meeting such guarantee).
(C) Delivery Shortfall; County Non-Performance. If in any Contract Year, for
any reason other than Uncontrollable Circumstances, the annual available County Processible
Waste is less than the Annual Waste Delivery Commitment, the County shall pay the Company
an amount equal to the Company's share of electricity sale revenues which would have been
payable under the Power Purchase Agreement had the shortfall not occurred, but not including
the "50% bonus" for exceeding the Annual Electricity Production Guarantee ("Delivery Shortfall
Liquidated Damages"). Delivery Shortfall Liquidated Damages shall be calculated by
multiplying (1) .10, times (2) the amount of such delivery shortfall, times (3) the $0.15, times
(4) the average electricity production (expressed in kWh per Ton of Processible Waste
processed) generated at the Facility during such Contract Year.
SECTION 15.12. BILLING AND PAYMENT. (A) Billin¢. The County shall pay
the Service Fee in monthly installments in an amount equal to the sum of (1) amounts
calculated in accordance with Sections 15.3, 15.4 and 15.6; (2) Pass Through Costs; (3) any
Extraordinary Items determined on a monthly basis; (4) one-twelfth of any Extraordinary Items
determined on an annual basis; and (5) any adjustments, plus or minus, to reconcile any prior
monthly Excess Operation Fee or Facility Pass Through Cost payments. Any overpayment from
prior months shall be credited against the monthly Service Fee payment. Any amount due the
County on account of exceedences of the Guaranteed Maximum Electricity Consumption shall
be paid as part of the Annual Settlement Statement.
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(B) Payment. The Service Fee for each month shall be on account of the
Operation Services rendered during the prior month. If the Company provides the County with
an invoice by the fifteenth day of each month which sets forth the monthly portion of the
Service Fee for the prior month and which shows the annual Service Fee and each component
thereof as calculated for the then current Contract Year, together with the accumulated
payments for each component to the date of such invoice and such other documentation or
information as the County may reasonably require to determine the accuracy and
appropriateness of the invoice, then the County shall pay the invoice within 30 days of receipt.
SECTION 15.13. ESTIMATES AND ADJUSTMENTS. (A) Pro Rata
Adjustments. Any computation made on the basis of a stated period shall be adjusted on a pro
rata basis to take into account any initial or final period which is a partial period.
(B) Budgetin¢. For County budgeting purposes, no later than 120 days
preceding each Contract Year, the Company shall provide to the County a written statement
setting forth for such Contract Year its reasonable estimate of the aggregate Service Fee, each
component thereof, and the CPI Adjustment Factor. The estimate shall not be binding on the
Company but shall establish the basis for monthly billing for such Contract Year, subject to
annual settlement pursuant to this Article.
(C) Adjustment to Service Fee. If any adjustment to the Service Fee is
required pursuant to any express provision of this Service Contract, the party requesting the
adjustment shall submit to the other party a written statement setting forth the cause of the
adjustment, the anticipated duration of the adjustment, and the amount of the adjustment, as
appropriate. Except to the extent that a longer period is otherwise specifically provided for in
this Service Contract, any request for adjustment of the Service Fee hereunder shall be
accepted or rejected by the party receiving the request within 45 days of receipt. If the
receiving party does not notify the requesting party of its rejection and the reasons therefore
within such 45 day period, the request shall be deemed rejected. A rejected request may be
resubmitted, with or without change, and this paragraph shall apply to such resubmitted
request as it applies to an original request. Any Service Fee adjustment request which is not
rejected or deemed rejected shall take effect as of the next monthly billing period thereafter, or
as otherwise agreed to by the parties.
SECTION 15.14. ANNUAL SETTLEMENT. Within 45 days after the end of each
Contract Year, the Company shall provide to the County an annual settlement statement (the
"Annual Settlement Statement") setting forth the actual aggregate Service Fee payable with
respect to such Contract Year and a reconciliation of such amount with the amounts actually
paid by the County with respect to such Contract Year. As part of the annual settlement
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process, the Company shall pay the County an amount equal to any overpayment made by the
County for electricity which would have been avoided had the Company met the Guaranteed
Maximum Electricity Consumption, together with interest on such overpayment at the Overdue
Rate computed from the time such guarantee was exceeded. The County or the Company, as
appropriate, shall pay all known and undisputed amounts within 60 days after receipt or
delivery of the Annual Settlement Statement. If any amount is then in dispute or is for other
reasons not definitely known at the time the Annual Settlement Statement is due, the Annual
Settlement Statement shall identify the subject matter and reasons for such dispute or
uncertainty and, in cases of uncertainty, shall include a good faith estimate by the Company of
the amount in question. When the dispute is resolved or the amount otherwise finally
determined, the Company shall file with the County an amended Annual Settlement Statement
which shall, in all other respects, be subject to this Section.
SECTION 15.15. BILLING STATEMENT DISPUTES. If the County disputes
any amount billed by the Company, the County may either (1) pay the disputed amount when
otherwise due, and provide the Company with a written objection indicating the amount that is
being disputed and providing all reasons then known to the County for its objection to or
disagreement with such amount, or (2) withhold payment of the disputed amount and provide
the Company with written objection as aforesaid within the time when such amount would
otherwise have been payable. When any billing dispute is finally resolved, if payment by the
County to the Company of amounts withheld or reimbursement to the County by the Company
of amounts paid under protest is required, such payment or reimbursement shall be made
within 45 days of the date of resolution, with interest at the Overdue Rate.
SECTION 15.16. TAXES. Except as otherwise provided in this Service
Contract, the Company shall be responsible for all federal, State, county and municipal Taxes
and any other Tax imposed in connection with its performance of the Contract Services.
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ARTICLE XVI
BREACH, DEFAULT, REMEDIES AND TERMINATION
SECTION 16.1. REMEDIES FOR BREACH. The parties agree that, except as
otherwise provided in Sections 16.2, 16.4, 16.5 and 16.6 with respect to termination rights, in
the event that either party breaches this Service Contract, the other party may exercise any
legal rights it may have under this Service Contract, under the Security Instruments or under
Applicable Law to recover damages or to secure specific performance, and that such rights to
recover damages and to secure specific performance shall ordinarily constitute adequate
remedies for any such breach. Neither party shall have the right to terminate this Service
Contract for cause except upon the occurrence of an Event of Default.
SECTION 16.2. EVENTS OF DEFAULT BY THE COMPANY. (A) Events of
Default Not Reauirin¢ Previous Notice or Further Cure Opportunity for Termination. Each of
the following shall constitute an Event of Default by the Company upon which the County, by
notice to the Company, may terminate this Service Contract without any requirement of having
given notice previously or of providing any further cure opportunity:
(1) Security for Performance. The failure of the Company to obtain,
maintain in full force and effect or renew within 30 days prior to expiration any Security
Instrument required by Article XVIII as security for the performance of this Service
Contract, without excuse for Uncontrollable Circumstances or County Fault;
(2) Failure to Achieve Acceptance. The failure of the Company to achieve
Acceptance prior to the end of the Extension Period;
(3) Insolvency. The insolvency of the Company or the Guarantor as
determined under the Bankruptcy Cade;
(4) Voluntary Bankruptcy. The filing by the Company or the Guarantor of a
petition of voluntary bankruptcy under the Bankruptcy Code; the consenting of the
Company or the Guarantor to the filing of any bankruptcy or reorganization petition
against the Company or the Guarantor under the Bankruptcy Code; or the filing by the
Company or the Guarantor of a petition to reorganize the Company or the Guarantor
pursuant to the Bankruptcy Code;
(5) Involuntary Bankruptcy. The issuance of an order of a court of
competent jurisdiction appointing a receiver, liquidator, custodian or trustee of the
Company or the Guarantor or of a major part of the Company's or the Guarantor's
property, respectively, or the filing against the Company or the Guarantor of a petition
to reorganize the Company or the Guarantor pursuant to the Bankruptcy Code, which
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order shall not have been discharged or which filing shall not have been dismissed
within 90 days after such issuance or filing, respectively;
(6) Default of Guarantor. The failure of the Guarantor to perform any
payment or other obligation under the Guaranty in a timely manner, the material
untruth of any representation or warranty made by the Guarantor in the Guaranty
Agreement, or the failure of the Guarantor to comply with the terms and conditions of
Section 18.1;
(7) Substantial Exhaustion of Limitation on Liability. [To be provided]; or
(8) Guarantor Credit Standing. The failure of the Company to provide credit
enhancement when and as required by subsection 18.1(C).
(B) Events of Default Requiring Previous Notice and Cure Opportunity for
Termination. It shall be an Event of Default by the Company upon which the County may
terminate this Service Contract, by notice to the Company, if. (1) any representation or
warranty of the Company hereunder or the Guarantor under the Guaranty Agreement was
false or inaccurate in any material respect when made, and the legality of this Service Contract
or the Guaranty Agreement or the ability of the Company to carry out its obligations hereunder
or the ability of the Guarantor to carry out its obligation thereunder is thereby adversely
affected; or (2) the Company fails, refuses or otherwise defaults in its duty (a) to pay any
amount required to be paid to the County under this Service Contract within 60 days following
the due date for such payment, or (b) to perform any material obligation under this Service
Contract (unless such default is excused by an Uncontrollable Circumstance or County Fault
as and to the extent provided herein), except that no such default (other than those set forth in
subsection (A) of this Section) shall constitute an Event of Default giving the County the right
to terminate this Service Contract for cause under this subsection unless:
(1) The County has given prior written notice to the Company stating that in
its opinion a specified default in its duty to pay or perform exists which gives the
County a right to terminate this Service Contract for cause under this Section, and
describing the default in reasonable detail; and
(2) The Company has not initiated within a reasonable time (in any event
not more than 30 days from the initial default notice) and continued with due diligence
to carry out to completion all actions reasonably necessary to correct the default and
prevent its recurrence.
If the Company shall have initiated within such reasonable time and continued with due
diligence to carry out to completion all such actions, the default shall not constitute an Event
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of Default during such period of time (in any event not more than 60 days from the initial
default notice) as the Company shall continue with due diligence to carry out to completion all
such actions.
(C) Other Remedies Upon Company Event of Default. The right of
termination provided under this Section upon an Event of Default by the Company is not
exclusive. If this Service Contract is terminated by the County for an Event of Default by the
Company, the County shall have the right to pursue a cause of action for actual damages and
to exercise all other remedies which are available to it under this Service Contract, under the
Security Instruments and under Applicable Law. Without limiting the foregoing, upon any
termination of the Company for an Event of Default the damages payable by the Company to
the County shall include the incremental costs of completing the Facility and any Capital
Modifications then under construction, remediating any public health and safety problems,
and paying all unpaid fines and penalties payable to any Governmental Body, in each case
resulting from any breach of this Service Contract by the Company. Such termination
damages shall also include, without limitation, a one-time payment equivalent to the sum of
(1) the excess, if any, of (a) the estimated present value (at a 6% discount factor) of the
reasonable costs of Facility operations, maintenance, repair and replacement, by the County, if
the Facility is to be operated, maintained, repaired and replaced by the County, or under any
new Service Contract with a replacement operator chosen as result of a competitive selection
process, if the Facility is to be operated, maintained, repaired and replaced pursuant to such
an agreement, in either case for a period equal to the balance of the Term at the time of
termination, over (b) the estimated present value (at a [60/61 discount factor) of the aggregate
Service Fee for the balance of the Term; plus (2) all reasonable costs incurred by the County in
procuring, negotiating and implementing a new Service Contract with a replacement operator,
if any. The Company shall not be entitled to any compensation for services provided
subsequent to receiving any notice of termination for an Event of Default under this Section.
SECTION 16.3. LIMITATION OF LIABILITY BY COMPANY. (A) Monetary
Limit, Generally. Notwithstanding anything to the contrary contained herein, the Company's
liability to the County with respect to termination damages shall not exceed an amount equal
to 125% of the Fixed Design/Build Price, which amount shall be lowered to 30% of the Fixed
Design/Build Price on the second anniversary of the Acceptance Date.
(B) Exclusions. Excluded from the stated monetary limitation on liability set
forth in subsection (A) above, are the following damages, costs or expenses:
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(i) any design, construction or operating overruns or losses sustained by
the Company, the Guarantor, or any other party in connection with the Service
Contract, the Guaranty Agreement or any other agreement relating hereto;
(ii) any claims, losses and liabilities to third parties in any Legal Proceeding;
(iii) any fines and penalties paid to any Governmental Body; and
(iv) any indemnity payments made to the County.
SECTION 16.4. EVENTS OF DEFAULT BY THE COUNTY. (A) Events of
Default Permitting Termination. Each of the following shall constitute an Event of Default by
the County upon which the Company, by notice to the County, may terminate this Service
Contract:
(1) Representations and Warranties. Any representation or warranty of the
County hereunder was false or inaccurate in any material respect when made, and the
legality of this Service Contract or the ability of the County to carry out its obligations
hereunder is thereby adversely affected;
(2) Failure to Pay or Perform. The failure, refusal or other default by the
County in its duty: (1) to pay the amount required to be paid to the Company under this
Service Contract within 60 days following the due date for such payment; or (2) to
perform any other material obligation under this Service Contract (unless such default is
excused by an Uncontrollable Circumstance or Company Fault); or
(3) Bankruptcy. The authorized filing by the County of a petition seeking
relief under the Bankruptcy Code, as applicable to political subdivisions which are
insolvent or unable to meet their obligations as they mature; provided that the
appointment of a financial control or oversight board by the State for the County shall
not in and of itself constitute an Event of Default hereunder.
(B) Notice and Cure Opportunity. No such default described in
subsection (A) of this Section shall constitute an Event of Default giving the Company the right
to terminate this Service Contract for cause under this subsection unless:
(1) The Company has given prior written notice to the County stating that a
specified default which gives the Company a right to terminate this Service Contract for
cause under this Section, and describing the default in reasonable detail; and
(2) The County has neither challenged in an appropriate forum the
Company's conclusion that such failure or refusal to perform has occurred or
constitutes a material breach of this Service Contract nor corrected or diligently taken
steps to correct such default within a reasonable period of time but not more than 30
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days from the date of the notice given pursuant to the preceding paragraph (but if the
County shall have diligently taken steps to correct such default within a reasonable
period of time, the same shall not constitute an Event of Default for as long as the
County is continuing to take such steps to correct such default).
(C) Termination Liquidated Damages During the Operation Period. If this
Service Contract is terminated by the Company for cause as a result of an Event of Default by
the County following the Acceptance Date, the County shall pay the Company, as liquidated
damages upon any such termination, the same amount which would be payable under
Section 16.5 if this Service Contract were terminated during the Operation Period, according to
the month of termination, at the election of the County for convenience and without cause.
SECTION 16.5. COUNTY CONVENIENCE TERMINATION DURING THE
OPERATION PERIOD. (A) Termination Right and Fee. The County shall have the right at any
time during the Operation Period, exercisable in its sole discretion, for its convenience and
without cause, to terminate this Service Contract upon 60 days' written notice to the Company.
If the County exercises its right to terminate the Service Contract pursuant to this Section, the
County shall pay the Company, in addition to all amounts due and owing for past performance,
a convenience termination fee equal to [$3,000,000], reduced by 1/240 of such amount for
each month which has elapsed following the Acceptance Date to and including the month in
which the Termination Date occurs. If this Service Contract is renewed pursuant to
Section 4.2, then the convenience termination fee payable during the Renewal Term shall be
zero.
(B) Uncontrollable Circumstances. In the event an Uncontrollable
Circumstance causes a total constructive loss of the Facility, or in the event an Uncontrollable
Circumstance causes an extraordinary increase in County costs, and thereupon the County
elects to exercise its right of convenience termination under this Section, the amount specified
in subsection (A) of this Section ([$3,000,0001 as reduced) shall be excluded from the
termination fee payable by the County. A "total constructive loss" for this purpose shall be
deemed to have occurred: (1) if so determined by the casualty insurance carrier; or (2) if the
Facility is substantially inoperable for a period of at least six months following the occurrence
of the Uncontrollable Circumstance. "An extraordinary increase" in County costs shall be
deemed to have occurred for this purpose if costs proposed to be paid to the Company resulting
from the Uncontrollable Circumstance would cause an increase of more than 25% from the
prior Contract Year in the total Service Fee payable under this Service Contract (excluding the
amortization of debt incurred by the Company for Capital Modifications resulting from
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Uncontrollable Circumstances) when compared to such amounts that would have been payable
during the comparable periods had no Uncontrollable Circumstances occurred.
(C) Payment of Amounts Owing Through the Termination Date. Upon any
termination pursuant to this Section, the Company shall also be paid all amounts due for the
Contract Services to be paid as part of the Service Fee but not yet paid as of the date of
termination.
(D) Termination Fee Payment Contingent Upon Surrender of Possession.
The County shall have no obligation to pay the applicable termination fee provided for under
this Section except concurrently with the surrender of possession and control by the Company
of the Facility to the County.
(E) Adequacy of Termination Payment. The Company agrees that the
applicable termination fee provided in this Article shall fully and adequately compensate the
Company and all Subcontractors for all foregone potential profits, Loss-and-Expense, and
charges of any kind whatsoever (whether foreseen or unforeseen), including initial transition
and mobilization costs and demobilization, employee transition and other similar wind-down
costs, attributable to the termination of the Company's right to perform this Service Contract.
(F) Consideration for Convenience Termination Payment. The right of the
County to terminate this Service Contract for its convenience and in its sole discretion in
accordance with this Article constitutes an essential part of the overall consideration for this
Service Contract, and the Company hereby waives any right it may have under Applicable Law
to assert that the County owes the Company a duty of good faith dealing in the exercise of such
right.
(G) Completion or Continuance by County. After the date of any termination
under this Section, the County may at any time (but without any obligation to do so) take any
and all actions necessary or desirable to continue and complete the Contract Services so
terminated, including, without limitation, entering into contracts with other operators and
contractors.
SECTION 16.6. OBLIGATIONS OF THE COMPANY UPON TERMINATION OR
EXPIRATION. (A) Company Obligations. Upon a termination of the Company's right to
perform this Service Contract under Section 16.2, 16.4 or 16.5 or upon the expiration of this
Service Contract under Section 4. 1, the Company shall, as applicable:
(1) stop the Contract Services on the date and to the extent specified by the
County;
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(2) promptly take all action as necessary to protect and preserve all
materials, equipment, tools, facilities and other property;
(3) promptly remove from the Facility all equipment, implements,
machinery, tools, temporary facilities of any kind and other property owned or leased by the
Company (including, but not limited to sheds, trailers, workshops and toilets), and repair any
damage caused by such removal;
(4) clean the Facility and the Site and leave them in a neat and orderly
condition;
(5) subject to subsection (B) of this Section, promptly remove all employees
of the Company and any Subcontractors and vacate the Facility;
(6) promptly deliver to the County a list of all supplies, materials,
machinery, equipment, property and special order items previously delivered or fabricated by
the Company or any Subcontractor but not yet incorporated in the Facility;
(7) deliver to the County the Operation and Maintenance Manual and all
computer programs used at the Facility in the performance of the Contract Services, including
all revisions and updates thereto;
(8) deliver to the County a copy of all books and records in its possession
relating to the performance of the Contract Services which the County is entitled to review
under this Agreement;
(9) provide the County with a list of all files, and access and security codes
with instructions and demonstrations which show how to open and change such codes;
(10) advise the County promptly of any special circumstances which might
limit or prohibit cancellation of any Subcontract;
(11) promptly deliver to the County copies of all Subcontracts, together with a
statement of:
(a) the items ordered and not yet delivered pursuant to each agreement;
(b) the expected delivery date of all such items;
(c) the total cost of each agreement and the terms of payment; and
(d) the estimated cost of canceling each agreement;
(12) assign to the County any Subcontract that the County elects in writing,
at its sole election and without obligation, to have assigned to it. The County shall assume,
and the Company shall be relieved of its obligations under, any Subcontract so assigned;
(13) unless the County directs otherwise, terminate all Subcontracts and
make no additional agreements with Subcontractors;
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(14) as directed by the County, transfer to the County by appropriate
instruments of title, and deliver to the Facility (or such other place as the County may specify),
all special order items pursuant to this Service Contract for which the County has made or is
obligated to make payments;
(15) promptly transfer to the County all warranties given by any
manufacturer or Subcontractor with respect to particular components of the Facility or the
Operation Services;
(16) notify the County promptly in writing of any Legal Proceedings against
the Company by any Subcontractor or other third parties relating to the termination of the
Design/Build Work or the Operation Services (or any Subcontracts);
(17) give written notice of termination, effective as of date of termination of
this Service Contract, promptly under each policy of Required Insurance (with a copy of each
such notice to the County), but permit the County to continue such policies thereafter at its
own expense, if possible;
(18) arrange its dealings with employees such that no "successor clause" or
accrued benefit liability will bind the County in the event the County determines to offer
employment to the Company's employees at the Facility following the Termination Date; and
(19) take such other actions, and execute such other documents as may be
necessary to effectuate and confirm the foregoing matters, or as may be otherwise necessary or
desirable to minimize the County's costs, and take no action which shall increase any amount
payable to the County under this Service Contract.
(B) Hiring of Company Personnel. Upon the termination or expiration of this
Service Contract under any provision hereof, the County or any successor operator of the
Facility designated by the County shall have the right to offer employment on any terms it may
choose to any Company employee employed full time at the Facility. No Company employment
agreement, job offer, letter or similar document may contravene this right. The County or its
designated successor operator shall extend any such job offer within 30 days of the expiration
or termination of this Service Contract. The Company shall assist and cooperate with any such
employee transition in the manner as reasonably requested by the County.
(C) Continuity of Service and Technical Support. Upon the termination of
the Company's right to perform this Service Contract under Section 16.2 or 16.5 or upon the
expiration of this Service Contract under Section 4. 1, the Company, at the request and
direction of the County, shall provide for an effective continuity of service and the smooth and
orderly transition of management to the County or any replacement operator designated by the
County. Such service shall be for a period of up to 180 days and shall include providing
technological and design advice and support and delivering any plans, drawings, renderings,
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blueprints, operating manuals, computer programs, spare parts or other information useful or
necessary for the County or any replacement operator designated by the County to carry out
and complete the Facility and to perform the Operation Services. In addition, the Company
shall provide the County and any replacement operator with a one-time training program
relating to the operation of the Facility, including any Capital Modifications thereto.
(D) Company Payment of Certain Costs. If termination is pursuant to
Section 16.2, or upon the expiration of this Service Contract under Section 4. 1, the Company
shall be obligated to pay the costs and expenses of undertaking its obligations under
subsection (A) of this Section. If the Company fails to comply with any obligation under this
Section, the County may perform such obligation and the Company shall pay on demand all
reasonable costs thereof subject to Cost Substantiation.
(E) County Payment of Certain Costs. If termination is for the convenience
of the County under Section 16.5 or due to a County Event of Default pursuant to
Section 16.4, the County shall pay to the Company within 60 days of the date of the
Company's invoice supported by Cost Substantiation all reasonable cost and expenses incurred
by the Company in satisfying its obligations under subsection (A) of this Section.
(F) Exit Test. Not later than six months prior to the Termination Date
resulting from the expiration of this Service Contract or concurrently with the termination
resulting from an early termination of this Service Contract pursuant to Section 16.2 or 16.5,
the Company shall prepare and submit to the County for its approval a plan for exit testing of
the Facility, which shall conform to the requirements of Appendix 17 in all respects. The
County shall submit its comments on the exit testing plan to the Company within 30 days of
receipt thereof, and the Company thereafter shall prepare a final exit testing plan,
incorporating the County's comments, for submission to the County within 30 days. The
Company (or a third party at the County's option), at the request of the County and after
reasonable notice to the Company, shall perform the exit test of the Facility for compliance with
the Exit Test Procedures and Standards in the first month of the 3-month period preceding the
end of the Term hereof. If such test shows that the Facility is operating out of compliance with
the Exit Test Procedures and Standards, then within 14 days of such test results, the Company
shall submit to the County a plan for remediation and retesting. The County shall have 14
days to approve such plan, which approval shall not to be unreasonably withheld. The
Company shall make all repairs, replacements, renewals and operating changes and take all
other actions which may be necessary to enable the Facility to meet the Exit Test Procedures
and Standards. The Facility shall then be re-tested to demonstrate that the necessary
corrective action has been taken and the Facility is in compliance with the Exit Test Procedures
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and Standards. No such testing or retesting shall relieve the Company of its obligations under
this Service Contract during the performance of the test or retest.
SECTION 16.7. SURVIVAL OF CERTAIN PROVISIONS UPON TERMINATION.
All representations and warranties of the parties hereto contained in Article II and the rights
and obligations of the parties hereto pursuant to Sections 4.1, 7.9, 8.6, 9.4, 9.5, 11.8, 16.3,
16.6, 16.9, 17.1, 17.3, 17.4, 19.3 and 19.7 shall survive the termination of this Service
Contract. No termination of this Service Contract shall (1) limit or otherwise affect the
respective rights and obligations of the parties hereto accrued prior to the date of such
termination; or (2) preclude either party from implementing the other party in any Legal
Proceeding originated by a third-party as to any matter occurring during the Term of this
Service Contract.
SECTION 16.8. NO WAIVERS. No action of the County or Company
pursuant to this Service Contract (including, but not limited to, any investigation or payment),
and no failure to act, shall constitute a waiver by either party of the other party's compliance
with any term or provision of this Service Contract. No course of dealing or delay by the
County or Company in exercising any right, power or remedy under this Service Contract shall
operate as a waiver thereof or otherwise prejudice such party's rights, powers and remedies.
No single or partial exercise of (or failure to exercise) any right, power or remedy of the County
or the Company under this Service Contract shall preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
SECTION 16.9. NO CONSEOUENTIAL OR PUNITIVE DAMAGES. In no event
shall either party hereto be liable to the other or obligated in any manner to pay to the other
any special, incidental, consequential, punitive or similar damages based upon claims arising
out of or in connection with the performance or non-performance of its obligations or otherwise
under this Service Contract, or the material falseness or inaccuracy of any representation
made in this Service Contract, whether such claims are based upon contract, tort, negligence,
warranty or other legal theory; provided, however, that nothing in this Section shall limit the
obligation of the Company to indemnify the County for any special, incidental, consequential,
punitive or similar damages payable to third parties resulting from any act or circumstance for
which the Company is obligated to indemnify the County hereunder.
SECTION 16.10. FORUM FOR DISPUTE RESOLUTION. It is the express
intention of the parties that all Legal Proceedings related to this Service Contract or to the
Facility or to any rights or any relationship between the parties arising therefrom shall be
solely and exclusively initiated and maintained in courts of the State located in Hawaii County.
The Company and the County each irrevocably consents to the jurisdiction of such courts in
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any such Legal Proceeding, and waives any objection it may have to the laying of the
jurisdiction of any such Legal Proceeding.
SECTION 16.11. NON-BINDING MEDIATION. (A) Rights to Request and
Decline. Either party hereto may give the other parry written notice of any dispute with respect
to the Company's satisfaction of any Acceptance Standard, any Performance Guarantee, any
technical matter or any other matter specified herein for resolution by mediation. Such notice
shall specify a date and location for a meeting of the parties hereto at which such parties shall
attempt to resolve such dispute. In the event that such dispute cannot be resolved by the
parties hereto within 30 days, such dispute shall be referred to a Mediator for advice and non-
binding mediation.
(B) Procedure. The Mediator shall be a professional engineer, attorney or
other professional mutually acceptable to the parties who has no current or on-going
relationship to either party. The Mediator shall have full discretion as to the conduct of the
mediation. Each party shall participate in the Mediator's program to resolve the dispute until
and unless the parties reach agreement with respect to the disputed matter or one party
determines in its sole discretion that its interests are not being served by the mediation.
(C) Non-Binding Effect. Mediation is intended to assist the parties in
resolving disputes over the correct interpretation of this Service Contract. No Mediator shall be
empowered to render a binding decision.
(D) Relation to Judicial Legal Proceedings. Nothing in this Section shall
operate to limit, interfere with or delay the right of either party under this Article to commence
judicial Legal Proceedings upon a breach of this Service Contract by the other party, whether in
lieu of, concurrently with, or at the conclusion of any Non-Binding Mediation.
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ARTICLE XVII
INSURANCE, UNCONTROLLABLE CIRCUMSTANCES
AND INDEMNIFICATION
SECTION 17.1. INSURANCE. (A) Company Insurance. At all times during
the Term of this Service Contract, the Company shall obtain and maintain the Required
Insurance in accordance with Appendix 14 and shall pay all premiums with respect thereto as
the same become due and payable.
(B) Insurers. Deductibles and County Rights. All insurance required by this
Section shall be obtained and maintained from financially sound and generally recognized
responsible insurance companies meeting the qualifications set forth in Appendix 14. The
insurers shall be selected by the Company with the consent of the County, which consent shall
not be unreasonably withheld, and authorized to write such insurance in the State. The
insurance coverage shall be written with deductible amounts within the limits allowed in
Appendix 14, and the Company shall be responsible for any deductible amounts [resulting
from the Company's negligence, willful misconduct or breach of this Agreement]. The Company
shall also be responsible for all self-insured retentions contained in its insurance coverages, as
well as any excluded losses if such losses are within the liability of the Company hereunder.
All policies evidencing such insurance shall provide for: (1) payment of the losses to the
County, and to the Company as their respective interests may appear; and (2) at least 30 days'
prior written notice of the cancellation thereof to the Company and the County. All policies of
insurance required by this Section shall be primary insurance without any right of contribution
from other insurance carried by the County. The County shall have the right to fully
participate in all insurance claim settlement negotiations and to approve all final insurance
settlements, which approval shall not be unreasonably withheld.
(C) Certificates. Policies and Notice. The delivery by the Company to the
County of certificates of insurance is required by this Service Contract as a condition to the
occurrence of the Construction Commencement Date (Required Design/Build Period
Insurance) and as a condition to the occurrence of the Acceptance Date (Required Operation
Period Insurance). The Company shall also supply the County, upon request, with certified
copies of such policies promptly following issuance by the insurers. Not later than 30 days
prior to the beginning of each Contract Year throughout the Term, the Company shall furnish
certificates of insurance to the County to confirm the continued effectiveness of the Required
Insurance. Whenever a Subcontractor is utilized, the Company shall either obtain and
maintain or require the Subcontractor to obtain and maintain insurance in accordance with
the applicable requirements of Appendix 14.
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(D) Maintenance of Insurance Coverage. If the Company fails to pay any
premium for Required Insurance, or if any insurer cancels any Required Insurance policy and
the Company fails to obtain replacement coverage so that the Required Insurance is
maintained on a continuous basis, then, at the County's election (but without any obligation to
do so), the County, following notice to the Company, may pay such premium or procure similar
insurance coverage from another company or companies and upon such payment by the
County the amount thereof shall be immediately reimbursable to the County by the Company.
The Company shall not perform Design/Build Work during any period when any policy of
Required Design/Build Period Insurance is not in effect. The Company shall comply with all
applicable Required Insurance in accordance with the requirements of this Service Contract
during the Term hereof. The failure of the Company to obtain and maintain any Required
Insurance shall not relieve the Company of its liability for any losses intended to be insured
thereby. Should any failure to provide continuous insurance coverage occur, the Company
shall indemnify and hold harmless the County in the manner provided in Section 17.3, from
and against any Loss-and-Expense arising out of such failure. The purchase of insurance to
satisfy the Company's obligations under this Section shall not be a satisfaction of any
Company liability under this Service Contract or in any way limit, modify or satisfy the
Company's indemnity obligations hereunder.
SECTION 17.2. UNCONTROLLABLE CIRCUMSTANCES. (A) Relief from
Obligations. Except as expressly provided under the terms of this Service Contract, neither
parry to this Service Contract shall be liable to the other for any loss, damage, delay, default or
failure to perform any obligation to the extent it results from an Uncontrollable Circumstance.
The parties agree that the relief for an Uncontrollable Circumstance described in this
Section shall apply to all obligations in this Service Contract, except to the extent specifically
provided otherwise, notwithstanding that such relief is specifically mentioned with respect to
certain obligations in this Service Contract but not other obligations. The occurrence of an
Uncontrollable Circumstance shall not excuse or delay the performance of a party's obligation
to pay monies previously accrued and owing under this Service Contract, or to perform any
obligation hereunder not affected by the occurrence of the Uncontrollable Circumstances. The
County shall pay the Service Fee during the continuance of any Uncontrollable Circumstance,
adjusted to account for any cost reductions achieved through Company mitigation measures
required by subsection (B) of this Section, as well as for any cost increases to which the
Company is entitled under subsection (C) of this Section.
(B) Notice and Mitigation. The party that asserts the occurrence of an
Uncontrollable Circumstance shall notify the other party by telephone or facsimile, on or
promptly after the date the party experiencing such Uncontrollable Circumstance first knew of
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the occurrence thereof, followed within 15 days by a written description of: (1) the
Uncontrollable Circumstance and the cause thereof (to the extent known); and (2) the date the
Uncontrollable Circumstance began, its estimated duration, the estimated time during which
the performance of such party's obligations hereunder shall be delayed, or otherwise affected.
As soon as practicable after the occurrence of an Uncontrollable Circumstance, the affected
party shall also provide the other party with an description of. (1) the amount, if any, by which
the Design/Build Price or the Service Fee is proposed to be adjusted as a result of such
Uncontrollable Circumstance; (2) any areas where costs might be reduced and the approximate
amount of such cost reductions; and (3) its estimated impact on the other obligations of such
party under this Service Contract. The affected party shall also provide prompt written notice
of the cessation of such Uncontrollable Circumstance. Whenever such act, event or condition
shall occur, the party claiming to be adversely affected thereby shall, as promptly as
practicable, use all reasonable efforts to eliminate the cause therefor, reduce costs and resume
performance under this Service Contract. While the Uncontrollable Circumstance continues,
the affected party shall give notice to the other party, before the first day of each succeeding
month, updating the information previously submitted. The party claiming to be adversely
affected by an Uncontrollable Circumstance shall bear the burden of proof, and shall furnish
promptly any additional documents or other information relating to the Uncontrollable
Circumstance reasonably requested by the other party.
(C) Conditions to Performance. Design/Build Price. Service Fee or Schedule
Relief. If and to the extent that an Uncontrollable Circumstance materially expands the scope
of the Company's obligations hereunder, materially interferes with, materially delays or
materially increases the cost of the Company's performing its obligations hereunder, the
Company shall, subject to the limitations specifically provided for in this Service Contract, be
entitled to relief from the performance of its obligations hereunder, an extension of schedule or
an increase in the Design/Build Price or the Service Fee, or any combination thereof, which
properly reflects the interference with performance, the time lost or the amount of the
increased cost, in each case as a result thereof, but only to the minimum extent reasonably
forced on the Company by the event, and the Company shall perform all other Contract
Services. The proceeds of any Required Insurance available to meet any such increase cost,
and the payment by the Company of any deductible, shall be applied to such purpose prior to
any determination of cost increase payable by the County under this Section. Any cost
reduction achieved through the mitigating measures undertaken by the Company pursuant to
subsection (B) of this Section upon the occurrence of an Uncontrollable Circumstance shall be
reflected in a reduction of the amount by which the Design/Build Price or the Service Fee
would have otherwise been increased or shall serve to reduce the Design/Build Price or the
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Service Fee to reflect such mitigation measures, as applicable. In the event that the Company
believes it is entitled to any relief on account of an Uncontrollable Circumstance, it shall
furnish the County written notice of the specific relief requested and detailing the event giving
rise to the claim within 30 days after the giving of notice delivered pursuant to subsection (B) of
this Section, or if the specific relief cannot reasonably be ascertained and such event detailed
within such 30-day period, then within such longer period within which it is reasonably
possible to detail the event and ascertain such relief. Within 30 days after receipt of such a
timely submission from the Company, the County shall issue a written determination as to the
extent, if any, it concurs with the Company claim for performance, price or schedule relief, and
the reasons therefore. The Company acknowledges that its failure to give timely notice
pertaining to an Uncontrollable Circumstance as required under this Section may adversely
affect the County. To the extent the County asserts that any such adverse effect has occurred
and that the relief to the Company or the additional cost to be borne by the County under this
subsection should be reduced to account for such adverse effect, the Company shall have the
affirmative burden of refuting the County's assertion. Absent such refutation, the reduction in
relief to the Company and the reduction in additional cost to the County asserted by the
County in such circumstances shall be effective. The agreement of the parties as to the specific
relief to be given the Company hereunder on account of an Uncontrollable Circumstance shall
be evidenced by a Contract Administration Memorandum, Service Contract amendment or a
Change Order, as applicable.
(D) Capital Modifications. Before proposing any modification to the Service
Fee in its notice of requested adjustment under this Section, the Company shall determine
whether any increased costs of operation and maintenance of the Facility resulting from an
Uncontrollable Circumstance can reasonably and prudently be reduced by the undertaking of a
Capital Modification. In the event that the Company makes such a determination, the
Company shall so advise the County in accordance with Sections 14.3 and 14.5. The County
shall thereupon determine, in its sole discretion, whether such a Capital Modification shall be
undertaken and shall so advise the Company within 60 days of receipt of such notice by the
Company. In no event shall the Company undertake such Capital Modification except at the
express written direction of the County.
(E) Acceptance of Adjustment Constitutes Release. The Company's
acceptance of any performance, price or schedule adjustment under this Section shall be
construed as a release of the County by the Company (and all persons claiming by, through, or
under the Company) for any and all losses or expenses resulting from, or otherwise attributable
to, the event giving rise to the adjustment claimed.
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SECTION 17.3. INDEMNIFICATION BY THE COMPANY. The Company shall
indemnify, defend and hold harmless the County, and its elected officials, appointed officers,
employees, representatives, agents, consultants and contractors (each, a "County Indemnitee"),
from and against (and pay the full amount of) any and all Loss-and-Expense incurred by a
County Indemnitee to third parties arising from or in connection with (or alleged to arise from
or in connection with): (1) any failure by the Company to perform its obligations under this
Service Contract; or (2) the negligent acts, errors or omissions or willful misconduct of the
Company or any of its officers, directors, employees, agents, representatives or Subcontractors
in connection with this Service Contract. The Company shall also indemnify the County as
and to the extent provided elsewhere in this Service Contract. The Company's indemnity
obligations hereunder shall not be limited by any coverage exclusions or other provisions in
any insurance policy maintained by the Company which is intended to respond to such events.
The Company shall not, however, be required to reimburse or indemnify any County
Indemnitee for any Loss-and-Expense to the extent caused by the negligence or willful
misconduct of any County Indemnitee or to the extent attributable to any Uncontrollable
Circumstance. A County Indemnitee shall promptly notify the Company of the assertion of any
claim against it for which it is entitled to be indemnified hereunder, and the Company shall
have the right to assume the defense of the claim in any Legal Proceeding and to approve any
settlement of the claim. These indemnification provisions are for the protection of the County
Indemnitee only and shall not establish, of themselves, any liability to third parties. The
provisions of this Section shall survive termination of this Service Contract.
SECTION 17.4. INDEMNIFICATION BY THE COUNTY To the extent
permitted by law, the County shall indemnify, defend and hold harmless the Company, and its
appointed officers, employees, representatives, agents, consultants and contractors (each, a
"Company Indemnitee"), from and against (and pay the full amount of) any and all Loss-and-
Expense incurred by a Company Indemnitee to third parties arising from or in connection with
(or alleged to arise from or in connection with): (1) any failure by the County to perform its
obligations under this Service Contract; or (2) the negligent acts, errors or omissions or willful
misconduct of the County or any of its officers, directors, employees, agents, representatives or
Subcontractors in connection with this Service Contract. The County shall also indemnify the
Company as and to the extent provided elsewhere in this Service Contract. The County's
indemnity obligations hereunder shall not be limited by any coverage exclusions or other
provisions in any insurance policy maintained by the County which is intended to respond to
such events. The County shall not, however, be required to reimburse or indemnify any
Company Indemnitee for any Loss-and-Expense to the extent caused by the negligence or
willful misconduct of any Company Indemnitee or to the extent attributable to any
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Uncontrollable Circumstance. A Company Indemnitee shall promptly notify the County of the
assertion of any claim against it for which it is entitled to be indemnified hereunder, and the
County shall have the right to assume the defense of the claim in any Legal Proceeding and to
approve any settlement of the claim. These indemnification provisions are for the protection of
the Company Indemnitee only and shall not establish, of themselves, any liability to third
parties. The provisions of this Section shall survive termination of this Service Contract.
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ARTICLE XVIII
SECURITY FOR PERFORMANCE
SECTION 18.1. GUARANTOR. (A) Guaranty Agreement. The Company shall
cause the Guaranty Agreement to be provided and maintained by the Guarantor during the
Term hereof in the form attached hereto as a Transaction Form.
(B) Material Decline in Guarantor's Credit Standing. For purposes of this
Section, a "Material Decline in Guarantor's Credit Standing" shall be deemed to have occurred
the event that the Guarantor's long-term senior debt outstanding has a rating by one of the
Rating Services below investment grade level. The Company immediately shall notify the
County of any Material Decline in the Guarantor's Credit Standing.
(C) Credit Enhancement. If a Material Decline in Guarantor's Credit
Standing occurs, the Company shall cause to be provided credit enhancement of its obligations
hereunder within 30 days after such occurrence. Such credit enhancement shall be in the
form either of. (1) an unconditional guarantee of all of the Company's obligations hereunder
provided by a corporation or financial institution whose long-term senior debt is or would be
rated investment grade by one of the Rating Services; or (2) a letter of credit securing the
Company's Design/Build Work obligations hereunder in a face amount equal to $10,000,000
provided by a financial institution whose long-term senior debt is or would be rated investment
grade by one of the Rating Services. The Guarantor shall maintain such credit enhancement
until the Guarantor's credit standing has been restored to investment grade.
(D) Annual Reports. The Company shall furnish the County, within 120
days after the end of the Guarantor's fiscal year, consolidating balance sheets and income
statements for the Guarantor attached to the audited year end financial statements reported
upon by the Guarantor's independent public accountant. If applicable, the Company shall also
furnish the County with copies of the quarterly and annual reports and other filings of the
Guarantor filed with the Securities and Exchange Commission.
SECTION 18.2. BONDS. (A) Construction Payment and Performance Bond.
On or before the Construction Commencement Date and any Capital Modification undertaken
by the Company, the Company shall provide the Construction Payment and Performance Bond
in an amount equal to the Fixed Construction Period Price relating to the construction work
(plus a reasonable amount to be determined by the parties for any estimated Fixed
Design/Build Price Adjustments), as financial security for the faithful performance and
payment of its Design/Build Period obligations hereunder. The Construction Payment and
Performance Bond shall be substantially in the form set forth in the Transaction Forms and
shall be issued by a surety company: (1) approved by the County having a rating of "A" in the
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latest revision of the A.M. Best Company's Insurance Report; (2) be listed in the United States
Treasury Department's Circular 570, "Companies Holding Certificates of Authority as
Acceptable Sureties on Federal Bonds and as Acceptable Reinsurance Companies"; and
(3) holding a certificate of authority to transact surety business in the State issued by the
Director of the Department of Insurance. The Construction Payment and Performance Bond
shall remain open until 6 months after Acceptance has been achieved.
(B) Monitoring of Sureties. The Company shall be responsible throughout
the Term of this Service Contract for monitoring the financial condition of any surety company
issuing bonds under this Service Contract and for making inquiries no less often than annually
to confirm that each such surety company maintains at least the minimum rating level
specified in this Section. In the event the rating of any issuing surety company falls below
such minimum level, the Company shall promptly notify the County of such event and shall
promptly furnish or arrange for the furnishing of a substitute or an additional bond of a surety
company whose rating and other qualifications satisfy all above requirements, unless the
County agrees to accept the surety company or agrees to an alternative method of assurance.
Upon such notice by the Company of such an event, the County shall not unreasonably
withhold its approval of such assurance.
SECTION 18.3. LETTER OF CREDIT. (A) Requirements. On the Acceptance
Date, the Company shall provide to the County as beneficiary an irrevocable standby letter of
credit in the stated amount of $2,000,000 issued by a Qualified Commercial Bank (the "Letter
of Credit"). The Letter of Credit shall be for a term of one year, shall be continuously renewed,
extended or replaced so that it remains in effect until 90 days after the Termination Date, and
shall be issued substantially in the form set forth in the Transaction Forms. The Letter of
Credit shall, upon each renewal, extension or replacement thereof, be reduced from the
required stated amount applicable for that Contract Year by the aggregate amount of all
amounts drawn on all previous Letters of Credit provided under this subsection. The Letter of
Credit shall serve as security for the performance of the Company's obligations hereunder, and
the stated amount thereof shall in no way limit the amount of damages to which the County
may be entitled for any Company Event of Default hereunder.
(B) Drawings for Non-Renewal or Bankruptcy. The County shall have the
unconditional right to immediately draw upon the Letter of Credit for the full stated amount
thereof upon the following conditions: (1) in the event that any required renewal, extension or
replacement thereof is not made earlier than the date which is 30 days prior to its expiration
date; (2) the Company or the Guarantor (i) has filed a petition of voluntary bankruptcy under
the Bankruptcy Code, (ii) has consented to the filing of any bankruptcy or reorganization
petition against the Company or the Guarantor, or (iii) has filed a petition to reorganize the
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Company or the Guarantor pursuant to the Bankruptcy Code; or (3) a court of competent
jurisdiction has issued an order appointing a receiver, liquidator, custodian or trustee of the
Company or the Guarantor or of a major part of the Company's or the Guarantor's property,
respectively, or a petition to reorganize the Company or the Guarantor pursuant to the
Bankruptcy Code has been filed against the Company or the Guarantor, and such order has
not been discharged or such filing has not been dismissed within 90 days after such issuance
or filing. The proceeds of any such drawing shall be held by the County as cash collateral to
secure the performance of the Contract Services and, in the event of a material breach of this
Service Contract following any such drawing, may be retained by the County as payment or
partial payment of damages resulting therefrom.
(C) Drawings for Termination. The County shall have the unconditional
right to immediately draw upon the Letter of Credit an amount estimated by the County as
representing the damages it has suffered as a result of the termination of this Service Contract
by the County pursuant to this Section.
(D) Drawings for Material Breach. The County shall have the right to draw
upon the Letter of Credit in an amount estimated by the County as representing the damages it
has suffered as a result of a material breach of this Service Contract by the Company. Unless
the Letter of Credit is due to expire prior to such period necessary to provide notice and hold a
meeting, it shall be a condition to the right of the County to draw on the Letter of Credit for a
material breach that: (1) the County has given the Guarantor notice of a material breach of
this Service Contract, whether or not such breach constitutes an Event of Default, and
attached a copy of the good faith assessment of the damages the County has suffered as a
result of such breach, and (2) the Company has had an opportunity at a meeting scheduled by
the County to be held not earlier than 15 days nor later than 30 days following delivery of such
notice, to present to the County evidence disputing the County's assertion of material breach or
assessment of damages. Notice to the Company of a material breach hereof shall be given
concurrently with the notice to the Guarantor, except that following any event of voluntary
bankruptcy or involuntary bankruptcy by the Company as described in subsection 16.2(B) or a
termination of this Service Contract pursuant to this Section, no such notice shall be required
to be given to the Company, nor shall the giving of such notice be a condition to the County's
drawing rights under the Letter of Credit pursuant to this subsection.
(E) Effect of Final Determination of Damages. In the event that subsequent
to any drawing on the Letter of Credit it is determined by any court of competent jurisdiction in
a final non-appealable decision that such drawing to any extent was not permitted hereunder,
the County shall pay the amount wrongfully drawn to the Company together with interest
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thereon at the Overdue Rate calculated from the date of the drawing to the date of payment to
the Company.
SECTION 18.4. COSTS OF PROVIDING SECURITY FOR PERFORMANCE.
(A) Inclusion in Service Fee. The cost and expense of obtaining and maintaining the Security
Instruments required under this Article as security for the performance of the Company's
obligations hereunder shall be borne by the Company without reimbursement from the County.
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ARTICLE XIX
MISCELLANEOUS PROVISIONS
SECTION 19.1. RELATIONSHIP OF THE PARTIES. The Company is an
independent contractor of the County and the relationship between the parties shall be limited
to performance of this Service Contract in accordance with its terms. Neither party shall have
any responsibility with respect to the services to be provided or contractual benefits assumed
by the other party. Nothing in this Service Contract shall be deemed to constitute either party
a partner, agent or legal representative of the other party. No liability or benefits, such as
workers compensation, pension rights or liabilities, or other provisions or liabilities arising out
of or related to a contract for hire or employer/ employee relationship, shall arise or accrue to
any party's agent or employee as a result of this Service Contract or the performance thereof.
SECTION 19.2. )RESERVEDI.
SECTION 19.3. PROPERTY RIGHTS. (A) Protection from Infringement. The
Company shall pay all royalties and license fees in connection with the Facility and the
Operation Services. The Company shall protect, indemnify, defend and hold harmless the
County, and any of the County Indemnities, in the manner provided in Section 17.3, from and
against all Loss-and-Expense arising out of or related to the infringement or unauthorized use
of any patent, trademark, copyright or trade secret relating to, or for the Design/Build Work
and the Operation Services, or at its option, shall acquire the rights of use under infringed
patents, or modify or replace infringing equipment with equipment equivalent in quality,
performance, useful life and technical characteristics and development so that such equipment
does not so infringe. The Company shall not, however, be required to reimburse or indemnify
any person for any Loss-and-Expense to the extent due to the negligence or willful conduct of
such person. The provisions of this Section shall survive termination of this Service Contract.
(B) Intellectual Property Developed by the Compan y. All intellectual property
developed by the Company at or through the use of the Facility or otherwise in connection with
the performance of the Contract Services shall be owned by the Company subject to the terms
and conditions of this Section, and is hereby licensed to the County on a non-exclusive cost
free, perpetual basis for use by the County and any successor operator of the Facility (but, with
respect to any successor operator, only in connection with the operation of the Facility). Such
intellectual property shall include technology, inventions, innovations, processes, know-how,
formulas and software, whether protected as proprietary information, trade secrets, or patents.
The Company shall have an irrevocable, perpetual and unrestricted right to use such
intellectual property for any County request, whether before or following the Termination Date.
Neither the County nor the Company shall license, transfer or otherwise make available such
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intellectual property to any third-party for remuneration except with the consent of the other,
which consent may be conditioned upon mutual agreement as to the sharing of any such
remuneration.
SECTION 19.4. PROPRIETARY INFORMATION. (A) Non-Disclosure. The
parties hereto hereby acknowledge that the Company has a proprietary interest in certain
information that may be furnished pursuant to the provisions of this Service Contract.
Without the prior written consent of the Company, the County agrees to keep in confidence and
agrees not to disclose any such information that is specifically designated by the Company as
being confidential or proprietary, subject however in all cases to operation of the provisions of
Applicable Law to the contrary. The provisions of this paragraph shall not apply to any
information, notwithstanding any confidential designation thereof, which (1) is known to the
County without any restriction as to disclosure or use at the time it is furnished, (2) is or
becomes generally available to the public without breach of any agreement, (3) is received from
a third party without limitation or restriction on such third party or the County at the time of
disclosure or (4) may be disclosed to a Governmental Authority pursuant to subsection 19.4(B)
hereof.
(B) Authorized Disclosures. The County may disclose any information
deemed confidential or proprietary when required to do so by or pursuant to (1) any Applicable
Law or regulations governing the disclosure of such information, (2) an order of a court of
competent jurisdiction, or (3) a lawful subpoena (collectively, "Governmental Authority"). Prior
to making any such disclosure, the County will (a) provide the Company with advance written
notice at the earliest practicable date of the proprietary information requested by or pursuant
to such Governmental Authority and the County's intent to disclose, (b) minimize, consistent
with Applicable Law, the amount of proprietary information to be provided in a manner that is
consistent with the requirements of the Governmental Authority involved, and (c) make all
reasonable efforts (which may include participation of the Company in discussions with or
pursuant to such Governmental Authority) to secure confidential treatment and minimization
of the proprietary information to be provided. In the event that efforts to secure the
confidential treatment of such proprietary information are unsuccessful, the Company shall
have the prior right to revise such information in order to minimize the disclosure of such
information if and to the extent any such revision is permitted by and consistent with the
requirements of the Governmental Authority involved.
SECTION 19.5. INTEREST ON OVERDUE OBLIGATIONS. Except as
otherwise provided herein, all amounts due hereunder, whether as damages, credits, revenue,
charges or reimbursements, that are not paid when due shall bear interest at the rate of
interest which is the Overdue Rate, on the amount outstanding from time to time, on the basis
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of a 365-day year, counting the actual number of days elapsed, and such interest accrued at
any time shall, to the extent permitted by Applicable Law, be deemed added to the amount due
as accrued.
SECTION 19.6. COST SUBSTANTIATION. (A) Substantiating Non-Fixed
Costs. The fixed component of the Service Fee and the Fixed Design/Build Price are fixed by
the terms of this Service Contract and are not subject to Cost Substantiation as provided in
subsection (B) of this Section except to the extent otherwise specifically set forth in this Service
Contract. Any other cost proposed or incurred by the Company which is directly or indirectly
chargeable to the County in whole or in part hereunder shall be the fair market price for the
good or service provided, or, if there is no market, (including costs related to emergency
actions, cost-plus work Capital Modifications, and other additional work necessitated or
additional costs to be borne on account of Uncontrollable Circumstances, County Fault or
County direction) shall be a commercially reasonable price. The Company shall provide
certified Cost Substantiation for all such other costs invoiced to the County hereunder.
(B) Cost Substantiation Certificate. Any certificate delivered hereunder to
substantiate cost shall be signed by senior management officers of the Company, shall state
the amount of such cost and the provisions of this Service Contract under which such cost is
properly chargeable to the County, shall describe the competitive or other process utilized by
the Company to obtain a fair market price, and shall state that such cost is a fair market price
for the service or materials to be supplied (or, if there is no market, that such cost is
commercially reasonable) and that such services and materials are reasonably required
pursuant to this Service Contract. The certificate shall be accompanied by copies of such
documentation as shall be necessary to reasonably demonstrate that the cost as to which Cost
Substantiation is required has been paid or incurred. Such documentation shall be in a
format reasonably acceptable to the County and shall include reasonably detailed information
concerning: (1) all subcontracts; (2) the amount and character of materials and services
furnished, the persons from whom purchased, the amounts payable therefor and related
delivery and transportation costs and any sales or personal property Taxes; (3) a statement of
the equipment used and any rental payable therefor; (4) Company and Subcontractor employee
hours, duties, wages, salaries, benefits and assessments; and (5) Company and Subcontractor
profit, administration costs, bonds, insurance, taxes, premiums overhead, and other expenses.
The Company's entitlement to reimbursement of Cost Substantiated costs of the Company
shall be subject to the limitations set forth in this Section.
(C) Technical Services. For costs proposed or incurred by the Company that
are subject to Cost Substantiation, Company personnel and personnel of Subcontractors
providing technical services shall be billed at their then currently applicable rates for similar
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services on projects of similar size and scope to the Design/Build Work or Operation Services.
The Company shall use commercially reasonable efforts to use available Company personnel
for additional work hereunder before using Subcontractors.
(D) Mark-Up. The Company will be entitled to a mark-up of 10% for a
combination of overhead, risk, profit and contingency on costs of its own personnel, except
with respect to work due to Uncontrollable Circumstances, for which the Company shall be
entitled to 5%a mark-up for overhead, risk, profit and contingency. No mark-up will be added to
the Company's costs for Subcontractors, lodging and meals or travel. Construction and
operation Subcontractors similarly will be entitled to such mark ups with respect to its
personnel costs but no mark ups for costs for their subcontractors, lodging and meals or
travel.
(E) Evidence of Costs Incurred. To the extent reasonably necessary to
confirm direct costs required to be Cost Substantiated, copies of timesheets, invoices, canceled
checks, expense reports, receipts and other documents, as appropriate, shall be delivered to
the County with the request for reimbursement of such costs.
SECTION 19.7. SUBCONTRACTORS. (A) Use Restricted. The Company
shall operate the Facility with its own employees and in accordance with Article XI and
Appendix 8. Subcontractors may be used to perform other Contract Services, subject to the
County's right of approval identified in subsection (B) of this Section.
(B) Limited County Review and Approval of Permitted Subcontractors.
Except as provided in the next sentence, the County shall have the right, based on the criteria
provided below in this Section, to approve all Subcontractors which the Company is permitted
to engage under subsection (A) of this Section for Contract Services valued in excess of $50,000
annually, which approval shall not be unreasonably withheld. County approval of
Subcontractors as provided in the preceding sentence shall not be required for: (1) Affiliates of
the Company; (2) equipment suppliers; (3) Governmental Bodies; (4) approved Subcontractors
listed in Appendix 13; and (5) Subcontractors hired by the Company for purposes of remedying
an emergency situation. The Company shall furnish the County written notice of its intention
to engage such Subcontractors, together with all information reasonably requested by the
County pertaining to the demonstrated responsibility of the proposed Subcontractor in the
following areas: (1) any conflicts of interest; (2) any record of felony criminal convictions or
pending felony criminal investigations; (3) any final judicial or administrative finding or
adjudication of illegal employment discrimination; (4) any unpaid federal, State, or local Taxes;
and (5) any final judicial or administrative findings or adjudication of non-performance in
contracts with the County or the State. The approval or withholding thereof by the County of
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any proposed Subcontractor shall not create any liability of the County to the Company, to
third parties or otherwise. In no event shall any Subcontract be awarded to any person
debarred, suspended or disqualified from State or County contracting for any services similar
in scope to the Operation Services or Design/Build Work.
(C) Subcontract Terms and Subcontractor Actions. The Company shall
retain full responsibility to the County under this Service Contract for all matters related to the
Contract Services notwithstanding the execution or terms and conditions of any Subcontract.
No failure of any Subcontractor used by the Company in connection with the provision of the
Contract Services shall relieve the Company from its obligations hereunder to perform the
Contract Services. The Company shall be responsible for settling and resolving with all
Subcontractors all claims arising out of delay, disruption, interference, hindrance, or schedule
extension caused by the Company or inflicted on the Company or a Subcontractor by the
actions of another Subcontractor.
(D) Indemnity for Subcontractor Claims. The Company shall pay or cause to
be paid to all direct Subcontractors all amounts due in accordance with their respective
Subcontracts. No Subcontractor shall have any right against the County for labor, services,
materials or equipment furnished for the Contract Services. The Company acknowledges that
its indemnity obligations under Section 17.3 shall extend to all claims for payment or damages
by any Subcontractor who furnishes or claims to have furnished any labor, services, materials
or equipment in connection with the Contract Services.
(E) Assignabili ty. All Subcontracts entered into by the Company with
respect to the Facility shall be assignable to the County, solely at the County's election and
without cost or penalty, upon the expiration or termination of this Service Contract.
SECTION 19.8. ACTIONS OF THE COUNTY IN ITS GOVERNMENTAL
CAPACITY. (A) Rights as Government Not Limited. Nothing in this Service Contract shall be
interpreted as limiting the rights and obligations of the County under Applicable Law in its
governmental or regulatory capacity (including police power actions to protect health, safety
and welfare or to protect the environment), or as limiting the right of the Company to bring any
action against the County, not based on this Service Contract, arising out of any act or
omission of the County in its governmental or regulatory capacity.
(B) No County Obligation to Issue Governmental Approvals. The County
retains all issuance and approval rights it has under Applicable Law with respect to any
Governmental Approval required with respect to the Facility, the Design/Build Work or the
Operation Services, and none of such rights shall be deemed to be waived, modified or
amended as a consequence of the execution of this Service Contract. The County shall not be
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deemed to be in breach of or in default hereunder as a result of any delay or failure in the
issuance or approval of any such Governmental Approval.
SECTION 19.9. ASSIGNMENT. (A) By the Company. The Company shall not
assign, transfer, convey, sell, lease, encumber or otherwise dispose of this Service Contract, its
right to execute the same, or its right, title or interest in all or any part of this Service Contract
or any monies due hereunder whatsoever prior to their payment to the Company, whether
legally or equitably, by power of attorney or otherwise, without the prior written consent of the
County. Any such approval given in one instance shall not relieve the Company of its
obligation to obtain the prior written approval of the County to any further assignment. Any
such assignment of this Service Contract which is approved by the County shall require the
assignee of the Company to assume the performance of and observe all obligations,
representations and warranties of the Company under this Service Contract, and no such
assignment shall relieve the Guarantor of any of its obligations under the Guaranty Agreement,
which shall remain in full force and effect during the Term hereof. The approval of any
assignment, transfer or conveyance shall not operate to release the Company in any way from
any of its obligations under this Service Contract unless such approval specifically provides
otherwise.
(B) By the County. The County may not assign its rights or obligations
under this Service Contract without the prior written consent of the Company. The County
may however, assign its rights and obligations under this Service Contract, without the
consent of the Company, to another Governmental Body if such assignee assumes, and is
legally capable of discharging, the duties and obligations of the County hereunder.
SECTION 19.10. PRACTICABILITY OF PERFORMANCE OF THE FACILITY. The
Design Requirements, the technology and the construction and management practices to be
employed in the construction of the Facility and operation of the Facility as so improved are
furnished exclusively by the Company pursuant to the terms of this Service Contract, and the
Company assumes and shall have exclusive responsibility for their efficacy, notwithstanding
the inclusion of design principles or other terms and conditions in the RFP or the negotiation of
the terms of the Design Requirements, Acceptance Test Procedures and Standards, and
Performance Guarantees between the Company and the County. The Company assumes the
risk of the practicability and possibility of performance of the Facility on the scale, within the
time for completion and in the manner required hereunder, and of reducing solid waste
through the operation of the Facility in a manner which meets all of the requirements hereof,
even though such performance and operation may involve technological or market
breakthroughs or overcoming facts, events or circumstances (other than Uncontrollable
Circumstances) which may be different from those assumed by the Company in entering into
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this Service Contract, and agrees that sufficient consideration for the assumption of such risks
and duties is included in the Fixed Design/Build Price and the Service Fee. No impracticability
or impossibility of any of the foregoing shall be deemed to constitute an Uncontrollable
Circumstance.
SECTION 19.11. FACILITY TOURS. The Company shall conduct tours of the
Facility during normal business hours and take visitors through such portions of the Facility
as are suitable for such visitation in a manner which does not interfere with the Company's
performance of its obligations hereunder as provided in Section 11.11. All visitors shall comply
with the Company's safety rules.
SECTION 19.12. COMPLIANCE WITH MATERIAL AGREEMENTS. The
Company shall comply with its obligations under agreements of the Company which are
material to the performance of its obligations under this Service Contract. The County shall
comply with its obligations under agreements of the County which are material to the
performance of its obligations hereunder.
SECTION 19.13. BINDING EFFECT. This Service Contract shall inure to the
benefit of and shall be binding upon the County and the Company and any assignee acquiring
an interest hereunder consistent with Section 19.9.
SECTION 19.14. AMENDMENT AND WAIVER. This Service Contract may not
be amended except by a written agreement signed by the parties. Any of the terms, covenants,
and conditions of this Service Contract may be waived at any time by the party entitled to the
benefit of such term, covenant or condition if such waiver is in writing and executed by the
party against whom such waiver is asserted.
SECTION 19.15. NON-DISCRIMINATION. The Company, its Subcontractor
and its suppliers in performing under this Service Contract shall not discriminate against any
worker, employee or applicant, or any member of the public, because of race, color, religion,
gender, national origin, age or disability nor otherwise commit an unfair employment practice.
SECTION 19.16. NOTICES. (A) Procedure. All notices, consents, approvals or
written communications given pursuant to the terms of this Service Contract shall be: (1) in
writing and delivered in person; (2) transmitted by certified mail, return, receipt requested,
postage prepaid or by overnight courier utilizing the services of a nationally-recognized
overnight courier service with signed verification of delivery; or (3) given by facsimile
transmission, if a signed original is deposited in the United States Mail within two days after
transmission. Notices shall be deemed given only when actually received at the address first
given below with respect to each party. Either party may, by like notice, designate further or
different addresses to which subsequent notices shall be sent.
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(B) Company Notice Address. Notices required to be given to the Company
shall be addressed as follows:
[Company Name
Local Address]
Attn: Facility Manager
With a copy to:
[Company Name--
National Address]
Attn:
(C) County Notice Address. Notices required to be given to the County shall
be addressed as follows:
Attn:
With a copy to:
Attn: [ ]
SECTION 19.17. NOTICE OF LITIGATION. In the event the Company or
County receives notice of or undertakes the defense or the prosecution of any Legal
Proceedings, claims, or investigations in connection with the Facility, the party receiving such
notice or undertaking such prosecution shall give the other party timely notice of such
proceedings and shall inform the other party in advance of all hearings regarding such
proceedings.
SECTION 19.18. FURTHER ASSURANCES. The County and Company each
agree to execute and deliver such further instruments and to perform any acts that may be
necessary or reasonably requested in order to give full effect to this Service Contract. The
County and the Company, in order to carry out this Service Contract, each shall use all
commercially reasonable efforts to provide such information, execute such further instruments
and documents and take such actions as may be reasonably requested by the other and not
inconsistent with the provisions of this Service Contract and not involving the assumption of
obligations or liabilities different from or in excess of or in addition to those expressly provided
for herein.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF the
parties have caused this Service Contract to be
executed by their duly authorized representatives as of the day and year first above written.
COUNTY OF HAWAII, HAWAII
ATTEST:
COUNTY OF HAWAII, a municipal [Company]
corporation
Name:
[Mayor] [Print Name - President]
President, [Company Name]
[Director, Department of Finance]
Approved as to form:
[County Corporation Counsel]
ATTEST: ATTEST:
[County Clerk] Printed Name:
487571.8 028493 AGMT
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ExEcuTIVE SummARY
SERVICE CONTRACT FOR THE
DESIGN, CONSTRUCTION AND OPERATION OF THE
COUNTY OF HAWAII SOLID WASTE REDUCTION FACILITY
The following represents a summary of certain significant terms and conditions of
the Service Contract as negotiated by the parties as of March 4, 2008:
Company: Wheelabrator Technologies Inc. (or a sole purpose entity wholly
owned by Wheelabrator).
Guarantor: Waste Management, Inc. a corporation organized under the laws of
Delaware, and its successors and assigns.
1. Introduction. The proposed Service Contract (the "Service Contract")
between the County of Hawaii (the "County") and Wheelabrator Technologies Inc., or a wholly
owned subsidiary of Wheelabrator Technologies Inc., (the "Company") contains detailed
provisions that address the full range of performance and risk issues associated with the design,
construction, and operation of a solid waste reduction facility that produces energy (the
"Facility"). This summary is a concise review of the major principles provided for in the
proposed Service Contract.
2. Full Service. As a full service agreement, one company is responsible for
the design, construction, and operation of the Facility. If performance problems occur, the
County need only look to one entity for remediation, thus avoiding contests among multiple
contractors over responsibility.
3. Term: The term of the Service Contract will commence upon the date that
it is executed and extend until 20 years following the date that the Facility is accepted. The
Service Contract may be extended for one five-year renewal term with the same terms and
conditions applicable during the renewal term as during the initial term of the Service Contract.
The parties must mutually agree to extend the Service Contract for the renewal term. As noted
below, however, the Service Contract may be terminated prior to the end of the initial term or
during the renewal term.
4. Contract Organization. The parties obligations are divided among the
period between Service Contract signing and issuance of a notice-to-proceed with construction
(the "Development Period"), the period after the issuance of the notice-to-proceed with
construction through acceptance of the Facility (the "Construction Period") and the period after
the acceptance date through the end of the operating term (the "Operating Period"). _
5. Development Period: Following the execution of the Service Contract, the
Company and the County will seek to fulfill certain responsibilities necessary to commence the
construction of the Facility (the "Development Period Responsibilities"). The Company's initial
responsibilities include performing certain permitting work, undertaking the Environmental
Impact Statement (the "EIS") process, refining the Design Build Price, and assisting with the
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negotiations of the Power Purchase Agreement. The County's initial responsibilities include
acting as lead agency for the EIS process and negotiating the Power Purchase Agreement. These
initial responsibilities of the parties constitute the "Initial Development Period Responsibilities"
or "Initial Development Period Work".
Unless the County has terminated the Service Contract as discussed in Section 8
below, commencing 31 days following the certification of the EIS, the County must make good
faith efforts to undertake the balance of its Development Period Responsibilities including to: (1)
adopt the general bond resolution (and issue bonds upon completion of all other Development
Period obligations of the parties); (2) execute the Power Purchase Agreement with the Power
Purchaser; (3) execute the technology supply agreement with the Company; (4) obtain the
governmental approvals for which it is responsible; (5) obtain certification of the Facility as a
"Qualifying Facility" from the Federal Energy Regulatory Commission or self-certify as
permitted by law; (6) obtain title to the site (if not already obtained); and (7) obtain all easements
or other interests in real property as necessary for the Company to construct and operate the
Facility.
Unless the County has terminated the Service Contract as discussed in Section 8
below, commencing 31 days following the certification of the EIS, the Company must make
good faith efforts to undertake the balance of its Development Period Responsibilities including,
to: (1) complete any necessary testing of the site; (2) perform all design work needed to obtain
all Governmental Approvals for which it is responsible; and (3) obtain all Governmental
Approvals for which it is responsible which are necessary to commence construction. In
addition, the Company is obligated to prepare a critical path method schedule, submit a
construction payment and performance bond, submit evidence of the required insurance, and to
deliver the technology supply agreement to the County.
6. Payment for Development Period Work.
(a) Funding of Initial Development Period Work. The Company will fund the
cost of the Company's Initial Development Period Responsibilities up to a maximum amount of
$1,000,000 (including up to $250,000 of the County's third party costs in connection with the
County's Initial Development Period Responsibilities).
(b) Balance of Development Period Work. Unless the County has terminated
the Service Contract as discussed in Section 8 below, the County will reimburse the Company
for the Initial Development Period Work funded by the Company 31 days after following
completion of the Initial Development Period, and the Company will be paid for the balance of
its Development Period Work monthly based upon the completion of specified milestones. The
total price for the Company's Development Period Work including its Initial Development
Period Work is $5,159,023.
7. Refinement of the Design Build Price. During the first 180 day period
following the Contract Date, the Company will, through an "open-book" process, refine its Fixed
Design-Build Price. If the refined Design-Build Price is less than the initial Fixed Design-Build
Price (as escalated), the County will realize sixty percent of such savings. If the refined Design-
Build Price is between $1 and $7,500,000 more than the initial Fixed Design-Build Price (as
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escalated), the Company will fully absorb such excess costs and the County will only have to pay
the initial Fixed Design-Build Price (as escalated). If the refined Design-Build Price is more than
$7,500,000 above the initial Fixed Design-Build Price (as escalated), the County will have the
option of absorbing the incremental increase (above $7,500,000) or terminating the Service
Contract as discussed in Section 8(a) below.
If the Service Contract is terminated during the period from the Contract Date
through 30 days following the certification of the EIS (i.e., the end of the Initial Development
Period) for the reasons stated in Section 8(a) below, the County will not have to reimburse the
Company for any expenses which it funded. If the Service Contract is not terminated, the
County will reimburse the Company for the Initial Development Period Work which it funded
(provided, that the accelerated design work will be paid pro-rata over the balance of the
remaining Development Period).
8. Termination of the Service Contract Dunne the Development Period.
(a) Termination Without Payment to the Company. During the period of time
from the Contract Date through 30 days following the completion of the Initial Development
Period Work, the County shall have the right to terminate the Service Contract for the following
reasons without any payment obligation to the Company: (i) within 30 days after the receipt of
the refined Design Build Price regardless of the amount of the revised Design Build Price, (ii) at
any time following the period described in (i) above, in the event the County reasonably
determines that the County's assumptions (as agreed to by the Company) regarding the
electricity power purchase agreement are not able to be achieved, (iii) within 30 days after the
receipt of the Company's report detailing potential environmental concerns and appropriate
mitigation measures with corresponding estimated costs, (iv) at any time in the event that the
actual costs of necessary environmental mitigation measures exceed those contained in the
Company's report, or (v) at any time during such period based upon material environmental
concerns raised during the EIS process which have not been addressed in the Company's
environmental report described in (iii) above.
(b) Termination With Payment to the Company. In addition to the termination
rights discussed in subparagraph (a) above, at any time during the Development Period the
County has the right to terminate the Service Contract for any reason. If the County elects to
terminate the Service Contract for convenience, the County will be required to reimburse the
Company for 100% of the costs already incurred directly by the Company and any expenses paid
or incurred to third parties directly related to the performance of the Company's Development
Period obligations which have not previously been paid by the County up to the maximum
amount of the Fixed Development Price ($5,159.03).
(b) Event of Default. The County also has the right to terminate the Service
Contract due to Company Event of Default, in which case it will not have to pay the Company,
and the County will seek payment of damages by the Company.
9. Significant Development Period Responsibilities.
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(a) Financing of the Facility. The County must secure the funds necessary to
pay the Design Build Price of the Facility. The County will own the Facility.
(b) Power Purchase Agreement. The County must negotiate the Power
Purchase Agreement which shall provide for the purchase of power by the Power Purchaser
(HELCO) for all electrical output of the Facility net of Facility usage. If the final terms of the
Power Purchase Agreement are less favorable than anticipated, the County can terminate the
Service Contract as discussed in Section 8(a) above. In the event the Company does not perform
its obligations under the Service Contract, and such failure is unexcused and causes a reduction
in revenues or increases expenses to the County under the Power Purchase Agreement, the
Company must reimburse the County for such loss in revenue or additional expense.
(c) Governmental Approvals. The Company shall apply for and obtain
governmental approvals necessary to commence construction, including Department of Health
air and solid waste permits.
10. Design and Construction of the Facility.
(a) Construction Period. Once the development period conditions are met,
the County will issue the Company a notice-to-proceed and the construction period begins. The
Company is obligated to complete the design and construct the Facility, and to successfully
perform start-up and acceptance testing by the scheduled acceptance date which is anticipated to
be 902 days following the first day of the construction period. If the Company fails to achieve
acceptance of the Facility by such scheduled acceptance date and such failure is not excused by
an uncontrollable circumstance, the Company will be liable for damages as described in
paragraph 21 below.
(b) Contract Standards. The Company is obligated to design and construct
the Facility in accordance with (i) design and construction quality standards included in the
Service Contract, (ii) requirements of applicable law, (iii) good engineering and construction
practice, (iv) a design build quality management plan, and (v) applicable insurance requirements,
among other standards. To achieve acceptance, the Company must demonstrate that the Facility
will meet the operating performance requirements set forth in the Service Contract.
(c) County Termination Options During the Construction Period. During the
Construction Period, the County has the right to terminate the Service Contract upon a Company
Event of Default and to pursue all remedies available to it in accordance with paragraph 21
below.
11. Warranties. The Company warrants to the County that the structures,
improvements, fixtures, machinery, equipment and materials incorporated in the Facility and in
all capital modifications to the Facility are new, of recent manufacture, of good quality and free
from faults and defects, suitable for its intended purpose and in conformance with the technical
specifications and the contract standards. These warranties will stay in effect for five years
following the Acceptance Date, except that the warranty against latent defects will terminate
upon the expiration of the Service Contract. No failure of a warranted structure, improvement,
fixture, machinery, equipment or material shall be the cause for an increase in the service fee
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payable by the County or non-performance of the contract services unless such failure is
attributable to an uncontrollable circumstance or County fault.
12. Start-Up and Acceptance Testing of the Facility.
(a) Start-Up. Start-up and acceptance testing of the Facility must occur by the
end of the construction period. The Company will provide the County with at least 30 days prior
notice of its substantial completion of construction of the Facility and the commencement of
start-up operations at the Facility in preparation for acceptance testing the Facility. During start-
up operations at the Facility, the County is obligated to deliver waste to the Facility in amounts
requested by the Company in order for the Company to conduct its start-up and commissioning
operations. During this period the Company will not receive the service fee, but will receive
$100 from the County for each ton of waste combusted at the Facility.
(b) Acceptance Testing. The Company will begin acceptance testing the
Facility after substantial completion and start-up of the Facility. The acceptance tests will assure
the County that the Facility is physically complete and that it "works". The acceptance tests and
standards include electricity production tests, throughput capacity tests, residue tests, and
emissions tests. The Company will be obligated to give the County a series of notices and
certifications prior to and during the acceptance tests, including notice of the quantity of waste
needed for performance of the acceptance tests. As with start-up, the County will be obligated to
deliver acceptable waste to the Facility for acceptance testing. Acceptance will not occur until
the Company certifies that the acceptance date conditions have been met and the County's
consulting engineer concurs with such certification.
(c) Extension Period. The Service Contract provides for a 1 year extension
period following the scheduled acceptance date for the Company to achieve acceptance if the
Company is unable to do so by the scheduled acceptance date. During the extension period, the
Company is obligated to dispose of all acceptable waste that is not processed at the Facility, the
County is responsible for paying the Company the service fee, and the Company must pay the
County damages for any failure to meet the Facility performance guarantees.
(d) Acceptance at a Reduced Standard. At the end of the extension period,
the Service Contract allows the Company to establish acceptance at a standard less than the full
acceptance standard, subject to certain limits. If acceptance is established at a lower standard for
any reason other than the occurrence of an uncontrollable circumstance or a capital modification,
the Company may be required to pay the County "throughput capacity liquidated damages". In
such event the Company's waste processing throughput guarantee and the County's waste
delivery obligations shall be adjusted downward.
(e) Failure to Meet Acceptance Standard. It will be an event of default by the
Company if by the end of the Extension Period the acceptance date has not occurred. As such,
the County will have the right to terminate the Service Contract.
13. Design Build Price.
(a) Design Build Price. The Company's Design Build Price of $125,485,000
consists of the fixed development period price and the fixed construction price.
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(b) Development Work Price. The Company will be paid for the development
period work and the design build work on a milestone basis. The fixed development period price
is $5,159,023 plus (or minus) any adjustments allowable under the Service Contract (including
escalation), including adjustments due to County approved change orders or as a result of the
Company submitting a refined Design Build Price as set forth in Section 7.
(c) Construction Price. As compensation for the construction of the Facility
the County will pay a fixed construction price. The fixed construction price is $120,325,977 plus
(or minus) any adjustments allowable under the Service Contract (including escalation),
including County approved change orders or as a result of the Company submitting a refined
Design Build Price as set forth in Section 7. The Company will invoice the County monthly
based upon a milestone schedule and subject to a maximum drawdown schedule.
14. County Waste Delivery Commitment. Beginning on the acceptance date,
the County will be required to deliver 85,000 tons of processible waste to the Facility each
contract year. If the County fails to deliver such amount of processible waste in any contract
year, the County will pay waste delivery shortfall damages as further described in Section 23
below.
15. Company's Throughput Guarantee. The Company is obligated to receive
and process at the Facility all processible waste delivered by or on behalf of the County in each
contract year up to the annual Facility throughput guarantee of 85,000 tons for processible waste
with an annual average higher heating value of 4,800 Btus per pound (the "Annual Throughput
Guarantee"). The Company has agreed to process predetermined amounts of waste each billing
period (the "Billing Period Throughput Guarantee") in amounts totaling the annual waste
processing throughput guarantee of 85,000 tons. The Company may refuse delivery of waste
that is considered non-processible waste, processible waste delivered during off hours,
processible waste that cannot be combusted or stored at the Facility on account of a shutdown at
the Facility due to the occurrence of an uncontrollable circumstance or County fault, or
processible waste delivered in excess of the Billing Throughput Guarantee or the Annual
Throughput Guarantee. The Company is obligated, however, to use commercially reasonable
efforts to combust all processible waste delivered to the Facility by or on behalf of the County.
The Company shall perform its obligations under the Service Contract in compliance with all
applicable laws.
16. Electricity Production Guarantee. Following acceptance of the Facility,
the Company must operate the Facility so that it produces a minimum annual average of 520
kWh of electricity per ton of waste (within an annual average higher heating value of 4,800 Btus
per pound) processed each contract year (the "Annual Electricity Production Guarantee").
17. Environmental Guarantee. The Company will be obligated to operate the
Facility in conformance with strict environmental standards equal to or more stringent than those
standards included in the operating permit. The Facility will not be allowed to operate, unless all
necessary permits have been obtained. If at any time the Company fails to comply with the
environmental guarantee, the Company will be obligated to make all necessary operating and
capital modifications at is cost and to pay damages as set forth in Section 23 below.
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18. Residue Guarantee. The Service Contract requires that the Company
comply with a residue guarantee which guarantees that the ash resulting from processing waste
will contain only limited combustible matter, will not contain excess moisture, and will not be
hazardous. Failure to meet this guarantee will result in the Company's liability to the County as
described in Section 23 below.
19. Transportation and Disposal of Residue. The Company will be
responsible for the storage and transportation of residue to the disposal facility so designated by
the County. The County's Pu'uanahulu Landfill shall be the initial residue disposal site
designated by the County.
20. Facility Maintenance. The Company is obligated to maintain the Facility
so that it is in good working order, condition and repair. The Company must keep the site in a
neat and orderly condition. In addition, the Company must perform major maintenance, repairs
and replacement at the Facility. The Company will bear the costs and expense of all
maintenance, repairs and replacements unless otherwise provided in the Service Contract. The
Company must return the Facility to the County in good condition and with a stated weighted
average remaining useful life. The County will have the option of performing audits and tests
during the Term to ensure that the Facility is being maintained properly.
21. Capital Improvements. The County may generally elect whether any
capital improvements to the Facility will be made, provided, however, that the County may not
withhold its approval of a capital modification necessary for the Company to meet the contract
standards, if such modification would not interfere with the operation of the Facility and the
Company pays for such capital modification.
22. Service Fee. The County will pay the Company a monthly service fee
starting on the acceptance date. The service fee will be based on a formula consisting of stated
components. The components of the service fee are as follows:
(i) One twelfth of a base operation fee of $7,129,685, as escalated in
accordance with the consumer price index ("CPI") each contract year, as compensation
for providing operation services which include combusting 85,000 Tons of processible
waste each year. To the extent the Company combusts more than 85,000 Tons of
processible waste in a contract year, the Company will receive an excess operation fee
equal to $63.19 per ton for each ton of waste combusted in excess of such amount. The
excess operation fee shall be escalated each contract year in accordance with the CPI;
(ii) Pass through costs based on cost substantiation for things such as
operation insurance, utilities and certain required chemicals (up to guaranteed
limitations), local fees, fees for propane gas (up to a guaranteed limitation), costs
associated with the handling of hazardous material, and transportation and disposal costs
for excess processible waste and non-processible waste;
(iii) An energy revenue credit; and
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(iv) any deductions for liquidated damages and reimbursements owed to the
County as more fully described in Section 23 below, plus any adjustments to the service
fee resulting from any capital improvements to the Facility.
23. Non-Performance Damages and Remedies.
(a) Damages Due to Compliance with Environmental Guarantee. If the
Company fails to comply with the environmental guarantee, and such failure is not the result of
an uncontrollable circumstance, the Company shall immediately correct the problem and
eliminate the cause of such failure. If such unexcused failure results in any permit violations the
Company must pay all related damages, fines, assessments, or other charges resulting from such
failure.
(b) Damage Adjustment to Account for Waste Btu Content Outside Design
Range. The Company will be liable to the County for damages for any unexcused failure to meet
the monthly waste throughput guarantee or the electricity production guarantee (which shall be
reconciled annually). Such damages will compensate the County for the use of the County
Landfill and for lost electricity revenues. The Company will not be liable to the County for any
damages if the Company can demonstrate that such failure resulted from circumstances outside
of their control.
(c) Damage Adjustments to Account for Waste Shortfalls. As noted in Section
15 above, the County must deliver 85,000 tons of processible waste to the Facility each contract
year. If the County fails to deliver such amount of processible waste in any contract year, the
County will pay the Company waste delivery shortfall damages which compensate the Company
for its lost energy revenues.
24. Company Events of Default.
(a) No Cure Opportunity. The following will be considered events of default
by the Company, giving the County the right to terminate the Service Contract and collect
damages without providing Company notice and an opportunity to cure:
(i) The unexcused failure to obtain the security instrument described in
Section 27;
(ii) The unexcused failure to achieve acceptance prior to the end of the
extension period;
(iii) The insolvency of the Company or the Guarantor or the involuntary or
voluntary filing of bankruptcy by the Company or the Guarantor;
(iv) The default of the Guarantor; and
(v) Substantial exhaustion of the liability of the Guarantor.
8
537754.4 028493 SUM
HDW Draft of 3/4/08
(b) Notice and Cure Opportunity. The following will be considered events of
default by the Company, giving the County the right to terminate the Service Contract
and collect damages following notice to the Company and a reasonable cure period:
(i) Any representation or warranty of the Company under the Service
Contract or the Guarantor under the Guaranty Agreement was materially false or
inaccurate when made and the legality of the Service Contract, the Guaranty Agreement
or the ability of the Company or the Guarantor to carry its obligations thereunder is
adversely affected; or
(ii) the Company fails, refuses or otherwise defaults in its duty to (x) pay an
amount required to be paid under the Service Contract within 60 days following its due
date or (y) perform any material obligation under the Service Contract, (unless excused
on account of the occurrence of an uncontrollable circumstance or County fault).
25. Termination for Convenience. The County has the right to terminate the
Service Contract for convenience without cause at any time following times set forth below:
(i) During the Development Period as described in Section 5 above;
(ii) During the Operating Period the County pays any amounts already due the
Company plus $3,000,000 (plus a declining percentage of any of the $7,500,000 absorbed
by the Company described in Section 7 above), reduced by 1/240 of such amount for
each month that has elapsed following the acceptance date; however, during the renewal
period the convenience termination fee is zero.
(iii) following a total constructive loss of the Facility on account of an
uncontrollable circumstance the County must pay any fees already accrued and payable
to the Company, but not the $3,000,000 (plus absorbed costs) fee set forth above.
26. Liability. The Company will be liable for performance and termination
damages up to 125% of the Fixed Design-Build Price through design, construction, start-up,
acceptance testing and the second anniversary of the acceptance date. The Company will be
liable for performance and termination damages up to 30% of the Fixed Design-Build Price
following the second anniversary of the acceptance date. The Company will also be responsible
for all design, construction or operating overruns, claims, losses and liabilities to third parties;
fines and penalties paid to Governmental Bodies; and, indemnification of the County for third
party claims due to Company fault, without limitation.
27. Security. The Company will provide the following security:
(a) Parent company guaranty guaranteeing the performance and payment
obligations of the Company.
(b) Letter of credit equal to $10,000,000 by the Guarantor in the event there is
a material decline in the parent guarantor's credit rating rendering the Guaranty's credit rating
below investment grade.
9
537754.4 029493 SUM
HDW Draft of 3/4/08
(c) During the Construction Period, the Company shall provide a construction
payment and performance bond equal to the fixed construction period price.
(d) During the Operating Period, the Company shall provide a letter of credit
in the stated amount of $2,000,000.
28. Risk Sharing and Uncontrollable Circumstances. The Service Contract
allocates risk in the event of an occurrence of an uncontrollable circumstance which is an act,
event or condition that is beyond the reasonable control of the parties:
If an uncontrollable circumstance materially expands the scope of a parry's
obligations, materially interferes with, materially delays or materially increases the cost of the
party's performing its obligations under the Service Contract, the party is entitled to relief from
its performance obligations under the Service Contract, an extension of schedule or an increase
of the design build price or the service fee or any combination of those things, which properly
reflects the interference with performance, the time lost or the amount of the increased cost. The
party affected by an uncontrollable circumstance must take reasonable measures to mitigate the
effects of such uncontrollable circumstance. Examples of uncontrollable circumstances might be
changes in law, the discovery of hazardous materials at the site, the discovery of lava tubes at the
site, volcanic eruptions and tsunamis. The Service Contract expressly provides that certain things
will not be considered uncontrollable circumstances and, therefore, will be the Company's risks
including, but are not limited to: labor disputes involving employees of the Company, its
affiliates or subcontractors; subsurface conditions at the site, other than lava tubes or similar
holes; and weather conditions normal for the County.
29. Miscellaneous Provisions. The Service Contract incorporates additional
protections in the form of insurance provisions requiring that the Company maintain adequate
insurance for the Facility at all times; indemnity provisions, whereby the Company and County
mutually agree to indemnify the other for any loss or expense incurred due to fault or negligence;
and limitations on assignments of the Service Contract. The forum for disputes will be in the
Hawaii state courts located in Hawaii County.
10
537754.4 028493 SUM
Harry Kim i' William Takaba
Mayor Director
Nancy E. Crawford
• Deputy Director
County of Hawaii
Finance Department
25 Aupuni Street Room 118 • Hilo, Hawaii 96720
(808) 961-8234 • Fax (808) 961-8248
March 4, 2008
Mark A. Weidman, President
Wheelabrator Technologies, Inc.
4 Liberty Lane West
Hampton, NH 03842
Reference: RFP Number 2210
Waste Reduction Facility Design-Build Operate Project
The Evaluation Committee ("Committee") evaluated the Stage 2 Proposal submitted on April 13,
2007 by Wheelabrator Technologies, Inc., together with its Best and Final Offer (BAFO) of
January 31, 2008, and subsequent negotiations and proposals. At its meeting on February 25,
2008, the Committee agreed that the documents received are complete and sufficiently detailed.
After conducting a thorough review of the proposal and offer, with input from the County's legal
and technical consultants, Hawkins Delafield & Wood LLP and R.W. Beck, Inc., the Committee
recommended the following:
• That an award of a contract be made to Wheelabrator Technologies, Inc., subject to Hawaii
County Council approval of a resolution that would authorize a multi-year contract.
• That "financing be done either through General Obligation Bonds, Revenue Bonds, or any
other appropriate financing mechanism, subject to approval by the Council."
In its recommendation, the Committee stated that although capital costs are higher than
previously estimated, there are significant safeguards that limit the County's liability and that the
proposal is worth pursuing. Further, the contract allows the County Council to initiate
cancellation with no penalty to the County after:
• Final construction costs and revenues are determined in six months; or
• The environmental impact statement is completed and the County is not satisfied with its
findings.
Hawaii County is an equal opportunity provider and employer.
Mr. Mark A. Weidman
Page Two
March 4, 2008
As the County's chief procurement officer, I hereby accept the Committee's recommendations
and am pleased to award Wheelabrator Technologies, Inc. the Waste Reduction Facility Design-
Build-Operate Project, RFP No. 2210. Should you have any questions, please contact me.
Thank you very much.
Sincerely yours,
William Tak ba
Director of Finance
cc: Harry Kim, Mayor
Bobby Jean Leithead-Todd, Director
Rick Sapir, Hawkins Delafield Wood LLP
Kyle Rhorer, R.W. Beck, Inc.
Craig Masuda, Deputy Corporation Counsel
Harry Kim rP!r u~ y William Takaba
Mayor Director
• Nancy E. Crawford
re nib~'~ Deputy Director
County of Hawaii
Finance Department
25 Aupuni Street, Room 118 • Hilo, Hawaii 96720
(808) 961-8234 . Fax (808) 961-8248
MEMORANDUM
DATE: March 4, 2008
TO: File
FROM: William Taka
Director of Finance
RE: RFP 2210 Waste Reduction Facility Design-Build-Operate
Project
Wheelabrator Technologies, Inc. was the only responsible offeror submitting an
acceptable proposal to Stage 2 of the referenced Request for Proposal. We
have determined that the submitted price and terms are fair and reasonable and
that other prospective offerors had reasonable opportunity to respond.
Pursuant to Hawai'i Administrative Rules, §3-122-59(a)(1) (Waiver to competitive
sealed proposal process) award may be made.
Hawaii County is an equal opportunityprovider and employer.
Message Page 1 of 2
Talkaba, Bill
From: Eric Sapir [ESapir@Hawkins.com]
,ant: Tuesday, March 04, 2008 7:02 AM
To: Leithead-Todd, Bobby Jean; Takaba, Bill; Rhorer, Kyle
Cc: Stephanie Kosmos
Subject: FW: 180 Days
As discussed in previous email.
-----Original Message-----
From: O'Friel, Michael [mailto:mofriel@wm.com]
Sent: Tuesday, March 04, 2008 11:48 AM
To. Eric Sapir
Cc: Ristau, Jack
Subject: Re: 180 Days
We agree to tie PPA pricing out to end of EIS process.
Original Message
From: Eric Sapir <ESapir@Hawkins.com>
To: O'Friel, Michael
Cc: Ristau, Jack
Sent: Tue Mar 04 10:01:14 2008
Subject: RE: 180 Days
Mike,
Inctead of tying it to the date that the old schedule had for the end of the EIS process, I think it would make more sense to be consistent with
resentation to the Council which tied it to the end of the EIS process (which I think you estimated would only be 2 or 3 months later than
me schedule which you previously provided).
I spoke with Jack this morning and he said that he was talking with Matt (your permitting guy) about providing us a schedule and description of
work that will be done relating to the EIS work and the permitting work. Also, while I agree with your comment in the last bullet, I raised the
concern to Jack that if the Development Schedule begins approaching the time period (4 years) that would allow either party to terminate, we
would want to consider making that period longer.
-Rick
-----Original Message-----
From: O'Friel, Michael [mailto7mofHel(a~wm.com]
Sent: Monday, March 03, 2008 11:28 PM
To: Eric Sapir
Subject: 180 Days
This was based on when the EIS would have been final under the old schedule. As you said we don't need to wait until PUC approval.
r******rr+*****+*r++***rtrt++*******r++****r++****rttr+**rtrr+++++***
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3/4/2008
Message Page 2 of 2
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contained in the communication (including any attachments) is not
intended or written to be used, and cannot be used, for the purpose
of (i) avoiding penalties under the Internal Revenue Code or
(ii) promoting, marketing, or recommending to another party any
transaction or matter addressed herein.
This e-mail, including any attachments, is sent by a law firm and may
contain information that is privileged or confidential. If you are not
the intended recipient, please delete the e-mail and any attachments,
destroy any printouts that you may have made and notify us immediately
by return e-mail. Thank you.
3/4/2008
P. i
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Reason for error
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E.5) Exceeded max. E-mail size
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HARRY KIM e'" }g William T. Takaba
Mayor Director
•i'•. Nancy E. Crawford
OM•o~YN':?~
Deputy Director
County of Hawaii
DEPARTMENT OF FINANCE
FACSIMILE TRANSMITTAL SHEET
TO: FROM:
Mark A. Weidman, William Takaba, Director of
President Finance
Wheelabrator Technologies,
Inc.
DATE:
MAR 4 Z-U88
FAX NUMBER: TOTAL NO. OF PAGES INCLUDING COVER:
(603) 929-3135
PHONE NUMBER: SENDER'S REFERENCE NUMBER:
RFP NO. 2210 = WASTE YOUR REFERENCE NUMBER:
REDUCTION FACILITY DESIGN-
BUILD OPERATE PROJECT
? FOR APPROVAL ? FOR EXECUTION ? AS REQUESTED ? FOR REVIEW & COMMENT
? FOR INFORMATION ? FOR QUOTATION ? OTHER
NOTES/COMMENTS:
Letter dated March 4, 2008 follows. Should you have any questions, please call me at
(808) 961-8234. Thank you.
25 Aupuni Street, Room 118 • Hilo, Hawaii 96720.4252
(808) 961.8234 . Fax (808) 961-8248
Hawaii County is an equal opportunity provider and employer.
NOTICE OF A WARD
REQUEST FOR PROPOSAL NO. 2210
TO DESIGN, BUILD, AND OPERATE A WASTE
REDUCTION FACILITY IN HILO
Award for the subject proposal has been
made to:
WHEELA ORATOR TECHNOLOGIES, INC.
Contract Amounts;
*$Z25,485,000 (Design-Build)
**$7,129,6851Yr. (Operating Fee) 3
LAnnual e Hawaii County Council of multi-year agreement.
nd construction escalation index adjustments at time
.
mer Price Index (CPI) adjustments.
i
DATE OF A WARD.,
MARCH 4, 2008
DATE POSTED;
MARCH 4, 2008
Haivai'i County is an Equal Opportunity Provider and Employer
11W 1W 1W 1W 1W IMF 1W 1W 1W W W 1w1w]
WRFTimetab1e080304.x1s WASTE REDUCTION FACILITY
31412008 11:34 AM RFP #2210
NO. ACTIVITY DATE
1 Hardin ESE Completed Solid Waste Integrated Management Plan. 12/31/02
2) County Council asked DEM to research and solicit proposals for WRF. Prior to
7/21/05
3 Retained Hawkins Delafield & Wood LLP 7121/05
4 Retained R.W. Beck, Inc. Oct. 2005
5) Environmental Management Committee endorsed Statement of Purpose and Need and 10/17/05
Project Team recommendations.
6 R.W. Beck prepared Waste Reduction Technology Assessment. 11/28/05
Determined that based on ISWMP and the updated Waste Reduction Technology
7) Assessment, the "Acceptable Technologies" are: waste-t-energy (bass burn), Waste-to- 11/28/05
energy refuse derived fuel), and Thermal gasification (pyrolysis and conventional.
8) Prepared and issued Stage 1 RFP. Direct mail (120+), website postings, HTH, WHIT, 12/28/05
Advertiser, Waste News, Waste Age.
9 Conducted pre-proposal meeting and site tour. 1/18/06
10 Issued Addendum No. 1 to Stage 1 RFP. 2/6/06
11) Executive session with County Council: General recap, Stage 1 RFP, Waste Reduction 2/28/06
Technology Assessment, EISPN, schedule.
12 Issued Addendum No. 2 to Stage 1 RFP. 3/7/06
Wayne Rifer, Rifer Environmental, documented decisions regarding the waste reduction
13) technology evaluation and procurement. The solid waste advisory committee decided that the 4/5/06
following technologies chould be carried forward: Waste-to-energy (combustion), Thermal
Gasification, and Anaerobic Digestion.
14 R.W. Beck revised Waste Reduction Technology Assessment. 4/10/06
15 Received statements of qualifications from 12 companies. 4/20/06
16) Evaluation Committee met and selected Covanta Energy Corporation, L-Con Constructors, 4/28/06
Wheelabrator Technologies, Inc. to be short-listed.
17) Geometrician, Inc. completed EISPN process and report. April 2006
18) Executive session with County Council: General recap, Stage 1 proposal evaluation findings, 5/1/06
shortlist recommendation, schedule.
19 Posted public notice of shortlistin . 5/1/06
F 20 Prepared and issued Stage 2 RFP. 10/16/06
21) Executive session with County Council: Update, Stage 1 proposal evaluation findings, 5/1/06
shortlist recommendations, schedule.
22 Issued Addendum No. 1 to Stage 2 RFP. 1/19/07
23 Issued Addendum No. 2 to Stage 2 RFP. 2/8/07
24 Issued Addendum No. 3 to Stage 2 RFP. 3/15/07
25) Executive session with County Council: Recap and update, Stage 2 proposal evaluation
findings, financial implications, next steps. 7/10/07
26) Solicited and incorporated comments from short-listed firms on draft Stage 2 RFP. 8/06 -
10/06
27 Issued Stage 2 RFP. 10/16/07
28) Received two proposals: Wheelabrator Technologies, Inc. & Covanta Energy Services, Inc. 4/16/07
Proposals evaluated by consultants and evaluation committee in accordance with Stage 2
29) RFP. Proposal submitted by Covanta was incomplete and non-responsive based on the 4/18/07
Stage 2 RFP requirements.
30) 1 Wheelabrator responded to clarification questions received and included in evaluation 6/1/07
process.
31 Evaluation Committee held proposal clarification meeting with Wheelabrator. 6/4/07
Evaluation Committee recommended that the administration proceed to negotiate a best and
32) final offer with Wheelabrator and that financing be done either privately or with revenue 7/9/07
bonds.
33) Executive session with County Council: Recap and update, Stage 2 proposal evaluation 7/10/07
findings, financial implications and options.
WRFTimetab1e080304.xl$ WASTE REDUCTION FACILITY
3/4/2008 11:34 AM RFP #2210
NO. ACTIVITY DATE
34) Council members Naeole, Higa, and Hoffmann visited Wheelabrator WTE facilities in Oct. 2007
Connecticut, Florida, and Germany.
35) Legal consultants conducted due diligence investigations of Wheelabrator, and discussions Oct. -
on power purchase agreement with HELCO. Nov. 2007
36) Executive session with County Council: Recap and update, recent project activities, 12/5/07
,presentation b Wheelabrator Technologies, Inc., next steps.
37 Wheelabrator finalized Best and Final Offer and submitted to County. 1/31/08
38) Executive session with County Council: Suggested we make award, then obtain approval for 2/21/08
multi-year contract with Wheelabrator. Council agreed.
Evaluation committee met to act on Best and Final Offer. Accepted, with additional
39) concessions from Wheelabrator that Jack Ristau agreed to at Council Executive session on 2/25/08
2/21/08.
40 Evaluation committee submitted recommendation to Finance Director, William Takaba. 2/27/08
41) Finance made award to Wheelabrator, conditioned upon multi-year award be approved by 3/4/08
Coun Council.
42 Award posted. 3/4/08