ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT

EXHIBIT 10.28

 

EXECUTION COPY

 

 

 

ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT

Between

US Geothermal, Inc.

And

Ormat Nevada, Inc.

 

 

Dated as of December 5, 2005

 

 

CONFIDENTIAL

*Certain portions of this exhibit have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.

 

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CONTENTS

ARTICLE 1.		DEFINITIONS, INTERPRETATION AND CONTRACT DOCUMENTS	1
	1.1	Definitions	1
	1.2	Interpretation	9
	1.3	Documents Included	9
ARTICLE 2.		CONTRACTOR RESPONSIBILITIES	11
	2.1	General Responsibilities	11
	2.2	Specific Responsibilities	11
	2.3	Contractor’s Personnel and Labor Relations	12
	2.4	Representations and Warranties of Contractor	13
	2.5	Use of Spare Parts	14
ARTICLE 3.		COMPANY RESPONSIBILITIES	14
	3.1	General Responsibilities	14
	3.2	Company’s Representative	15
	3.3	Representations and Warranties of Company	15
	3.4	Sale of Project	16
	3.5	Future Projects	16
ARTICLE 4.		COMMENCEMENT OF WORK	17
	4.1	Notice to Proceed	17
	4.2	Commencement	17
	4.3	Substantial Completion	17
	4.4	Substantial Completion Certificate	18
	4.5	Deemed Substantial Completion	18
	4.6	Delay Liquidated Damages and Bonus	18
	4.7	Final Completion	19
	4.8	Final Completion Certificate	19
	4.9	Punchlist	20
	4.10	Failure to Achieve Final Completion by the Guaranteed Final Completion Date	20

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ARTICLE 5.		COMPENSATION AND PAYMENT	21
	5.1	Contract Price	21
	5.2	Payment Milestones	22
	5.3	Payment	22
	5.4	Final Completion Payment for the Facility	23
	5.5	Payments Not Acceptance of Work	23
	5.6	Payment of Subcontractor	23
	5.7	Waiver of Liens	23
	5.8	Interest	24
	5.9	Security Interest	24
ARTICLE 6.		TESTING	24
	6.1	General	24
	6.2	Test Procedures	24
	6.3	Notice of Testing	24
	6.4	Delayed Tests; Deemed Completion	25
	6.5	Facilities	26
	6.6	Repeat Performance Tests	26
	6.7	Certification or Disagreement as to Test Results	26
ARTICLE 7.		INTENTIONALLY OMITTED	26
ARTICLE 8.		CONSTRUCTION SUSPENSION AND ACCELERATION; CHANGE ORDER	26
	8.1	Construction Suspension and Acceleration	26
	8.2	Change Orders	27
	8.3	Procedure for Change Orders	27
	8.4	Change Orders Due to Contractor Error	28
	8.5	Change Orders Due to Changes in Law	28
	8.6	Effect of Force Majeure; Excused Performance	28
	8.7	Company-Caused Changes	30
	8.8	Price Change	30
	8.9	Effectiveness; Continued Performance Pending Resolution of Disputes	31
	8.10	Documentation	31

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	8.11	Continue Work	32
	8.12	Critical Path Schedule Updates	32
	8.13	Change Order Constitutes Complete Relief	32
	8.14	Effect of Changes on Warranties and Safety	32
ARTICLE 9.		DESIGN AND DOCUMENTATION	33
	9.1	Ownership of and Responsibility for Design	33
	9.2	Inspection of Work	33
	9.3	As-Built Drawings	33
	9.4	License to Use	33
	9.5	Use of Documents After Termination	34
	9.6	O&M Manual	34
ARTICLE 10.		WARRANTIES	34
	10.1	Warranty	34
	10.2	Warranty Period	35
	10.3	Defect Remedy Work	35
	10.4	Implementation of Warranty	36
	10.5	Disclaimer and Release	36
ARTICLE 11.		PERFORMANCE AND PERFORMANCE RELATED REMEDIES; EXCLUSIVITY; LIMITATION OF LIABILITY	37
	11.1	Performance Liquidated Damages and Performance Bonus	37
	11.2	Exclusivity	37
	11.3	General Limitation of Liability	37
	11.4	Other Provisions	38
ARTICLE 12.		TITLE; CARE OF THE WORK	38
	12.1	Passage of Title	38
	12.2	Risk of Loss	39
	12.3	Care, Custody and Control	39
ARTICLE 13.		INSURANCE	39
	13.1	Contractor Provided Insurance	39
	13.2	Company Provided Insurance	40
	13.3	Policies	41

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	13.4	Payment of Deductibles	42
	13.5	Evidence of Insurance	42
ARTICLE 14.		DISPUTE RESOLUTION	43
	14.1	Settlement by Mutual Agreement	43
	14.2	Mediation	43
	14.3	Pending Disputes	43
ARTICLE 15.		INDEMNIFICATION	44
	15.1	General	44
	15.2	Indemnification for Bodily Injury or Property Damage	44
	15.3	Indemnity from Liens	44
	15.4	Contractor’s Infringement Indemnity	44
	15.5	Company’s Indemnity	45
	15.6	Notice and Settlement of Claims	45
ARTICLE 16.		ASSIGNMENT	46
	16.1	Assignment by Company	46
	16.2	Assignment by Contractor	46
	16.3	Succession	46
ARTICLE 17.		SUBCONTRACTORS	46
	17.1	Subcontracts	46
	17.2	Subcontract Provisions	47
	17.3	Approved Vendors	47
	17.4	Exclusion	47
ARTICLE 18.		SUSPENSION	48
	18.1	Right of Company to Suspend Work	48
	18.2	Initial Payments to Contractor	48
	18.3	Extended Suspension	48
	18.4	Right of Contractor to Suspend	48
	18.5	Additional Changes Resulting From Suspensions	48
	18.6	Resumption of Work	49
ARTICLE 19.		TERMINATION	49

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	19.1	Termination by Company	49
	19.2	Termination by Contractor	50
	19.3	Due to Force Majeure	51
	19.4	Due to Company’s Convenience	51
	19.5	Exclusive Remedy	51
	19.6	Actions Required Following Termination	51
	19.7	Termination and Transfer of Subcontracts and Other Rights	52
	19.8	Surviving Obligations	52
ARTICLE 20.		INTENTIONALLY OMITTED	53
ARTICLE 21.		CONFIDENTIALITY	53
	21.1	Both Parties to Keep Information Confidential	53
	21.2	Use of Information	53
	21.3	Exclusions	53
	21.4	Company Not to Remove Logos	53
ARTICLE 22.		NOTICES	53
ARTICLE 23.		MISCELLANEOUS	55
	23.1	Governing Law	55
	23.2	Construction	55
	23.3	Nature of Agreement	55
	23.4	Severability	55
	23.5	Amendments and Waivers	56
	23.6	Survival	56
	23.7	Counterparts	56
	23.8	Entire Contract	56
	23.9	Waivers	56
	23.10	Counterparts; Transmitted Copies	56
	23.11	Further Assurances	57

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LIST OF EXHIBITS

Exhibit A	Scope of Work Allocation and Interface Points
Exhibit B	Contract Price, Milestone Payment Schedule and Work Milestone Schedule
Exhibit C	Power Plant Design Criteria, Drawings and Specifications per itemized list of Section 1.3.
Exhibit D	Performance Tests and Correction Curves
Exhibit E	Warranty Claim Procedures
Exhibit F	Approved Vendors List
Exhibit G	Permits
Exhibit H	Certificate of Substantial Completion
Exhibit I	Certificate of Final Completion
Exhibit J	Form of Final Lien Waiver
Exhibit K	Liquidated Damages and Bonuses
Exhibit L	Change Order Form
Exhibit M	Change Order Request Form

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ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT

          THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT (“ Contract ”) dated as of December 5, 2005, is made by and between:

(1)	US GEOTHERMAL, INC. , an Idaho corporation, with its principal place of business at 1509 Tyrell Lane, Suite B, Boise, Idaho 83706 (“ Company ”); and
(2)	ORMAT NEVADA, INC. , a Delaware corporation, with its principal place of business at 980 Greg Street, Sparks, NV 89431-6039 (“ Contractor ”).

RECITALS

           A.       Company is developing a thirteen (13) MW geothermal power plant in the Raft River Known Geothermal Resource Area in the State of Idaho and desires to retain Contractor to provide certain construction related services and to supply equipment in relation to such power plant.

           B.       Contractor desires to be retained by Company to provide construction related services and supply equipment in relation to Company’s power plant.

AGREEMENT

     THEREFORE, Company and Contractor (each individually, a “ Party ” and together, the “ Parties ”) agree as follows:

ARTICLE 1.        DEFINITIONS, INTERPRETATION AND CONTRACT DOCUMENTS

           1.1        Definitions

          In addition to the terms defined elsewhere in this Contract, the definitions of certain terms used in this Contract with initial letters capitalized are as set forth herein.

          “ Affiliate ” means, with respect to any person or entity, any other person or entity (including any officer, director, shareholder, partner, employee, agent or representative of such person or entity) that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first person or entity. For purposes of this definition, “ control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person or entity, whether through the ownership of voting securities, partnership or other ownership interests, by contract, by Law or otherwise.

          “ Approved Vendors ” means the vendors set forth in Exhibit F, as amended from time-to-time pursuant to Section 17.3.

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          “ As-Built Drawings ” has the meaning given to it in Section 9.3.

          “ Capacity Test ” has the meaning given to it in Exhibit D.

          “ Certificate of Final Completion ” means the certificate issued by Contractor to Company under this Contract, pursuant to Section 4.4.

          “ Certificate of Substantial Completion ” means the certificate issued by Contractor to Company under this Contract, pursuant to Section 4.3.

          “ Change in the Work ” means a change to the Work as provided in Article 8.

          “ Change of Law ” means any Law, official interpretation thereof or manner of interpretation thereof, that is amended or modified, is enacted, adopted, promulgated or otherwise becomes effective or is repealed, revoked, suspended or not renewed after the Effective Date and which increases Contractor’s cost of performing the Work, delays Contractor’s performance of the Work or otherwise adversely affects Contractor’s performance of its obligations under this Contract.

          “ Change Order ” means a written change order based on the form set forth in Exhibit L describing the Change in the Work and its effect, if any, on the Contract Price, the Milestone Payment Schedule, the Schedule and any other provision of this Contract that is affected.

          “ Commencement Date ” has the meaning given to it in Section 4.2.

          “ Company ” has the meaning set forth in the introductory paragraph to this Contract .

          “ Company Default ” means the failure or delay of Company or its representatives, agents, subcontractors or suppliers (other than Contractor and its Subcontractors and their agents and employees) to meet Company’s material obligations under this Contract, including the obligations identified in Section 3.1.

           “Company Indemnified Party” has the meaning set forth in Section 15.1.

          “ Company Permits ” means the Permits to be obtained by Company as described in Exhibit G and, other than the Contractor Permits, any Permits otherwise necessary for the construction, operation and maintenance of the Project.

          “ Company’s Representative ” has the meaning given to it in Section 3.2.

          “ Contract ” means this Engineering, Procurement and Construction Contract together with the Exhibits attached hereto, as the same may be amended or otherwise modified from time-to-time as permitted herein.

          “ Contract Price ” means the total aggregate price payable to Contractor by Company as set forth in Exhibit B, and as adjusted pursuant to the provisions of this Contract.

          “ Contractor ” has the meaning given to it in the Preamble.

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          “ Contractor Hazardous Materials ” has the meaning given to it in Section 2.2(h) .

          “ Contractor Permits ” means the Permits to be obtained by Contractor as described in of Exhibit G.

          “ Contractor’s Representative ” has the meaning given to it in Section 2.3.2.

          “ Correction Curves ” has the meaning(s) given to it in Exhibit D and shall be used to adjust Facility performance from variations from the Design Conditions and/or other specified factors (e.g., degradation) as provided therein.

          “ Day ” means a twenty-four (24) hour period beginning and ending at 12:00 midnight .

          “ Defect ” or “ Defective ” means any Work, including any part or component thereof, that: (i) contains improper or inferior workmanship; (ii) fails to conform in any material respect with the relevant Drawings or Specifications, including any Change in the Work; (iii) is not manufactured in any material respect with the applicable Drawings and the Specifications; and (iv) is not free from defects in material and workmanship.

          “ Defect Remedy Work ” means Contractor’s repair or replacement of any Defect or Work that is Defective.

          “ Delay Liquidated Damages ” has the meaning given to it in Section 4.6.1.

          “ Delayed Payment Rate ” means a per annum rate of interest equal to the lesser of (i) twelve percent (12%) and (ii) the maximum rate permitted by applicable Law.

          “ Design Conditions ” means the design operating conditions for the Facility as set forth in Exhibit C.

          “ Documents ” means any design, drawing (including the Drawings), certificate, specification (including the Specifications), report, studies, model, program, record, pattern, sample, written information and data and other document of whatever nature (including a record thereof in software form).

          “ Dollars ” or “ $ ” means the lawful currency of the United States of America.

          “ Drawings ” means the Facility drawings set forth in Exhibit C or otherwise provided by Contractor to Company pursuant to Article 9 or other terms of this Contract, including the As-Built Drawings.

          “ Effective Date ” means the date of this Contract.

          “ Facility ” means the unit number one geothermal power plant and related infrastructure to be located the Raft River Known Geothermal Resource Area in Cassia County in the State of Idaho to be constructed as part of the development of the Project on the Site, all as more particularly described in Exhibits A and C, but for avoidance of doubt excludes the

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interconnection facilities, geothermal production, re-injection and cooling tower make-up water wells, the gathering system and other portions of the Project outside of the power plant island.

          “ Final Completion ” means the satisfaction or deemed satisfaction of each of the following: (a) Substantial Completion has occurred; (b) Contractor has delivered final lien waivers and releases from Contractor and Contractor’s Subcontractors to Company; (c) all Documents which are to be delivered to Company, by Contractor on or before the Final Completion Date pursuant to this Contract have in-fact been delivered to Company; (d) all of Contractor’s supplies, personnel, rubbish and Contractor Hazardous Materials have been removed from the Site; and (e) all Work other than Punch List Items have been completed in accordance with this Agreement.

          “ Final Completion Date ” means the earlier of (a) the date upon which the Certificate of Final Completion was issued by Contractor to Company pursuant to Section 4.7 (provided that such Certificate of Final Completion has been subsequently countersigned by Company pursuant to Section 4.8) or (b) the date upon which Final Completion is deemed to have occurred under this Contract pursuant to Section 4.8 or Section 6.4.3.

          “ Financing Parties ” means (a) any and all lenders providing senior or subordinated construction, interim or long-term debt financing or refinancing; and (b) any and all equity investors providing leveraged lease-financing or refinancing, and in each case any trustee or agent acting on their behalf, for the Facility. Company shall provide written notice to Contractor of the names of all of the Financing Parties.

          “ Force Majeure ” means any war, declared or not, invasion, armed conflict or act of public enemy, blockage, embargo, revolution, insurrection, riot, civil commotion, act of terrorism, or sabotage provided that any such event occurs within or directly involving the United States or any individual state, or any other country from which machinery, equipment or material for the Facility are procured or transported through, an act of God, including, but not limited to, lightning, fire, earthquakes, volcanic activity, floods, storms or unusual weather conditions, cyclones, typhoons, or tornadoes, labor disputes including strikes, or slowdowns, or lockouts that extend beyond the Facility or are widespread or nationwide, or any other event or circumstances or combination of event(s) or circumstances beyond the reasonable control of a Party, that have a real, quantifiable and adverse impact on cost or performance of the Work.

          “ Gross Invoice Amount ” has the meaning given to it in Section 5.3.1.

          “ Governmental Authority ” means any local, state, regional, central or national government administrative, judicial or executive organs, but excluding any similar foreign or multinational entity, that has or purports to have or asserts or attempts to assert, jurisdiction to legislate, decree, adjudicate or enforce any decision related to, or bearing on, the Facility or the Work.

          “ Guaranteed Final Completion Date ” means the Guaranteed Final Completion Date identified in the Schedule, as the same may be amended from time-to-time in accordance with this Contract.

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          “ Guaranteed Substantial Completion Date ” means the Guaranteed Substantial Completion Date identified in the Schedule, as the same may be amended from time-to-time in accordance with this Contract.

          “ Hazardous Materials ” means any hazardous or toxic substances, materials and wastes which are regulated or are classified as hazardous or toxic by any Governmental Authority having jurisdiction over the Site, including, but not limited to, those substances included in the definitions of “Hazardous Substances,” “Hazardous Materials,” “Toxic Substances,” “Hazardous Waste,” “Solid Waste,” “Pollutant,” or “Contaminant " ” in any federal, state, local or other Law pertaining to public or worker health, welfare or safety or the environment, including, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. § 9601 et seq. , as amended by the Superfund Amendments and Reauthorization Act of 1986; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. § 6901 et seq. ; the Federal Clean Air Act, 42 U.S.C. § 7401-7626; the Federal Water Pollution Control Act and Federal Clean Water Act of 1977, as amended, 33 U.S.C. § 1251 et seq. ; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 135 et seq. ; the Federal Environmental Pesticide Control Act, the Federal Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. ; the Federal Safe Drinking Water Act, 42 U.S.C. § 300(f) et seq. ; the Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C. § 11001 et seq. ; and the Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq. and in the regulations promulgated pursuant to those laws.

          “ Information ” means any Drawings, Specifications or other information furnished directly or indirectly by the other Party hereto in connection with the Contract and the Facility and the Project whether such Information has been furnished prior to, during or following termination of the Contract in connection with the performance of this Contract.

          “ Insolvency Event ” means the bankruptcy, insolvency, liquidation, administration or other receivership or dissolution of a Party and any equivalent or analogous Proceedings by whatever name known and in whatever jurisdiction and any step taken (including the presentation of a petition or the passing of a resolution) for or with a view to any of the foregoing.

          “ Law ” means any federal, state, commonwealth, local or other constitution, charter, act statute, law, ordinance, treaty, resolution, directive (to the extent having the force of law), code, rule, regulation, order, specified standards or objective criteria contained in any applicable permit or approval, which standards or criteria must be met in order for the Facility to be constructed and operated lawfully, and other legislative or administrative action of any Governmental Authority, or a final decree, judgment or order of a court, or any applicable engineering, construction, safety or electrical generation code.

          “ Letter of Credit ” means a stand-by letter of credit procured: (i) by Company, or (ii) through one or more of the Financing Parties for the benefit of Company and in favor of Contractor, and which shall be sufficient to pay Contractor any balance of sums owed to Contractor by Company pursuant to this Contract (as such Letter of Credit may be updated from

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time-to-time), but in particular with respect to the payment terms set forth in Section 5.3.1 and the Schedule.

          “ Liability ” or “ Liabilities ” means any fine, penalty, damage, loss, cost, claim or expense or other liability (including any related fees, expenses and disbursements of a Party’s counsel).

          “ Liquidated Damages ” means Delay Liquidated Damages, Performance Liquidated Damages, Shortfall Generation Liquidated Damages and Net Performance Liquidated Damages.

          “ Major Vendor ” means any vendor engaged directly by Contractor to provide equipment for incorporation into the Work at the Site, whose Work is valued in excess of One Million Dollars ($1,000,000).

          “ Materials ” means all equipment, supplies, apparatus, instruments, machinery (including the OEC), parts, tools, components, appliances, spare parts and appurtenances thereto to be supplied under this Contract by Contractor as described in or required by the Scope of Work.

          “ Milestone Payment Schedule ” means the payment schedule for payment of the Contract Price as set forth in Exhibit B.

          “ Minimum Payment ” has the meaning given to it in Section 5.3.1.

          “ Month ” means a period beginning at 12:00 midnight on the last Day of the preceding calendar month and ending at 12:00 midnight on the last Day of the calendar month.

          “ MW ” means megawatts.

          “ Net Deliverable Capacity ” has the meaning given to it in Exhibit D.

          “ Net Performance Liquidated Damages ” means the Performance Liquidated Damages less the amount of Shortfall Generation Liquidated Damages paid or payable by Contractor to Company pursuant to Section 4.10.

          “ Notice to Proceed ” means the notice issued by Company to Contractor authorizing Contractor to commence the Work under this Contract.

          “ O&M Manual ” means the operation and maintenance manual to be provided by Contractor to Company pursuant to Section 9.6.

          “ OEC ” means the Ormat Energy Converter.

          “ Party ” and “ Parties ” have the meanings given to them in the Preamble.

          “ Performance Bonus ” has the meaning given to it in Section 11.1.3.

          “ Performance Guarantee ” means the guaranteed minimum level of Net Deliverable Capacity to be attained as specified in Exhibit D.

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          “ Performance Liquidated Damages ” has the meaning given to it in Section 11.1.1.

          “ Performance Tests ” means the Synchronization Test, the Trip Test, the Capacity Test, the Reliability Test, and the Turbine Run Back Test (all as are defined in Exhibit D) to be carried out to determine whether the Facility satisfies the performance requirements set forth in this Contract.

          “ Permits ” means the permits, approvals and licenses required from Governmental Authorities necessary for the construction, operation and maintenance of the Facility and the performance of the Work.

          “ PPA ” means the Firm Energy Sales Agreement in effect between Idaho Power Company and US Geothermal Inc. under which the output from the Facility would be delivered and bought.

          “ Proceeding ” means any claim, suit, demand, allegation, arbitration, dispute or other action process, or proceeding whether actual or threatened.

          “ Project ” means the geothermal power generation project unit number one to be constructed in the Raft River Known Geothermal Resource Area in Cassia County in the State of Idaho, including the Facility and the related substation, geothermal production and re-injection wells and the gathering system, all as more particularly described in the Power Plant Design Criteria document included in Exhibit C.

          “ Prudent Industry Practices ” means those practices, methods, equipment, specifications and standards of safety and performance, as the same may change from time-to-time, as are commonly used in operations of privately-owned geothermal electric power generation facilities similar to the Facility, which in the exercise of reasonable judgment and in light of the facts known at the time the decision was made, are considered good, safe and prudent practice in connection with the operation and maintenance of geothermal electric power generation facilities similar to the Facility. Prudent Industry Practices are not intended to be limited to the optimal practices, methods, equipment, specifications and standards, but rather to be the practices, methods, equipment, specifications and standards generally accepted in the privately-owned geothermal electric power industry.

          “ Punchlist Items ” means unfinished items of Work (such as Spare Parts, painting, fine-finish grading or clean-up, updating of Drawings, manuals or other Documents) the lack of which or the failure of which to complete (considered individually or in the aggregate of all Punchlist Items) does not or will not adversely affect the, safety or integrity of the Facility and does not impact the performance of the Facility.

          “ Safety Plans ” has the meaning given to it in Section 2.3.4.

          “ Safety Report ” has the meaning given to it in Section 2.3.4.

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          “ Schedule ” means Exhibit B, as it may be amended from time-to-time as set forth in this Contract, which sets forth the Work performance and payment milestone schedule for the Facility.

          “ Schedule Bonus ” has the meaning given to it in Section 4.6.2.

          “ Scope of Work ” means the specific delineation of items of Work to be performed by Contractor as set forth in Exhibit A, which may be modified pursuant to a Change Order pursuant to Article 8, and which shall conform to the Drawings and the Specifications.

          “ Shortfall Generation Liquidated Damages ” has the meaning given to it in Section 4.10.3.

          “ Site ” means the site more specifically described in Exhibit C, together with spaces, surface water, ground water, diversion weirs, roads, easements, privileges, access rights, rights-of-way and other rights and interests in land and water acquired or to be acquired by Company to develop, engineer, build, own, operate or maintain the Facility and appurtenant facilities, including any associated working and laydown areas for Contractor.

          “ Spare Parts ” means the spare parts for the Facility to be provided by Company as described in Exhibit C.

          “ Specifications ” means the system descriptions, technical specifications and performance specifications and standards for the Facility and the performance of the Work as set forth in Exhibit C.

          “ Synchronization Test ” means a test whereby the Facility OEC is synchronized to the power grid, as described in Exhibit D.

          “ Subcontract ” means an agreement between Contractor and a Subcontractor for the performance of any portion of the Work.

          “ Subcontractor ” means any person or entity, other than Contractor’s employees, engaged by Contractor to perform services relating to the Work.

          “ Substantial Completion ” means the performance of the Work requirements specified in Section 4.3.

          “ Substantial Completion Date ” means the earlier of (a) the date upon which the Certificate of Substantial Completion was issued by Contractor to Company pursuant to Section 4.3 (provided that such Certificate of Substantial Completion is subsequently countersigned by Company pursuant to Section 4.4) or (b) the date upon which Substantial Completion is deemed to have occurred under this Contract pursuant to Section 4.5.

          “ Tax ” means any present or future tax, charge, levy, impost or duty of any kind whatsoever, or any amount payable on account of or as security for any of the foregoing,

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imposed by any Governmental Authority together with any penalties, additions, liens, surcharges and interest relating thereto.

          “ Trip Test ” has the meaning given to it in Exhibit D.

          “ Warranty Period ” has the meaning given to it in Section 10.2.

          “ Work ” means all of the work, services and other duties, obligations and responsibilities that are to be carried out by or under the direction of Contractor pursuant to this Contract, including that work specifically described as Contractor liabilities in the Scope of Work.

           1.2       Interpretation

                      1.2.1      Where the context requires, words importing the singular shall include the plural and vice versa, and words importing persons shall include entities.

                      1.2.2      A reference in this Contract to any Article, Section, Exhibit, Clause or Paragraph is, except where it is expressly stated to the contrary, a reference to such article, section, exhibit, clause or paragraph in this Contract.

                       1.2.3      Headings are for convenience of reference only.

                       1.2.4      Each reference to this Contract shall include a reference to each agreed variation of or supplement to this Contract as may be amended, varied or supplemented from time-to-time.

                       1.2.5      Where the context requires, any reference to a person, entity or Party shall include such person’s, entity’s or Party’s successors and permitted assigns.

                      1.2.6      References to the word “include” or “including” are to be construed without limitation.

           1.3        Documents Included

          This Contract shall consist of this document and the following Exhibits, which are specifically incorporated herein and made a part hereof by this reference.

	Exhibit A	Scope of Work Allocation and Interface Points
	Exhibit B	Contract Price, Milestone Payment Schedule and Work Milestone Schedule
	Exhibit C	Power Plant Design Criteria, Drawings and Specifications

 

a)

Power Plant Design Criteria, dated December 5, 2005;

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	b)	Design Point Heat and Mass Balance Diagrams (Guaranteed, Design, Winter Average, Summer Average), drawing numbers 0.002.95.873.0, sheets 1 through 4, Rev 0.
	c)	The Process Flow Diagram number 7.011.00.981.0, rev P5;
	d)	P&ID drawing numbers (not a complete list of all drawings required for the Facility):

 

 

e)

Electrical 1-line and other control, and protection drawings numbers.

 

 

f)

Site Plan drawing number 7.011.00.970.0, rev P5.

 

	Exhibit D	Performance Tests and Correction Curves
	Exhibit E	Warranty Claim Procedures
	Exhibit F	Approved Vendors List
	Exhibit G	Permits
	Exhibit H	Certificate of Substantial Completion

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	Exhibit I	Certificate of Final Completion
	Exhibit J	Form of Final Lien Waiver
	Exhibit K	Liquidated Damages and Bonuses
	Exhibit L	Change Order Form
	Exhibit M	Change Order Request Form

ARTICLE 2.        CONTRACTOR RESPONSIBILITIES

           2.1        General Responsibilities

                      2.1.1      Except as otherwise expressly set forth in this Contract, Contractor, in consideration of the Contract Price, shall provide, furnish and perform, or cause to be provided, furnished or performed, engineering and design services, Materials, consumables and utilities, and supervision, labor and services required for the development, design, engineering, procurement, manufacturing, transport to Site, quality assurance, inspection, erection, construction, commissioning and performance testing of the Facility as specified in the Scope of Work and in accordance with the provisions of this Contract.

                      2.1.2      Contractor shall diligently prosecute the Work in a good and workmanlike manner in accordance with the Schedule and in accordance with the provisions of this Contract.

           2.2        Specific Responsibilities

          Without limiting the generality of Section 2.1.1 and subject to the terms and conditions set forth in this Contract, Contractor shall at its own expense furnish, undertake, provide or cause to be furnished, undertaken or provided the following:

                    (a)      preparation of the conceptual design and integrated detail design and engineering for the Facility such that the Facility conforms to the Scope of Work and meets the performance and other requirements described in this Contract;

                    (b)      obtain the Contractor Permits from the applicable Governmental Authorities;

                   (c)      coordinate its activities pursuant to this Contract with those activities of Company’s other contractors as requested by Company; provided, however, that such coordination does not delay or otherwise unreasonably interfere with Contractor’s performance of the Work in accordance with the Schedule;

                    (d)      clearing, excavation, backfilling, compaction, consolidation and removal or importation of related materials required with respect to preparation of the Site in accordance with the Scope of Work;

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                    (e)      procurement, supply and transportation to the Site of all Materials necessary to complete the Facility;

                    (f)      supervision and direction of construction and other Work activities on the Site, including construction by Subcontractors, and the coordination of the Work under this Contract;

                    (g)      keep the Site from waste materials or rubbish caused by Contractor’s activities and in a reasonably presentable condition given the nature of the Work. Contractor may store all rubbish and construction debris in an authorized disposal area furnished by Company as provided in Section 3.1(i) . Contractor shall be responsible for the containment of any such material within such area. All rubbish and construction debris caused by Contractor’s activities shall be disposed through a licensed waste hauler, or in a licensed waste disposal site.

                    (h)      remediate and dispose of in accordance with applicable Law any Hazardous Materials generated, transported or released by Contractor or any Subcontractor on or about the Site (“ Contractor Hazardous Materials ”);

                    (i)      training, in the operation and maintenance of the Facility, of a reasonable number of operating and maintenance personnel furnished by Company pursuant to Section 3.1(f) . Such training shall be carried out in conjunction with the normal commissioning, start-up operations and testing activities of Contractor;

                    (j)      provide periodic reports to Company, not less frequently than monthly, regarding the progress of the Work, including a Gantt Chart in MS Project format in sufficient detail to allow a reasonably experienced engineer to evaluate the progress of the Work;

                    (k)      commission and test the Facility as detailed in Exhibit D; and

                    (l)      clearance of the Site of temporary structures, surplus Materials and tools that were delivered or created by Contractor through the course of the Work, upon completion of field work; provided that Contractor shall offer to sell to Company at cost any such temporary structures, surplus Materials and tools that Contractor does not want to retain.

           2.3        Contractor’s Personnel and Labor Relations

                      2.3.1      Contractor shall ensure that there are at all times at the Site while the Work is being performed at the Site there are sufficient suitably qualified and experienced personnel to supervise and perform such Work.

                      2.3.2      Contractor shall designate, by written notice to Company, a representative who shall act as a single point of contact with Company in all matters relating to the Work (“ Contractor’s Representative ”). Contractor’s Representative shall have full authority to act on behalf of Contractor for all purposes in connection with this Contract.

                      2.3.3      Company shall be entitled by written notice to Contractor to object to any representative or person employed by Contractor (including Contractor’s Representative) or any

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Subcontractor in the execution of the Work who, in the reasonable opinion of Company, is incompetent or negligent, or engaged in misconduct, and Contractor shall promptly remove such person from the Work and appoint a suitable replacement, or ensure that the relevant Subcontractor does so.

                      2.3.4      Contractor shall develop, present to Company and implement a safety plan for its own construction activities on the Site and for emergency situations prior to the commencement of Work at the Site (“ Safety Plans ”). During performance of the Work, Contractor shall publish work safety rules for the Site in compliance with the Safety Plan, which safety rules shall apply to any and all visitors to the Site, including representatives of Company. Each week (or other interval mutually agreeable to Company and Contractor), Contractor shall prepare and provide to Company a written report (“ Safety Report ”) listing (i) any breaches or violations of the Safety Plan, (ii) a description of any incidents resulting therefrom, (iii) incidents related to safety issues at the Site, (iv) the cause of any such incident, (v) the nature of such incident, (vi) the severity of such incident, and (vii) the remedial actions planned to remedy such incident and prevent such incident from occurring in the future.

                      2.3.5      Contractor shall be responsible for the security and protection (i) of its equipment, supplies and tools used in connection with the Work through the Final Completion Date, and (ii) for all of the other property owned or leased by Contractor or any of its Subcontractors located at the Site at areas thereon provided by Company or stored or warehoused off the Site through the Final Completion Date. Contractor shall use due care to protect any of Company’s property at any time in its possession or under its control while performing the Work which shall not be less than the care exercised by Contractor with its own property and Contractor shall be responsible for any damage to such property resulting from its failure to use such care.

                      2.3.6      Contractor shall conduct all of its activities within the boundaries of the Site. Contractor, its Subcontractors, agents and employees shall observe all pertinent and reasonable regulations and rules issued by Company to Contractor which are in effect at the Site, as the case may be, regarding passes, badges and proper conduct on such Site. Company may issue reasonable modifications to such regulations and rules from time-to-time.

                      2.3.7      Company and its agents, employees and other contractors shall observe all pertinent and reasonable regulations and rules issued by Contractor, including the Safety Plan, which are in effect at the Site, as the case may be, regarding passes, badges and proper conduct on such Site. Contractor may issue reasonable modifications to such regulations and rules from time-to-time.

           2.4        Representations and Warranties of Contractor

          Contractor represents and warrants to Company that:

                    (a)      Contractor is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware and has the requisite legal power and authority to execute, deliver and perform this Contract;

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                    (b)      the execution, delivery and performance by Contractor of this Contract has been duly authorized by all requisite action of Contractor, and there is no provision in its charter documents requiring further consent for such action by any other person or entity; and

                    (c)      this Contract constitutes the legal, valid and binding obligation of Contractor, enforceable against Contractor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, reorganization, moratorium or similar laws affecting or limiting creditors’ rights generally or by equitable principles relating to enforceability.

           2.5       Use of Spare Parts

          Spare parts may be withdrawn by Contractor from the Spare Parts for the purposes of the Work. Contractor shall be responsible, at its cost, for replacing any such withdrawn Spare Parts as soon as reasonably practicable and in any event no later than the expiration of the Warranty Period.

ARTICLE 3.        COMPANY RESPONSIBILITIES

           3.1        General Responsibilities

          Company shall, at Company’s expense, furnish, undertake, provide or cause to be furnished, undertaken or provided the following:

                    (a)      make available to Contractor and its Subcontractors by the time specified in the Schedule, and continuing until the end of the Warranty Period, the Site, including space for all construction facilities, laydown and storage areas, and roads and other means of access to and from the Site in a timely manner and in accordance with Contractor’s reasonable requirements regarding amount, weight and dimensions of equipment to be transported and the size and layout of the laydown and storage areas;

                    (b)      obtain and maintain in effect all Company Permits from the Governmental Authorities in a timely manner as required to permit Contractor and its Subcontractors to proceed with the Work in accordance with the Schedule;

                    (c)      prepare and/or obtain all environmental impact assessments, studies and statements and geotechnical reports required in connection with the ownership, financing, construction, operation and maintenance of the Facility and the performance of this Contract;

                    (d)      furnish to Contractor copies of any environmental impact assessment, studies and statements and geotechnical reports prepared or obtained as provided in Section 3.1(c) and any information, a power of attorney (if required) and any other items reasonably necessary for Contractor to obtain the Contractor Permits or perform the Work in a timely manner as required to permit Contractor and its Subcontractors to proceed with the Work in accordance with the Schedule;

                    (e)      arrange for electricity, water and other utilities to be available to Contractor at then current market terms for the same for use in the construction, start-up, testing

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and commissioning of the Facility, in a timely manner as required to permit Contractor and its Subcontractors to proceed with the Work in accordance with the Schedule;

                    (f)      provide a reasonably sufficient number of operating personnel, including their supervisors, for training by Contractor as provided in Section 2.2(i), and for participating in the start-up, testing, commissioning, maintenance and upkeep of the Facility through to Final Completion. Each person designated for training by Company shall be a qualified technician and said trainees shall not be deemed employees or Subcontractors of Contractor;

                    (g)      provide the geothermal heat resource in the quantity and quality detailed in the Design Conditions, and in the time frame as required to permit Contractor and its Subcontractors to proceed with the Work in accordance with the Schedule;

                    (h)      provide or make arrangements for the tie-in point to the electricity grid (or any other defined electricity consumer) to be ready in a timely manner in accordance with the Schedule;

                    (i)      provide to Contractor a rubbish and construction debris (but not for Contractor Hazardous Materials) storage area on or adjacent to the Site. Disposal of such Contractor materials stored therein shall be the responsibility of the Contractor, pursuant to Section 2.2 (g).

                    (j)      any removal or disposal of the existing transite pipe on the Site exposed during the Work; and

                    (k)      remediate and dispose of in accordance with applicable Law any Hazardous Materials that are found or are uncovered on or about the Site other than Contractor Hazardous Materials that are the responsibility of Contractor as provided in Section 2.2(h) .

           3.2        Company’s Representative

          Company shall designate by written notice to Contractor a representative who shall act as a single point of contact with Contractor in all matters relating to the Work (“ Company’s Representative ”). Company’s Representative shall have full authority to act on behalf of Company for all purposes in connection with this Contract.

           3.3       Representations and Warranties of Company

          Company represents and warrants that:

                    (a)      Company is a corporation duly organized and validly existing under the Laws of the State of Idaho and has all requisite legal power and authority to execute, deliver and perform this Contract;

                    (b)      the execution, delivery and performance by Company of this Contract have been duly authorized by all requisite corporate action of Company and there is no provision

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in its charter documents requiring further consent for such action by any other person or entity; and

                    (c)      this Contract constitutes the legal, valid and binding obligation of Company, enforceable against Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, reorganization, moratorium or similar laws affecting or limiting creditors’ rights generally or by equitable principles relating to enforceability.

           3.4        Sale of Project

          If prior to the expiry of the Warranty Period (or any extension thereof) Company elects to convey or otherwise transfer its right, title and interest in and to the Project or in and to the owner of the Project, Company shall provide written notice of such intent to Contractor. Transfer to any third party shall not relieve Company of any obligation hereunder, whether such obligation arises prior to or after the transfer.

           3.5        Future Projects

          In the event that Company or its Affiliates elect to pursue up to two (2) additional geothermal power plants in its expansion of the Project, Company or its Affiliates shall have the option to acquire from Contractor, and Contractor shall have the option to provide to Company or its Affiliates, the services and equipment of the type provided by Contractor under this Contract for a lump-sum payment for each power plant equal to the Contract Price subject to adjustment as follows. The Contract Price, for purposes of this Section 3.5, may be adjusted to reflect changes in applicable materials and labor prices as determined from relevant published cost indices from the Effective Date of this Contract, to the effective date of the subsequent contract(s). The services and equipment provided by Contractor with respect to the power plants described above shall be provided and subject to an EPC agreement with terms and conditions substantially the same as set forth in this Contract.

          In the event that Company elects to pursue the installation of the two such additional power plant in its expansion of the Project at the same time, Company or its Affiliates shall have the option to acquire from Contractor and Contractor shall have the option to provide to Company or its Affiliates the services and equipment of the type provided by Contractor under this Contract with respect to such power plant for a lump-sum payment equal to (a) two (2) times the Contract Price subject to adjustment as provided above minus, (b) a reasonable discount, determined by Contractor in its sole discretion, that reflects the economies of scale in performing EPC contract services and equipment for the simultaneous supply of the two geothermal power plants. The option provided to each of Company (and its Affiliates) and Contractor if such parties have not entered into a definitive EPC agreement or EPC agreements reflecting such terms and conditions on or before December 31, 2007.

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ARTICLE 4.        COMMENCEMENT OF WORK

           4.1       Notice to Proceed

          Company shall issue a Notice to Proceed to Contractor only at such time as Company has arranged financing reasonably satisfactory to Contractor as being sufficient for Company to be able to meet its obligations under this Contract and to develop the Project and pays to Contractor simultaneously with the issuance of such Notice to Proceed the amount specified for the first payment milestone set forth in the Schedule. The Notice to Proceed shall not be issued by Company prior to February 1, 2006 and Contractor shall have the right to terminate this Contract if the Notice to Proceed has not been provided by June 1, 2006.

           4.2        Commencement

          Subject to Section 4.1, Contractor shall commence performance of the Work promptly upon receipt of a Notice to Proceed from Company (“ Commencement Date ”). Contractor shall thereafter proceed diligently to perform the Work and furnishing sufficient forces, construction plant and equipment to perform the Work in accordance with the Schedule.

           4.3        Substantial Completion

          Contractor shall achieve Substantial Completion of the Facility on or before the Guaranteed Substantial Completion Date. When all of the following conditions have been met with respect to the Facility, Contractor shall issue to Company a Certificate of Substantial Completion in substantially the same form as that set forth in Exhibit H:

                    (a)      all of the Work, except for completion of insulation, painting, final grading, the As-Built Drawings, training and any other portion of the Work not affecting the operability, safety, mechanical and/or electrical integrity of the Facility, have been properly constructed, installed, correctly adjusted and tested, are mechanically, electrically and structurally sound and comply with the Drawings and the Specifications, and can be used safely;

                    (b)      all Documents which are to be delivered to Company by Contractor on or before the Substantial Completion Date pursuant to this Contract have, in fact, been delivered to Company (including, but not limited to, a waiver and release of Contractor’s and all of its Subcontractor’s mechanics’ liens through such date (which may be conditioned upon payment by Company));

                    (c)      Contractor has made training available to Company’s personnel (or other nominees of Company) and written operating procedures sufficient to safely start-up and continuously operate the Facility; and

                    (d)      the Synchronization Test has been satisfactorily completed.

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           4.4        Substantial Completion Certificate

          Within ten (10) Days following the receipt of the Certificate of Substantial Completion, Company shall inspect the Facility and review all Work and services performed by Contractor with respect thereto, and shall either (i) deliver to Contractor the Certificate of Substantial Completion countersigned and certifying that the requirements of this Contract applicable to Substantial Completion have been fully satisfied for the Facility and Substantial Completion of the Facility has accordingly been achieved or (ii) if reasonable cause exists for doing so, notify Contractor in writing that Substantial Completion of the Facility has not been achieved, stating in detail the reasons therefore. In the event that Company determines that Substantial Completion has not been achieved and Contractor has not disputed Company’s determination, Contractor shall promptly take such corrective action or perform such additional Work or other services as shall achieve Substantial Completion of the Facility and shall issue to Company another Certificate of Substantial Completion. Such procedure shall be repeated until Substantial Completion of the Facility has been achieved; provided, however, that Company shall respond to any such subsequent Certificate of Subsequent Completion within five (5) Days following the receipt thereof.

           4.5        Deemed Substantial Completion

          Deemed completion may occur under one (1) or both of two (2) circumstances, when: (a) Company fails to provide the countersigned Certificate of Substantial Completion as contemplated in Section 4.4 within the period referenced therein; or (b) Contractor’s conduct or completion of the Synchronization Test is delayed from the date on which such test would otherwise have commenced, been conducted or completed due to a Company Default and Contractor has completed all of the other requirements set forth in Section 4.3. In the event of (b), Contractor shall notify Company of having achieved deemed Substantial Completion pursuant to Section 4.4.

           4.6        Delay Liquidated Damages and Bonus

                      4.6.1      The Parties agree that it would be extremely difficult and impracticable under the presently known and anticipated facts and circumstances to ascertain and fix the actual damages that Company would incur should Contractor fail to achieve Substantial Completion by the Guaranteed Substantial Completion Date, and accordingly, the Parties hereby agree that if Contractor fails to so achieve Substantial Completion by the Guaranteed Substantial Completion Date, then Company shall be entitled to recover from Contractor as liquidated damages for such delay, and not as a penalty, the amounts set forth in Section 1 of Exhibit K (“ Delay Liquidated Damages ”). The Delay Liquidated Damages are, subject to Section 4.10 and Article 19, Company’s sole and exclusive remedy in the event Contractor fails to achieve any of the milestones for the Facility, including Substantial Completion, by the dates set forth in the Schedule. Company and Contractor further agree that the Delay Liquidated Damages are a good faith estimate of the damages Company would suffer.

                      4.6.2      If the Substantial Completion Date occurs prior to the Guaranteed Substantial Completion Date, Company shall pay to Contractor a bonus, for each Day which

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shall elapse between the Substantial Completion Date and the Guaranteed Substantial Completion Date, the amounts set forth in Section 2 of Exhibit K (“ Schedule Bonus ”).

           4.7       Final Completion

          When all of the following conditions have been met with respect to the Facility, Contractor shall issue to Company a Certificate of Final Completion in substantially the same form as that set forth in Exhibit I:

                    (a)      except for the Punchlist Items and As-Built Drawings, the Facility and Work has been completed and complies with the Scope of Work, the Drawings, the Specifications and applicable Laws, and Contractor has made training available to Company’s personnel (or other nominees of Company);

                    (b)      the Facility has satisfied or, pursuant to Sections 6.4.2, 6.4.3 or 6.7 is deemed to have satisfied, the checks and tests under Exhibit D, including the Performance Guarantee or, if the Performance Guarantee was not met, the Performance Liquidated Damages have either been paid or agreed and shall be deducted from the final payment of the Contract Price;

                    (c)      any amount finally determined due for Delay Liquidated Damages has either been paid or agreed and shall be deducted from the final payment of the Contract Price;

                    (d)      the list of Punchlist Items (if any) for the Facility have been identified by Contractor and provided to Company as provided in Section 4.9;

                    (e)      all other deliverables identified in this Contract with respect to the Facility (except for the As-Built Drawings or deliverables appearing in the Punchlist Items provided by Contractor), including the O&M Manual and other documents and materials described in Article 9, have been completed in accordance with the provisions hereof and have been provided to Company . ; and

                    (f)      all rubbish accumulated by Contractor in the Company-designated disposal area has been removed and disposed in accordance with Section 2.2(g) .

           4.8        Final Completion Certificate

          Within fifteen (15) Days following the receipt of the Certificate of Final Completion, Company shall inspect the Facility and review all Work and services performed by Contractor with respect thereto, and shall either (i) deliver to Contractor the Certificate of Final Completion countersigned and certifying that the Work requirements of this Contract (other than the Punchlist Items identified by Contractor and the As-Built Drawings) have been fully satisfied for the Facility and Final Completion of the Facility has accordingly been achieved, or (ii) if reasonable cause exists for doing so, notify Contractor in writing that Final Completion of the Facility has not been achieved, stating in detail the reasons therefore. In the event that Company determines that Final Completion has not been achieved and Contractor has not disputed Company’s determination, Contractor shall promptly take such corrective action or perform such

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additional Work or other services as shall achieve Final Completion of the Facility and shall issue to Company another Certificate of Final Completion. Such procedure shall be repeated until Final Completion of the Facility has been achieved; provided, however, that Company shall respond to any such subsequent Certificate of Final Completion within five (5) Days following the receipt thereof. If Company fails to provide the Certificate of Final Completion or as contemplated in (ii) above within the aforementioned period, Final Completion of the Facility shall be deemed to have been achieved.

           4.9        Punchlist

          Contractor shall provide to Company a list of all Punchlist Items and the estimated cost thereof prior to the issuance of the Certificate of Final Completion. Within fifteen (15) Days following the receipt of this list of Punchlist Items, Company shall notify Contractor in writing whether Company has any objections to that list or the estimates thereof. If Company has any objections, including additions, the Parties shall use good faith efforts to resolve such objections. If no agreement can be reached, the provisions of Article 14 shall be invoked to resolve the dispute. Two hundred percent (200%) of the estimated value of such Work, as reasonably decided by Company, shall be retained or deducted from the Contract Price by Company or, at Contractor’s option, paid to Company by Contractor pending satisfactory rectification and/or completion. Contractor shall rectify or complete to the reasonable satisfaction of Company within the time stated in the Certificate of Final Completion any such Punchlist Items listed. In the event Contractor fails to rectify or complete any Punchlist Items listed, Company may arrange for the outstanding work to be done and the cost thereof shall be certified by Company and deducted from the Contract Price or, at Contractor’s option, paid to Company by Contractor. Upon satisfactory rectification and/or completion of such Work, the money retained, deducted or paid under this Section 4.9 in relation thereto shall be reimbursed to Contractor by Company. During the period after Final Completion, Contractor and Company shall cooperate to ensure that the performance of the Work does not unreasonably interfere with the commercial operation of the Facility and at the same time allowing the remaining Work to be performed in a prompt and efficient manner. As soon as practicable after the completion of all Punchlist Items, Contractor shall remove all of its equipment and Materials and complete the removal of all Work-related waste material and rubbish from and around the Site.

           4.10       Failure to Achieve Final Completion by the Guaranteed Final Completion Date

                      4.10.1      If the Final Completion Date has not occurred on or before the Guaranteed Final Completion Date and if the Net Deliverable Capacity is less than the Performance Guarantee, and Contractor elects to make corrections to the Facility and continue repeating Performance Tests pursuant to Exhibit D, then Contractor shall be liable for liquidated damages to the Company for the shortfall in generation in the amount calculated as described below until such time that Contractor has performed the final Capacity Test pursuant to Exhibit D so that there can be a determination as to whether Performance Liquidated Damages or a Performance Bonus is payable as provided in this Contract.

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                      4.10.2      The shortfall in generation for purposes of Section 4.10.1 shall be calculated as the lesser of: (a) the Net Deliverable Capacity Deficiency, as defined in Schedule A of Exhibit D; and (b) the difference between what the Facility would have been able to generate and sell to Idaho Power Company had the Facility met the Performance Guarantee, and that which it was actually able to sell as a result of the Facility not meeting the Performance Guarantee. The shortfall in generation shall be calculated between the Guaranteed Final Completion Date and the actual Final Completion Date. Any shortfall generation attributable to the Company, whether because the Facility was unable to operate or to only operate at a reduce power output, shall not be included in the shortfall generation for which the Contractor is liable.

                      4.10.3      The Shortfall in Generation liquidated damages that the Company shall be entitled to recover from Contractor, and Contractor shall pay to Company, shall be calculated as the shortfall in generation calculated as provided in Section 4.10.2 multiplied by the PPA rate for the power (“ Shortfall Generation Liquidated Damages ”).

ARTICLE 5.        COMPENSATION AND PAYMENT

           5.1       Contract Price

                      5.1.1      As compensation for the performance of the Work, Company shall pay Contractor, in the manner and at the times hereinafter specified, the Contract Price, which amount may be subject to adjustment in accordance with the terms of this Contract.

                      5.1.2      The Contract Price includes any and all Taxes imposed directly or indirectly by any Governmental Authority including export taxes, importation duties and income Taxes imposed on Contractor, but excludes State of Idaho and local sales and use taxes.

                      5.1.3      Contractor shall be responsible for paying all State of Idaho sales and use taxes due as a result of the Work in the construction of the Facility to the State of Idaho on behalf of the Company. Company shall reimburse Contractor for any such taxes so paid. The State of Idaho sales and use taxes paid by Contractor since the previous invoice shall be stated separately and shown on all invoices as a separate line item and shall be paid by Company to Contractor.

                      5.1.4      Upon request of Company, Contractor shall:

                    (a)      promptly provide to Company evidence of its remittance to the applicable Governmental Authority of all state and local sales and use taxes that Contractor collects from Company under this Contract; and

                    (b)      provide Company with sufficient level of detail such that Company is able to claim any State of Idaho sales and use tax refund for geothermal energy projects for which it may be eligible under State of Idaho law.

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           5.2        Payment Milestones

          Exhibit B sets forth the payment installments payable by Company in respect of Work performed by Contractor. The Schedule shall be used as the basis for preparation of invoices and for payments. Any cumulative acceleration of the Milestone Payment Schedule of more than fourteen (14) Days must reflect a reciprocal acceleration in the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date.

           5.3        Payment

                      5.3.1      Upon the completion of any of the payment milestones described in the Schedule, Contractor shall present to Company the invoice and any other Documents described for payment of such milestone in the Schedule. Except as provided below in this Section 5.3, invoices that are presented for payment shall be paid within thirty (30) Days of Company’s receipt of such invoice. All invoices presented for payment by Contractor to Company shall set forth the following information, the: (i) aggregate Contract Price related committed costs for the period represented by such invoice as provided in the Milestone Payment Schedule (“ Gross Invoice Amount ”); (ii) minimum cash payment required to be paid by Company pursuant to such invoice as provided in the Milestone Payment Schedule (“ Minimum Payment ”); and (iii) aggregate payments made by Company to Contractor as of the invoice date. Contractor agrees to forebear the requirement for payment of the Gross Invoice Amount and shall accept payment of the Minimum Payment with respect to such invoice; provided, that Company shall provide to Contractor a Letter of Credit in a form, and issued by a financial institution, acceptable to Contractor, for the: (a) aggregate of the Gross Invoice Amount less the Minimum Payment, and (b) any outstanding balances owed to Contractor by Company in relation to prior invoices where Company paid Contractor a Minimum Payment.

                      5.3.2      Within ten (10) Days of its receipt of an invoice and such Documents, Company’s Representative shall give written notice to Contractor of any objections that Company’s Representative has with regard to the accomplishment of such milestone. If Company’s Representative fails to provide such notice within such ten (10) Day period, the milestone shall be deemed accomplished and Contractor shall be entitled to payment. If Company’s Representative provides written notice of objection to the accomplishment of such milestone and said Documentation within the period described above, and the contents of Company’s Representative’s notice is not in dispute, Contractor shall resubmit the corrected invoice and/or Documentation, and the above-described approval process shall reapply except that the response time shall be five (5) Days rather than ten (10) Days.

                       5.3.3      If pursuant to Section 5.3.2, Company’s Representative disputes any amounts invoiced by Contractor within the specified time period, Company shall promptly pay to Contractor the undisputed amount of such invoice in the manner provided in Section 5.3.1, and any disputed amount that is ultimately determined to have been payable shall be paid with interest from the date the item was payable to and including the date of payment, in accordance with the provisions of Section 5.8. The Parties shall resolve their differences regarding the disputed amount in accordance with the dispute resolution procedures set forth in Article 14.

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                    5.3.4      The Letter of Credit will provide that Contractor is entitled to draw under the Letter of Credit the amount of the applicable Minimum Payment upon presentation of a certificate signed by Contractor stating that Company has failed to pay to Contractor a Minimum Payment when due and that such payment is not subject to a bona fide dispute subject to the dispute resolution procedures set forth in this Contract. The Letter of Credit will also provide that Contractor is entitled to draw the full amount of the Letter of Credit upon presentation of a certificate signed by Contractor stating that one of the events described in Section 19.2.1 of this Contract has occurred and Company has failed to cure such default within the time periods specified in Section 19.2.1.

           5.4        Final Completion Payment for the Facility

          No later than thirty (30) Days after the Final Completion Date, Contractor shall submit to Company a statement summarizing and reconciling all previous invoices, payments and Changes in the Work, with respect to the Work, and a waiver of liens as provided in Section 5.7 from Contractor for the Facility and such other data as Company may reasonably request establishing payment of or surety for payment of such unpaid Contractor obligations. Within thirty (30) Days of the receipt of such statements and lien waiver, Company shall pay Contractor the remaining portion of the Contract Price (except with respect to amounts remaining to be paid by Company under the Contract for Punchlist Items and less any unpaid Liquidated Damages owing by Contractor). Any disputes regarding a final payment shall be handled in accordance with the procedure set forth in Article 14.

           5.5        Payments Not Acceptance of Work

          No payment made by Company to Contractor shall be considered or deemed to represent that Company has inspected the Work or checked the quality or quantity of the Work and shall not be deemed or construed as an approval or acceptance of any Work or as a waiver of any claim or right Company may have hereunder.

           5.6        Payment of Subcontractor

          Contractor shall promptly pay, in accordance with the terms and conditions set forth in the respective Subcontract, each Subcontractor the amount to which said Subcontractor is entitled. Contractor shall, by an appropriate agreement with each Subcontractor, require each Subcontractor to make timely payments to its laborers, suppliers and subcontractors in a similar manner.

           5.7        Waiver of Liens

          As a condition precedent to the making of the final Milestone Payment Schedule payment by Company hereunder, Contractor shall be required, upon request by Company, to supply Company with a waiver and release of liens and security interests to the extent of such payment in the form attached as Exhibit J, duly executed by Contractor.

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           5.8       Interest

          Amounts not paid by either Party to the other when due under any provision of this Contract, including the provisions of this Article 5, shall bear interest, from the date payment was due to and including the date of payment, at the Delayed Payment Rate. For the purposes of this Agreement, interest shall not accrue on sums owed to Contractor by Company that are secured by a Letter of Credit pursuant to Section 5.3.1.

           5.9        Security Interest

          Notwithstanding anything to the contrary herein, Contractor hereby reserves and Company hereby grants Contractor, a purchase money security interest in the Work as security for the due and punctual performance of all of Company’s obligations hereunder. The security interest referred to above shall be satisfied by payment in full of the Contract Price and any other amounts payable to Contractor hereunder. Company hereby agrees to execute such documents to evidence and perfect such security interest as Contractor may reasonably request from time-to-time. Company hereby appoints each of Contractor’s officers as Company’s duly authorized agent for the purpose of taking any and all such action, including execution of financing statements on Form UCC-1 and other documents deemed reasonably necessary by Contractor for the perfection and enforcement of the security interest granted hereby.

ARTICLE 6.        TESTING

           6.1        General

          Development and implementation of tests procedures shall be the responsibility of Contractor. Contractor shall be responsible for providing all supplies required for carrying out such tests, except to the extent heat resource, testing power and water is required to be supplied by Company in accordance with this Contract. Company may, at its expense, require independent calibration of any and all instruments used by Contractor and/or supply Company’s own instruments to be used in addition to those of Contractor.

           6.2        Test Procedures

          The Performance Tests shall be performed under normal operating conditions as described in Exhibit D hereto and in accordance with all applicable Laws in effect on the date thereof, and the test results shall be adjusted pursuant to the Correction Curves for deviations from the Design Conditions and shall be adjusted for other deviations as set forth in Exhibit D. Contractor may conduct the Performance Tests after the Substantial Completion Date.

           6.3       Notice of Testing

          Contractor shall notify Company at least fourteen (14) Days in advance of the actual date that Contractor shall start conducting the initial Performance Test. Company’s Representative shall be entitled to attend at the time and place appointed and Company shall instruct its operating personnel to follow the directions of Contractor in connection with the performance of the Performance Tests. If Company’s Representative fails to attend at the time and place

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appointed for the Performance Tests, Contractor shall be entitled to proceed with the Performance Tests in their absence. The Performance Tests shall then be deemed to have been made in the presence of Company’s Representative.

           6.4        Delayed Tests; Deemed Completion

                      6.4.1      In the event that Contractor’s conduct or completion of the Performance Tests is delayed for less than sixty (60) Days from the date on which such test would otherwise have commenced, been conducted or completed due to the failure of Company to fulfill any of its obligations under this Contract, then Company shall issue a Change Order extending the Schedule Day-for-Day for each Day of delay for those Schedule items that are affected by the Company’s failure to fulfill its obligations and compensating Contractor for its additional costs incurred as a result of such delay.

                      6.4.2      In the event that Contractor’s conduct or completion of the Performance Test is delayed for thirty (30) Days from the Substantial Completion Date due to a Company Default, then Company shall pay to Contractor fifty percent (50%) of the payment milestone set forth in the Milestone Payment Schedule for the Final Completion payment milestone.

                      6.4.3      In the event that Contractor’s conduct or completion of the Performance Test is delayed for sixty (60) Days from the Substantial Completion Date due to a Company Default, then the Facility shall then be deemed to be completed for all purposes under this Contract, Company shall pay to Contractor the remainder of the Contract Price less only the amounts withheld for Punchlist Items pursuant to Section 4.10 and Final Completion shall be deemed to have occurred.

                      6.4.4      Subject to Section 6.4.5, prior to the commencement of the Performance Tests or, if the Performances Tests have been delayed as provided in this Section 6.4, if and when the events that prevented the commencement of the Performance Tests cease, the Parties shall inspect the Facility and:

	(a)	if geothermal fluid and or cooling water have been run through any part of the Facility or the Facility has otherwise been operated by Company, for a cumulative period of more than two (2) weeks, or based on shortfall in the test results, Contractor may require that the parties jointly open and inspect the Facility prior to the Performance Tests being carried out or prior to repeating of the test as the case may be; and
	(b)	if the Facility is in good, clean and as-installed condition, Contractor will proceed within a reasonable period of time to conduct the Performance Tests not previously completed; or
	(c)	if the Facility is not in good, clean and as-installed condition, prior to the conduct of the Performance Tests, Company will within a reasonable period of time clean and repair the Facility (as Contractor reasonably deems appropriate) at Company’s expense and then Contractor will conduct such Performance Tests; or

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(d)

if the Facility can not be cleaned and/or repaired to a standard to enable the Performance Tests to be carried out, the testing protocols and requirements shall be revised accordingly to adjust for the constraints which prevent such tests from being performed as originally defined and within a reasonable period of time Contractor shall conduct such revised Performance Tests.

Subject to the foregoing, such Performance Test(s) shall be conducted in accordance with the terms of this Contract and the results of the final Capacity Test conducted during such period, if any, shall be subject to the payment of Net Performance Liquidated Damages or Performance Bonus in accordance with the terms set forth in Article 11. Contractor shall be paid all additional costs and expenses, if any, from those costs and expenses anticipated in the Contract Price that arise directly from such prevention and delay, including without limitation those costs and expenses reasonably incurred for demobilization and remobilization and increased costs and expenses incurred for rescheduling of the testing.

                      6.4.5      Subject to extension as provided elsewhere in this Agreement, Contractor’s obligations under this Section 6.4 shall cease one hundred eighty (180) Days from the Substantial Completion Date if Contractor has not been able to commence the Performance Tests before the end of that period.

           6.5        Facilities

          Except as expressly set forth in Section 3.1, Section 6.3 and the Scope of Work, Contractor shall be responsible for the provision of all necessary labor, supervision, consumables, materials and equipment necessary to carry out properly the Performance Tests.

           6.6        Repeat Performance Tests

          The terms governing the repetition of the Performance Tests are provided in Exhibit D, Section 4.

           6.7        Certification or Disagreement as to Test Results

          The terms governing the certification of the Performance Tests and resolution of disputes thereof pursuant to Article 14 of the Contract are provided in Exhibit D, Section 6.

ARTICLE 7.        INTENTIONALLY OMITTED

ARTICLE 8.        CONSTRUCTION SUSPENSION AND ACCELERATION; CHANGE ORDER

           8.1        Construction Suspension and Acceleration

                      8.1.1      Company may order Contractor to suspend the Work, or any part thereof, for such a time and in such a manner as Company may consider necessary or desirable. Contractor, during such a suspension, shall properly protect and secure the Work, or such part

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thereof, so far as is necessary in the opinion of Company. In the event of such order to suspend the Work, or any part thereof, and such suspension is not the result of a Contractor default, Contractor shall be entitled to a Change Order for adjustments pursuant to this Article 8 in the Contract Price and the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) as may be affected by such suspension.

                      8.1.2      Company may order Contractor to accelerate the progress of the Work, or any part thereof, for such a time and in such a manner as Company may consider necessary or desirable provided that such acceleration is reasonably practicable. In the event of such order to accelerate the Work, or any part thereof, and such acceleration is not the result of Contractor’s default, Contractor shall be entitled to a Change Order for adjustments pursuant to this Article 8 in the Contract Price as may be affected by such acceleration.

           8.2        Change Orders

          Company, without invalidating this Contract, may order Change in the Work that are reasonably related to and do not materially reduce or increase the Scope of Work, in which event one or more of the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) and other such parts of the Contract as may be affected by such Change in the Work shall be adjusted as necessary. If Company decides not to issue a Change Order after having requested a Change in the Work, unless such Change Order request is issued in response to a Contractor Change Order notice as set forth in Section 8.3.2, Contractor shall be entitled to reasonable compensation for providing engineering services necessary to respond to Company’s Change Order request. Such reasonable compensation is defined to mean Contractor’s actual direct cost of providing such engineering services plus a fifteen percent (15%) mark-up for overhead and profit. All Changes in the Work shall be authorized by a Change Order and only Company or Company’s Representative may issue Change Orders.

           8.3        Procedure for Change Orders.

                      8.3.1      As soon as reasonably possible, but in no event later than fourteen (14) Days after Contractor becomes aware, through the exercise of reasonable diligence, of any circumstances which Contractor has reason to believe may constitute a Change in the Work, Contractor shall issue to Company a Change Order notice using the Change Order Request form set forth in Exhibit M. All Change Order notices shall include preliminary documentation sufficient to enable Company to determine (i) the factors necessitating the possibility of a Change Order; (ii) the impact which the Change Order is likely to have on the Contract Price; and (iii) the impact which the Change Order is likely to have on the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date). Failure to give such proper and timely Change Order notice shall, to the extent Company is prejudiced by such failure, constitute a waiver of Contractors right to an adjustment.

                      8.3.2      If Company desires to make a Change Order in response to a Change Order notice, it shall submit a Change Order request to Contractor using the Change Order Request form set forth in Exhibit M. Contractor shall promptly review the Change Order request and notify Company promptly in writing of the options for implementing the proposed Change

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Order (including, if possible, any option that does not involve an extension of time) and the effect, if any, each such option would have on the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date), or any other such part of the Contract as may be affected. The preparation and provision of information to Company in response to a Change Order request shall be at Contractor’s expense if such Change Order request is issued in response to a Change Order notice issued by Contractor pursuant to this Section 8.3.2 and otherwise Contractor shall be reimbursed for such expense as provided in Section 8.2.

                      8.3.3      If Company agrees that a Change Order is in order and accepts Contractor’s statement of the effect of such Change Order on any one or more of the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date), or any other such part of the Contract as may be affected, Company shall issue a Change Order. In the event Company disagrees with Contractor’s statement of the effect of such Change Order on any one or more of the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date), or any other such part of the Contract as may be affected, Company may proceed to issue the Change Order in accordance with Section 8.8.

           8.4        Change Orders Due to Contractor Error

          Except as provided in Sections 8.5, 8.6 or 8.7, no Change Order shall be issued and no adjustment of any one or more of the Contract Price or the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) shall be made to the extent resulting from any delay, failure of performance, correction of errors, and flaws or errors in design, omissions, deficiencies or improper or defective Work, machinery, equipment, materials, systems, supplies or other items on the part of Contractor or any Subcontractor in the performance of the Work or provisions of, or delay in provisions of Materials or other items of the Work where such delay was within the reasonable control of Contractor or any Subcontractor, or any failure of Contractor or any Subcontractor to comply with the Contract. To the extent any delay or failure of performance was concurrently caused by Company and Contractor, Contractor shall be entitled to an adjustment of the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) for that portion of the delay or failure of performance that was concurrently caused, but Contractor shall not be entitled to any adjustment of Contract Price for such concurrent delay.

           8.5        Change Orders Due to Changes in Law

          Any Change in the Work necessitated by any Change of Law enacted after the Effective Date (excluding therefrom any change in applicable Law relating to taxation of Contractor’s income) shall be treated as a Change Order under Section 8.3.

           8.6        Effect of Force Majeure; Excused Performance

          If Contractor’s performance hereunder is wholly or partially prevented due to the occurrence of a Force Majeure affecting Contractor and such Force Majeure has caused an extension of the Guaranteed Substantial Completion Date or any other date under the Schedule,

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Contractor shall provide to Company a written description of Contractor’s plan to make-up Days lost under the Schedule due to the occurrence of such Force Majeure, including an estimate of the costs of such plan. In the event of the occurrence of a Force Majeure, Contractor shall be entitled to a Change Order for adjustments pursuant to this Article 8 in the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) and other such parts of the Contract as may be affected by such Force Majeure; provided, however, that there shall be no adjustment in the Contract Price for the first two (2) events of Force Majeure declared by a Party or any event of Force Majeure that arises from a failure of Contractor’s vendor, Ormat Systems Ltd., to timely perform its obligations that are being performed outside of the United States of America under its OEC supply agreement with Contractor. To the extent that Company desires to pay for the costs of acceleration of the Work or change to the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) set forth in Contractor’s proposal in order to compensate for delays in the work caused by such Force Majeure, Company shall authorize a Change Order increasing the Contract Price and adjusting the Schedule (in addition to any automatic adjustments of the Guaranteed Substantial Completion Date). To the extent Contractor (a) is compensated for the effect of a Force Majeure by insurance maintained pursuant to this Contract, or (b) would have been so compensated, but for Contractor’s failure to provide such insurance as required under this Contract, Contractor shall not be entitled to a Change Order to the Contract Price in connection with such Change Order issued for such Force Majeure. Except for the obligations of either Party to make any required payment then due and owing under this Contract, if either Party is rendered wholly or partially unable to perform its obligations under this Contract because of a Force Majeure, then such Party’s obligations that are so affected shall be excused and suspended to the extent and during the continuance of the Force Majeure. If the Force Majeure continues for six (6) consecutive months or more, this Contract may be terminated by either Party pursuant to Section 19.3. This Section 8.6 is subject to and conditioned upon the following:

                    (a)      the non-performing Party, by exercise of due foresight, could not reasonably have been expected to avoid, or that by the exercise of reasonable due diligence could not have been able to overcome, such Force Majeure;

                    (b)      the non-performing Party gives the other Party notice describing the particulars of the occurrence, with notice given promptly after the occurrence of the Force Majeure, and in no event more than fifteen (15) Days after the affected Party becomes aware of such occurrence; within thirty (30) Days after such occurrence, the non-performing Party shall give the other Party written notice estimating the expected duration and probable impact on the performance of such Party’s obligations hereunder, and continues to furnish timely regular reports with respect thereto during the continuation of the Force Majeure;

                    (c)      the non-performing Party shall forecast the duration of its non-performance, provided that it shall be no more than is reasonably required by the Force Majeure;

                    (d)      the non-performing Party shall exercise all reasonable efforts to mitigate or limit damages to the other Party;

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                    (e)      the non-performing Party shall exercise all reasonable efforts to continue to perform its obligations hereunder and to correct or cure the event or condition excusing performance; and

                    (f)      when the non-performing Party is able to resume performance of its obligations under this Contract, that Party shall give the other Party written notice to that effect and shall promptly resume performance hereunder.

           8.7        Company-Caused Changes

          In the event and to the extent (a) a failure of Company to perform, or cause performance of, its obligations in accordance with the Contract; or (b) damage to or destruction of any Work caused by Company cause a delay in Contractor’s performance of the Work which impairs Contractor’s ability to meet the Schedule, or impacts Contractor’s cost of performance of the Work, an equitable adjustment in the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) or the Contract Price or any other such part of this Contract as may be affected shall be made pursuant to this Article 8. To the extent Contractor cannot reasonably redeploy labor or equipment, reasonable standby and mobilization/remobilization costs incurred by Contractor resulting from any such delay shall be reimbursed to Contractor monthly as such costs are incurred.

           8.8        Price Change

                      8.8.1      An increase or decrease in Contract Price, if any, required pursuant to this Article 8 as a result of a Change Order shall be determined by the mutual agreement of the Parties, and shall be paid (or reimbursed) in one or more payments in accordance with the following:

                     (a)      as a fixed price lump-sum, in an amount proposed by Contractor (properly itemized and supported by sufficient substantiating data to permit evaluation) and accepted by Company; or

                     (b)      if the method set forth in Section 8.1(a) is not agreed upon by the Parties, Contractor shall perform the Work on a time and material basis.

                 8.8.2       Change Order Pricing – Time and Material Prices .

                    (a)      Whenever Company authorizes Contractor to perform Work contemplated under a Change Order on a time and material basis, Company’s authorization shall clearly state:

                              (i).      scope of Work to be performed; and

                              (ii).     type of reimbursement including pre-agreed rates, if any, for material quantities or labor.

                    (b)      Contractor shall:

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                              (i).      cooperate with Company and assist in monitoring the Work being performed. As requested by Company, identify workers assigned to the Work and areas in which they are working;

                              (ii).     identify on daily time sheets all labor, equipment and materials furnished in accordance with this authorization. Submit copies of daily time sheets within two (2) Days for Company’s review;

                              (iii).    leave access as appropriate for quantity measurement;

                              (iv).   efficiently perform all Work in accordance with this Section 8.8.2;

                              (v).    not be required to perform time and material work past the established not to exceed limit(s) without Company’s prior written approval.

                              (vi).   Submit costs in accordance with Section 8.8.1, plus profit and overhead of fifteen percent (15%) on the sum of such costs and additional verification supported by:

                                        (1)      labor priced at Contractor’s then current burdened direct labor rates, detailed on daily time sheets;

                                        (2)      invoices for equipment and material; and

                                        (3)      invoices for construction equipment rental costs.

           8.9        Effectiveness; Continued Performance Pending Resolution of Disputes

          If a Change in the Work is initiated under this Article 8, then the Change Order and the modifications made pursuant to such Change Order shall be effective upon Company’s issuance of a Change Order with respect thereto. Notwithstanding a dispute regarding any proposed or requested Change Order, or any adjustment of one or more of the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date), or any other such part of this Contract as may be affected with respect to a Change Order, Contractor shall proceed with the performance of such Change Order promptly following Company’s execution of the corresponding Change Order.

           8.10        Documentation

          All claims by Contractor for adjustments pursuant to a Change Order to one or more of the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date), or any other such part of this Contract as may be affected as a result of Change Orders under this Article 8 shall be supported by such documentation as is reasonably sufficient for Company to determine the accuracy thereof. Within thirty (30) Days of Contractor’s knowledge of Contractor’s need to provide additional supporting data for the

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Change Order notice, unless Company agrees in writing to allow an additional period of time to ascertain more accurate data, Contractor shall supplement the Change Order notice with additional supporting data. Such additional data shall include, to the extent known, or through the exercise of reasonable diligence should be known at the time, at a minimum (a) the amount of compensation or delay claimed, itemized in accordance with procedures set forth herein; (b) specific facts, circumstances; (c) analysis that confirms not only that Contractor suffered the damages or delay claimed, but that the damages or delay claimed were actually a result of the act, event, or condition complained of, and that the Contract provides entitlement to an equitable adjustment in Contract Price or Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) for such act, event or condition; and (d) supporting documentation sufficiently detailed to permit an informed analysis of the request by Company. Failure to provide such additional information and documentation, to the extent such information and documentation was reasonably available to Contractor, within the time allowed or within the format required shall, to the extent Company’s interests are prejudiced, constitute a waiver of Contractor’s right to an adjustment.

           8.11        Continue Work

          Pending final resolution of any request in accordance with this Article 8, unless otherwise agreed in writing, Contractor shall proceed diligently with performance of the Work.

           8.12        Critical Path Schedule Updates

          If there is any change in the Schedule covered by a Change Order, or based on a Change Order notice, Contractor shall provide Company with an updated version of Contractor’s critical path schedule reflecting the change attributable to the Change Order or event(s) giving rise to the request for adjustment.

           8.13        Change Order Constitutes Complete Relief

          Except for aggregate impacts which are either unknown, or despite the exercise of reasonable diligence would not be known at the time of execution of a Change Order, any Change Order signed by Company and Contractor shall constitute full compensation to Contractor for all claims for cost for direct, indirect, labor, temporary construction failures, job site, or home office overhead, stacking of trades, inefficiencies, impacts or any other cost of any kind or nature; and in the event the Change Order adjusts the Schedule, the Change Order signed by Company and Contractor constitutes complete relief to Contractor for schedule impacts for all events giving rise to the Change Order.

           8.14        Effect of Changes on Warranties and Safety

          8.14.1 If Contractor reasonably believes that a proposed Change in the Work may negatively affect any warranty or performance commitments with regard to any Work, Contractor shall serve Company notice within fourteen (14) Days of Contractor’s receipt of such proposal of its belief and the believed effect. If Company insists, despite Contractor’s notice, upon requiring the execution of such proposal and Contractor acquiesces to Company’s request and executes the proposal, the affected warranties or performance commitments shall be adjusted

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to the extent agreed between the Parties or as already determined in accordance with the provisions of Article 14, but only to the extent related to or derived from Company’s proposal.

                      8.14.2      If Contractor reasonably believes that a proposed Change in the Work may negatively affect safety of the Work or persons in its vicinity or would violate any applicable Laws, Contractor shall serve Company notice within fourteen (14) Days of Contractor’s receipt of such proposal of Contractor’s belief and the believed effect, and Contractor shall not be required to perform such proposal.

ARTICLE 9.        DESIGN AND DOCUMENTATION

           9.1        Ownership of and Responsibility for Design

                      9.1.1      Contractor retains legal title to and ownership of the design and engineering of the Facility and Contractor remains entitled to freely use, modify, license or otherwise dispose of the same at its discretion without any obligation to account to Company.

                      9.1.2      Contractor shall be responsible for the development of the technical data (other than the technical interface data which is being developed and provided by Company), design and other documentation required for the performance of the Work.

           9.2        Inspection of Work

          At Company’s sole expense, Company and Company’s Representative shall have the right to inspect any item of the Work to be provided hereunder. Company and Company’s Representative shall have access to those portions of the Site then under Contractor’s control, at reasonable times and upon reasonable notice. While at the Site, Company and the Company’s Representative shall comply with all of Contractor’s safety rules and other job site rules and regulations.

           9.3        As-Built Drawings

          Within three (3) months following the Final Completion Date, Contractor shall furnish to Company two (2) reproducible sets of full sized construction drawings of the Facility on which are marked any and all material deviations from those Drawings that were issued for construction (“ As-Built Drawings ”). In addition, Contractor shall provide a complete set of the “As-Built” Drawings in electronic media compatible with AutoCAD – Release 2002 or newer, or substitute as approved by Company.

           9.4        License to Use

          Subject to Section 9.1.1, Company shall have a non-exclusive, transferable license and right to use and reproduce all Drawings, Specifications, Facility manuals and any other Documents provided or to be provided by Contractor hereunder, including the O&M Manual for the Facility and the reproducible Drawings furnished by Contractor pursuant to Section 9.3, solely for the purpose of operating, maintaining and repairing the Facility. Company shall not use any such Documents for any other purpose.

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           9.5        Use of Documents After Termination

          If this Contract is terminated by Company pursuant to Section 19.1 prior to completion of the Facility, Company may, in its sole discretion, use any Drawings, Specifications, Facility manuals or other Documents prepared hereunder solely for the purpose of completing the Facility. If this Contract is terminated by Contractor and full payment of the Contract Price is not received, Company shall not be entitled to use or continue using the documents thereafter.

           9.6        O&M Manual

          At least sixty (60) Days prior to the start-up of the Facility or any portion thereof, Contractor shall deliver to Company four (4) copies of the preliminary draft of the O&M Manual for the Facility as provided in the Scope of Work. The O&M Manual shall include the information for that manual described in the Scope of Work. Such preliminary draft shall be as reasonably complete as available information shall allow and at a minimum with sufficient information to permit the training of Company’s operation and maintenance personnel and the normal operation and maintenance of the Facility by persons generally familiar with facilities and plants similar to the Facility. Contractor thereafter shall provide to Company four (4) copies of the final and complete O&M Manual for the Facility prior to Final Completion.

ARTICLE 10.        WARRANTIES

           10.1        Warranty

          Contractor warrants to Company that:

                    (a)      the Work shall conform in all material respects to the Drawings, the Specifications and the other requirements set forth in this Contract;

                    (b)      the Work shall be of good quality, free from any Defect and shall be performed in a workmanlike and skilful manner;

                    (c)      the equipment and all Materials and other items incorporated in the Work shall:

                              (i)      be new and shall be of a suitable grade of its respective kind for its intended use;

                              (ii)     be free from any Defect;

                              (iii)    meet the requirements of this Contract;

                              (iv)    be free from any charge, encumbrance, lien or other security interest; and

                              (v)     comply with current applicable Laws.

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                    (d)      title and ownership to the Work shall pass to and vest in Company, as described in Section 12.1, free and clear of any and all liens, claims, charges, security interests, encumbrances and rights of other persons arising as a result of any actions or failure to act of Contractor, its Subcontractors, or their employees or representatives; and

                    (e)      the Work has been and shall be designed and engineered with all the skill, care and diligence to be expected of appropriately qualified and experienced professional designers and engineers with experience in carrying out works of a similar, type, nature and complexity to the Work.

           10.2        Warranty Period

          The warranties set forth in Section 10.1 shall extend for a period of twelve (12) Months from the Final Completion Date; provided, however, that such period with respect to any item of the Work that is repaired, replaced, modified, or otherwise altered by Contractor pursuant to Section 10.3 shall be extended for twelve (12) Months from the date of completion of such repair, replacement, modification or alteration, but in no event shall such period exceed twenty-four (24) Months from the Final Completion Date for the subject item of the Work (for such item, the “ Warranty Period ”). Upon the expiration of the Warranty Period, Contractor will assign to Company, to the extent assignable, the warranties relating to the Work from any Subcontractors or vendors that extend beyond the Warranty Period, if any.

           10.3        Defect Remedy Work

                       10.3.1      Company shall notify Contractor promptly (but not longer than forty-eight (48) hours) upon discovery of any Defect. A written “failure report,” which includes available technical and logistic information to assist Contractor to assess the damage to the equipment and to evaluate appropriate corrective action, shall be provided to Contractor as soon as reasonably practicable upon discovery of the Defect. If Contractor requests, Company shall supply all relevant information relating to past maintenance, repair and operational data relating to the failed Work.

                       10.3.2      Contractor’s responsibility for any such warranty claim shall be limited to Contractor’s performance of Defect Remedy Work on the Defect and Contractor shall perform such Defect Remedy Work as soon as reasonably possible following Contractor’s receipt of notice and the relevant failure report from Company applicable to such Work. Only direct costs and expenses of Defect Remedy Work shall be borne by Contractor. Contractor shall have the obligation in connection with the performance of any Defect Remedy Work to provide any special rigging, cranes or heavy equipment or any labor required in connection with operating such equipment, except where such items or labor are readily available at the Site, in which case such items or labor shall be provided by Company or Company’s operator, at Contractor’s request, and Contractor shall pay reasonable compensation therefore.

                       10.3.3      All costs associated with the performance of any repair and maintenance work which is not Defect Remedy Work, including the costs of the replacement of any parts or other portions of the Work which are not defective but which are replaced in conjunction with Defect Remedy Work at the request of Company, shall be the responsibility of Company.

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Company shall provide Contractor with access to the Facility and to utilities, tools and equipment available at the Site for Contractor’s performance of any Defect Remedy Work. If Contractor elects not to carry out such Defect Remedy Work and requests Company to perform the same under this Article 10 instead of Contractor, Company may cause the Defect Remedy Work to be effected and Contractor shall reimburse Company the costs Company has reasonably incurred as a result.

                       10.3.4      The warranty and the liabilities and obligations of Contractor under this Contract shall not extend to replacement of normal consumables or apply to any failure to comply with the warranty that has been caused by (i) any erosion or derosion or normal wear and tear in operation of the subject Work; (ii) any failure of Company or a third party, other than Contractor or Subcontractor, to properly store, install, operate and/or maintain the subject Work in accordance with good industry practices and the O&M Manual; (iii) any modifications made to the subject Work by any person other than personnel of Contractor or Subcontractor without Contractor’s express written consent prior to such modifications; (iv) any neglect, abuse, malicious mischief, vandalism or event of Force Majeure (other than a warranty failure) affecting the subject Work; (v) any other negligent act of Company or Company’s operator; (vi) operation of the Facilities under conditions (including composition of the geothermal fluid) outside of the range specified in the Design Conditions; or (vii) operation of the Facility, other than by personnel of Contractor or Subcontractor, without Contractor’s prior express written consent, outside the Facility’s defined operation range.

           10.4        Implementation of Warranty

          The warranty claims and related Work shall be implemented in accordance with the Warranty Claim Procedures in Exhibit E.

           10.5        Disclaimer and Release

           THE WARRANTIES, CONDITIONS, OBLIGATION AND LIABILITIES OF CONTRACTOR AND RIGHTS AND REMEDIES OF COMPANY SET FORTH IN THIS CONTRACT ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND COMPANY HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER PRESENT AND FUTURE WARRANTIES, CONDITIONS, OBLIGATIONS, REPRESENTATIONS AND LIABILITIES OF CONTRACTOR, TOGETHER WITH ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF COMPANY AGAINST CONTRACTOR, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, (A) ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE; (B) ANY IMPLIED WARRANTY OR CONDITION ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; (C) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF CONTRACTOR OR ITS SUBCONTRACTORS, ACTUAL, PASSIVE OR IMPUTED; OR (D) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO THE FACILITY, WORK OR ANY

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PORTION THEREOF OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES.

ARTICLE 11.        PERFORMANCE AND PERFORMANCE RELATED REMEDIES; EXCLUSIVITY; LIMITATION OF LIABILITY

           11.1        Performance Liquidated Damages and Performance Bonus

                       11.1.1      In the event that, upon completion of the Capacity Test, the Net Deliverable Capacity result is less than the Performance Guarantee, Contractor shall have the option for the period specified in Exhibit D to undertake any necessary actions to increase the Net Deliverable Capacity of the Facility to satisfy the Performance Guarantee at its own cost. If, upon the expiration of such period, the Net Deliverable Capacity of the Facility as determined by the last Capacity Test is below such Performance Guarantee, then Contractor shall, within thirty (30) Days, pay to Company as liquidated damages, and not as penalty, the amounts set forth in Section 3 of Exhibit K (“ Performance Liquidated Damages ”); provided, however, that if Contractor has made any payments of Shortfall Generation Liquidated Damages to Company pursuant to Section 4.10, Contractor shall be obligated to only pay Net Performance Liquidated Damages to Company.

                       11.1.2      Notwithstanding anything to the contrary herein, Performance Liquidated Damages as provided in this Section 11.1 or the payments described in Section 4.10 shall not be payable if failure to achieve the Performance Guarantee is due to Force Majeure, Company Default or any other reason not attributable to Contractor.

                       11.1.3      If the Facility, as determined by the last Capacity Test, exceeds the Performance Guarantee in respect of Net Deliverable Capacity, Company shall pay Contractor within thirty (30) Days of Contractor’s invoice, as a bonus and in addition to the Contract Price, the amounts set forth in Section 4 of Exhibit K (“ Performance Bonus ”).

           11.2 Exclusivity

          The Liquidated Damages payable under this Contract shall, without duplication, be the sole and exclusive remedy and measure of damages with respect to any delay in completion of the Facility or any failure to meet the Performance Guarantee. Once payment of Liquidated Damages and other amounts has been made, or the limits set forth in Section 11.5 have been met, and Contractor has performed all other Work required hereunder with respect to the Facility, Contractor shall be relieved of any further Liability with respect to such failures.

           11.3        General Limitation of Liability

                       11.3.1      Notwithstanding any other provision to this Contract, Contractor’s maximum aggregate Liability under this Contract (including for Liquidated Damages) from any and all causes shall in no case exceed the sum of: the lower of one hundred percent (100%) of the Contract Price (as the same may be adjusted in accordance with this Contract) or one hundred percent (100%) of the amount of the actual payments for the Work received by Contractor hereunder.

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                       11.3.2      Except to the extent of the Liquidated Damages, Performance Bonus, Schedule Bonus or the termination payments described in Article 19, in no event shall either Party be liable to the other for any indirect, special, incidental, consequential or exemplary damages (which includes loss of profit, revenues or savings), or for costs of procurement of substitute goods whether arising in contract, equity, tort, or other basis for Liability, even if it has been advised of the possibility of such damages.

                       11.3.3      The foregoing limitations on Liability in this Section 11.3 shall:

                    (a)      not limit Company’s right to receive proceeds of Contractor’s insurance required to be maintained pursuant to Article 13 of this Contract;

                    (b)      not apply to limit, nor shall they include, the costs of Contractor’s or Company’s indemnification obligations under Article 15; or

                    (c)      exclude any Liability of Contractor or Company stemming from the fraud or willful misconduct of Contractor, any Subcontractor, or their respective employees or Company or its employees, respectively.

           11.4       Other Provisions

          The Parties acknowledge and agree that because of the unique nature of the Facility and the unavailability of substitute facilities, it is difficult or impossible to determine with precision the amount of damages that would or might be incurred by Company as a result of Contractor’s failure to complete the Work so that Substantial Completion is accomplished by the Guaranteed Final Completion Date and the Facility is completed by the Guaranteed Final Completion Date or so that the Facility meets the Performance Guarantee. It is understood and agreed by the Parties that Company shall be damaged by the failure of Contractor to meet such obligations and that (i) it would be impracticable or extremely difficult to fix the actual damages resulting therefrom; (ii) any Liquidated Damages that are payable under this Contract are in the nature of liquidated damages, and not a penalty, and are fair and reasonable; and (iii) such payments represent a reasonable estimate of fair compensation to Company for the losses that may reasonably be anticipated from such failure. The Parties hereby acknowledge that Section 4.6, Section 4.10 and this Article 11 represent a reasonable allocation of risk.

ARTICLE 12.        TITLE; CARE OF THE WORK

           12.1        Passage of Title

          Subject to the provisions of Sections 9.1.1 and 9.4, legal title to and ownership of all Work and Materials provided hereunder shall pass to and vest in Company the later of (i) delivery to the Site; or (ii) upon payment of the respective milestone payment pursuant to the Milestone Payment Schedule.

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           12.2       Risk of Loss

          Contractor shall be responsible to assure safe delivery of all Materials to the Site. Except to the extent caused by the negligence or willful misconduct of Company, Contractor shall bear the risk of physical loss or destruction of or damage to the Materials and the Work, whether or not incorporated in the Facility at the Site or located on or off the Site, until the Substantial Completion Date. Notwithstanding the passage of title as provided in Section 12.1, Contractor assumes the risk of loss with respect to, and shall be obligated to replace, repair or reconstruct, any portion or all of the Materials or the Work that is lost, damaged or destroyed prior to turning over care, custody and control of such Material or Work to Company as provided in this Contract, irrespective of how such loss, damage or destruction shall have occurred. In the event of a termination of this Contract in accordance with the provisions hereof prior to such turnover, the risk of loss with respect to such Materials and Work shall pass to Company upon the effective date of termination, whether by Company or by Contractor.

           12.3        Care, Custody and Control

          Upon the Substantial Completion Date, Contractor shall turn over to Company the care, custody and control of the Facility. Company, at its expense, shall properly operate and maintain such portions of the Facility turned over to it by Contractor in accordance with applicable Laws, Prudent Industry Practices, the O&M Manual and the instructions and specific recommendations provided by Contractor to Company. Contractor may conduct periodic inspections of the turned-over equipment to ensure that Company is complying with such obligations. It is further acknowledged and agreed that Company shall provide Contractor, at all times, free and clear access to the Facility in order to allow Contractor to perform its obligations under the Contract (including completion and/or repetition of testing, Punchlist Items and warranties).

ARTICLE 13.        INSURANCE

           13.1        Contractor Provided Insurance

          Contractor shall:

                    (a)      obtain and maintain in full force and effect from the Commencement Date through Final Completion, at its own cost, the following policies of insurance:

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                    (b)      procure and maintain such further coverages as Contractor is required to have by any applicable Law.

In the event this insurance or any portion of it becomes commercially unavailable, Company and Contractor shall cooperate to obtain such replacement insurance as may be available and this Contract shall be modified accordingly.

13.2 Company Provided Insurance

Company shall:

                    (a)      obtain and maintain in full force and effect, at its own cost, the following policies of insurance:

                    (b)      procure and maintain such further coverages as Company is required to have by any applicable Law.

In the event this insurance or any portion of it becomes commercially unavailable, Company and Contractor shall cooperate to obtain such replacement insurance as may be available and this Contract shall be modified accordingly.

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           13.3        Policies

                       13.3.1      Contractor’s insurance shall:

                    (a)      name Company and its directors, officers, representatives, employees and agents and any identified Financing Parties as additional insureds;

                    (b)      include the following cross-liability clause:

“Where more than one party comprises the “Insured,” each of the parties shall, for the purpose of such insurance, be considered as a separate and distinct unit/entity, and the words “the Insured” shall be considered as applying to each party in the same manner as if a separate policy has been issued to each of the said parties. The insurer shall provide indemnity to each in the same manner and to the same extent as if a separate policy has been issued to each, provided that the total amount payable in respect of compensation shall not exceed the limits of indemnity”;

                    (c)      provide that such Contractor’s insurance may not be cancelled, non-renewed or materially changed by the insurer without giving thirty (30) Days’ prior written notice to Company;

                    (d)      waive any and all rights of subrogation against Company and its respective directors, officers, representatives, agents and employees, and waive any other right of the insurers to any offset or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any Liability of Company or its directors, officers, representatives, agents and employees; and

                    (e)      provide that any other insurance maintained by Company and its respective directors, officers, representatives, agents and employees is in excess of such Contractor’s insurance and not contributory with it.

                            13.3.2      Company’s insurance shall:

                    (a)      name Contractor, Subcontractors and their respective directors, officers, representatives, employees and agents and any identified Financing Parties as additional insureds;

                    (b)      include the following cross-liability clause:

“Where more than one party comprises the “Insured,” each of the parties shall, for the purpose of such insurance, be considered as a separate and distinct unit/entity, and the words “the Insured” shall be considered as applying to each party in the same manner as if a separate policy has been issued to each of the said parties. The insurer shall provide indemnity to each in the same manner and to the same extent as if a separate policy has

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been issued to each, provided that the total amount payable in respect of compensation shall not exceed the limits of indemnity”;

                    (c)      provide that such Company’s insurance may not be cancelled, non-renewed or materially changed by the insurer without giving sixty (60) Days’ prior written notice to the Contractor;

                    (d)      waive any and all rights of subrogation against Contractor, Subcontractors and their respective directors, officers, representatives, agents and employees, and waive any other right of the insurers to any offset or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any Liability of Contractor, Subcontractors or their respective directors, officers, representatives, agents and employees; and

                    (e)      provide that any other insurance maintained by Contractor, any Subcontractors and their respective directors, officers, representatives, agents and employees is in excess of such Company’s insurance and not contributory with it.

           13.4        Payment of Deductibles

          If any of the insurance described above shall have any deductibles, the Party obligated to procure such insurance shall be solely responsible for payment of all such deductible amounts associated with such insurance.

           13.5        Evidence of Insurance

          Within thirty (30) Days of the Commencement Date (or with regard to the Builders All Risk coverage described in Section 13.1(a)(i), prior to the commencement of Work at the Site), each Party shall cause its insurers or agents to provide to the other Party for the other Party’s review and approval certificates of insurance evidencing the policies and terms specified in this Article 13. Notwithstanding the foregoing, Contractor shall be entitled to cause its insurers or agents to provide to Company the certificates of insurance evidencing its builders all risk policy only when the relevant risk arises. Failure by a Party to obtain the insurance coverage or certificates of insurance required by this Article 13 shall not in any way relieve or limit such Party’s obligations and liabilities under this Contract, nor shall the failure of any insurance company for any reason to pay claims accruing with respect to such Party’s insurance, affect, negate or release such Party from any of the provisions of this Contract, including such Party’s indemnity obligations. The insurance coverage to be provided by each Party pursuant to this Article 13 are not intended to, and shall not in any manner, limit or modify such Party’s obligations under this Contract, except to the extent any proceeds of such insurance are applied in satisfaction of such Party’s obligations. If a Party shall fail to procure or maintain its insurances, then the other Party shall have the right (but shall not be obligated) to provide and maintain such insurance at the defaulting Party’s expense and to deduct the cost thereof from any amount or amounts due to the other Party or in the event there are no such amounts due and payable, the defaulting Party shall reimburse the other Party for such costs on demand.

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ARTICLE 14.        DISPUTE RESOLUTION

           14.1        Settlement by Mutual Agreement

          Company and Contractor desire that this Contract operate between them fairly and reasonably. If during the term of this Contract a dispute arises between Company and Contractor, or one Party perceives the other as acting unfairly or unreasonably, or a question of interpretation arises hereunder, then the Parties shall cause the Company’s Representative and Contractor’s Representative to promptly confer and exert their good faith efforts to reach a reasonable and equitable resolution of the issue. If Company’s Representative and Contractor’s Representative are unable to resolve the issue within fourteen (14) Days (within five (5) Days if a payment dispute), the matter shall be referred within two (2) Days of the lapse of such period to the Parties’ responsible officers for resolution. Neither Party shall seek resolution by mediation or arbitration of any dispute arising in connection with this Contract until both Parties’ responsible officers, who shall be identified by each Party from time-to-time, have had at least fourteen (14) Days (seven (7) Days if a payment dispute) to resolve the dispute following referral of the dispute to such responsible officers. If the Parties fail to settle such dispute within such period (including a failure to identify their respective responsible officers and make necessary referrals within such period), the provisions of Section 14.2 shall apply unless the Parties agree that the dispute is to be resolved according to the provisions of Section 14.3.

           14.2       Mediation

          If a dispute under this Contract is not resolved by the Parties pursuant to Section 14.1, upon the request of either Party the Parties shall try in good faith to settle the dispute by nonbinding mediation administered by the American Arbitration Association under its Commercial Mediation Rules before resorting to arbitration. Unless otherwise agreed upon by the Parties, the mediation shall be held in King County, Washington. Each Party shall bear the cost and expense of preparing and presenting its own case (including, but not limited to, its own attorneys’ fees and costs of witnesses). Payment of the mediator and other costs and expenses of the mediation shall be divided equally among the Parties.

           14.3        Pending Disputes

          Notwithstanding any provision of this Article 14 to the contrary, either Party may commence litigation within thirty (30) Days prior to the date after which the commencement of litigation could be barred by any applicable statute of limitations or other law, rule, regulation, or order of similar import or in order to request injunctive or other equitable relief in connection with any bankruptcy or insolvency proceeding or otherwise necessary to prevent irreparable harm. In such event, the Parties shall (except as may be prohibited by judicial order) nevertheless continue to follow the procedures set forth herein. While any disputes under this Contract are pending, including the commencement and pendency of any of the dispute resolution procedures set forth in this Article 14, the Parties shall abide by all their obligations under this Contract without prejudice to a final determination in accordance with the foregoing provisions of this Article 14.

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ARTICLE 15.        INDEMNIFICATION

           15.1        General

          Contractor shall defend, indemnify and hold harmless Company, the Financing Parties, each of their parent company and affiliates, and the directors, officers, members, agents, employees, successors and assigns of each of them (each, a “ Company Indemnified Party ”), from and against any and all claims, demands, and causes of action asserted by any Governmental Authority or other third party against any Company Indemnified Party (other than as a result of a breach of this Contract by such person) and any Liabilities, including reasonable attorneys’ fees, incurred by such Company Indemnified Party in connection therewith to the extent and as a result of Contractor’s performance (or that of its Subcontractors, agents, employees or consultants) under this Contract, including, but not limited to (a) on account of any violation of any Law or Permit to be complied with by Contractor hereunder; and (b) in respect of any Taxes imposed on or attributable to performance of Contractor (other than sales or use taxes in the State of Idaho except to the extent that Company has not made payment to Contractor when due hereunder Taxes in the State of Idaho; in each case other than to the extent caused by or arising from the negligence or willful misconduct of such Company Indemnified Party not attributable to Contractor or any affiliate or Subcontractor of Contractor.

           15.2        Indemnification for Bodily Injury or Property Damage

          Company, as one Party, and Contractor, as the other Party, shall defend, indemnify and hold each other, and each other’s lenders, Financing Parties, parent company, affiliates, officers, directors, members, agents and employees, owners of the real property comprising the Site, harmless from and against any loss, damage or liability (including, but not limited to, reasonable attorneys’ fees and other costs but excluding consequential damages) on account of any claim by a third party for bodily injury or property damage against the indemnified party caused by the negligent act or omission of the indemnifying party or the indemnifying party’s employees, contractors, subcontractors or agents, in connection with the performance of their respective undertakings under this Contract.

           15.3        Indemnity from Liens

          Contractor shall defend, indemnify and hold each of the Company Indemnified Parties harmless from and against (i) all liens arising from the performance of the Work by Contractor or otherwise caused by any Subcontractor or any employee, agent or Affiliate of Contractor or any of its Subcontractors or anyone else entitled to file a lien under Law; and (ii) any loss, damage or liability (including, but not limited to, reasonable attorneys’ fees and other costs) in connection with any and all mechanics’ liens filed in connection with Contractor’s Work hereunder. This Section 15.3 shall not apply to Liens of Contractor which result from non-payment by Company.

           15.4        Contractor’s Infringement Indemnity

          Contractor shall indemnify and keep indemnified and hold harmless Company Indemnified Party(ies) from and against any and all third-party suits, actions claims of any type

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of character, type or description, based upon any claim of infringement of any patent or other license or intellectual property right (whether by way of trademark or otherwise) resulting directly or indirectly from furnishing of the Work pursuant to this Contract asserted by any third party against any Company Indemnified Party and any Liabilities, including reasonable attorneys’ fees, incurred by such Company Indemnified Party in connection therewith. Each Party agrees to notify the other as soon as reasonably possible of any material matters with respect to which the foregoing indemnity is likely to apply and of which the notifying Party has actual knowledge. If notified in writing of any action or claim for which the Contractor may be liable to provide indemnity, the Contractor shall, without limitation, defend (subject to reasonable consultation with Company) such action or claim at their expense and pay the cost and damages and attorneys’ fees awarded against Company in such action or claim; provided, however, that the Contractor shall have the right to control the defense and settlement of all such actions or claims, which settlement shall be subject to the consent of Company, if applicable, not to be unreasonably withheld. This Section 15.4 shall not be applicable to any suit, claim or proceeding based on infringement or violation of a patent or copyright (i) relating solely to a particular process or product of a particular manufacturer specified by Company and not offered or recommended by Contractor; or (ii) arising from modifications to the Work by Company after Final Completion of the Facility. If a suit, claim or proceeding is based upon the events set forth in the preceding sentence, Company shall defend, indemnify and hold harmless Contractor to the same extent as Contractor is obligated to indemnify Company.

           15.5        Company’s Indemnity

          Company shall defend, indemnify and hold harmless Contractor and its Subcontractors and their respective joint venture partners, directors, officers, agents, employees, shareholders and affiliates from any and all Liability or Proceedings arising out of:

                    (a)      any actual or alleged injury or death of persons or damage to property arising out of the negligence, willful misconduct or default of Company (except only to the extent that the same have been caused by the negligence or default of Contractor or its Subcontractors);

                    (b)      any and all environmental related liability or cost arising from or related to the Site, including any actual or alleged injury to persons or property related thereto or any remedial activity (except to the extent the same was caused by the negligence or default of Contractor or its Subcontractors in connection with their performance of the Work); or

                    (c)      on account of any violation of any Law or Permit to be complied with by Company hereunder.

           15.6       Notice and Settlement of Claims

          A Party seeking the benefit of an indemnity under this Article 15 shall give the other Party written notice of any claim giving rise to the indemnity promptly after such Party learns of the same. The indemnifying Party may, at its own cost, conduct negotiations for the settlement of such claim and any litigation that may arise therefrom. The Party claiming the benefit of the indemnity shall not make any admission that might be prejudicial to the indemnifying Party

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unless the indemnifying Party fails to take over the conduct of the negotiations or litigation within a reasonable time after having been so requested. The indemnifying Party shall not settle any indemnified claim without the indemnified Party’s prior written approval (not to be unreasonably withheld or delayed). The Party claiming the benefit of the indemnity shall, at the request of the other Party, provide reasonable assistance for the purpose of contesting any such claim or action, and shall be paid all reasonable costs incurred in doing so and shall have the right to have its own counsel, at its expense, participate in the defense and negotiation of the claim or action.

ARTICLE 16.        ASSIGNMENT

           16.1        Assignment by Company

          Company may not assign any or all of its obligations, rights, title and/or interest in and to or arising out of or in connection with the Contract without the prior written approval of Contractor, which approval shall not be arbitrarily or unreasonably withheld or delayed. Notwithstanding the foregoing, Company may assign its obligations, rights, title and/or interest in and to or arising out of or in connection with the Contract to an Affiliate who is a special purpose entity wholly owned by Company whose sole assets relate to the Facility, without Contractor’s consent. No assignment of Company’s obligations, rights, title and/or interest in and to or arising out of or in connection with the Contract shall relieve Company of any obligation hereunder.

           16.2        Assignment by Contractor

          Contractor may not assign any or all of its obligations, rights, title and/or interest in and to or arising out of or in connection with the Contract without the prior written approval of Company, which approval shall not be arbitrarily or unreasonably withheld or delayed. Notwithstanding the foregoing, Contractor may assign its obligations, rights, title and/or interest in and to or arising out of or in connection with the Contract to an Affiliate, without Company’s consent. No assignment of Contractor’s obligations, rights, title and/or interest in and to or arising out of or in connection with the Contract shall relieve Contractor of any obligation hereunder.

           16.3        Succession

          This Contract shall inure to the benefit of and be binding upon the successors and permitted assigns (as provided for by Sections 16.1 and 16.2) of the Parties.

ARTICLE 17.        SUBCONTRACTORS

           17.1        Subcontracts

          Subject to Section 17.2, Contractor may enter into Subcontracts for the performance of the Work and shall be solely responsible for the satisfactory performance of the Work and the acts, defaults and omissions of any Subcontractor notwithstanding any review, approval or other action taken by Company with regard to the selection of a Subcontractor hereunder. Contractor

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shall be responsible for the actions of the Subcontractors in their performance of the Work as if such actions were those of Contractor. The issuance of any Subcontract shall not relieve Contractor of any of its obligations under this Contract. All Subcontracts shall be consistent with and in no way contrary to or inconsistent with any of the terms or provisions of this Contract. No contractual relationship shall exist between Company and any Subcontractor with respect to the Work to be performed hereunder, and no Subcontractor is intended to be or shall be deemed a third-party beneficiary of this Contract. Except as expressly set forth in Section 17.2, nothing contained herein shall (a) create any contractual relationship between any Subcontractor and Company or (b) obligate Company to pay or arrange for the payment of any Subcontractor.

           17.2        Subcontract Provisions

          Contractor shall ensure that Subcontracts made with Subcontractors having a value of Two Million Dollars or more are made in writing. Contractor shall make reasonable efforts to require that each such Subcontract shall provide that the rights and obligations of Contractor under each such Subcontract are assignable to Company, its successors and assigns upon Company’s written request accompanied by proof of source of payment to such Subcontractor’s satisfaction, following any termination of this Contract.

           17.3        Approved Vendors

          Contractor shall not subcontract the supply of any equipment for a price of in excess of One Million Dollars ($1,000,000), except to Major Vendors approved by Company, which approval shall not be arbitrarily or unreasonably withheld. The vendors appearing on the Approved Vendors List set forth in Exhibit F have been approved by Company. The Approved Vendors List attached as Exhibit F is preliminary and may be amended in the following manner. In the case the need arises for Contractor to add a Major Vendor to the Approved Vendors List, in Contractor’s opinion, Contractor shall propose such addition to the Company’s Representative in writing identifying the type of equipment that could be purchased from such Major Vendor. Within five (5) Days after receipt of Contractor’s proposal, the Company’s Representative shall have the right to advise Contractor of any such potential Major Vendors to which it reasonably objects, together with the reasons for objection. Contractor shall not add any potential Major Vendor to the list to which the Company’s Representative so reasonably objects. If the Company’s Representative fails to respond within such five (5) Day period, Contractor shall have the right to add said potential Major Vendor to the list.

           17.4        Exclusion

          The provisions of this Article 17 shall not apply to the suppliers of equipment for the OEC.

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ARTICLE 18.        SUSPENSION

           18.1        Right of Company to Suspend Work

          Company may suspend performance of the Work by Contractor hereunder as provided in Section 8.1.1.

           18.2        Initial Payments to Contractor

          Contractor shall be entitled to payment for Work that has been completed as of the effective date of such suspension or concerning which delivery has been suspended if such suspension has not ceased within ten (10) Days of the effective date of such suspension within thirty (30) Days of the issuance of an invoice therefore by Contractor.

           18.3        Extended Suspension

          In the event that the duration of the suspensions by Company exceed ninety (90) Days in the aggregate, then Contractor may give notice to the Company’s Representative requesting permission to proceed. If permission is not granted within twenty (20) Days of the delivery of such notice, Contractor may terminate its obligations under the Contract by so notifying Company in writing, and Contractor shall be entitled to payments as described in Section 19.2.2.

           18.4        Right of Contractor to Suspend

     &n