AGREEMENT

By and Between

[ENRON NORTH AMERICA CORP.]

AND

FUELCELL ENERGY, INC.
For

Direct FuelCell® Power Plants

TABLE OF CONTENTS

ARTICLE I.  DEFINITIONS	7 8
ARTICLE II.  RESPONSIBILITIES OF PURCHASER	12 13
2.1	Purchaser Responsibilities	12 13
2.2	Compliance with Governmental Rules	1213
2.3	Unit Interiors	14
ARTICLE III.  RESPONSIBILITIES OF SELLER	14 15
3.1	General Obligations	14 15
3.2	Delivery of Equipment and Documentation	14 15
3.2.1	Delivery to Delivery Point	14 15
3.2.2	Installation Services	14 15
 3.2.4
3.2.3	Maximize Assembly	14 15
3.3	Relevant Information	14 15
3.4	Hazardous Materials	Notification 15 16
3.5	Employment of Licensed Personnel	15 16
3.6	Customs Clearance	16
3.7	Compliance with Governmental Rules	16
3.8	Purchaser Review of Vendors	17 18
3.9	Financing Assistance	17 18
3.10	Purchaser Permit Support	17 18
3.11	Spare Parts	18 19
3.12	Key Personnel	18 19
ARTICLE IV.  REPRESENTATIONS AND WARRANTIES	19 20
4.1	Representations and Warranties of Purchaser	19 20
4.2	Purchaser Supplied Information	19 20
4.3	Representations and Warranties of Seller	19 20
ARTICLE V.  PURCHASE AMOUNT AND OTHER CHARGES	22 23
5.1	Purchase Amount	22 23
5.1.1	Purchase Amount	22 23
5.2	Taxes and Contributions	22 23
5.2.1	Seller Seller’s Responsibility for Personnel Taxes	22 23
5.2.2	Seller’s Responsibility for Taxes	22 23
5.2.3	Tax Penalties	22 23
5.3	Changes Increases to the Purchase Amount	23
5.4	Termination	23 24
 5.4.1 Cancellation by Purchaser 23
ARTICLE VI.  PAYMENT TERMS	24 25
6.1	Payment of Purchase Amount	24 25
6.1.1	Payment	Periods. 24 25
6.1.2	Payment for Spare Parts	24 25
6.2	Payment Disputes	24 25
6.3	Payment of Vendors. 24	25
6.4	Purchaser Delay; Payment	24 25
6.5	Notices of Nonpayment	25 26
6.6	Lien Release	25 26
6.7	Invoices	25 26
6.7.1	Contract Reference	25 26
6.7.2	Address for Invoices	25 26
6.7.3	Date of Receipt	25 27
6.8	Method of Payment	25 27
6.9	Payments Not Acceptance of Work	26 27
 ARTICLE VII. EFFECTIVE DATE, COMMENCEMENT OF THE WORK, TERMINATION 26
6.10	Punchlist	27
 7.1 Effective Date 26
ARTICLE VII.  RELEASE	28
 7.2 Commencement of Work 26
7.1	Effective Period for Submitting Release	28
7.2	Release	28
ARTICLE VIII.  PROJECT DOCUMENTS	27 29
8.1	Project Management Plan	27 29
8.2	Monthly Reports	27 29
 8.3
8.3	Design Drawings	29
8.4	Specifications	27 29
ARTICLE IX.  INSPECTION AND CORRECTION OF WORK	28 30
9.1	Inspections	28 30
9.2	Resident Facilities	28 30
9.3	Quality Plan	28 30
9.4	Notice 28 of Witness Points	30
9.5	Correction of Equipment	29 31
 ARTICLE 30
ARTICLE X.  PERFORMANCE GUARANTEES AND ACCEPTANCE	32
10.1	Performance Guarantees	30 32
10.2	Performance Standard 30 Standards	32
10.3	Endurance	30 32
10.4	Remedy for Failures to Meet Performance Standards	30 32
10.5	Testing	30 32
 10..5.1
10.5.1	Notice of Installation Completion,; Conducting Tests	30 32
10.5.2	Test Results	31 33
10.5.3	Costs of Retests	31 33
10.6	Acceptance	31 33
10.7	Reduced Purchase Amount for Failing to Meet Guaranteed Performance Standards	3133
10.8	Improved Performance	33
10.9	Water Quality	33
ARTICLE XI.  CHANGE ORDER	32 35
11.1	Adjustment of Purchase Amount	32 35
11.2	Purchaser Requested Change Order	32 35
11.3	Seller Requested Change Order	32 35
11.4	Other Change Order	32 35
11.5	Disputes	33 36
11.6	Change Order Pricing	33 36
11.6.1	Method of Pricing	33 36
11.6.2	Cost Plus Basis	33 36
11.6.3	Audit Rights	34 37
ARTICLE XII.  INTENTIONALLY OMITTED 35 INTELLECTUAL PROPERTY RIGHTS AND INDEMNITY	38
 15.3
12.1	Seller’s Drawings, Etc. for Use by Purchaser	35 38
 15.4
12.2	Licensing Procedure	35 38
 15.2.2
12.3	Infringement Cures and Defense	35 38
ARTICLE XIII.  ORDER OF PRECEDENCE	37 40
13.1	Order of Precedence	37 40
ARTICLE XIV.  WARRANTY	38 41
14.1	Seller’s Warranty	38 41
14.1.1	Primary Warranty	Period 38 41
14.1.2	Warranty Clarification	38 41
14.1.3	Warranty Breach Notice	38 41
14.2	Remedy	38 42
14.2.1	Obligations, Responsibilities and Recourse	38 42
14.2.2	Continued Warranty on Corrections or Repairs Performed During the Primary Warranty Period	39 42
14.3	Extended Stack Module Warranty	Period 39 42
14.4	Vendor Warranty	40 43
14.5	Limited Warranty	40 43
14.6	Defective Equipment	40 43
14.7	Termination of Warranty	4043
14.8	Damage caused by Equipment	44
ARTICLE XV.  RISK OF LOSS AND TITLE	41 45
15.1	Risk of Loss	41 45
15.2	Title	41 45
ARTICLE XVI.  PACKING AND SHIPPING	42 46
16.1	Packing	42 46
16.2	Notice of Shipment	42 46
ARTICLE XVII.  DEFAULT; TERMINATION	43 47
17.1	Event of Seller Default	43 47
17.2	Purchaser's Remedies Against Seller	43 47
17.3	General Obligations	44 48
17.4	Payment Obligations	44 48
17.5	Events of Purchaser Default	44 48
17.6	Seller Remedies	45 48
17.7	Termination Due to Inability to Obtain a Permit	45 49
ARTICLE XVIII.  FORCE MAJEURE	46 50
18.1	Failure to Perform Due to an Event of Force Majeure	46 50
18.2	Events of Force Majeure	46 50
18.3	Notice of Event of Force Majeure	46 50
18.4	Events of Force Majeure	47 51
18.5	Certain Events Not Excused	47 52
18.6	Continued Performance	48 52
18.7	Force Majeure - Delays	48 52
18.8	Force Majeure - Cost	48 52
ARTICLE XIX.  INSURANCE	49 53
19.1	Insurance - Seller	49 53
19.1.1	All Risk	49 53
19.1.2	Workers Compensation and Employers Liability Insurance	49 53
19.1.3	Commercial General Liability Insurance	49 53
19.1.4	Business Automobile Liability Insurance	49 53
19.1.5	Excess Umbrella Liability Coverage	50 53
19.1.6	Vendors	50 54
19.1.7	Certificate of Insurance	50 54
19.1.8	Other Requirements	50 54
19.1.9	Compliance with Insurance	50 54
19.1.10	Limitation	51 54
 19.1.10. 51
19.1.10.1	55
19.1.10.2	51 55
19.2	Insurance - Purchaser	51 55
19.3	Primary Insurance	51 55
ARTICLE XX.  INDEMNIFICATION	52 56
20.1	Third Party	52 56
20.2	Notice	52 56
20.3	Survival of Obligation	53 57
ARTICLE XXI.  NON-DISCLOSURE OF INFORMATION	54 58
21.1	Proprietary Information	54 58
21.2	Press Releases	54 58
21.3	Confidentiality	54 58
ARTICLE XXII.  ASSIGNMENT	57 61
22.1	Assignment by Seller	57 61
22.2	Assignment by Purchaser	57 61
22.3	Assignment after Acceptance	57 62
ARTICLE XXIII.  RELATIONSHIP OF THE PARTIES	58 63
23.1	Independent Contractor	58 63
23.2	Responsibilities of Seller as Principal for its Agents	58 63
23.3	Employees	58 63
ARTICLE XXIV.  NOTICES AND COMMUNICATIONS	59 64
24.1	Notices	59 64
24.2	Effectiveness of Notices	59 64
24.3	Technical Communications	59 64
ARTICLE XXV.  DISPUTE RESOLUTION	60 65
25.1	Negotiation of Disputes	60 65
25.2	Waiver of Trial by Jury	60 65
25.3	Consent to Jurisdiction	60 65
25.4	Dispute Resolution Procedures	60 65
ARTICLE XXVI.  LIMITATION OF LIABILITY	63 68
26.1	Maximum Liability	63 68
26.2	Consequential Damages	63 68
26.3	Releases Valid in All Events	63 68
ARTICLE XXVII.  DRUG AND ALCOHOL-FREE WORKPLACE	64 69
ARTICLE XXVIII.  MISCELLANEOUS	65 70
28.1	Validity and Enforceability	65 70
28.2	Governing Law	65 70
 29.3
28.3	Entire Agreement	65 70
28.4	Agreement Modification	65 70
28.5	Waiver	65 70
28.6	Headings	65 70
28.7	Third-Party Beneficiaries	65 70
28.8	Counterparts	65 70
28.9	Equal Employment Opportunity	65 70
28.10	Cooperation on Site	66 71

AGREEMENT

This Agreement is made and entered into and effective on the ___ day of ______________, 2000 (the “Effective Date”) by and between [ENRON NORTH AMERICA CORP.]., incorporated under the laws of the state of Delaware, with offices located at [                    ] ("Purchaser"), and FuelCell Energy, Inc., a corporation incorporated under the laws of Delaware (“Seller”), with offices located at [                                ].

RECITALS

WHEREAS, Purchaser has the need to acquire fuel cell power plants and associated equipment and services; and

WHEREAS, Seller is in the business of designing, engineering, manufacturing, and installing Direct FuelCell power plants and associated equipment and providing other services related thereto;

WHEREAS, Purchaser wishes to contract with Seller for the design, engineering, manufacture, and installation of such equipment and other services related thereto;

WHEREAS, the parties desire to set forth the terms and conditions under which Seller will provide and Purchaser will pay for such equipment and related services;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and intending to be legally bound, the parties hereto agree as follows:

ARTICLE I.  DEFINITIONS

Capitalized words used in this Agreement without other definition shall have the meanings specified in this Article I, unless the context requires otherwise.

As used in this Agreement, the terms "herein", "herewith" and "hereof" are references to this Agreement, taken as a whole, the term "includes" or "including" shall mean "including, without limitation," and references to a "Section", "subsection", "clause", "Article", "Exhibit", "Appendix" or "Schedule" shall mean a Section, subsection, clause, Article, Exhibit, Appendix or Schedule of this Agreement, as the case may be, unless in any such case the context requires otherwise.  All references to a given agreement, instrument or other document shall be a reference to that agreement, instrument or other document as modified, amended, supplemented and restated through the date as of which such reference is made, and reference to a law, regulation or ordinance includes any amendment or modification thereof.  A reference to a person includes its successors and permitted assigns.  The singular shall include the plural and the masculine shall include the feminine, and vice versa.  

The terms and the definitions set forth herein apply when capitalized.

“Acceptance” shall have the meaning as set forth in Section 10.6.

“Acceptance and Performance Evaluation Testing Protocol” shall have the meaning as set forth in Section 10.5.1.

“Affiliate” shall mean a person or entity who, with respect to a specified person or entity, directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control or ownership with, the person or entity specified.

“Agreement” shall mean this Agreement for the purchase of the Equipment, including all Exhibits attached hereto, as amended from time to time as provided herein.

“Applicable Laws” shall mean any applicable federal, state, municipal or local statute, ordinance or other law, regulation or by-law or any rule, code or direction or any license, consent, permit, authorization or other approval including any conditions attached thereto (whether relating to the environment or otherwise) which has appropriate jurisdiction.  

“Average Purchase Amount” shall mean the total of the Purchase Amounts for all Units included in all Releases submitted under this Agreement divided by the total number of Units subject to release under this Agreement.

“Base Stack Price” shall have the meaning set forth in Section 14.3.

“Change in Law” shall mean any change in, or binding change in the judicial or administrative interpretation of, or adoption of, any Applicable Law, which is implemented after the Effective Date, and which has an adverse affect on a party’s performance under this Agreement; provided, however, that a change in any federal, commonwealth, state or local income or franchise tax law, workers' compensation, or payroll or withholding tax law shall not constitute a change in law hereunder. 

“Change Order” shall have the meaning as set forth in Section 11.2.

“Day or day” shall mean a calendar day, including weekdays, weekends, and holidays.

“Delivery Point” for all Units, delivery shall mean a Facility location in Connecticut designated by Purchaser in a Release pursuant to Section 7.2. 
“Direct FuelCell Power Plants” shall mean electrical power generation facilities using fuel cell units manufactured and licensed by Seller.

“Effective Date” shall have the meaning as set forth in the preliminary statements.

“Equipment” shall mean the parts, components and materials specified in the Final Specifications and required for the performance of the Units and the balance of plant pursuant to this Agreement.

“Event of Force Majeure” shall have the meaning as defined in Section 18.1.

“Event of Purchaser Default” shall have the meaning as defined in Section 17.5.
 
“Event of Seller Default” shall have the meaning as defined in Section 17.1.

“Expected Delivery Date” shall mean the date that the major components of a given Unit are expected to be delivered to a Site pursuant to Section 7.2, the Expected Delivery Date being at least ninety (90) days prior to the Guaranteed Installation Date unless otherwise agreed.  Seller shall in no event deliver Units of Equipment prior to the Expected Delivery Date unless Seller has received prior written consent from Purchaser for such early delivery. 

“Extended Warranty Period” shall have the meaning as set forth in Section 14.2.2.

“Facility” shall mean each electric generation plant developed hereunder and comprised of the specified number of Units and the balance of plant.

“Final Project Schedule” shall mean a mutually agreed upon timeline for each party’s performance of the obligations contemplated by this Agreement, the Scope of Work and any given Release.

“Final Specifications” shall mean the final, “as built” specifications issued by Purchaser pursuant to Section 8.3 for the design, manufacture, assembly, performance and supply of the Units, which will be generally in conformity with the Preliminary Specifications.

“Guaranteed Acceptance Date” shall mean the date set forth in an applicable Release by which a particular unit will achieve Acceptance and shall be calculated in accordance the timeline set forth in Section 17.1(d).

“Hazardous Materials” shall mean any hazardous substance or hazardous waste as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Resource Conservation and Recovery Act, as amended, the Hazardous Waste Transportation Act, as amended, and regulations promulgated pursuant to these Acts and any similar law or regulation in the United States defining hazardous substances or hazardous waste, and any equipment containing polychlorinated biphenyls or asbestos that may become friable.

“Heat Rate” shall mean the actual fuel energy consumed during the Performance Test determined from the actual lower heating value of the fuel multiplied by the quantity of fuel consumed and expressed in British Thermal Units (BTU), divided by the Maximum Unit Output measured in kWh during the Performance Tests, expressed as BTU/kWh(LHV) and measured from the interconnection points set forth on Exhibit C.

“Indemnified Party” shall have the meaning as set forth in Section 20.1.

“Installation Completion” shall have the meaning set forth in Section 10.5.1.

“Interest Rate” shall mean the prime rate as published by Citibank at its New York office plus two percent (2%) per annum, provided however, that the Interest Rate shall never exceed the highest applicable lawful rate.

“kW” shall mean kilowatt.

“kWh or kwh” shall mean kilowatt hour.

“Lender” shall mean any financial institution from which Purchaser is obtaining financing in connection with a Facility.

“Maximum Unit Output” shall mean [to be pulled from Exhibit] the maximum electrical output measured for a particular Unit in the most recent Performance Test conducted on such Unit.  The Maximum Unit Output shall not exceed 2000 kW for each 2.0 MW Unit, 2400 kW for each 2.4 MW Unit, and 3000 kW for Units which have had one or more modules replaced.

“Notice or notice” shall mean any notification of one party hereto by the other party hereto with respect to any matter arising under or in connection with this Agreement, to be given as provided in Section 24.1 hereof.

“O&M Spare Parts” shall have the meaning set forth in Section 3.11.

“O&M Spare Parts Amount” shall have the meaning set forth in Section 3.11.

“Patent Indemnities” shall have the meaning as set forth in Section 12.3.

“Performance Standards” shall have the meaning as set forth in Section 10.1.

“Performance Test” shall mean the test(s) conducted at each Site on each Unit in accordance with the Acceptance and Performance Evaluation Testing Protocol to determine whether the tested Unit meets the Performance Standards.

“Performance Test Certificate” shall mean the certificate(s) prepared by Purchaser in the format attached hereto as [Exhibit G-1 or G-2] E and provided to Seller, certifying that Performance Tests have been completed and setting forth the results thereof in such detail to reflect the performance of the Units.  Such certificate(s) shall also document the results of any other tests performed in accordance with the Final Specifications.

“Permit Notice” has the meaning set forth in Section 3.10.

“Preliminary Specifications” shall mean those design, manufacture, assembly, and performance specifications attached hereto as Exhibit B-1, which shall be subject to change from time to time in accordance with this Agreement; provided that the Preliminary Specifications shall include those details set forth on Exhibit C, which details shall not be subject to change and shall be incorporated into the Final Specifications.  

“Primary Warranty Period” shall have the meaning as set forth in Section 14.1.1.
	
“Project Management Plan” shall mean the plan as described in Section 8.1.

“Project Manager” shall mean the project manager designated by Seller pursuant to Section 3.3(a) hereof.  

“Punchlist” shall mean a list of incomplete or deficient work or materials associated with Seller’s performance of the Scope of Work, which is comprised of those items which are minor in nature and do not affect the performance of the Units, safety of personnel working on or operating the Units and Equipment or the ability of the Units to function properly.  

“Purchase Amount” shall have the meaning set forth in Section 5.1.1, as such amount may be adjusted from time to time in accordance with the terms of the Agreement.

“Purchaser” shall have the meaning set forth in the preliminary statements.

“Purchaser Delay” shall have the meaning set forth in Section 6.4.

“Purchaser's Representative” shall mean the individual designated by Purchaser pursuant to Section 2.1(a) hereof, who shall have the responsibility and authority specifically delegated to such individual by Purchaser and made known in writing to Seller.

“Release” shall have the meaning as set forth in Section 7.2.

“Scope of Work” shall mean a statement executed by both parties setting forth the Units and all other design, engineering, manufacture, delivery, transportation, services, equipment, drawings, documentation, supplies and materials to be performed and/or furnished by Seller and Purchaser pursuant to this Agreement. The Scope of Work is generally described in Exhibit B.

“Seller” shall have the meaning set forth in the preliminary statements.

“Seller’s Use of Hazardous Materials” shall have the meaning set forth in Section 3.4(b).

“Shipping Charge” shall have the meaning set forth in Section 5.1.1.

“Site” shall mean any or all of the land where a Facility is located.
“Specifications” shall mean the final specifications issued by Purchaser pursuant to Section 8.3 for the design, manufacture, assembly, performance and supply of the Units, which will be generally in conformity with [Exhibit B-1].

“Stack Purchase Amount” shall have the meaning set forth in Section 14.3.

“Unit” singularly, any of the electrical power generation facilities using fuel cell Units (known as Direct FuelCell Power Plants) that Seller is furnishing under this Agreement and in accordance with the Scope of Work and the Final Specifications. 

“Vendor” shall mean any vendor, supplier or subcontractor utilized by Seller in the performance of the Scope of Work hereunder.

ARTICLE II.  RESPONSIBILITIES OF PURCHASER

2.1	Purchaser Responsibilities.  Purchaser recognizes and acknowledges the duty to reasonably cooperate with Seller, and agrees not to wrongfully interfere with Seller’s agents, employees or Vendors during the performance of this Agreement.  Without limiting the generality of the foregoing or Purchaser’s other obligations under this Agreement, Purchaser shall be responsible for ensuring that the following occur on a timely basis and in accordance with the Scope of Work and the Project Management Plan:

	(a)	designation of a representative (“Purchaser’s Representative”) and delivery of a Notice to Seller identifying Purchaser's Representative, within thirty (30) days of the Effective Date (and from time to time thereafter), who shall act as the primary point of contact for Seller with respect to the prosecution of the Scope of Work and shall have the authority to bind Purchaser but not to amend this Agreement;

	(b)	delivery of Notice, within thirty (30) days of the Effective Date (and from time to time thereafter) to Seller identifying such persons within Purchaser's organization that have authority to approve Change Orders; 

	(c) designation of the Units to be delivered to up to five (5) Sites within ninety (90) days of Release, with such designation to be subject to change by Purchaser upon ten (10) days notice until six (6) months prior to the Expected Delivery Date for the Unit;

(d)	pay to Seller the sums required to be paid by Purchaser pursuant to the terms of this Agreement; 

(e)
	(d)	provision or arrangement for adequate road access to the Facility from the nearest highway and other Site preparation obligations; and,; and,

(f)
	(e)	provision or arrangement for those materials, items and services specifically identified in Exhibit B, in accordance with the time table set forth in such Exhibit B.

(g)
	(f)	subject to the provisions of Section 3.10, commencement of the permitting of the Facilities within ten (10) days of receipt of a favorable ruling concerning funding for the Purchase Amount from the Connecticut [DUPC] DPUC].

2.2	Compliance with Governmental Rules.  

(a)	Purchaser Conduct.  Purchaser shall comply with all Applicable Laws. Purchaser shall not act in violation of the U.S. Foreign Corrupt Practices Act, and in connection therewith shall not make any payments, loans, or gifts directly or indirectly, to or for the use or benefit of any official employee, agency or instrumentality of any government, political party or candidate thereof, or any other person or entity, the payment of which would violate the laws or policies of the United States, or the country or countries in which the Scope of Work is performed, in whole or in part.  Purchaser shall possess or procure all permits, certificates, and licenses necessary to allow Purchaser to perform this Agreement at all locations of performance.  Purchaser further agrees to pay any government assessed penalties, fines, and charges, and associated damages, costs, losses, and expenses (including, without limitation, court costs and attorneys' fees) of whatever kind which Purchaser Seller may incur, be required to pay or be liable for as a result of, in connection with, arising out of or related to any noncompliance with this Section 2.2(a).

(b)	Employment Practices.

(1)	Purchaser agrees that it shall be at all times during the term of this Agreement in full compliance with all Applicable Laws relative to Purchaser’s employment of employees and agents of Purchaser.

(2)	Purchaser agrees to pay any government assessed penalties, fines, and charges, and associated damages, costs, losses, expenses (including, without limitation, court costs and attorneys' fees) of whatever kind which Purchaser Seller may incur, be required to pay or be liable for as a result of, based on, in connection with, related to or arising from Purchaser's noncompliance with this Section 2.2(b).

(c)	Compliance with Change in Law.  Purchaser shall, on a reasonable efforts basis, advise Seller of pending Applicable Laws of which Purchaser is aware so that each party may make an informed decision as to whether to have the Equipment designed in anticipation of such pending change as it affects the Scope of Work.  

2.3	Unit Interiors.  Purchaser shall not, and shall not permit its employees, subcontractors, Facility operators, Site owners, or agents, to open any Unit modules or otherwise attempt to view the interiors of the Units.  Violation of this Section 2.3 (a) shall be deemed a material breach of the confidentiality provisions set forth in Section 21.3; and (b) shall void all warranties contained in Article XIV; provided, however that such warranties shall only be voided if Seller has complied with its warranty obligations prior to violation of this Section 2.3 and if Seller continues to make available, directly or indirectly, service for the modules after expiration of the warranty obligations.   

ARTICLE III.  RESPONSIBILITIES OF SELLER

3.1	General Obligations.  Except as expressly set forth in this Agreement, Seller shall provide the materials and supplies, competent personnel and supervision required for Seller to fulfill its responsibilities, under the Scope of Work in accordance with the terms of this Agreement, including all Exhibits.  In furtherance of the foregoing, Seller shall ensure that all Units shall comply with Final Specifications.

References in the Final Specifications to Equipment, including, material, articles or patented processes, by trade name, make, or catalog number, shall be regarded as the standard of quality to be met by Seller.  Notwithstanding the foregoing, Seller may, with the prior written consent of Purchaser, which consent shall not be unreasonably withheld or delayed, use any commercially reasonable operational, technical or and functional equivalent for any equipment, material, article, or process that is named in the Final Specifications.

3.2	Delivery of Equipment and Documentation.  

3.2.1	Delivery to Delivery Point. Seller shall (i) cause the Equipment to be delivered to the Delivery Point in undamaged condition in accordance with the Specifications and the Release on or before the Expected Delivery Date, and (ii) use commercially reasonable efforts to manufacture, deliver and install the Equipment in accordance with the Scope of Work.

3.2.2	Installation Services.  Seller shall offload and install the Units at the Site in accordance with Exhibit B.  Purchaser shall have the right to object to any Vendor that Seller desires to employ in carrying out the transportation of the Units and the installation services; provided, however that such objection must be given promptly and may not be unreasonable.

3.2.3	Maximum Assembly.  Seller shall use commercially reasonable efforts to maximize the assembly of the Equipment prior to shipment.

3.3	Relevant Information.  In response to a reasonable request for information from Purchaser, Seller shall provide on a timely basis to Purchaser information reasonably necessary to fulfill Seller’s obligation pursuant to this Agreement, including:

(a)	within thirty (30) days of the Effective Date of this Agreement (and from time to time thereafter), the identity  of a project manager (the "Project Manager") who shall have full supervision over the completion of  the Scope of Work and who shall act as the primary point of contact with Purchaser regarding all matters relating to the Scope of Work; 

(b)	such information as is reasonably requested by Purchaser in dealing with its customers and/or any governmental authority in matters relating to the Scope of Work;

(c)	within thirty (30) days of a Release and for every month thereafter, a Project Management Plan, including an updated project schedule detailing the expected manufacturing, shipping and installation schedule for each Unit which is subject to the Release; and 

(d)	upon such reasonable request of Purchaser, such documents as required by or as reasonably required to implement or evaluate the Project Management Plan.

3.4	Hazardous Materials.  

(a)	Seller warrants that it will use reasonable skill and care to limit the use of any Hazardous Material specified or incorporated into the Units installed at the Site; provided that where in the opinion of Seller this results in any conflict with any relevant statutory requirements or where the Scope of Work would be prejudiced through lack of suitable alternatives, then Seller shall immediately notify Purchaser in writing specifying the conflict or prejudice which has arisen and the substance which Seller wishes to stipulate or use and Seller shall not stipulate or use the same without, in each case, the prior written consent of Purchaser.  In the event Seller, with Purchaser's approval, incorporates any Hazardous Materials into the Units to be installed at the Site, Seller shall provide Purchaser with notification as to the Hazardous Materials present in such Units.

(b)	Seller shall be responsible for the proper collection, removal, and disposal of any Hazardous Materials furnished, used, applied, consumed, or stored at the Site by Seller ("Seller's Use of Hazardous Materials"), including used oils, greases, and solvents from flushing and cleaning processes, and shall assume generator status for disposal of any Hazardous Materials introduced by Seller at the Site.  All costs, fines, liabilities, penalties, and other expenses associated with the handling, transporting, and disposing of Hazardous Materials introduced on or to the Site solely by Seller shall be paid by Seller without reimbursement by Purchaser.

(c)	SELLER SHALL BE LIABLE FOR AND SHALL INDEMNIFY, PROTECT, DEFEND AND HOLD HARMLESS PURCHASER AND ITS DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST ANY AND ALL DEMANDS, CLAIMS, SUITS AND CAUSES OF ACTION AND ANY AND ALL LIABILITY, COSTS, EXPENSES, SETTLEMENTS AND JUDGMENTS OF THIRD PARTIES INCURRED BY PURCHASER (INCLUDING ATTORNEYS FEES AND COURT COSTS) DIRECTLY RELATED TO ARISING OUT OF SELLER'S USE OF HAZARDOUS MATERIALS.

3.5	Employment of Licensed Personnel.  Whenever required by Applicable Law or generally accepted engineering and construction practices, Seller agrees to employ licensed personnel to perform engineering, and design services in the performance of its obligations under this Agreement.  Seller shall use commercially reasonable efforts to employ and utilize personnel, including vendors and subcontractors, who possess the proper training and experience, and who are capable of performing the tasks for which they are employed or utilized.  
  
3.6	Customs Clearance.  Seller shall perform customs clearance for the Equipment through U.S. Customs, if applicable.  

3.7	Compliance with Governmental Rules.  

(a)	Seller Conduct.  Seller shall comply with all Applicable Laws. Seller shall not act in violation of the U.S. Foreign Corrupt Practices Act, and in connection therewith shall not make any payments, loans, or gifts directly or indirectly, to or for the use or benefit of any official, employee, agency or instrumentality of any government, political party or candidate thereof, or any other person or entity, the payment of which would violate the laws or policies of the United States, or the country or countries in which the Scope of Work is performed, in whole or in part.  Seller shall possess or procure all permits, certificates, and licenses necessary to allow Seller to perform this Agreement at all locations of performance and shall ensure that Vendors have all permits, certificates, and licenses necessary for such Vendors to perform under this Agreement.  Seller further agrees to pay any government assessed penalties, fines, and charges, and associated damages, costs, losses, and expenses (including, without limitation, court costs and attorneys' fees) which Seller Purchaser may incur, be required to pay or be liable for as a result of, in connection with, arising out of or related to any noncompliance with this Section 3.7(a).

(b)	Employment Practices.

(1)	Seller agrees that it shall be at all times during the term of this Agreement in full compliance with all Applicable Laws relative to Seller’s employment of employees and agents of Seller.

(2)	Seller agrees to pay any government assessed penalties, fines, and charges, and associated damages, costs, losses, expenses (including, without limitation, court costs and attorneys' fees) of whatever kind which Seller Purchaser may incur, be required to pay or be liable for as a result of, based on, in connection with, related to or arising from Seller's noncompliance with this Section 3.7(b).

(c)	Compliance with Change in Law.  Seller shall, on a reasonable efforts basis, advise Purchaser of pending Applicable Laws of which Seller is aware so that the parties may make an informed decision as to whether to have the Equipment designed in anticipation of such pending change as it affects the Scope of Work.  In the event Seller believes a change to the Scope of Work is necessary because a Change in Law has occurred, Seller shall prepare and deliver to Purchaser a request for a Change Order identifying the nature of the change, including any extensions of time to the performance of the Scope of Work and increase or decrease to the Purchase Amount.  Notwithstanding the foregoing, in the event a Change Order is requested by Seller in accordance with this Section 3.7(c) because of a Change in Law which affects Seller’s compliance with Applicable Laws and of which Seller should have been aware prior to agreeing upon the Scope of Work, no change in the Purchase Amount shall be incorporated into the applicable Change Order.  In the event that Purchaser does not agree to the Change Order, thereby electing to not have Seller comply with such Change in Law, Purchaser shall indemnify Seller for any penalties, fines, charges, damages, costs, losses and expenses (including without limitation court costs and attorney fees) of whatever kind which Seller may incur as a result of such failure of the Scope of Work to comply with such Change in Law.

3.8	Purchaser Review of Vendors.  Seller will notify Purchaser as to the Vendors to be used in performance of the Scope of Work for any major component of a Unit or performance of a significant portion of the Scope of Work.  Purchaser shall have the right to object to any Vendor proposed by Seller for an item of Equipment; provided, however that such objection must be given promptly and may not be unreasonable.

3.9	Financing Assistance.  Seller shall provide such information as Purchaser may reasonably request in connection with Purchaser's obtaining financing for the Facility including without limitation providing information related to design, engineering and status of the completion of the Scope of Work and Seller’s credentials and experience, and as required perform reasonable travel.  In the event Seller determines that a request by Purchaser shall reimburse Seller for all costs including travel at commercially reasonable rates for its time in providing information in accordance with this Section 3.7 3.9 is unreasonable, Seller shall promptly notify Purchaser of this determination.  Purchaser shall reimburse Seller for all costs including travel at commercially reasonable rates for its time in providing information in accordance with this Section 3.9.  Lender and the Lender's engineers and consultants shall have the right to participate in all inspections conducted by Purchaser under this Agreement and to attend all tests of the Equipment that Purchaser is entitled to attend pursuant to this Agreement. At Purchaser's request, Seller shall furnish to Purchaser and/or Lender copies of notices given to Purchaser hereunder. 

3.10	Purchaser Permit Support.  (a) Seller shall provide all information, data and documents in a timely fashion that Purchaser may reasonably request for Purchaser to obtain applicable permits for operation of the Direct FuelCell® Power Plants.  Purchaser shall from time to time keep Seller appraised apprised of the status of key permitting activities as such activities for the Facilities relate to the Final Specifications and Performance Standards of the Units.  At some point in the permitting process, Purchaser shall provide Seller with a conceptual layout of the Site and Seller shall review such layout solely for accuracy of access and location of Equipment.  Once such layout has been reviewed and approved by Seller, Seller shall incorporate the access and location of the Equipment used in such layout into the Final Specifications.  Seller’s approval of the layout shall not constitute a review or approval of any other information on such conceptual layout.   

(b)	If (i) Purchaser becomes aware of a permitting issue related specifically to the level of the Performance Standards of a Unit and (ii) after exercising commercially reasonable efforts to resolve such issue, Purchaser reasonably determines that a permit allowing the unit Unit or units Units to operate at maximum unit capacity for a minimum of [8,760] hours per year is unlikely to be obtained, Purchaser at its sole discretion can issue a Permit Notice to Seller. This Permit Notice will detail the specific nature of the permitting problem and the change needed to the Performance Standards to resolve the problem.  Along with the Permit Notice, Purchaser shall supply all relevant documentation received from permitting agencies supporting the proposed change to the Performance Standard. The parties shall have the earlier of (i) thirty (30) days from Seller's receipt of such Permit Notice; or (ii) one hundred eighty (180) days from the Release Date, to mutually agree to amend this Agreement for the new Performance Standard.  If such amendment does not occur within such thirty (30) day period, Purchaser shall have the right to terminate the Release and/or this Agreement pursuant to Section 17.7.  If the Permit Notice provided pursuant to this Section 3.10 is given within sixty (60) such right to terminate is exercised, within ninety (90) days of the date of the applicable Release, Purchaser shall have no obligation to pay Seller the Purchase Amount in the event Purchaser terminates the Release or this Agreement in accordance with this Section. If the Permit Notice provided pursuant to this Section 3.10 is given more than sixty (60). If such right to terminate is exercised (x) more than ninety (90) days after the date of the applicable Release Date, Purchaser shall pay Seller those costs incurred by Seller as of the date of termination plus a reasonable fee in the event Purchaser terminates the Release or this Agreement in accordance with this Section $7,290,000; (y) more than one hundred twenty (120) days after the applicable Release Date, Purchaser shall pay Seller $7,990,000; and (z) more than one hundred fifty (150) days after the applicable Release Date but less than one hundred eighty (180) days after the applicable Release Date, Purchaser shall pay Seller $8,690,000.    

3.11	Spare Parts.  The Purchase Amount includes (i) all spare parts necessary to achieve installation, start up, commissioning, and (ii) all installation and maintenance tools that are not normally found available in the market place.  Seller will provide a list of recommended Spare Parts required to support operations and maintenance program for a period of [two (2) ] years ("O&M Spare Parts") for each Site four (4) months before delivery the Expected Delivery Date.  Such list shall include pricing which shall remain in effect for a twelve (12) month period.  In the event Purchaser purchases such O&M Spare Parts hereunder, the transaction shall be accomplished by a Change Order pursuant to the provisions of this Agreement or by separate agreement issued by Purchaser.  The value of such O&M Spare Parts purchase shall be known as the “O&M Spare Parts Amount.”  A conceptual list of the O&M Spare Parts is attached hereto as Exhibit G.  Purchaser acknowledges that this list is subject to change and is merely intended to be illustrative of the nature of the O & M Spare Parts.    

3.12	Key Personnel.  Seller shall provide Purchaser with resumes for each Project Manager.  If, in the reasonable opinion of Purchaser, Purchaser determines such a key person is not adequately performing, Purchaser shall provide Seller with notice detailing the nature of the inadequate performance.  If Seller has not resolved the performance problem within thirty (30) days of receipt of such notice, Purchaser may require Seller to remove such person from work on the Scope of Work under this Agreement and replace such person with a satisfactory replacement.

ARTICLE IV.  REPRESENTATIONS AND WARRANTIES

4.1	Representations and Warranties of Purchaser.  Purchaser makes the following representations and warranties to Seller, each of which is true and correct on the date hereof:

(a)	Purchaser is a corporation organized, existing and in good standing under the laws of the state of Delaware; Purchaser possesses all requisite power and authority to enter into and perform this Agreement, and to carry out the transactions contemplated herein; and Purchaser has all legal power and authority to own and use its properties, and to transact the business in which it is engaged and holds or expects to obtain all franchises, licenses, and permits necessary and required therefor;

(b)	Purchaser's execution, delivery, and performance of this Agreement have been duly authorized by, and are in accordance with, its articles of incorporation and by-laws; this Agreement has been duly executed and delivered for it by the signatories so authorized; and this Agreement constitutes Purchaser's legal, valid, and binding obligation;

(c)	Purchaser is not in breach of, in default under, or in violation of, any Applicable Laws, or the provisions of its articles of incorporation or by-laws, or any franchise or license, or in breach of, in default under, or in violation of any provision of any indenture or any evidence of indebtedness or security therefor, lease, contract, license or other agreement by which it is bound, if such breach, default or violation may result in a material adverse effect on the business or financial condition of Purchaser; and the execution and delivery of this Agreement and the performance of its obligations hereunder will not constitute or result in any such breach, default or violation; and

(d)	no suit, claim, action, arbitration, or legal, administrative or other proceeding is pending or threatened against Purchaser that would affect the validity or enforceability of this Agreement, the ability of Purchaser to fulfill its commitments hereunder in any material respect, or that could result in any material adverse change in the business or financial condition of Purchaser.

4.2	Purchaser Supplied Information. Except to the extent that the information provided by Purchaser to Seller is in the form of a specification or performance requirement specifically called out in this Agreement, it is Purchaser’s responsibility to ensure that the information provided to Seller by Purchaser is accurate, correct, complete and fit for the particular purpose(s) for which Seller may utilize it. 

4.3	Representations and Warranties of Seller.  Seller makes the following representations and warranties to Purchaser, each of which is true and correct on the date hereof:

(a)	It is duly organized, existing and in good standing under the laws of the State of Delaware; that it possesses all requisite power and authority to enter into and perform this Agreement, to carry out the transactions contemplated herein, and to conduct business in each of the locations where any portion of the Scope of Work is to be performed; and Seller has all legal power and authority to own and use its properties and to transact the business in which it is engaged and holds or expects to obtain all franchises, licenses, and permits required therefor;

(b)	Seller’s execution, delivery, and performance of this Agreement have been duly authorized by, and are in accordance with, its articles of incorporation and by-laws; this Agreement has been duly executed and delivered for it by the signatories so authorized; and this Agreement constitutes Seller’s legal, valid, and binding obligation;

(c)	Seller is not in breach of, in default under, or in violation of, any Applicable Law or the provisions of  its articles of incorporation or by-laws or any franchise or license, or in breach of, in default under, or in violation of, any provision of any indenture or any evidence of indebtedness or security, lease, contract, license or other agreement by which it is bound if such breach, default or violation may result in a material adverse effect on the business or financial condition of Seller; and the execution and delivery of this Agreement and the performance of its obligations hereunder will not constitute or result in any such breach, default or violation;  

(d)	no suit, claim, action, arbitration, or legal, administrative or other proceeding is pending or threatened against Seller that would affect the validity or enforceability of this Agreement, the ability of Seller to fulfill its commitments hereunder in any material respect, or that could result in any material adverse change in the business or financial condition of Seller; 

(e)	Seller has the right and authority to convey and grant all the rights of ownership in the Units Equipment;  

(f)	Any and all hardware, software and firmware product delivered (as a component of a system, part of a piece of equipment, or as a stand alone item) under this Agreement shall be able to:

(1)	accurately process date data (including but not limited to accepting input, providing output and calculating comparing and sequencing) from, into and between the Twentieth and Twenty-First Centuries, including (but not limited to) leap year calculations;

(2)	respond to and process two digit year input without creating any ambiguity as to the century; and

(3)	store and provide date input information without creating an ambiguity as to the century, provided that such hardware, software and/or firmware is operated in accordance with the manufacturer recommendations, (a copy of which shall be provided to and explained to the Purchaser).

(g)	Seller has or will have the manufacturing capacity to meet the requirements of this Agreement and a Release thereunder, and shall identify manufacturing schedule for any Equipment ordered in accordance with the terms of this Agreement and the Project Management Plan, and will devote commercially reasonable resources to meet the requirements of this Agreement, including the Project Schedule.

ARTICLE V.  PURCHASE AMOUNT AND OTHER CHARGES

5.1	Purchase Amount. 

5.1.1	Purchase Amount.  The purchase amount for Units shall be as stated in Exhibit A (the "Purchase Amount"), which is fixed and not subject to escalation for any Release submitted prior to March 1, 2001. The Purchase Amount for any Release submitted after March 1, 2001 shall be as mutually agreed at or before the time of the Release. The Purchase Amount shall be complete compensation for manufacture, delivery and installation of the Units but shall not include the cost of any replacement modules under Section 14.3, shipping charges, Change Orders, financing assistance or any other miscellaneous services.  Shipping charges shall be invoiced at the lesser of the actual cost or $87,000 per Unit (“Shipping Charge”).

5.2	Taxes and Contributions.

5.2.1	Seller’s Responsibility for Personnel Taxes.  Seller assumes full responsibility for and agrees to pay all contributions and taxes payable under all Applicable Laws pertaining to social security laws, unemployment compensation laws and income tax laws as they apply to Seller’s employees engaged in the performance of the Scope of Work and the warranty provided in Article XIV.  Seller acknowledges that Purchaser has no responsibility for such taxes as they apply to Seller, Seller’s employees or the employees of Vendors. 

5.2.2	Seller’s Responsibility for Taxes.  Except as set forth herein, Seller is responsible for taxes arising out of its performance of the Work including import duties (if any), harbor taxes, personal and corporate taxes.  The Purchase Amount and Stack Purchase Amount excludes any US federal, state or local jurisdiction imposed property, sales, use, excise, gross receipts, valued added, or similar tax which may now or hereafter be applicable to, measured by, or imposed upon with respect to the transaction, Seller’s Scope of Work, its sale, its value, its presence in such taxing jurisdiction or its use, or any services performed in connection therewith.  Such taxes are for the account of Purchaser and Purchaser agrees to pay any such taxes when due or reimburse Seller within twenty-five (25) days after the date of Seller’s invoice to Purchaser for any such tax which it is required to pay. Should Purchaser be exempted from any such tax it shall provide Seller with certification prior to transfer of title of such Work, or at the time the certification is obtained, whichever first occurs.

5.2.3	Tax Penalties. Each party agrees to timely pay any tax, interest, penalty, fines, costs, losses and expenses (including, without limitation, court costs and attorney’s fees) of whatever kind, which said party is required to pay in accordance with this Agreement. Each party shall indemnity the other for any such tax, interest, penalty, fines, costs, losses and expenses which the other party may incur , be required by law to pay, or be liable for as a result of, arising from, in connection with, related to or based on any failure to withhold any amounts from any payments made or any amounts which the responsible party  fails to pay in connection with, as a result of, arising from or based on the Scope of Work  or otherwise comply with this Article V.

5.3	Increases to the Purchase Amount.  After Release, the Purchase Amount may only be increased by Change Order pursuant to Article XI. Seller’s entitlement to an increase in the Purchase Amount shall be conditional upon:

(i)	Seller having used commercially reasonable efforts to mitigate the increase in Purchase Amount (except for Purchaser’s exercise of options);
(ii)	Seller having given notice in accordance with the terms of this Agreement; and
(iii)	the cost increase not being attributable to an Event of Seller Default.

5.4	Termination.  Once a Unit has been included in a Release, neither party may terminate such Release for convenience.  

ARTICLE VI.  PAYMENT TERMS

6.1	Payment of Purchase Amount. 

6.1.1	Payment.  Upon Acceptance of a Unit, Seller shall invoice Purchaser for the Purchase Amount, Shipping Charge and/or Stack Purchase Amount (in accordance with Section 14.3) related to that Unit, including any approved Change Orders. Payment of the Purchase Amount for the Unit shall be due within three (3) days of receipt of the invoice.

6.1.2	Payment for Spare Parts.  Payment of the O&M Spare Parts Amount, to the extent Purchaser orders O&M Spare Parts, shall be due and payable by Purchaser to Seller within thirty (30) days of:

(i)	Seller’s delivery of such O&M Spare Parts to the Delivery Point in accordance with terms of the Change Order; and
(ii)	Purchaser's receipt of a properly prepared invoice for such O&M Spare Parts Amount.

6.2	Payment Disputes.  Payment shall not prejudice the right of Purchaser to protest or question the correctness thereof or compliance of the Scope of Work or any portion thereof with this Agreement or prejudice or constitute a waiver of any right of Purchaser hereunder.  Any amount questioned by either party and found to be in such party's favor shall be refunded or paid, as appropriate.  In the event an amount is withheld because of a dispute, and it is subsequently determined that the disputed amount or a portion of the disputed amount was due and payable, interest shall accrue at the Interest Rate commencing on the date the payment would have been payable if the dispute had not occurred.  Seller’s acceptance of partial payment of the Purchase Amount shall not be deemed to constitute a waiver of the right to receive amounts which are then in dispute, and Seller and Purchaser shall use their reasonable efforts to resolve all disputed amounts as soon as practicable.  Any undisputed amounts not paid when due shall bear interest at the Interest Rate. 

6.3	Payment of Vendors.  Seller shall promptly pay, in accordance with the terms and conditions set forth in the respective subcontract, each Vendor the amount to which said Vendor is entitled.  Seller shall, by an appropriate agreement with each Vendor, require each Vendor to make timely payments to its laborers, contractors and Vendors in a similar manner.

6.4	Purchaser Delay; Payment.  The following shall constitute an event or act of delay by Purchaser (each a “Purchaser Delay”): (i) failing to make the Site available as of the latest date allowed under this Agreement and the Final Project Schedule, assuming Seller has given notice of readiness to ship in accordance with this Agreement, (ii) changing the site to which a Unit is to be delivered after the latest time for making the change has passed, (iii) failing to commence the Performance Tests within fourteen (14) days of Installation Completion, and Purchaser’s receipt of proper notice thereof, or (iv) Purchaser failing to complete its obligations in accordance with the Final Project Schedule. Seller shall be entitled to an extension in the Project Schedule (including the termination dates referenced in Section 17.1(d)) for any Units for which a Purchaser Delay directly causes the Acceptance of a Unit to be delayed, so long as Seller is in compliance with the Project Schedule. The failure to obtain necessary permits shall not constitute, so long as Seller has delivered the major components to the Site in accordance with said Final Project Schedule.  Notwithstanding the foregoing subsection (iv), Seller shall have no obligation to deliver the major components to the Site if Purchaser’s delay or failure to meet its obligations results in a situation where Seller is unable to deliver to the Site.  In such case, Purchaser’s failure shall be considered an event of Purchaser Delay regardless of whether the major components have been delivered to the Site.  Seller shall be entitled to an extension in the Final Project Schedule (including the termination dates referenced in Section 17.1(d)) for any Units for which a Purchaser Delay directly causes the Acceptance of a Unit to be delayed, so long as Seller is in compliance with the Final Project Schedule.  The failure to obtain necessary permits shall not constitute an event of Purchaser Delay so long as (a) Purchaser has initiated the permitting process within ninety (90) days of the Release Date or (b) the Performance Standards are not acceptable to the authority issuing the permit and the procedures set forth in Section 3.10 have been utilized without resolution of the issue.  If an event or act of Purchaser Delay continues for one hundred and five (105) days from the Expected Delivery Date, Purchaser shall pay Seller the Purchase Amount for the affected Unit regardless of whether such Unit has gone through Acceptance.  If a Purchaser's Delay continues for more than 150 days from the Expected Delivery Date Purchaser shall also pay Seller for any additional cost beyond the Purchase Amount for storage, warranty coverage, mobilization and demobilization that Seller incurs to fulfill its obligations after the delay. Seller’s right to receive payment shall be contingent upon Seller providing five (5) days Notice to Purchaser of actual delay caused by the above.  Notwithstanding the foregoing, if a delay continues for more than 510 days from the Expected Delivery Date, Seller shall have the option to terminate this Agreement together with any and obligations of Seller hereunder including, without limitation, warranty obligations.  

6.5	Notices of Nonpayment.  If Purchaser receives written notice from any Vendor of Seller that Seller has failed to pay such Vendor for labor, materials, services and/or equipment related to the Scope of Work, Purchaser may, upon thirty (30) days notice to Seller, withhold payment from Seller in the amount claimed by the Vendor as due and owing, unless Seller notify Purchaser in writing within such thirty (30) days that Seller disputes the Vendor's claim.  Purchaser may continue to withhold such amount until Purchaser receives (a) written notice from such Vendor that such amount has been paid in full by Seller; or (b) evidence from Seller that such amount has been paid in full.

6.6	Lien Release.  Seller represents that all services, equipment, materials and information for which Seller seeks payment are free and clear of liens, claims, security interests and encumbrances arising in favor of Vendors.  Seller shall maintain a lien on any Units or Equipment that have not been paid for by Purchaser in full.  Immediately upon receipt of the Purchase Amount for all of the Units at a given Site, Seller shall provide Purchaser with a Lien Release in substantially the form set forth in Exhibit F.   

6.7	Invoices.

6.7.1	Contract Reference.  Each invoice will reference CONTRACT #].

6.7.2	Address for Invoices.  Invoices will be mailed or hand carried to:

	[Enron .
	Houston, Texas  77002
	Attn: ]  

Purchaser anticipates that this address may change, and will notify Seller of such change, prior to the change. 

6.7.3	Date of Receipt.  Date of receipt of invoice by Purchaser will be evidenced by date stamp, or other generally accepted date receipting system.

6.8	Method of Payment.  Payment will be made by wire transfer unless otherwise requested by Seller.  Payments to the Seller shall be made to the following address:
	[                                  ]

6.9	Payments Not Acceptance of Work.  Purchaser waives no rights under this Agreement by making payment hereunder.

6.10	Punchlist.  (a) Purchaser shall develop the Punchlist for each Site starting with delivery of the first Unit to a Site and provide such Punchlist to and associated updates to Seller.  Seller shall complete such Punchlist in a commercially reasonable and timely manner. 

(b)	Purchaser may withhold from payment of the Purchase Amount on the final Unit at a Site, the amount that the parties reasonably determine is equivalent to the value of completion of the items of the Punchlist created for such Site.  The payout of such withheld funds shall be made as such Punchlist items are completed by Seller.    

ARTICLE VII.  RELEASE

7.1	Effective Period for Submitting Release.  This Agreement shall terminate one year after the Effective Date if Purchaser has not submitted a Release (as defined below) by that date.

7.2	Release.  Should Purchaser desire to place an order for Units, it shall submit a release to Seller (a "Release").  The date the Release is submitted shall be the Release Date. Such Release shall specify the type and number of Units, Delivery Point Guaranteed Acceptance Date, Expected Delivery Date, and Purchase Amount all as based on Exhibit A.   Each Release shall also specify the Guaranteed Acceptance Date for each Unit and its associated Equipment. Such dates may be adjusted in accordance with the terms of this Agreement.  Upon receipt of the Release Seller shall either propose revision or accept the terms of the Release as evidence by return to Purchaser of a revised copy of the Release or an executed copy of the Release, as the case may be Each Release shall also specify the Delivery Point for each Unit; provided, however that such Delivery Point may be subject to change by Purchaser upon ten (10) days notice until six (6) months prior to the Expected Delivery Date for the Unit.  Seller shall be required to perform under a Release only if all of the terms of such Release comply with this Agreement and particularly, with the provisions of Exhibit A.  

ARTICLE VIII.  PROJECT DOCUMENTS

8.1	Project Management Plan.  Within thirty days of the Release Date the Seller shall submit a proposed project management plan which shall include the project schedule for manufacturing, shipping and installation of each Unit, a staffing plan, a quality control plan, a subcontracting plan, technical interface, and other matters required to successfully manage the project to conclusion (the “Project Management Plan”).  Six months following the Release Date, Seller and Purchaser shall agree to the initial project schedule contained in the Project Management Plan, which shall set forth the critical path for each Unit to achieve Acceptance prior to the termination dates under Section 17.1(d) related to such Unit.  Seller shall provide an updated Project Management Plan, including a transportation plan, document review schedule, and a draft Acceptance and Performance Evaluation Testing Protocol.

8.2	Monthly Reports.  Seller shall provide monthly reports to Purchaser, providing a narrative status update as well as updates to the project schedule.

8.3	Specifications. Exhibit [B-1] contains the preliminary specifications for the Equipment. No later than four (4) months prior to the Expected Delivery Date, Purchaser shall submit final Design Drawings.  No later than eight (8) months after the Release Date, Seller shall provide Purchaser with Seller’s approved design engineering drawings.  Purchaser shall have fourteen (14) days to review such drawings and provide comments.

8.4	Specifications.  Exhibit B-1 contains the Preliminary Specifications for the Units.  No later than twelve (12) months after the Release Date, Seller shall submit Final Specifications to Purchaser, which shall be in general conformity with the preliminary specifications Preliminary Specifications; provided, however that those items listed on Exhibit C shall be incorporated into both the Preliminary Specifications and the Final Specifications. 

ARTICLE IX.  INSPECTION AND CORRECTION OF WORK 

9.1	Inspections.  Purchaser or its designated representatives, shall have the right from time to time during this Agreement and during normal business hours to review Seller’s performance of this Agreement; provided, however that Purchaser has provided Seller with seven (7) days notice of such desire to observe Seller’s performance.   Purchaser's rights to inspect under this Section 9.1 shall include those actions reasonably necessary to verify that the Equipment conforms to the specified requirements of this Agreement (including the Final Specifications and Project Schedule), is being produced in accordance with the manufacturing schedules, and that Seller is acting in conformity with its quality plan. These inspection and observation rights may include but not be limited to the right to review manufacturing schedules and observe certain agreed production inspections and tests of Equipment at Seller’s workplace or those of its Vendors. However, any observance, inspection or review of performance of this Agreement shall not constitute or be deemed to be actual control or a right to control Seller, its employees, agents, personnel, Affiliates, or Vendors.  Purchaser's inspection of any part of the Equipment shall in no way affect Seller’s obligations to perform the Scope of Work in accordance with the Specification Final Specifications and all other terms of this Agreement, and any audit, examination, inspection, review, or testing by Purchaser shall not constitute acceptance or prejudice, be a waiver, or be deemed to be a waiver of any of Purchaser's rights hereunder or of its rights to reject defective performance of this Agreement or release Seller from any obligation under this Agreement.

9.2	Resident Facilities.  If reasonably requested by Purchaser, Seller shall act in a commercially reasonable manner to accommodate Purchaser’s request to have a quality representative resident at Seller’s facilities and the Site.  

9.3	Quality Plan.  Seller shall maintain a quality plan compliant with ISO 9001/2000, in general conformity with the Project Management Plan, detailing:

(i)	specific authorities and responsibilities;
(ii)	procedures, methods and work instructions; 
(iii)	inspection and test plans;
	(iv)	vendor qualification procedure. 

In the event of a conflict between the Project Management Plan and ISO 9001/2000, the higher standard shall prevail.

9.4	Notice of Witness Points.  In establishing the Project Management Plan the parties shall agree on witness points and factory acceptance tests. Seller shall provide not less than fourteen (14) days notice prior to any of the witness or hold points as set forth in the Project Management Plan.  Seller shall not proceed past an established hold point prior to the date for such hold point specified in the advance notice of such hold point given by Seller to Purchaser, unless Purchaser has witnessed the activity or given written approval to proceed past the hold point.  In the event Seller provides the appropriate advance notice to a hold point and Purchaser does not either witness the hold point or give written notice to Seller releasing the hold point within ten (10) days of receipt of such Notice, Purchaser shall be deemed to have waived the right to witness the test.  Witnessing a test (or waiving the right to witness such test) does not constitute an acceptance of any work, or waiver of any rights under this Agreement. 

9.5	Correction of Equipment.  Prior to Acceptance, Seller shall, at its sole cost and risk, promptly correct any part of the Equipment which, in Seller's determination, fails to comply with the Final Specifications, regardless of the stage of its completion or the time or place of discovery of such defects and regardless of whether Purchaser has previously paid for or accepted such part of the Equipment through oversight or otherwise. Seller shall replace or correct such defective work or condition such that the Equipment is in accordance with this Agreement, including the Specification Final Specifications.  Seller may repair (making an item functional, but not necessarily conforming the work to its original specification) the Equipment or a portion of the Equipment only with Purchaser's written consent, which will not be unreasonably withheld.

ARTICLE X.  PERFORMANCE GUARANTEES AND ACCEPTANCE

10.1	Performance Guarantees.  Seller guarantees that each Unit, including Units subject to stack replacements under Section 14.3, will meet the applicable performance standards for Heat Rate, Maximum Unit Output, emissions, water consumption, sound and endurance as set forth in Sections 10.2 and 10.3 (the “Performance Standards”), when Performance Tests are conducted in accordance with the Acceptance and Performance Evaluation Testing Protocol (as defined below).

10.2	Performance Standards.  Each Unit shall meet the applicable Performance Standards for that model as described in this Article X and as set forth in the following table below in order to achieve Acceptance:

	2MW Power Plants 2.4MW Power Plants Units	2MW Unit with Replacement Module(s)	2.4MW Units	2.4MW Unit with Replacement Module(s)	
Maximum Unit Output, kW	2000 kW	2000 kW	2400 kW	2400 kW	
Heat Rate (LHV)	7,108 BTU/kWh	7,108 BTU/kWh	7,108 BTU/kWh	7,108 BTU/kWh	
Water Consumption	600 gal/h	600 gal/h	620 gal/h	620 gal/h	
Water Discharge	450 gal/h 460 gal/h Sound level 65 dB(A) at 100 feet 65 dB(A) at 100 feet Emissions   Nox <1 ppmv <1 ppmv SOx gal/h	450 gal/h	460 gal/h	460 gal/h	
Sound level	[65] dB(A) at 100 feet	[65] dB(A) at 100 feet	[65] dB(A) at 100 feet	[65] dB(A) at 100 feet	
Emissions					
Nox	<1 ppmv	<1 ppmv	<1 ppmv	<1 ppmv	
Sox	<0.1 ppmv	<0.1 ppmv	<0.1 ppmv	<0.1 ppmv	
CO	<20 ppmv	<20 ppmv	<20 ppmv	<20 ppmv	
VOC	<20 ppmv	<20 ppmv	<20 ppmv	<20 ppmv	
       Particulates (PM10)	<20 mg/m3	<20 mg/m3	<20 mg/m3	<20 mg/m3	

 When restacked with other Units in the future (which may increase the output per plant above 2.4MW), the water consumption and emissions parameters will meet or exceed the 2.4MW guarantee and no guarantees are made beyond the original Performance Standards for such Unit.
[Enron to provide detail on sound requirements]

10.3	Endurance.  Seller guarantees that each Unit will pass an endurance test by operating at Maximum Unit Output for seventy-two (72) consecutive hours without unplanned outages during the most recent Performance Test conducted in accordance with Section 10.5.

10.4	Remedy for Failures to Meet Performance Standards.  Except as specified in Section 10.8 10.7 the failure to achieve the Performance Standards by the Guaranteed Acceptance Date as set forth in Section 17.1(d), shall constitute an Event of Seller Default under this Agreement, and Purchaser shall have the remedies specified in Article XVII.

10.5	Testing.

10.5.1	Notice of Installation Completion; Conducting Tests.  Seller shall deliver Notice to Purchaser that a Unit has been installed (“Installation Completion”) so that the Unit is ready to be tested.  Within fourteen (14) days of receipt of this Notice, Purchaser shall perform the Performance Tests in accordance with the test procedures set forth in Exhibit B D (the “Acceptance and Performance Evaluation Testing Protocol”); however, Purchaser shall not be required to conduct Performance Tests prior to sixty (60) days from the Expected Delivery Date  or date of actual delivery of all the major components of the Units to the Site, whichever is latest. Purchaser shall give Seller five (5) days notice of the time of the Performance Tests. Seller shall be present or to have a representative present at the Performance Tests, shall be provided access to all Units, equipment and measurements, and shall provide technical advice during the tests; however, Purchaser may at its option conduct the test without Seller, assuming notice was properly given in accordance with this section.

10.5.2	Test Results.  Performance Tests shall be conducted in a commercially reasonable manner on a Unit-by-Unit basis in strict accordance with the Acceptance and Performance Evaluation Testing Protocol.  Upon the completion of a Performance Test for a Unit, Purchaser will issue a Performance Test Certificate setting forth the results achieved during such test.  In the case of multiple Performance Tests on a Unit, performance shall be measured by the most recent Performance Test.

10.5.3	Costs of Retests.  If one or more additional Performance Tests are required due to the failure of a properly operated Unit to pass a properly administered Performance Test, Seller will bear the additional costs (if any) incurred by Purchaser in excess of the costs of fuel, water and operation and maintenance personnel associated with operating the Unit during such additional Performance Tests for the first six (6) such retests. Such additional costs may include, but not be limited to, cost of testing, instrumentation, fuel, consumable spare parts, and additional personnel required to conduct the tests.  Seller shall bear the total costs (if any) incurred by Purchaser in connection with Performance Tests conducted after the first six (6) retests for such Unit. 

10.6	Acceptance.  Upon the successful completion of the Performance Test for a Unit, Purchaser shall submit a Performance Test Certificate to Seller certifying that a Unit has achieved the Performance Standards and is accepted.  “Acceptance” for each Unit (and its associated Equipment) shall occur upon: 

(a)	the issuance of the Performance Test Certificate by Purchaser as a result of the Unit having met the Performance Standards; and
(b)	completion of all training and delivery of O & M manual required to be provided by Seller to Purchaser in accordance with the Scope of Work for the first Unit delivered to a given Site.   

10.7	Reduced Purchase Amount for Failing to Meet Performance Standards.  Should (i) the most recent Performance Test of a Unit demonstrate that the Unit has met the Performance Standards except for the Maximum Unit Output Performance Standard and (ii) during such Performance Test of a Unit, the Unit demonstrates that it has met 90% or greater of the Maximum Unit Output Performance Standard, the Purchase Amount related to that Unit shall be reduced by the percent by which the Unit fails to meet the Maximum Unit Output Performance Standard. Seller shall within 30 days refund any prior payment received for the Unit in excess of the reduced Purchase Amount. 

10.8	Improved Performance.  For a period of ninety (90) days following Acceptance, Seller shall use commercially reasonable efforts to achieve Unit performance which improves upon the Performance Standards.  

10.9	Water Quality.  Purchaser shall provide Seller with the water quality parameters for all water to be provided to the Units at each Site.  Such parameters will be consistent with the Preliminary Specifications.  Upon receipt of such parameters, Seller shall have fourteen (14) days in which to provide Purchaser with a standard for the quality of water discharged from such Unit.      

ARTICLE XI.  CHANGE ORDERS ORDER

11.1	Adjustment of Purchase Amount.  The Purchase Amount shall be subject to adjustment in accordance with the terms of this Agreement solely for (a) Purchaser-requested or caused changes in the Scope of Work; (b) changes in the Scope of Work proposed by Seller and approved by Purchaser; (c) Change in Law, or (d) an Event of Force Majeure.

11.2	Purchaser Requested Change Order.  If Purchaser desires to make any change in the Scope of Work (a "Change Order") including, without limitation, any alteration in the Scope of Work, (which whether by way of additions, modification or omission does not cover that which a commercially reasonable Seller should have provided as part of the Scope of Work) Purchaser shall advise Seller, and Purchaser and Seller shall consult concerning the estimated cost and impact on the Expected Delivery Date, and the Purchase Amount. Thereafter, Purchaser may request, and Seller shall upon receipt of such request prepare, a detailed estimate of the cost of such change, taking into account the effect of such change on the Scope of Work and other agreed upon and contemplated Change Orders.  Purchaser shall review Seller’s estimate, and if Purchaser accepts or the parties otherwise agree as to the Change Order, it shall be endorsed by Purchaser.  Thereafter, the parties shall promptly adjust the Expected Delivery Date, and the Purchase Amount and any other Exhibits requiring adjustment to reflect the Change Order.  In the event Seller proceeds with any proposed changes in the Scope of Work prior to execution of a Change Order, Seller shall do so at its own risk.  Purchaser has no obligation to pay Seller for any additional cost and Seller is not entitled to any extension of time for performance as a result of any change implemented by Seller without an executed Change Order.  Seller shall have no obligation to perform under a Change Order until such Change Order is executed by both parties and effective.

11.3	Seller Requested Change Order.  If Seller determines that a condition or the occurrence of an event requires a change in the Scope of Work, Seller shall within fifteen (15) days of such determination prepare and deliver to Purchaser a request for a Change Order which shall describe such condition or event in detail.  Within fifteen (15) days following delivery of such request, or such other period as may be agreed upon by the parties, Seller shall specify the adjustment to the Scope of Work, the Expected Delivery Date and/or the Purchase Amount requested by it.  Following receipt of such request, Purchaser shall determine whether any changes to the Scope of Work, the Expected Delivery Date and/or the Purchase Amount shall be effected, but failure by Purchaser to approve any such changes shall not affect or modify any of Seller’s obligations hereunder or cause an increase in the Purchase Amount and/or extension of the Expected Delivery Date.  If Seller propose changes in the Scope of Work to Purchaser, Seller shall not make such changes without receiving the prior written consent of Purchaser which shall be reflected on a Change Order, in accordance with the procedures as described in Section 11.2.  Seller shall have no obligation to perform under a Change Order until such Change Order is executed by both parties and effective.

11.4	Other Change Order.  Except as otherwise provided by Sections 3.7(c), if after the date of this Agreement there shall be any Change in Law that will require a material change in the Specification Final Specifications, Seller shall prepare a Change Order form in accordance with the provisions of Section 11.3.  Upon Purchaser's consent, which shall not be unreasonably withheld, such Change Order shall be effective.

11.5	Disputes.  In the event of an unresolved dispute regarding a Change Order, the parties agree that the matter shall be submitted to alternative dispute resolution in accordance with Article XXV. 

11.6	Change Order Pricing.

11.6.1	Method of Pricing.  All Change Orders which impact the Purchase Amount or provide for some other payment shall be either lump sum, or unit price unless neither method can be agreed upon, in which case the additional work shall be paid on a cost plus basis.

11.6.2	Cost Plus Basis.  The following procedures will be used for all calculations of cost plus basis Change Orders:

(a)	For all Seller labor directly charging to an in scope Change Order, Seller will be reimbursed in accordance with (c) below; and
(b)	For all Seller direct charges related to in scope Change Order material costs, equipment charges, third party services, or related travel for change work, plus any applicable sales or use taxes assessed and paid in conjunction with such material purchases Seller will be reimbursed in accordance with (c) below.  
(c)	Seller's direct charges for an approved cost plus Change Order may include, but are not limited to the following:
Hourly labor charges for:
Outside consultants,
Outside experts,
Technicians,
Engineers,
New and clean materials,
Alternate materials,
Necessary travel,
Natural Gas and other maintenance or operating materials, and
Yet-unspecified direct charges as mutually agreed by the parties.
Indirect costs shall be based on Seller's Federal Government Approved provisional billing rates in effect as of the time the cost was incurred, which shall be subject to retroactive adjustment at the end of the Seller's fiscal year to reflect actual indirect rates.  In addition, a twelve percent (12%) fee shall be applied to the total of direct and indirect costs.

(d)	Seller shall submit monthly invoices to Purchaser for all approved cost plus Change Orders, summarizing costs for each Change Order by category within each invoice, including costs incurred for the month and a cumulative total from inception.  Purchaser's Project Manager shall approve each invoice and timely release it for payment within thirty (30) days of receipt.  Upon request, Seller will supply documentation supporting costs submitted.

11.6.3	Audit Rights.  For a period of one (1) year two (2) years following completion of any cost plus work performed under this Agreement, Purchaser shall have the right to audit all direct and indirect charges related thereto.  Seller shall cooperate with Purchaser in the audit, and upon request of Purchaser and at Purchaser's expense, Seller will promptly supply all information reasonably necessary for Purchaser to conduct the audit.

ARTICLE XII.   INTELLECTUAL PROPERTY RIGHTS AND INDEMNITY

12.1	Seller’s Drawings for Use by Purchaser.  All drawings, documents, engineering and other data furnished or to be furnished by Seller (other than proprietary data furnished by Seller and Vendors) in performing the Scope of Work may be used by Purchaser, Purchaser's operation or subsequent owner for the purpose of constructing the Facility, including but not limited to operation, maintenance and repair of the Equipment.  In the event any of the information described in this Section 12.1 includes intellectual property rights, proprietary information, copyrighted information of a third party, or any information or property requiring a license to use, manufacture, sell, reproduce, distribute by any means, perform publicly or display such material, Seller shall secure the necessary rights, license or release to allow Purchaser, Purchaser's operation or subsequent owner to use such information for the purposes stated in the preceding sentence.

12.2	Licensing Procedure.  Seller grants Purchaser a non-exclusive, irrevocable license to use the Equipment, software and hardware supplied under this Agreement for operating, maintaining and repairing the Facility.  Purchaser shall have no right to the source code; provided, however in the event Seller or Seller’s Vendor discontinue maintenance of such software, Seller shall use reasonable efforts to attempt to obtain such source code for Purchaser.  The non-exclusive license granted herein to Purchaser may transferred by Purchaser (and Purchaser's operator for the sole purpose of operating the Facility), solely to permitted assignees of this Agreement. Purchaser agrees to abide by the terms of any license or release so long as Seller as provided Purchaser with a copy of said license.

12.3	Infringement Cures and Defense.  

(a)	Seller represents and warrants that the design, engineering, manufacture, delivery, installation, training and other services, and equipment, materials and information provided to Purchaser by Seller hereunder will not infringe on any third party's U.S. patent, copyright, trademark, trade secret or other U.S. intellectual property rights.  In the event a suit or proceeding is brought against Purchaser or its affiliates, (the "Patent Indemnitees") for infringement of any patent, copyright, trademark, trade secret or other intellectual property right, Seller shall Indemnify and hold harmless Patent Indemnities and anyone directly or indirectly employed by either of them from and against all claims, damages, losses and expenses (including attorneys' fees) arising out of any infringement of patent rights or copyrights incident to the use or production of the Equipment or incorporation therein of any invention, design process, product or device not specified in the Agreement, and shall defend all such claims in connection with any alleged infringement of such rights.  Seller shall pay all costs and expenses of any such action or suit or threat thereof, including compensation and expenses of experts and counsel of Seller’s choice and selection and Seller shall also pay and hold Patent Indemnitees free and harmless from expenses incurred or any damages or other sums awarded or assessed in any such action or suit including costs resulting from imposition of any injunction against Patent Indemnitees.  Patent Indemnitees may be represented by counsel of their own selection and expense, but agrees to cooperate fully in the defense of any such action or suit and to furnish all the evidence in its control.  

Notwithstanding the foregoing, Seller shall have no obligation to indemnify Patent Indemnitees for damages incurred as a result of Patent Indemnitees' continued use of the allegedly infringing intellectual property after they were provided with written notice from Seller to cease using such intellectual property.

	(b)	Nothing herein shall authorize Seller to settle any suit or action as referred to in Section 12.3(a) without prior written authorization from the affected Patent Indemnitee, if by such settlement, the affected Patent Indemnitee shall be obliged to make any monetary payment, part with any property, or grant any licenses or other rights under its intellectual property.   

(c)	In the event a Patent Indemnitee is as a result of such suit or proceeding prevented from using such alleged infringing Equipment or other deliverables, Seller shall at its option and expense:

(i)	obtain the right to continued use of the Equipment or other deliverables under this agreement;
(ii)	correct or modify the infringing aspect of the Equipment or other deliverables under this Agreement so that it becomes non-infringing; or
(iii)	replace the infringing Equipment or other deliverables under this Agreement with equivalent non-infringing Equipment or other deliverables.

Once Seller has obtained such right, or made such correction or replacement, Seller shall have no obligation to indemnify Patent Indemnitees in accordance with Section 12.3(a) for damages incurred as a result of Patent Indemnitees' continued use of the allegedly infringing intellectual property in a manner that is inconsistent to the resolution of such suit or proceeding.

THIS SECTION IS AN EXCLUSIVE STATEMENT OF ALL THE DUTIES OF SELLER RELATING TO INTELLECTUAL PROPERTY AND DIRECT OR CONTRIBUTORY INFRINGEMENT OR MISAPPROPRIATION AND OF ALL THE REMEDIES OF PURCHASER RELATING TO ANY CLAIMS, SUITS, OR PROCEEDINGS INVOLVING PATENTS. Compliance with this Section as provided herein shall constitute fulfillment of all liabilities of Seller under the Agreement with respect to patents, copyright, trademark, trade secret or other intellectual property rights.

ARTICLE XIII.  ORDER OF PRECEDENCE

13.1	Order of Precedence.  This Agreement shall be read as a whole and in the event of a conflict between documents, the Articles of this Agreement shall take precedence over the Exhibits and the Releases.

ARTICLE XIV.  WARRANTY

14.1	Seller’s Warranty.

14.1.1	Warranty.  Seller warrants that for a period of twelve months following the date of Acceptance (the “Primary Warranty Period”): 

(a)	the Equipment and all other materials and articles furnished hereunder are new, not repaired (except as permitted by Purchaser); 
(b)	the Equipment is designed to and will generate electricity when operated in accordance with Seller’s written instructions; 
(c)	the Scope of Work was performed in a good and workmanlike manner and in accordance with the degree of care, skill and diligence consistent with electric industry standards, and the Equipment is free from defects in materials and/or workmanship; and
(c)
(d)	the Equipment conforms to the Specification Final Specifications and other material requirements of this Agreement.

Nothing in Section 14.1.1(b) shall be construed as establishing a level of performance for the Equipment for the generation of electricity or beyond that of the Performance Standards.  

14.1.2	Warranty Clarification.  Seller shall have no obligation for correction, repair or replacement of the Equipment in accordance with this Article XIV to the extent that a defect or non-conformance is the result of:

(i)	assembly, use or service of the Equipment or any relevant part thereof by Purchaser or its contractors other than in conformance with Seller’s or their Vendor's specifications, manuals or written instructions (except as specifically set forth in this Agreement); 
(ii)	a Purchaser directed change in the use, design or construction of the Equipment which Seller reasonably disputes as not being in accordance with good workmanship or generally accepted professional engineering standards, provided that Seller has given Purchaser written notice of its dispute prior to performing any such change and such dispute ultimately is resolved in Seller’s favor;
(iii)	degradation in accordance with Seller’s Maximum Unit Output and Heat Rate degradation curves included in the Final Specifications; or
(iv)	damage caused by Purchaser or its agents.

Seller also shall have no obligation for defect in the Equipment under this Section 14.1.2 to the extent that such defect arises out of Purchaser failing to notify Seller within a reasonable time after an Equipment defect becomes apparent, not to exceed thirty (30) days from the date Purchaser becomes aware of such defect.  

14.1.3	Warranty Breach Notice.  In the event Purchaser determines that a defect or other breach of warranty exists, Purchaser shall immediately promptly provide Seller with Notice of such a defect or other breach describing the nature of the defect or breach.

14.2	Remedy.

14.2.1	Obligations, Responsibilities and Recourse..  During the Primary Warranty Period, if Seller’s warranties are breached, Seller shall repair, replace, and/or correct the applicable portion of the Scope of Work such that it meets the requirements of this Agreement at no cost to Purchaser.  Seller shall begin corrective action on the Equipment as soon as reasonably possible after receipt by Seller of Purchaser's notice referred to in Section 14.1.3 but not later that five (5) days after receipt of such notice.  Seller shall as its sole expense make commercially reasonable efforts to minimize the downtime obligation when disassembling, removing, replacing and reinstalling the Equipment.  Purchaser shall provide Seller with full and free access to the Equipment to perform its warranty obligations under this Agreement, so long as such access does not unreasonably interfere with operation of the Facility.  Any change to parts or equipment that would alter conformance with the Specification Final Specifications may be made only with prior written approval of Purchaser in accordance with the terms of Article XI hereof.  If, after notification of such defect in materials or workmanship, Seller shall unreasonably delay to commence, continue or complete making good such defect(s), Purchaser may then, following written notice to Seller, correct such defect(s) in accordance with this Agreement, and Seller shall be liable for all reasonable costs, charges and expenses incurred by Purchaser in connection with such reasonable repair or replacement and shall forthwith pay to Purchaser an amount equal to such costs, charges and expenses upon receipt of invoices certified by Purchaser.  In an emergency where delay would cause serious risk of loss or damage, Purchaser may take such actions as necessary to mitigate such risk and correct the deficiency with oral notice followed up immediately with written confirmation of the notice to Seller in accordance with Section 14.1.3.  Such emergency actions shall be to the account of Seller.

14.2.2	Continued Warranty on Corrections or Repairs Performed During the Primary Warranty Period.  With respect to any portion of the Equipment corrected, repaired, modified or replaced as a result of a defect manifesting during the Primary Warranty Period, Seller shall warrant such portion of the Equipment in a like manner for a period of twelve (12) months from the date of such modification or correction (the "Extended Warranty Period"), but in no event shall the Extended Warranty Period extend more than twelve (12) months beyond the expiration of the Primary Warranty Period. 

14.3	Stack Module Warranty.  In addition to the other warranties contained herein, Seller warrants that for a period of thirty-six (36) months following Acceptance or forty-eight (48) months following delivery, whichever comes first, the combined measured(i) Maximum Unit Output and Heat Rate of the Stack Modules shall equal __ of shall decline no more than 15% from the Maximum Unit Output and measured at the time of Acceptance; (ii) Heat Rate shall increase no more than 15% from the Heat Rate measured at the latest Performance Test of the Unit performed in accordance with Article X. Should the Stack Modules time of Acceptance; and (iii) the combined percentage point changes for Maximum Unit Output and Heat Rate as measured in (i) and (ii) shall not exceed 20%.  Should the stack modules fail to perform in accordance with the foregoing, Seller shall replace the non-performing Stack Module stack module (including ordinary removal of the old Stack Module and ordinary Installation of the new one). The stack module and ordinary installation of the new one).  Subject to the replacement Unit successfully passing the Performance Tests and subject to a pricing adjustment pursuant to Section 10.7, the maximum cost of a stack module replacement (“Base Stack Price”) in accordance with this Section 14.3 during a Unit’s Primary Warranty Period shall be $380/kW of times the Maximum Unit Output of each replacement unit as demonstrated in the most recent Performance Test (subject to the replacement unit successfully passing the Performance Tests outlined in Article X and subject to a pricing adjustment pursuant to Section 10.7) (“Base Stack Price”), and such(up to 3000kW) measured in a Performance Test conducted as soon as practical after the stack module is replaced.  If only on stack module is replaced in a Unit, the Base Stack Pric shall be half of $380/kW times the Maximum Unit Output (up to 3000kW) measure in a Performance Test conducted as soon as practical after the stack module replacement.  Such Base Stack Price shall be prorated based on the percentage of the Stack Module stack module Warranty period completed at the time of such unit Unit failure (for example, if a failure occurs two years after Acceptance, Purchaser shall pay 2/3 of the replacement cost).  The “Stack Purchase Amount” shall be equal to the pro rata portion of the Base Stack Price that Purchaser has to pay pursuant to this Section 14.3.  Purchaser shall conduct a new Performance Test on the replacement Stack Module stack module, and the replacement Stack Module stack module shall be warranted for an additional thirty-six (36) months following successful completion of the Performance Tests in accordance with the terms of this section.

14.4	Vendor Warranty.  Seller shall be responsible for enforcing the warranties of all Vendors through the Primary Warranty Period, or, if applicable, the Extended Warranty Period.  In the event of Purchaser's termination of Seller for an Event of Seller Default, Vendor warranties shall automatically be assigned to Purchaser.  Any Vendor warranties that are still in existence at the end of the Primary Warranty Period, or the Extended Warranty Period, as the case may be, shall automatically be assigned on such date to Purchaser.  Thereafter, Seller shall provide reasonable assistance to Purchaser in connection with the enforcement by Purchaser of any Vendor warranty. 

14.5	Limited Warranty.  THE WARRANTIES CONTAINED AND REMEDIES FOR BREACH OF WARRANTY CONTAINED IN THIS AGREEMENT ARE THE EXCLUSIVE WARRANTIES AND REMEDIES BY SELLER APPLICABLE TO THE EQUIPMENT AND THE ASSOCIATED SERVICES AND ARE EXPRESSLY IN LIEU OF ANY OTHER REMEDIES OR WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF SATISFACTORY QUALITY (MERCHANTABILITY) OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER WARRANTY EXPRESSED OR IMPLIED AGAINST VICES OR DEFECTS, LATENT OR OTHERWISE.  SELLER NEITHER ASSUMES NOR AUTHORIZES ANY OTHER PERSON TO ASSUME FOR IT ANY OTHER WARRANTY OBLIGATION IN CONNECTION WITH THE EQUIPMENT OR ANY PART THEREOF. 

14.6	Defective Equipment.  Notwithstanding the foregoing, Seller shall have no obligation hereunder if the Equipment becomes defective in whole or in part as a result of repairs not made by Seller (unless Seller has defaulted in making such repairs), or as a result of the Equipment not having been operated and maintained in accordance with Seller’s written operating limitations and maintenance instructions, or accepted industrial practice.

14.7	Termination of Warranty.  In the event that Purchaser or a third party undertakes unauthorized alterations or repairs to the equipment (other than normal maintenance as set out in Seller’s instruction manuals, approved emergency repairs, and replacing defective parts with Seller approved spares) without Seller’s written consent, any warranty applicable to the Equipment adversely affected by such alterations or repairs shall be immediately terminated.  If a defect covered by the warranty is discovered by Purchaser and Purchaser does not:

(i)	immediately take reasonable action to mitigate the damage consequent to the occurrence of the defect; and
(ii)	promptly notify Seller allow Seller to correct the defect,

Seller shall not be responsible for repair of that part of the damage attributed to Purchaser's failure to take such action.

14.8	Damage caused by Equipment.  Seller shall repair, replace, and/or correct damage to any part of a Unit caused by a failure of that Unit’s Equipment during the Primary Warranty Period or the Extended Warranty Period, as the case may be, provided, however that such failure was not caused by Purchaser’s failure to operate the Equipment in accordance with Seller’s instructions or Purchaser’s negligence or willful misconduct.    

ARTICLE XV.  RISK OF LOSS AND TITLE

15.1	Risk of Loss.  Seller shall bear the risk of loss and damage with respect to the Equipment until Acceptance. 

15.2	Title.  Title to Units, Equipment, O&M Spare Parts and like materials will pass from Seller to Purchaser upon payment in full in accordance with this Agreement.  Seller warrants that legal title to and ownership of the Equipment (including, subject to the use and disclosure limitations in Article XXI, all calculations, as-built, arrangements drawings, detailed engineering drawings and other drawings and documentation required by Purchaser in connection with the operation and maintenance of the Equipment) shall be free and clear of any and all liens, claims, security interests or other encumbrances when title thereto passes to Purchaser. 

ARTICLE XVI.  PACKING AND SHIPPING

16.1	Packing.  Seller shall perform all packaging of the Equipment in accordance with commercially reasonably standards so as to prevent damage to the Units and Equipment during handling and transportation. 

16.2	Notice of Shipment.  Seller shall provide Purchaser with an initial fourteen (14) day advance notice of the expected packing date and the expected loading date of any such shipment, and shall provide two business days advance notice of the actual packing date and the actual loading date of such shipment.  Seller shall provide the Purchaser with a stowage and packing plan forty-five (45) days prior to loading. 

[Enron team to provide additional section allowing for Purchaser’s review of shipments]

ARTICLE XVII.  DEFAULT; TERMINATION

17.1	Event of Seller Default.  Seller shall be in default hereunder upon the occurrence of any one of the following events, which shall be events of default (each an "Event of Seller Default") if not cured within thirty (30) days following delivery to Seller of a notice of such event from Purchaser, or, if not curable in such thirty (30) Day period, if Seller has not commenced the cure within such period as agreed by Purchaser and Seller and does not thereafter diligently pursue such cure to completion as agreed; provided that the event described in paragraph (d) below shall be an Event of Seller Default upon its occurrence, with no cure period:

(a)	Seller shall have assigned or transferred this Agreement or any right or interest herein except as expressly permitted by this Agreement;

(b)	any representation made by Seller in this Agreement shall have been materially false or misleading when made and Purchaser has been materially harmed by the fact that such representation was materially false or misleading;

(c)	Seller shall have defaulted in its performance under any material provision of this Agreement,  

(d)	Seller has failed to achieve Acceptance of the first Unit on or before the expiration of twenty-nine (29) months of the Release Date, failed to achieve Acceptance of Units #2 through 8 on or before the expiration of thirty-five (35) months of Release, or failed to achieve Acceptance of all Units on or before the expiration of forty-two (42) months from Release (such dates subject to extension for Purchaser Delays, which Seller must reasonably provide, upon request of Purchaser, supporting documentation if greater than day-to-day extension for any Units affected by Purchaser Delay in accordance with Section 6.4),

(e)	any proceeding is instituted against Seller seeking to adjudicate Seller as a  bankrupt or insolvent, or Seller make a general assignment for the benefit of its creditors, or a receiver is appointed on account of the insolvency of Seller, or Seller file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding up or composition or readjustment of debts and, in the case of any such proceeding instituted against Seller (but not by Seller), such proceeding is not dismissed within sixty (60) days of such filing. 
Notwithstanding the foregoing, if Purchaser is not materially harmed by the occurrence of an event listed above such event shall not constitute an Event of Default.

17.2	Purchaser's Remedies Against Seller.  The provisions of Article XXVI hereof notwithstanding, and without limitation of Purchaser's rights, in the case of an Event of Seller Default Purchaser shall have the right to terminate this Agreement in whole or in part, without further obligation to Seller, as to any Equipment not yet achieving Acceptance by giving Notice of termination to Seller, specifying which Equipment is being terminated.  Seller shall be allowed sixty (60) days following the receipt of the termination notice to achieve Acceptance of the Equipment which is the subject of the termination notice; provided such Equipment has been delivered to the appropriate Site as of the date of the termination notice.  In the event of Acceptance within such sixty (60) day cure period the termination notice shall be deemed to be void and without effect. In the Event of Seller Default under 17.1(e) based upon an action or proceeding instituted against Seller, such notice of termination by Purchaser shall not be given until sixty (60) days after such filing as to those Units that achieved Acceptance.  These rights are in addition to any rights and remedies that may be available at law or in equity or as provided herein. 

17.3	General Obligations.  In the case of a partial termination pursuant to Section 17.2, Seller shall continue performing its obligations under this Agreement for all Equipment and Services not terminated by Purchaser.

17.4	Payment Obligations. Seller shall not be entitled to any payment for any terminated Equipment, and shall refund any money paid for such terminated Equipment within ten (10) days of receipt of notice of termination. Should some Equipment be terminated for an Event of Seller Default, Purchaser shall pay the Average Purchase Amount for any Equipment which is not terminated and which achieves Acceptance.  Shipping costs shall not be included in the calculation of Average Purchase Amount, and Purchaser shall pay the lesser of the actual shipping costs and $87,000 for any Units achieving Acceptance. The Average Purchase Amount shall be used in the case of a reduction in the Purchase Amount due to failure to achieve the Performance Standards.

17.5	Events of Purchaser Default..  Purchaser shall be in default hereunder upon the occurrence of any one of the following events, which shall be events of default (each an "Event of Purchaser Default") if not cured within thirty (30) days following delivery to Purchaser of a notice of such event from Seller or if not curable in such thirty (30) day period, if Purchaser has not commenced the cure within such period as agreed by Purchaser and Seller and does not thereafter diligently pursue such cure to completion as agreed, provided that the event described in paragraph (d) below shall be an Event of Purchaser Default upon its occurrence with no cure period:

(a)	Purchaser shall have assigned or transferred this Agreement or any right or interest herein except as expressly permitted by this Agreement;

(b)	any representation made by Purchaser in this Agreement shall have been materially false or misleading when made;

(c)	Purchaser shall have defaulted in its performance under any material provision of this Agreement; or 

(d)	any proceeding is instituted against Purchaser seeking to adjudicate Purchaser as a bankrupt or insolvent, or Purchaser makes a general assignment for the benefit of its creditors, or a receiver is appointed on account of the insolvency of Purchaser, or Purchaser files a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, winding up or composition or readjustment of debts and in the case of any such proceeding instituted against Purchaser (but not by Purchaser) such proceeding is not dismissed within sixty (60) days of such filing.

17.6	Seller Remedies.  The provisions of Article XXVI hereof notwithstanding, if an Event of Purchaser Default shall have occurred and be continuing, Seller shall have the right to terminate this Agreement by delivery of a notice of termination to Purchaser, in addition to any rights and remedies that may be available at law or in equity.   In the Event of Purchaser Default under Section 17.5(d) based upon an action or proceeding instituted against Purchaser, such notice of termination by Seller shall not be given until sixty (60) days after such filing.

17.7	Termination Due to Inability to Obtain a Permit.  If (i) Purchaser issues a Permit Notice pursuant to Section 3.10 and (ii) the parties have failed to execute an amendment to the Agreement within thirty (30) days of Seller’s receipt of such Permit Notice, then Purchaser may terminate this Agreement with respect to the Units which cannot be permitted.

ARTICLE XVIII.  FORCE MAJEURE

18.1	Failure to Perform Due to an Event of Force Majeure.  Subject to the terms of this Article XVIII, either party shall be excused from performance and shall not be considered to be in default with respect to any obligation hereunder, to the extent its failure of performance is due to an event beyond the reasonable control of the affected party (an “Event of Force Majeure”).

18.2	Events of Force Majeure.  Events of Force Majeure shall include without limitation the circumstances set forth in clause 18.4 but only if, and to the extent:

(i)	such circumstance is not within the reasonable control of the party affected;

(ii)	such circumstance, despite the exercise of reasonable diligence, can not be prevented, avoided or removed by such party;

(iii)	such event materially adversely affects (in cost and/or time) the ability of the affected party to fulfill its obligations under the Agreement;

(iv)	the affected party has taken reasonable precautions, due care and reasonable alternative measures in order to avoid the effect of such event on the affected party's ability to fulfill its obligations under the Agreement and to mitigate the consequences thereof;

(v)	such event is not the result of any material breach of such party to perform any of its obligations under the Agreement, provided however that each such circumstance invoked by a party as affecting it's ability to perform shall be an Event of Force Majeure if such party has acted in a reasonable and prudent manner.  

18.3	Notice of Event of Force Majeure.  As soon as possible following the date of commencement of any Event of Force Majeure, if either party desires to invoke such Event of Force Majeure as a cause for delay in the performance of any obligation hereunder or as potential adjustment of the Purchase Amount, it shall promptly (but not later than give prompt notice (such notice to be given not later than 72 hours upon learning of such Event of Force Majeure unless it is not reasonably practicable given the nature of the Event of Force Majeure ), advise to give notice within such 72 hours, in which case notice shall be given as soon as reasonably practicable), to the other party in writing of such date.  Within seven (7) days, the affected party shall provide Notice to the other party a description the event and reasonable alternative measures which the affected party has taken in order to avoid the effect of such event on such party's ability to fulfill its obligations under the Agreement and to mitigate the consequences thereof, and the nature and expected duration of such Event of Force Majeure.  The affected party shall provide additional information concerning the event as reasonably requested by the other party  (including, without limitation, updating of any information already provided under this Section 18.3).  Within a reasonable time following the date of termination of such Event of Force Majeure, the party having invoked such Event of Force Majeure as a cause for such delay or potential adjustment of the Purchase Amount shall submit to the other party as soon as practicable, reasonable proof of the nature of such delay and its effect upon the Expected Delivery Date and/or the Guaranteed Acceptance Date or the basis for an adjustment of the Purchase Amount.  The burden of proof to demonstrate that an Event of Force Majeure has occurred and affects the claiming parties ability to perform, rests with the claiming party. The parties will meet within ten (10) days after receipt of Notice by the unaffected party to discuss appropriate measures to mitigate the impact of the Event.  The parties shall thereupon consult with one another concerning the effect of such Event of Force Majeure and an extension of the Guaranteed Acceptance Date or, if applicable, an adjustment in the Purchase Amount shall be made by the parties to take into account such effect on the ability of Purchaser and Seller to reschedule project activities to avoid or minimize overall delays or additional costs resulting from the Event of Force Majeure.  The parties:

(i)	shall make all reasonable efforts to prevent and reduce to a minimum and mitigate the effect of any delay or potential adjustment of the Purchase Amount occasioned by any Event of Force Majeure including recourse to alternate acceptable sources of services, equipment and materials and construction equipment; and

(ii)	shall use commercially reasonable efforts to ensure resumption of normal performance of the Agreement after the occurrence of any Event of Force Majeure and shall perform their obligations to the maximum extent practicable as agreed between the parties.

18.4	Events of Force Majeure.  Subject to the provisions of Sections 18.2 and 18.5, an Event of Force Majeure shall include the following:

(a)	explosions, fires, nuclear radiation contamination, hurricanes, earthquakes, floods, natural disasters, epidemics, other acts of God, and any other similar circumstances;

(b)	war and other hostilities (whether declared or not), revolution, public disorders, insurrection, rebellion, sabotage, acts of public officials or terrorist action;

(c)	any reasonably unforeseeable action or inordinately lengthy material inaction by any national or local government or judicial authority after the Release Date of the affected Equipment, including without limitation any order, legislation, enactment, judgment, ruling or decision; 

(d)	strikes or labor disputes; national or regional strikes which are not specific to Seller’s manufacturing facilities;

(e)	accidents in transportation; 

(f)	delays resulting from extreme weather conditions; and 

(g)	strikes or labor disputes involving Seller’s facilities provided, however, that such strikes or labor disputes shall constitute an Event of Force Majeure only after they have continued unresolved for a period of sixty (60) days and, once considered an Event of Force Majeure, shall constitute grounds for Seller to receive relief from compliance with the Final Project Schedule but shall not constitute grounds for an adjustment to the Purchase Amount.   

18.5	Certain Events Not Excused.  Notwithstanding that an Event of Force Majeure may otherwise exist, the provisions of this Article XVIII shall not excuse: 

(a)	late delivery of equipment or materials caused by Seller, or caused by any of the subcontractors, component manufacturers and suppliers of Seller if Seller could have avoided such late delivery by exercising all reasonable endeavors as a commercially reasonable equipment supplier;

(b)	late performance by Seller caused by Seller’s failure to engage qualified subcontractors and suppliers or to hire an adequate number of personnel or labor or by inefficiencies on the part of Seller;

(c)
(c)	failures or delays due to problems relating to the development of fuel cell technology or the manufacturing process to product the technology; and 

(d)	failure of Seller to act in accordance with industry standards, including, but not limited to, failure to ship the Equipment in a commercially reasonable manner.

18.6	Continued Performance.  Upon the occurrence of any Event of Force Majeure, the parties shall endeavor to continue to perform their obligations under the Agreement so far as reasonably practicable and Seller shall, if reasonably practical, during the period of such circumstances protect and secure the Works in such manner as Purchaser shall require. Seller shall notify Purchaser of the steps he proposes to take including any reasonable alternative means for performance of the Works not prevented by the Event of Force Majeure. 

18.7	Force Majeure - Delays.  If either party becomes unable to perform all or part of its obligations under the Agreement because of an Event of Force Majeure, and such party has properly invoked and observed the provisions of Section 18.3 in respect thereof, such party shall be permitted a delay in the performance of its obligations affected by the Event of Force Majeure, including an extension of the Guaranteed Acceptance Date, if applicable. Seller’s entitlement to an extension of time shall be conditional upon Seller having used reasonable endeavors to mitigate the delay and Seller not otherwise committed an Event of Seller Default.

18.8	Force Majeure - Cost.  Seller shall bear its own delay costs occasioned by any Event of Force Majeure for the first forty-five (45) day period during the occurrence or continuance of each such Event of Force Majeure.  If an Event of Force Majeure continues beyond such ninety (90) Day period, provided Seller has properly invoked and observed the provisions of Section 18.3 in respect thereof, Seller shall be entitled, subject to the provisions of Section 11.3, to recover costs occasioned by each such Event of Force Majeure which accrue after each such ninety (90) Day period pursuant a Purchase Amount adjustment in accordance with Section 5.3 and Article XI hereof.

ARTICLE XIX.  INSURANCE

19.1	Insurance - Seller.  Seller shall procure at its own expense and maintain in full force and effect at all times throughout Seller’s performance under this Agreement to include Seller’s performance of its warranty obligation with responsible insurance carriers insurance as set forth in this Agreement. 

19.1.1	All Risk.  Seller shall purchase and maintain insurance to the full replacement cost of the Equipment during the process of fabrication, in the factory, during transportation, installation and testing, until Acceptance.  

19.1.2	Workers Compensation and Employers Liability Insurance.  Seller agrees to comply with workers compensation laws of each jurisdiction where the Scope of Work is performed, and to maintain a Workers Compensation and Employers Liability policy.  This policy shall be endorsed, if applicable, to provide all state coverage, alternate employer, voluntary compensation coverage and occupational disease with the limits set forth below. 

Workers Compensation	Statutory
Employers Liability		$1,000,000 Each Accident
$1,000,000 Disease 
Each Employee (Minimum)

19.1.3	Commercial General Liability Insurance.  Seller shall maintain Commercial General Liability Insurance, endorsed to provide coverage for: Explosion, Collapse and Underground hazards; Contractual Liability (particularly applicable to the provisions of the "General Indemnity" section of this Agreement);  and Products and Completed Operations (for a minimum of one year after completion of the Scope of Work) with the following limits:   

Bodily Injury and		$1,000,000 Combined Single Limit 
Property Damage		Each Occurrence, (Minimum)

19.1.4	Business Automobile Liability Insurance.  Seller shall provide Business Automobile Liability Insurance which shall include the following coverage for all owned, non-owned and hired vehicles:

Bodily Injury 	  	$1,000,000 Each Person  (Minimum)
$1,000,000 Each Occurrence (Minimum)
Property Damage 	$1,000,000 Each Occurrence (Minimum)
or
Bodily Injury and 	$1,000,000 Combined Single Limit
Property Damage 	Each Occurrence (Minimum)  

19.1.5	Excess Umbrella Liability Coverage.  Seller shall provide Excess Umbrella Liability coverage with minimum limits of:

Bodily Injury and	$5,000,000 Combined Single Limit 
Property Damage 	Each Occurrence. 

19.1.6	Vendors.  Seller shall require its Vendors and others connected with the Scope of Work  to provide and maintain insurance at all times during the period that their agreement related to the Scope of Work under this Agreement is in force and effect at the Vendor's, or other's own cost, with insurance limits which at minimum meets levels as required for similar contracts and is customary for the applicable industry. 

19.1.7	Certificate of Insurance.  Within twenty (20) days of execution of this Agreement, Seller shall submit to Purchaser a certificate of insurance, in form satisfactory to Purchaser, evidencing that satisfactory coverage of the type and limits set forth hereinabove are in effect.  Policies providing such coverage shall contain provisions that no cancellation or material changes in the policies shall become effective except on sixty (60) days advance written notice thereof to Purchaser.  Irrespective of the requirements as to insurance to be carried as provided for herein, the insolvency, bankruptcy or failure of any insurance company carrying insurance of Seller, the failure of any insurance company to pay claims accruing, shall not affect, negate or waive any of the provisions of this Agreement including, without exception, the indemnity obligations of Seller. 

19.1.8	Other Requirements.  Seller shall be responsible for the payment of all deductible and self insurance retention amounts with respect to the insurance required to be maintained by it pursuant hereto.  All Seller insurance shall:

(a)	Specify Purchaser as additional insured for all insurance coverage other than Worker's Compensation Insurance, or its equivalent as required in jurisdictions other than the United States;

(b)	Provide that Purchaser shall have the right, but not any obligation, to pay any premiums if Seller shall fail to do so, and such payment of premiums by Purchaser shall be at Seller’s expense, either by direct charge or setoff; and

For all insurance coverage related to Scope of Work, waive any right of subrogation against Purchaser, Lender, their parent and affiliated companies and their directors, officers, employees and agents, and all other named and additional insured and any other right of the insurer to any setoff or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of Purchaser, Lender, or any other named or additional insured.

19.1.9	Compliance with Insurance.  Seller and their directors, officer, representatives, agents and employees shall comply with all the terms of the policies of insurance referred to in this Section 19.1.  Seller and their directors, officers, representatives, agents and employees shall comply with the procedures for claims, notification and administration under the aforesaid insurance policies and shall not do or omit to do anything which might render voidable policies of insurance or entitle insurers to avoid liabilities thereunder.  [Seller shall ensure that all major subcontractors shall be subject to provisions identical to this Section 19.1.9.]

19.1.10	Limitation.

19.1.10.1.	In the event that Seller breaches its obligations under the first two sentences of Section 19.1.9 of the Agreement and such breach results in an insurer avoiding, in relation to Seller, any policy of insurance obtained by Purchaser pursuant to Section 19.2 of the Agreement, Seller shall not be regarded as an additional insured under such policy and any waiver of subrogation in favor of Seller included in that policy pursuant to Section 19.2 shall not apply.

19.1.10.2	In the event that any Vendor fails to comply with the procedures for claims notification and administration under any policy of insurance obtained by Purchaser pursuant to Section 19.2 of the Agreement or does anything which might render any such policy of insurance voidable or entitle insurers to avoid liability thereunder and as a result thereof an insurer avoids in relation to that Vendor any such policy of insurance, that Vendor shall not be regarded as an additional insured under such policy and any waiver of subrogation in favor of that subcontractor included in that policy pursuant to Section 19.2 of the Agreement shall not apply.

19.2	Insurance - Purchaser.  

	(a)	For all insurance coverage related to Scope of Work, Purchaser waives any right of subrogation against Seller, its Affiliates, and its directors, officers, employees and agents, and all other named and additional insured and any other right of the insurer to any setoff or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of Seller, or any other named or additional insured.

	(b)	[Enron to complete statement as to coverage for General Liability and Errors & Omissions]

19.3	Primary Insurance.  All policies of insurance referred to in herein shall be endorsed to specify that for activities at the Site, they are primary to and not excess to or on a contributing basis with any insurance or self-insurance maintained by the Purchaser and Seller (and its affiliate) or any Subcontractors in respect of losses arising out of or in connection with the Works at the Site. Contractor's insurance under Section 19.1 shall be primary for losses away from the Site.

ARTICLE XX.  INDEMNIFICATION

20.1	Third Party.  SELLER AGREES TO INDEMNIFY, PROTECT, DEFEND, AND HOLD HARMLESS PURCHASER AND ITS DIRECTORS, OFFICERS AND EMPLOYEES AND AFFILIATES, AND THE DIRECTORS, OFFICERS EMPLOYEES OF PURCHASER'S AFFILIATES (“INDEMNIFIED PARTIES”), FROM AND AGAINST ANY AND ALL DEMANDS, LIENS OR OTHER ENCUMBRANCES ON PURCHASER OR ITS PROPERTY (INCLUDING THE FACILITY), CLAIMS, SUITS AND CAUSES OF ACTION OF THIRD PARTIES AGAINST PURCHASER INDEMNIFIED PARTIES AND ANY AND ALL LIABILITY, COSTS, EXPENSES, AND JUDGMENTS INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT LIMITATION, COURT COSTS AND ATTORNEY'S FEES), WHETHER ARISING IN EQUITY, AT COMMON LAW, OR BY STATUTE, OR UNDER THE LAW OF CONTRACTS, TORTS (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE AND STRICT LIABILITY WITHOUT REGARD TO FAULT) PERTAINING TO PERSONAL INJURY OR PROPERTY CLAIMS, OF EVERY KIND OR CHARACTER, BASED UPON, IN CONNECTION WITH, RELATING TO OR ARISING OUT OF THE AGREEMENT OR SELLER’S PERFORMANCE UNDER THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY FAILURE TO COMPLY WITH ANY APPLICABLE LAWS; PROVIDED, HOWEVER, THAT SELLER’S CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL NOT EXTEND TO THE PERCENTAGE OF DAMAGES OR INJURIES ATTRIBUTABLE TO PURCHASER'S NEGLIGENCE OR OTHER FAULT, BREACH OF CONTRACT OR WARRANTY,  OR TO STRICT LIABILITY IMPOSED UPON PURCHASER AS A MATTER OF LAW.  THIS INDEMNIFICATION OBLIGATION SHALL APPLY REGARDLESS OF THE AMOUNT OF INSURANCE COVERAGE HELD BY SELLER, INCLUDING THAT UNDER ANY WORKER'S COMPENSATION ACT OR EQUIVALENT AS REQUIRED BY THE APPLICABLE JURISDICTION, DISABILITY ACT, OR OTHER ACT OR LAW WHICH WOULD LIMIT THE AMOUNT OR TYPE OF DAMAGES, COMPENSATION, OR BENEFITS PAYABLE BY OR FOR SELLER, AND SHALL NOT BE LIMITED BY ANY INSURANCE CARRIED OR PROVIDED BY SELLER IN ACCORDANCE WITH THIS AGREEMENT OR OTHERWISE. 

20.2	Notice.  If the Indemnified Party intends to seek indemnification under this Article from Seller with respect to any action or claim, the Indemnified Party shall give Seller  prompt Notice of such claim or action upon the receipt of actual knowledge or information by the Indemnified Party of any possible claim or of the commencement of such claim or action, which period shall in no event be later than the lesser of:

(a)	fifteen (15) business days prior to the last Day for responding to such claim or action; or
(b)	one-half of the period allowed for responding to such claim or action.

Seller shall have no liability under this Article XX for any claim or action for which such Notice is not provided, if the failure to give such notice prejudices Seller.  Seller shall have the right to assume the defense of any such claim or action with counsel designated by Seller and reasonably satisfactory to the Indemnified Party; provided, however, that if the defendants in any such action include both the Indemnified Party and Seller, and the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to those available to Seller, the Indemnified Party shall have the right to select separate counsel to assert such legal defenses and to otherwise participate. 

20.3	Survival of Obligation.  The duty to indemnify under this Article XX will continue in full force and effect notwithstanding the expiration or termination of this Agreement.

ARTICLE XXI.  NON-DISCLOSURE OF INFORMATION

21.1	Proprietary Information.  Any information concerning the parties which is designated in writing as proprietary and/or confidential and disclosed to the other party incident to the performance of Scope of Work pursuant to this Agreement is disclosed in confidence and the transferee shall not publish or otherwise disclose it to others without the written approval of the transfer or, provided, however, that nothing herein shall limit either party's rights to disclose data which: 

(a)	was developed on its own or furnished to it prior to this Agreement without restriction;

(b)	becomes generally available to the public through no fault of either party; or

(c)	is received by either party from a third party without restriction and not in breach of this Agreement.

Furthermore Purchaser or Seller may provide any such information to any governmental authority having jurisdiction and asserting a right to obtain such information, but only to the extent required to do so by law. This clause shall survive the termination of this Agreement. 

21.2	Press Releases.  Both parties shall agree in writing to any  press release, advertisement in the trade press, or tombstone in the financial or trade press issued by either concerning this Agreement, or any work related thereto.

21.3	Confidentiality.   [complete with Alliance terms.] 

(a)	“Confidential Information” means all information that is furnished under this Agreement by a party hereto, and which is confidential, proprietary or otherwise not generally available to the public.  Notwithstanding the foregoing, the following will not constitute Confidential Information for purposes of this Agreement:  (i) information that is or becomes generally available to the public other than as a result of a breach of this Agreement by the party receiving such information or its representatives; (ii) information that, prior to being furnished pursuant hereto, was already in the files of the party receiving such information or its representatives from another source not known to be subject to any prohibition against transmitting the information; or (iii) information that becomes available to the party receiving such information or its representatives from another source not known to be subject to any prohibition against transmitting the information.

(b)	In connection with the matters described in this Agreement, each party may provide to the other certain information that is confidential, proprietary or otherwise not generally available to the public.  As a condition to furnishing such information the parties agree as follows:

(1)
(i)	Nondisclosure of Confidential Information.  From and after the date hereof, until the date [two] years after the disclosure of the particular Confidential Information, such Confidential Information shall be used solely in connection with the matters contemplated by this Agreement and the recipient of the Confidential Information shall not disclose the Confidential Information to any person other than representatives who need to know the Confidential Information.  It is understood that (i) the representatives shall be informed of the confidential nature of the Confidential Information and the requirement that it not be used other than for the purposes described herein and (ii) in any event, the party receiving Confidential Information shall be responsible for any breach of this Agreement by any of its representatives.  Each party may also disclose the Confidential Information in order to comply with any Applicable Laws.

(2)
(ii)	Return of Information.  The written Confidential Information, including that portion of the Confidential Information that my be found in analyses, compilations, studies or other documents prepared by or for the party receiving the Confidential Information, will be returned promptly upon any request made during the [two]-year period referred to in Section 21.3(b)(1) 21.3(b)(i) above, and no copies shall be retained by the party receiving the Confidential Information or its representatives.  

(c)	Notwithstanding the foregoing, either party shall be entitled to disclose the terms and conditions of this Agreement and any data or information acquired by it under or pursuant to this Agreement without the prior consent of the other party:

(i)	to any Affiliate of such party;

(ii)	to potential engineering, procurement and construction contractors, and other such parties in connection with the construction, operation, financing or operation of a Unit or Facility;

(iii)	to potential Lenders and investors;

(iv)	to the extent required by the rules of a relevant and recognized stock exchange;

(v)	to the extent required by law or pursuant to an order of any court of competent jurisdiction, provided that the original disclosing party is given notice and adequate time to seek a protective order applicable to the information before it is disclosed;

(vi)	to any insurer under a policy of insurance required to be taken out by either party under the Agreement; or

(vii)	to directors, employees, agents and officers of such party;

	(viii)	to Connecticut Resource Recovery Authority, and other potential assignees

provided that the disclosing party determines in good faith that the recipient has a legitimate need to see such data or information, the recipient has been made aware of and has agreed to be bound in writing by the requirements of this Article XXI and only the minimum amount of such information as is necessary is disclosed.

ARTICLE XXII.  ASSIGNMENT

22.1	Assignment by Seller.  This Agreement or any right or obligation contained herein (including the right to place an order), or any Release may not be assigned by Seller without Purchaser’s consent to:

(i)	an Affiliate;  

(ii)	a joint venture, partnership, or other similar entity in which Seller or Seller's Affiliate is a venturer, partner or participant; or 

(iii)	to an entity that succeeds or acquires to all or substantially all of the assets or business of Seller whether by merger, acquisition or otherwise.

Except for (i) through (iii) above, this Agreement may be assigned by Seller to other parties only upon the prior written consent of Purchaser, which shall not be unreasonably withheld. [FEC has request regarding FCE’s right to assign the Agreement in the case of a merger or acquisition]. or delayed.  When duly assigned in accordance with the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the assignee, and Seller shall have no further liability under this agreement; any other assignment by Seller shall be void and without force or effect. 

[Enron to provide language that solves the Lender problem]

22.2	Assignment by Purchaser.  This Agreement or any right or obligation contained herein (including the right to place an order), or any Order Release may be assigned by Purchaser without Seller’s consent to:

(i)	an Affiliate;  

(ii)	a joint venture, partnership, or other similar entity in which Purchaser or Purchaser's Affiliate is a venturer, partner or participant;

(iii)	the Owner of a Facility, including, but not limited to, Connecticut Resource Recovery Authority;

(iv)	[to any entity for the purposes of financing] or sale of  a Facility, or for the construction of a Facility;

(v)	to an entity that succeeds or acquires to all or substantially all of the assets or business of the assigning party Purchaser whether by merger, acquisition or otherwise.

Except for (i) through (v) above, this Agreement may be assigned by Purchaser to other parties only upon the prior written consent of Seller which shall not be unreasonably withheld or delayed.  When duly assigned in accordance with the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the assignee, and Purchaser shall have no further liability under this agreement; any other assignment by Purchaser shall be void and without force or effect.  For an assignment under this Section 22.2, Seller shall be entitled to receive a corporate guaranty or other commercially reasonable payment security, from an entity with a credit rating of A BBB or better.  Notwithstanding the foregoing, Seller shall have the right to object to an assignment to a competitor of Seller regardless of whether such assignment otherwise meets the requirements of this Article XXII.  As used in this Section 22.2, “competitor” means manufacturers and distributors of fuel cells and products easily substituted for fuel cells.  “Competitor” specifically excludes Enron and CRRA.

22.3	Assignment after Acceptance.  Notwithstanding the foregoing, this Agreement (or any right or obligation arising hereunder) or any Release may be assigned without Seller’s consent following payment of the Purchase Amount.  Notwithstanding the foregoing, Seller shall have the right to object to an assignment to a competitor of Seller regardless of whether such assignment otherwise meets the requirements of this Article XXII.

ARTICLE XXIII.  RELATIONSHIP OF THE PARTIES

23.1	Independent Contractor.  Seller undertakes performance of this Agreement as an independent contractor.  Nothing herein shall create a relationship of employer and employee, joint venture, or partnership between Purchaser and Seller, their agents, representatives, employees Affiliates, Vendors or subcontractors, for any purpose whatsoever.  Nothing herein shall create a relationship of principal and agent between Purchaser and Seller, their agents, employees, representatives or subcontractors.  Neither party shall have the authority to bind or obligate the other in any manner as a result of the relationship created hereby.  Purchaser shall not have the right to control the manner(s) or prescribe the method(s) by which Seller perform this Agreement.  Seller shall be wholly responsible for supervision and the methods of performance.  Purchaser shall have no responsibility for Seller's acts and the acts of Seller's agents, employees, representatives, Affiliates, and Vendors engaged in the performance of this Agreement.  Seller shall provide qualified personnel who shall be and remain solely the employees of Seller, and at no time or in any manner shall said personnel be considered as or deemed to be employees of Purchaser.  Purchaser's general coordinative efforts, suggestions and procedures with respect to the Scope of Work and Purchaser's right of inspection, review and observation of the performance of this Agreement shall not make Seller or their employees, employees of Purchaser.

23.2	Responsibilities of Seller as Principal for its Agents.  Seller has complete and sole responsibility as a principal for its agents, Vendors and all other hires to perform or assist in performing the Scope of Work.

23.3	Employees.  Neither party nor its directors, officers, employees, agents, Affiliates or representatives, nor any independent contractor engaged by it in connection with the performance of this Agreement, shall be deemed an employee of the other party.  Neither party shall bring any claim against the other party or its directors, officers, Affiliates, agents, representatives, employees or independent contractors with respect to any liability for compensation under an applicable State or Federal Worker's Compensation Act or equivalent as required by the relevant jurisdiction, including, but not limited to, Worker's Compensation and/or employer's liability claims of employees. 

ARTICLE XXIV.  NOTICES AND COMMUNICATIONS

24.1	Notices.  Any notice pursuant to the terms and conditions of this Agreement shall be in writing and either:

(a)	delivered personally;
(b)	sent by certified mail, (return receipt requested);
(c)	sent by a recognized overnight mail or courier service with delivery receipt required; or
(d)	sent by confirmed facsimile transfer:

Commercial - Legal:

If to Seller:					If to Purchaser:

Either party may change its address or the person to be notified by a notice delivered in accordance with this section.

24.2	Effectiveness of Notices.  Notices shall be effective when received  at the address specified.

24.3	Technical Communications.  Notwithstanding communications and notices addresses as set forth in Section 24.1, the parties will route routine and technical communications as follows:

If to Seller:						If to Purchaser:	

ARTICLE XXV.  DISPUTE RESOLUTION

25.1	Negotiation of Disputes.  If a Dispute arises under this Agreement that cannot be resolved informally by the parties in interest, a party to the Dispute shall invoke the procedures set forth in this Article XXV.  All Disputes will be solely and finally settled by this Article XXV and such procedures.  Nothing in this Article XXV shall preclude any party from seeking a preliminary injunction or other provisional relief, either prior to, during or after the proceedings provided for in this Article XXV, if in its judgment such action is necessary to avoid irreparable damage or to preserve the status quo.

25.2	Waiver of Trial by Jury.  THE PARTIES, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE OTHER PARTIES IN CONNECTION HEREWITH.

25.3	Consent to Jurisdiction.  The parties each irrevocably consent that any action or proceeding against it under, arising out of or in any manner relating to this Agreement shall be brought in the courts of the State of Connecticut.  The parties hereby each expressly and irrevocably assent and submit to the personal jurisdiction of any such court in any such action or proceeding.  The parties each further irrevocably consent to the service of summons, notice or other process relating to any such action or proceeding by delivery thereof by hand or by mail and consent that it may be served with any process or paper by registered mail or by personal service within or without the State of Connecticut in accordance with applicable law.  The parties each waive any objection, claim or defense which it may have at any time to the laying of venue of any such action or proceeding in any such court; irrevocably waive any claim that any such action or proceeding brought in any such court has been brought in an inconvenient forum; and further irrevocably waive the right to object, with respect to any such action or proceeding brought in any such court, that such court does not have jurisdiction over such party.

25.4	Dispute Resolution Procedures.  

(a)	Method of Invoking Alternative Dispute Resolution Procedures

1.	These procedures may be invoked by any party by giving written notice to the other of the dispute and designating one or more persons (collectively, the “Designee”) to act on behalf of the disputing party regarding the dispute.  The other party shall be required to respond to the disputing party’s notice within ten (10) business days by designating in writing its own Designee.  A party may choose to represent itself, or if it appoints a Designee, its officers may nonetheless attend such meetings.

2.	The parties, each acting through its Designee, shall meet at a mutually acceptable time and place within ten (10) business days after the non-disputing party designates its Designee to the other.  At that meeting, the parties shall attempt in good faith to negotiate a resolution of the dispute, or failing that, to agree on a method for resolving the claim or dispute.

3.	If, within ten (10) business days after the first meeting or within such longer period of time as the parties may mutually agree, the parties have not succeeded in negotiating a resolution of the claim or dispute or agreeing on a dispute resolution mechanism, they shall submit the dispute to mediation in accordance with the procedures set forth herein.

4.	The parties will jointly appoint a mutually acceptable mediator to mediate the dispute.  If the parties are unable to agree on a mutually acceptable mediator within five (5) business days after the conclusion of the negotiations described in paragraph 3 above, then the parties shall select a neutral Third Party from American Arbitration Association (“AAA”) in New York, New York, with the assistance of AAA, unless the parties agree otherwise in finding a mutually acceptable mediator.

5.	Each party to the dispute shall bear an equal share of the fees and costs of the mediator, and any fees and costs of AAA.

6.	The parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days from appointment of a mediator by any of the parties or the AAA.

7.	The parties agree that the mediation period may be extended for an additional thirty (30) days beyond the initial thirty (30) day period upon agreement of the parties.  Either party may terminate the mediation at any time after the initial thirty (30) days or when any agreed upon extension has expired.

(b)	Mediation Procedures

1.	The mediator shall be neutral and impartial.

2.	The mediator shall control the procedural aspects of the mediation.  The parties will cooperate fully with the mediator.

	(a)	The mediator is free to meet and communicate separately with each party.

	(b)	The mediator will decide when to hold joint meetings with the parties and when to hold separate meetings.  There shall be no stenographic record of any meeting.  Formal rules of evidence will not apply.

3.	Each party may be represented by more than one person, including an attorney. 

4.	The process will be conducted expeditiously.

5.	The mediator will not transmit information received from any party to another party or any third person unless authorized to do so by the party transmitting the information.

6.	The entire process is confidential.  The parties and the mediator will not disclose information regarding the process, including settlement terms, to third persons, unless the parties otherwise agree.  The process shall be treated as a compromise negotiation for purposes of the applicable rules of evidence.  Further, the parties will not disclose the existence of a dispute or information regarding the mediation to third persons including, without limitation, the media.

7.	The parties will refrain from pursuing administrative and/or judicial remedies during the mediation process, except as otherwise expressly provided in the agreement which incorporates these procedures.  The parties agree that any and all statutes of limitation or periods of time for taking action shall be tolled during the time period that the parties are engaged in mediation.

8.	Unless all parties and the mediator otherwise agree in writing:

(a)	The mediator will be disqualified as a witness, consultant or expert in any pending or future investigation, action or proceeding relating to the subject matter of the mediation (including any investigation, action or proceeding which involves persons not parties to this mediation); 

(b)	The mediator, at the conclusion of the mediation, will immediately either destroy and certify destruction of, or return to the providing party, any and all documents and information in the mediator's possession, whether or not the mediation was successful; and 

(c)	The mediator will not be subpoenaed in any such investigation, action or preceding and all parties will oppose any effort to have the mediator subpoenaed.

9.	The mediator, if a lawyer, may freely express views to the parties on the legal issues of the dispute.

10.	The mediator shall not be liable for any act or omission in connection with the mediation.

11.	The mediator may withdraw at any time by written notice to the parties (i) for overriding personal reasons, (ii) if the mediator believes that a party is not acting in good faith, or (iii) if the mediator concludes that further mediation efforts would not be useful.

(c)	Litigation

If the parties do not resolve the dispute through mediation within the period provided in Part A above, the parties may pursue any and/or all applicable legal and/or equitable remedies available to them.  

ARTICLE XXVI.  LIMITATION OF LIABILITY

26.1	Maximum Liability.  Seller’s maximum aggregate liability for claims by Purchaser arising out of Seller’s performance of this Agreement whether arising from tort (including negligence), breach of contract or any other cause of action is limited to one hundred percent (100%) of the Purchase Amount; provided, however, that the foregoing limitation of liability of Seller shall not apply to the following: 

(i)	under Article XX (Indemnification);

(ii)	Article XIX obligation to maintain insurance; 

(iii)	arising from or related to environmental harm to the extent caused by an action or inaction of Seller, its agents, employees or Vendors during the performance of the Scope of Work;

(iv)	resulting from the gross negligence or willful misconduct of Seller, their agents, employees or Vendors; or

(v)	patent or copyright infringement in accordance with Section 15.2.

which liabilities shall not be limited.  

26.2	Consequential Damages.  In no event shall Seller be liable to Purchaser for special, indirect, or consequential damages of any nature whatsoever, including losses or damages caused by reason of unavailability of the Equipment, shutdowns or service interruptions, loss of use, loss of profits or revenue, inventory or use charges, cost of purchased or replacement power, interest charges or cost of capital or claims of Purchaser's customers, whether as a result of breach of contract, breach of warranty, tort liability (including negligence or strict liability), or otherwise, whether arising before or after completion of the Scope of Work and whether or not Seller knew or was advised of such losses.  In no event shall Purchaser be liable hereunder for special, indirect, or consequential damages of any nature whatsoever, including, but not limited to, loss of use, loss of profits or revenue, or inventory or use charges, whether as a result of breach of contract, breach of warranty, tort liability (including negligence or strict liability) or otherwise. 

26.3	Releases Valid in All Events.  Releases, disclaimers and limitations on liability expressed herein shall apply even in the event of the negligence, strict liability, fault or breach of contract (including other legal bases of responsibility such as fundamental breach) of the party whose liability is released, disclaimed or limited. 

ARTICLE XXVII.  DRUG AND ALCOHOL-FREE WORKPLACE

The parties desire to provide a safe and productive work environment.  The parties believe that the use, possession and/or distribution of illegal/unauthorized drugs and alcohol presents a serious threat to the safety of employees, visitors and others at the job site, or other premises owned, leased, or occupied by Purchaser.  All Seller’s and Seller’s Vendors' and Subcontractors' employees associated with the Work under this Agreement must agree to compliance with Purchaser's drug and alcohol policy [Number 1200-2, dated September 11, 1995] to the extent such policy is consistent with laws of the State of Connecticut including: 

(1)	while on or entering the Site or other premises owned, leased, or occupied by Purchaser, search of personal and professional possessions, including but not limited to automobiles, trucks, briefcases, lunchboxes, and person for illegal drugs.  Failure to consent to such search shall be grounds for immediate removal from the Site or other premises owned, leased, or occupied by Purchaser;

(2)	drug testing at any time while on the Site or other premises owned, leased or occupied by Purchaser.  Failure to do so or failing any such test shall be grounds for immediate removal from the Site or other premises owned, leased, or occupied by Purchaser; and

(3)	failure of a Seller’s or Vendor's employee to agree and abide by these requirements will be grounds for immediate removal from the job site or other premises owned, leased, or occupied by Purchaser from any work associated with the Scope of Work under this Agreement.

ARTICLE XXVIII.  MISCELLANEOUS

28.1	Validity and Enforceability.  The invalidity or unenforceability of any portion or provision of this Agreement shall not affect the validity or enforceability of any other portion or provision.  Any invalid or unenforceable portion or provision shall be deemed severed from this Agreement, and the balance of the Agreement shall be construed and enforced as if the Agreement did not contain such invalid or unenforceable portion or provision.  Notwithstanding the provisions of the preceding sentence, should any term or provision of this Agreement be found invalid by any governmental authority having jurisdiction thereof, the parties shall immediately renegotiate in good faith such term or provision of the Agreement to eliminate such invalidity.

28.2	Governing Law.  This Agreement, its interpretation and any disputes relating to, arising out of or connected with this Agreement, shall be governed by the laws of the state of Connecticut, without regard to its conflicts of law provisions. 

28.3	Entire Agreement.  This Agreement, and the Exhibits attached hereto constitute the entire agreement between the parties with respect to the subject matter hereof, and there are no oral or written understandings, representations or commitments of any kind, express or implied, not set forth herein.  This Agreement supersedes all prior agreements between the parties with respect to the subject matter hereof.

28.4	Agreement Modification.  No oral or written modification of this Agreement either before or after its execution shall be of any force or effect unless such modification is in writing and signed by the party to be bound thereby. 

28.5	Waiver.  The waiver by any party of any breach or failure to enforce any of the terms, covenants or conditions of this Agreement shall not in any way affect, limit, modify or waive the future enforcement of such terms, covenants or conditions. 

28.6	Headings.  The headings contained herein are included solely for the convenience of the parties and are not to be used as a basis for interpreting the various sections of this Agreement.

28.7	Third-Party Beneficiaries.  The provisions of this Agreement are intended for the sole benefit of Purchaser and Seller, and there are no third-party beneficiaries other than assignees contemplated by the terms herein. 

28.8	Counterparts.  This Agreement may be executed in counterparts, each of which when so executed and delivered shall be an original, and all of which, when taken together, shall constitute one and the same instrument. 

28.9	Equal Employment Opportunity.  To the extent performance of any Scope of Work is performed in the United States, the parties hereto agree that the provisions of Executive Order 11246, as amended, and the Rehabilitation Act of 1973 (Section 503, Public Law 93-112, as amended), the Vietnam Era Veteran's Readjustment Assistance Act of 1974, as amended (including the provisions of the "Equal Opportunity" clauses), and the regulations promulgated pursuant to the above, are hereby incorporated into this Agreement by reference as if fully set out. 

28.10	Cooperation on Site  To the extent Seller is required to perform services on Site it shall cooperate with other contractors on Site so as to coordinate work and schedules.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date and the year first above written.

[ENRON]							FUELCELL ENERGY, INC.
Purchaser							Seller

By:  ___________________________			By:  ___________________________	                                      
Title:  _________________________			Title:  _________________________   

Date:  _________________________ 			Date:  __________________________                        

EXHIBIT A – Pricing and Schedule Details

EXHIBIT B - Scope of Work

EXHIBIT B-1 – Preliminary Specifications

EXHIBIT C - Fixed Specifications

EXHIBIT D – Acceptance and Performance Evaluation Testing Protocol

EXHIBIT E - Form of Performance Test Certificate

EXHIBIT F - Form of Lien Release

EXHIBIT G – Conceptual List of O & M Spare Parts

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#900266 v4 - FuelCell/Enron Purchase Agreement CMPREV.DOC 
Purchaser _________ Seller __________

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