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Exhibit 10.1 Progress Energy, Inc. and Florida Power
Corporation d/b/a Progress Energy Florida, Inc. ("PEF") have
requested confidential treatment for certain portions of this
document pursuant to an application for confidential treatment sent
to the Securities and Exchange Commission. Progress Energy, Inc.
and PEF have omitted such portions from this filing and filed them
separately with the Securities and Exchange Commission. Such
omissions are designated as "[***]." ENGINEERING,
PROCUREMENT AND CONSTRUCTION
AGREEMENT BETWEEN FLORIDA POWER CORPORATION
DOING BUSINESS AS: PROGRESS ENERGY FLORIDA, INC.
(OWNER) AND A CONSORTIUM CONSISTING OF
WESTINGHOUSE ELECTRIC COMPANY LLC
AND
STONE & WEBSTER, INC.
(CONTRACTOR) FOR AN AP1000 NUCLEAR POWER PLANT
Progress Energy Contract No. 414310
TABLE OF CONTENTS
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Page
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ARTICLE 1 - DEFINITIONS
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2
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ARTICLE 2 - INTERPRETATION
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20
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ARTICLE 3 - SCOPE OF WORK AND SCHEDULE
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21
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3.1 General
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21
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3.2 Phase I
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22
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3.3 Phase II
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23
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3.4 Schedule for Completion of the Facility
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23
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3.5 Contractor’s General Responsibilities
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25
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3.6 Owner’s General Responsibilities
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29
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3.7 Subcontracting
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33
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3.8 Design and Engineering
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35
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3.9 Project Controls
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37
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3.10 Responsibility for Work
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37
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3.11 Site and Nearby Work Areas Cleanup
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37
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3.12 Establishment of Project Policies and Procedures
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38
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ARTICLE 4 - FACILITY LICENSES, PERMITS AND APPROVALS
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38
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4.1 Owner Permits
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38
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4.2 Contractor Permits
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38
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4.3 ITAACs
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39
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ARTICLE 5 - QUALITY ASSURANCE; INSPECTION OF WORK; 10 C.F.R. 21;
SAFEGUARDS INFORMATION
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39
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5.1 Quality Assurance Program
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39
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5.2 Augmented Quality Controls for Non-Safety Related
Structures, Systems and Components
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40
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5.3 Augmented Quality Controls for Commercially Critical
Items
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40
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5.4 Subcontractor Quality Assurance
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41
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5.5 Contractor Quality Control and Inspection Activities
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41
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5.6 Access and Auditing On-Site and Other Facilities
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41
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5.7 Owner Designated Persons
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42
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TABLE OF CONTENTS
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5.8 Additional Access and Auditing Requirements
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43
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5.9 Owner Witness and Hold Points
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43
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5.10 Uncovering of Work; Re-performance of Inspection and
Testing
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44
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5.11 Reporting of Defects and Non-compliance; 10 CFR 21
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44
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5.12 Calibrations with respect to Non-Safety Items
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45
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5.13 Stop of Work
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45
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5.14 Safeguards Information
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46
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5.15 Components and Welds
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46
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ARTICLE 6 - CONTRACT PRICE
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46
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6.1 Components of the Contract Price
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46
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6.2 Price Breakdown
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46
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ARTICLE 7 - PRICE ADJUSTMENT PROVISIONS
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47
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ARTICLE 8 - PAYMENTS AND SECURITY
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47
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8.1 Payments
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47
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8.2 Final Payment
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48
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8.3 Supporting Documentation; Payment Disputes
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48
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8.4 [***]
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50
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8.5 No Acceptance by Payment
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50
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8.6 Security for Payments from Contractor
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50
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8.7 Manner of Payment
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50
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8.8 Cash Flow Accruals
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50
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8.9 Work Completed Accruals
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50
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8.10 Cash Flow Covenant
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51
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ARTICLE 9 - CHANGES IN THE WORK
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51
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9.1 Requests for and Entitlement to Change Orders
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51
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9.2 Owner-Directed Changes
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53
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9.3 No Oral Changes
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53
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9.4 Change Orders
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54
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Page
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9.5 Permitted Contractor Changes
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55
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9.6 Optional Services and Equipment
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56
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ARTICLE 10 - FORCE MAJEURE
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56
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10.1 Performance Excused
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56
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10.2 Notice
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56
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ARTICLE 11 - TESTING; PERFORMANCE GUARANTEES
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56
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11.1 Scope and Objective of Testing
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56
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11.2 Construction and Installation Tests
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57
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11.3 Preoperational Tests
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57
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11.4 Start-up Tests
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59
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11.5 Performance Tests, Other Tests and Guarantees
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61
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11.6 Readiness for Performance Tests
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67
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11.7 Retesting
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68
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11.8 [***]
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68
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11.9 Performance Guarantee Remedies
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68
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ARTICLE 12 - STAGES OF COMPLETION
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68
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12.1 Turnover
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68
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12.2 Mechanical Completion
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69
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12.3 Preoperational Test Completion
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70
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12.4 Start-up Test Completion
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70
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12.5 Substantial Completion
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71
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12.6 Punch List
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72
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12.7 Final Completion
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72
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ARTICLE 13 - DELAY LIQUIDATED DAMAGES; LIQUIDATED DAMAGE
CAPS
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73
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13.1 Delay Liquidated Damages
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73
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13.2 Payment of Delay Liquidated Damages
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74
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ARTICLE 14 - WARRANTY
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74
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14.1 Equipment
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74
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TABLE OF CONTENTS
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14.2 Services
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78
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14.3 Warranty Fulfillment
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79
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14.4 Warranty Periods
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79
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14.5 Warranty Period Extension
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81
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14.6 Warranty of Title
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82
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14.7 Software Warranty
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82
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14.8 Assignment of Residual Third Party Warranties
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83
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14.9 Limitations and Disclaimers
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83
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ARTICLE 15 - INDEMNITY AND PROTECTION FOR NUCLEAR INCIDENTS
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84
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15.1 Contractor’s General Indemnity
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84
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15.2 Owner’s General Indemnity
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86
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15.3 Application of Insurance Proceeds
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87
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15.4 Intellectual Property Indemnity
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87
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15.5 Other Indemnity Obligations of Each Party
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87
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15.6 Nuclear Incidents
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89
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15.7 Indemnity Procedures
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90
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15.8 Extension of Liability and Insurance Protections from Third
Party Contractors
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91
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ARTICLE 16 - INSURANCE
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91
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16.1 Contractor Coverages – Phase I and End of Phase
II
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91
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16.2 Insurance Coverages – Phase II through Substantial
Completion
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93
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16.3 Additional Requirements
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94
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16.4 Additional Insureds
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94
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16.5 Waiver of Subrogation
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95
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16.6 Subcontractors
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95
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16.7 Certificates of Insurance; Coverage Verification
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95
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16.8 Builder’s Risk Insurance
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96
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16.9 Payment of Premiums
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99
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16.10 Owner Representative
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99
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ARTICLE 17 - LIMITATION OF LIABILITY
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99
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17.1 No Consequential Damages
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99
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17.2 Maximum Total Liability
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99
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17.3 Division of Liability
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100
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ARTICLE 18 - LIENS
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100
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18.1 Liens
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100
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18.2 Discharge or Bond
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101
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ARTICLE 19 - PROPRIETARY DATA; SOFTWARE LICENSE
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101
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19.1 Protection of Proprietary Data
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101
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19.2 Ownership of Rights and License to AP1000 Facility
Information
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108
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19.3 Ownership of Invention Rights
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109
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19.4 Controlling Provisions
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109
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19.5 Use of Terms
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109
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19.6 Designation of Owner Engineer
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109
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19.7 Software License
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109
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ARTICLE 20 - ENVIRONMENTAL; HAZARDOUS MATERIALS
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112
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20.1 Material Safety Data Sheets
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112
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20.2 Facility Use, Storage and Removal
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112
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20.3 Handling, Collection, Removal, Transportation and
Disposal
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112
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20.4 Notice of Discovery of Pre-existing Condition
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113
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20.5 Environmental Audit
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113
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ARTICLE 21 - TITLE; RISK OF LOSS; PROPERTY DAMAGE LIABILITY
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113
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21.1 Transfer of Title
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113
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21.2 Risk of Loss and Property Damage Liability
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113
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21.3 Construction Equipment
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114
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TABLE OF CONTENTS
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Page
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ARTICLE 22 - SUSPENSION AND TERMINATION; CANCELLATION OF [***]
WITHOUT CAUSE
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115
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22.1 Suspension
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115
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22.2 Termination by Owner for Cause
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117
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22.3 Termination by Owner for Convenience
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119
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22.4 Termination Due to Other Circumstances
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120
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22.5 Termination by Contractor
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121
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22.6 Actions Required of Contractor upon Termination
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122
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22.7 Cancellation of [***] Without Cause
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122
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ARTICLE 23 - SAFETY; INCIDENT REPORTING; PROJECT POLICIES AND
PROCEDURES
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122
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23.1 Environmental, Health and Safety Programs
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122
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23.2 Designated Contractor Safety Representative
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123
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23.3 OSHA and Other Laws
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123
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23.4 Site and Nearby Work Areas Safety
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124
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23.5 Dangerous Materials
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126
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23.6 Cooperation in Governmental Investigations and
Inspections
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126
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23.7 Work Place Violence Prevention
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126
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23.8 Audit
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126
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ARTICLE 24 - QUALIFICATIONS AND PROTECTION OF ASSIGNED
PERSONNEL
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127
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24.1 Site and Nearby Work Area Security and Fitness for Duty
Requirements
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127
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24.2 Minimum Screening Measures
|
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128
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24.3 Contractor’s Personnel
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128
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24.4 Prohibited Substances
|
|
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129
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24.5 Training of Employees
|
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130
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|
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|
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24.6 NRC Whistleblower Provisions
|
|
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130
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24.7 Radiation Worker Training
|
|
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131
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24.8 Employee Concerns Program
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131
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-vi-
TABLE OF CONTENTS
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Page
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24.9 Use of Non-English Speaking Workers
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133
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24.10 Code of Ethics
|
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133
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24.11 Compliance Audits
|
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133
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ARTICLE 25 - RECORDS AND AUDIT
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133
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25.1 Technical Documentation
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133
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25.2 Other Records
|
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134
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25.3 Accounting Records
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134
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25.4 General Maintenance of Records
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134
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25.5 Right to Audit
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134
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25.6 Sales Tax Records
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135
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ARTICLE 26 - TAXES
|
|
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135
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26.1 Employment Taxes
|
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135
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26.2 Sales Taxes on Contractor Tools and Other Property
|
|
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136
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26.3 Sales Tax on Items Incorporated into the Facility
|
|
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136
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26.4 Property Taxes
|
|
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138
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26.5 Tax Indemnification
|
|
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138
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26.6 Pollution Control Equipment and Other Qualifying Exempt
Equipment Information
|
|
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140
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ARTICLE 27 - DISPUTE RESOLUTION
|
|
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140
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27.1 Claims
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|
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140
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27.2 Condition Precedent
|
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141
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27.3 Continuation of Obligations
|
|
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141
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27.4 Appointment of Dispute Resolution Board
|
|
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141
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27.5 DRB Member Qualifications
|
|
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143
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27.6 Ongoing Duties of the DRB
|
|
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145
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27.7 Claims Process
|
|
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146
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27.8 DRB Hearing Rules and Procedures
|
|
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149
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27.9 Admissibility of DRB Award
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|
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151
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|
-vii-
TABLE OF CONTENTS
|
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Page
|
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27.10 Payment of Costs
|
|
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151
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27.11 Review and Modification
|
|
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151
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27.12 Unresolved Claims
|
|
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151
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ARTICLE 28 - NOTICES
|
|
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152
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ARTICLE 29 - ASSIGNMENT
|
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153
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ARTICLE 30 - WAIVER
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|
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153
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ARTICLE 31 - MODIFICATION
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|
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154
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ARTICLE 32 - SURVIVAL
|
|
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154
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ARTICLE 33 - TRANSFER
|
|
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154
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ARTICLE 34 - GOVERNING LAW; WAIVER OF JURY TRIAL; COMPLIANCE
WITH SPECIFIED LAWS
|
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155
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34.1 Governing Law
|
|
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155
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34.2 Waiver of Jury Trial
|
|
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155
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34.3 Compliance with Specified Laws
|
|
|
155
|
|
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ARTICLE 35 - RELATIONSHIP OF OWNER AND CONTRACTOR
|
|
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156
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|
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|
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ARTICLE 36 - NO THIRD PARTY BENEFICIARIES
|
|
|
157
|
|
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|
|
ARTICLE 37 - MISCELLANEOUS PROVISIONS
|
|
|
157
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37.1 Liability Protection
|
|
|
157
|
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37.2 [***]
|
|
|
157
|
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37.3 Severability
|
|
|
157
|
|
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|
37.4 Entire Agreement
|
|
|
157
|
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37.5 Counterparts
|
|
|
157
|
|
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37.6 Public Communication
|
|
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157
|
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37.7 Facility Co-Owners
|
|
|
158
|
|
-viii-
EXECUTION COPY
Trade Secret; Confidential Information—Subject to Restricted
Procedures—No Copies EXHIBITS
|
|
|
|
|
Exhibit
|
|
Description of Exhibit
|
|
|
|
|
|
A
|
|
Scope of Work/Supply and Division of
Responsibilities
|
|
|
|
|
|
B
|
|
Contractor’s Organization
|
|
|
|
|
|
C
|
|
Progress Energy Levy Units 1&2 Permits
|
|
|
|
|
|
D
|
|
Project Execution Plan
|
|
|
|
|
|
E
|
|
Milestone Performance Schedule
|
|
|
|
|
|
F-1
|
|
Payment Schedule — [***]
|
|
|
|
|
|
F-2
|
|
Estimated Payment Schedule — [***]
|
|
|
|
|
|
G
|
|
Time and Materials [***] Rates and Charges
|
|
|
|
|
|
H
|
|
Contract Pricing
|
|
|
|
|
|
I
|
|
Form of Full Notice to Proceed
|
|
|
|
|
|
J
|
|
Price Adjustment Provisions
|
|
|
|
|
|
K
|
|
Cost Categories
|
|
|
|
|
|
L
|
|
Net Unit Electrical Output Guarantee and [***]
House Load List
|
|
|
|
|
|
M-1
|
|
AP1000 Intellectual Property License Agreement
(Westinghouse)
|
|
|
|
|
|
M-2
|
|
AP1000 Intellectual Property License Agreement
(Stone & Webster)
|
|
|
|
|
|
N
|
|
Industry Codes and Standards
|
|
|
|
|
|
O
|
|
Proprietary Data Agreement
|
|
|
|
|
|
P-1
|
|
AP1000 — Major Subcontractors
|
|
|
|
|
|
P-2
|
|
EPC Subcontractors for Site and Nearby Work Areas
Construction and Related Field Services
|
|
|
|
|
|
Q
|
|
Equipment with Owner Witness and Hold Points
|
|
|
|
|
|
R-1
|
|
Site Description
|
|
|
|
|
|
R-2
|
|
Nearby Work Areas Description
|
EXECUTION COPY
Trade Secret; Confidential Information—Subject to Restricted
Procedures—No Copies
|
|
|
|
|
Exhibit
|
|
Description of Exhibit
|
|
|
|
|
|
S
|
|
Site, Nearby Work Areas, and Transportation
Assumptions
|
|
|
|
|
|
T-1
|
|
Interim Waiver and Release of Lien
|
|
|
|
|
|
T-2
|
|
Final Waiver and Release of Lien
|
|
|
|
|
|
U
|
|
Not used
|
|
|
|
|
|
V
|
|
Direct Pay Documentation
|
|
|
|
|
|
W-1
|
|
Toshiba Parent Company Guarantee
|
|
|
|
|
|
W-2
|
|
Shaw Parent Company Guarantee
|
|
|
|
|
|
X
|
|
Dispute Review Board Member Three Party
Agreement
|
|
|
|
|
|
Y
|
|
Project Plans, Policies, Programs and
Procedures
|
|
|
|
|
|
Z
|
|
Extended Equipment Warranty
|
|
|
|
|
|
AA-1
|
|
Confidentiality and License Agreement with
Substitute Contractor (Westinghouse)
|
|
|
|
|
|
AA-2
|
|
Confidentiality and License Agreement with
Substitute Contractor (Stone & Webster)
|
|
|
|
|
|
BB
|
|
Owner Controlled Insurance Program
|
|
|
|
|
|
CC
|
|
Augmented Quality Program for Critical Non-Safety
Equipment
|
|
|
|
|
|
DD
|
|
Supplier Diversity & Business Development
Subcontracting Report
|
|
|
|
|
|
EE
|
|
Form of Acknowledgment and Agreement
|
ii
ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT
This ENGINEERING, PROCUREMENT AND
CONSTRUCTION AGREEMENT (the " Agreement ") is entered into
as of the 31st day of December, 2008 (the " Effective Date
"), by and between FLORIDA POWER CORPORATION, d/b/a PROGRESS ENERGY
FLORIDA, INC. (" Owner "), and a consortium consisting of
WESTINGHOUSE ELECTRIC COMPANY LLC, a Delaware limited liability
company having a place of business in Monroeville, Pennsylvania ("
Westinghouse "), and STONE & WEBSTER, INC., a Louisiana
corporation having a place of business in Baton Rouge, Louisiana ("
Stone & Webster "). Except where the context otherwise
requires, Westinghouse and Stone & Webster hereinafter are
individually referred to as a " Consortium Member " and
collectively as " Contractor ". Owner and Contractor may be
referred to individually as a " Party " and collectively as
the " Parties ". RECITALS
WHEREAS , Owner desires to
develop, license, procure and have constructed a nuclear-fueled
electricity generation facility;
WHEREAS , Westinghouse is engaged in the business of
designing, developing and supplying commercial nuclear facilities
and has developed a pressurized water Nuclear Power Plant known as
the AP1000 (the " AP1000 Nuclear Power Plant ") for which
the U.S. Nuclear Regulatory Commission has issued a Standard Design
Certification in the form of a rule set forth in Appendix D to
10 C.F.R. Part 52;
WHEREAS , Stone & Webster is engaged in the business of
designing and constructing industrial and power generation
facilities; WHEREAS ,
Westinghouse and Stone & Webster desire to assist Owner in the
licensing of, and to design, engineer, procure, construct, and test
two AP1000 Nuclear Power Plants and related facilities, structures
and improvements at an unimproved, "greenfield" site in Levy
County, Florida (the " Facility ");
WHEREAS , Owner and
Contractor now desire to enter into this Agreement to provide for,
among other things, the licensing support, design, engineering,
procurement and installation of Equipment (as defined below), and
construction and testing of the Facility; and
WHEREAS , Westinghouse, under
a separate agreement between Westinghouse and Owner dated the
Effective Date, will be supplying Nuclear Fuel and Related Services
(as defined below) for the Facility.
NOW, THEREFORE , in consideration of the recitals, the
mutual promises herein and other good and valuable consideration
received, and as a material inducement for the Parties to enter
into this Agreement, the guaranties to be provided to secure the
obligations of Westinghouse and Stone & Webster under
Section 8.6 , the sufficiency of which the Parties
acknowledge, the Parties, intending to be legally bound, stipulate
and agree as follows:
ARTICLE 1 — DEFINITIONS For purposes of this
Agreement, the following words and expressions shall have the
meanings hereby assigned to them, except where the context clearly
indicates a different meaning is intended. These definitions may be
supplemented by any definitions contained in any of the documents
incorporated by reference herein, but in case of any conflict or
inconsistencies, the definitions set forth below shall prevail:
"Accept," "Accepted" or "Acceptance" by Owner means that Owner has
examined or reviewed a deliverable, and has found it to be in
accordance with the requirements of this Agreement and Good
Industry Practice. However, acceptance of a deliverable by Owner
shall not be deemed to be a waiver of any of its rights. "AEA"
means the Atomic Energy Act of 1954, as amended, 42 U.S.C.
§2011 et seq. "Affiliate" means, with respect to any Party,
any other Person that (a) owns or controls, directly or
indirectly, the Party, (b) is owned or controlled by the
Party, or (c) is under common ownership or control with the
Party, where " own " means ownership of fifty percent (50%)
or more of the equity interests or rights to distributions on
account of equity of the Party and " control " means the
power to direct the management or policies of the Party, whether
through the ownership of voting securities, by contract, or
otherwise. "Agreement" has the meaning set forth in the first
paragraph above and shall include all Exhibits, and amendments
hereto (including Change Orders). "Agreement Termination Fee" shall
have the meaning set forth in Section 22.3(b) .
"Ancillary Facilities" means the facilities, structures and
improvements at the Site and Nearby Work Areas that are within
Contractor’s Scope of Work as provided in
Exhibit A but are not part of either Unit. "AP1000
Nuclear Power Plant" has the meaning set forth in the Recitals.
"AP1000 Facility Information" means information in the form of
electronic databases, documents and drawings that (a) is
integral to the Facility design, engineering, licensing, analysis,
installation, construction, performance or testing and (b) is
necessary or useful for Owner’s licensing, startup,
operation, modification and maintenance of the Facility, or
training in connection with the Facility. The AP1000 Facility
Information shall include the documents listed in
Exhibit A, Table 2 , and shall indicate the sources of
each database included in the AP1000 Facility Information. From the
Effective Date through Final Completion, the AP1000 Facility
Information taken as a whole shall reflect the Facility constructed
as a part of the Contractor’s Scope of Work. "Appendix B
Subcontractors" has the meaning set forth in
Section 5.4 . "Award" means the written decision,
statement of findings, and ruling of the DRB. "Base ITAAC" shall
have the meaning set forth in Section 4.3(a) .
Page 2
"Business Day" means every calendar day other than Saturday,
Sunday or a legal holiday recognized by the State of Florida.
"Chairperson" has the meaning set forth in
Section 27.4(c) . "Change" has the meaning set forth in
Section 9.1(a) . "Change in Law" means (a) any
adoption or change of Law, or any change in the judicial or
administrative interpretation of any Laws by a Government
Authority, after the Effective Date (excluding any Laws relating to
net income Taxes), which is inconsistent or at variance with any
Laws in effect on the Effective Date that impacts the Work,
(b) the imposition after the Effective Date of any requirement
for a new Government Approval or (c) the imposition after the
Effective Date of any condition or requirement that impacts the
Work (except for any conditions or requirements which result from
the acts or omissions of Contractor or any Subcontractor) not
required as of the Effective Date affecting the issuance, renewal
or extension of any Government Approval. "Change Order" has the
meaning set forth in Section 9.4(b) . "Claim" has the
meaning set forth in Section 27.1 . "Claim Notice" has
the meaning set forth in Section 27.7 . "Combined
License" or "COL" means the combined construction permit and
operating license to be issued pursuant to 10 C.F.R. Part 52.
"Combined License Application" or "COLA" means the COL application
for the Units at the Site that has been submitted to the NRC, as
such application may be updated or changed from time to time.
"Configuration Data" means the Unit-specific data that is supplied
by Contractor and used in conjunction with the Software, including
without limitation, tuning and set point constants, graphical,
pictorial and text files that configure the Software for the
specific Unit environment. "Consortium Member" has the meaning set
forth in the opening paragraph of this Agreement. "Construction
Equipment" means equipment, machinery, tools, materials and/or test
equipment to be used in the performance of Contractor’s Scope
of Work, until such equipment is no longer needed for tasks
associated with Contractor’s Scope of Work, and which will
not become a permanent part of the Facility. "Construction and
Installation Tests" means the tests conducted as provided in
Section 11.2 . "Contract Price" means the sum of the [***]
"Contractor" has the meaning set forth in the opening paragraph of
this Agreement.
Page 3
"Contractor Controlled Insurance Program" or "CCIP" shall have
the meaning set forth in Section 16.2(b) . "Contractor
Interests" means Contractor and each of the Consortium Members, and
its (or their) respective Affiliates, successors and assigns,
including any tier of the foregoing, its (or their) Subcontractors
of any tier, and employees of all the foregoing, this being limited
to any activity connected in any way with this Agreement.
"Contractor Permits" means the Government Approvals identified in
Exhibit C as Contractor’s responsibility, as well
as all other Government Approvals that must be obtained by
Contractor in order to complete the Work. "Contractor’s
Deductible Portion" shall mean, for each property loss occurrence,
the portion of the liability that Contractor is responsible for as
provided under the terms and conditions of this Agreement, [***]
"Contractor’s Project Director" means the Person who
Contractor designates in writing to administer this Agreement on
behalf of Contractor, subject to the terms and conditions set forth
in Section 3.5(b) of this Agreement. [***] has the
meaning set forth in Section 11.5(f). "Cooling Tower
Performance Test" has the meaning set forth in
Section 11.5(f) . "CPR" means the International
Institute for Conflict Prevention and Resolution. "Day" as used in
the Agreement means a calendar day and includes Saturdays, Sundays
and legal holidays. "Deductions" means the following items
associated with Contractor’s bringing the Work to an orderly
conclusion following the termination of this Agreement:
(a) any rebates, credits or refunds (including Tax refunds)
obtained, (b) the net proceeds of any sale or transfer of
unused Equipment to a third party, or to another use, or to another
AP1000 Nuclear Power Plant project; or (c) any other cost
recovery. "Delay Liquidated Damages" has the meaning set forth in
Section 13.1 . "Design Control Document" or "DCD" means
the AP1000 Nuclear Power Plant Design Control Document,
APP-GW-GL-700 (Rev. 17 dated September 22, 2008). "Direct
Costs" has the meaning described in Exhibit K . "Direct
Pay Documentation" has the meaning set forth in
Section 26.3 . "Dispute Resolution" means the process
for settling disputes between Owner and Contractor as set forth in
Article 27 .
Page 4
"Dispute Resolution Board" or "DRB" means the standing panel of
neutrals to be appointed under Section 27.4 .
"Documentation" means, at any date of determination, the applicable
technical or operational databases, drawings, documents or other
materials in printed or electronic format existing on such date
(other than drafts for which a subsequent draft or final version
exists that does not require the prior drafts for the determination
of any conclusions contained therein) and that are, or are required
hereunder to be, prepared by Contractor in connection with the
Work, including all documents that Contractor has agreed to provide
in its Scope of Work as set forth in Exhibit A, Table 2
and the other AP1000 Facility Information, specifications
(including the Specifications), schedules (including the Project
Schedule), schematics, drawings (including "as built" drawings of
buildings, structures, plant operating equipment and ancillary
plant Equipment), blueprints, memoranda, letters, notes,
isometrics, flow charts, logic diagrams, graphs, studies, system
descriptions, lists, charts, diagrams, standards, criteria,
assumptions, measurements, procedures (including test procedures),
instructions, reports, test data and results, analyses,
calculations, formulas, computations, plans, empirical and other
correlations, models, manuals (including software manuals and
Facility Manuals), procedures (including Maintenance Procedures and
Operating Procedures), and training materials. "DOE" means the U.S.
Department of Energy and its staff. "Effective Date" means the date
of this Agreement first above written. "Employee Concerns Program"
has the meaning set forth in Section 24.8 . "Employment
Taxes" has the meaning set forth in Section 26.1 .
"Enrolled Parties" means any Person that is enrolled in the OCIP or
CCIP (as applicable) as provided in Exhibit BB .
"Equipment" means the machinery, computer hardware and its
associated Software, apparatus, components, articles, Mandatory
Spare Parts, Optional Spare Parts that are added to
Contractor’s Scope of Work, materials, and items of any kind
that will, or in the case of spare parts may, become a permanent
part of the Facility to be provided by the Contractor to Owner
under this Agreement, but excluding the Nuclear Fuel and Related
Services. "Equipment Warranty" has the meaning set forth in
Section 14.1(a) . "Equipment Warranty Period" shall
mean the Standard Equipment Warranty Period, or the Extended
Equipment Warranty Period, as applicable. "Established Target
Price" has the meaning set forth in Section H.1.2 of
Exhibit H . "Excluded Parties" has the meaning set
forth in Section BB.2(c) of Exhibit BB .
"Exhibit" means each one of the documents Exhibits A through
EE , annexed to this Agreement. "Extended Equipment Warranty"
has the meaning set forth in Section 14.1(a) of this
Agreement.
Page 5
"Extended Equipment Warranty Period" has the meaning set forth
in Section 14.4(a) . "Facility" means the Unit(s) and
the Ancillary Facilities, and is more fully described in
Exhibit A . [***] "Facility Manuals" means those
manuals to be provided by Contractor for use by the Owner or the
Operator in connection with the operation, testing and maintenance
of the Facility. "Factory Test" means those tests normally
performed at the place of manufacture of the Equipment. "Final
Completion" means, with respect to a Unit, that such Unit has
achieved all of the conditions set forth in
Section 12.7 . "Final Payment Invoice" has the meaning
assigned in Section 8.2 . [***] "First Wave Utility
Customers" means each of the following companies, provided such
company executes, prior to December 31, 2009, an engineering,
procurement, and construction contract with Contractor for the
design, engineering, procurement and construction of one or more
AP1000 Nuclear Power Plants: Duke Power Company LLC, Georgia Power
Company, South Carolina Electric & Gas Company and Owner. [***]
"Force Majeure" means any event or condition beyond the reasonable
control of a Party which impacts or delays a Party in performance
of its obligations under this Agreement, and which could not have
been avoided or overcome after exercising commercially reasonable
efforts, including but not limited to the following:
(a) An
act of God, including landslide, lightning, earthquake, fire,
explosion, flood, unusual or severe weather conditions, including
hurricanes, ice storms, and tornadoes;
(b) Acts
of a public enemy, war, blockade, embargo, insurrection, riot or
civil disturbance, sabotage or similar occurrence or any exercise
of the power of eminent domain, police power, any act of terrorism,
epidemic, condemnation or other taking by or on behalf of any
public, quasi-public or private entity;
(c) Strikes
or other concerted labor actions that are not due to the breach of
a labor contract or violation of any Law or other fault of the
Party claiming the Force Majeure event or any of its Affiliates or
Subcontractors;
(d) The
suspension, termination, interruption, denial, delay in obtaining
or failure of renewal or issuance of any Government Approval
relating in any way to the Work or operation of the Facility not
caused by the Party claiming the Force Majeure event, provided that
the affected Party has made timely application for the Government
Approval and has taken commercially reasonable efforts to obtain
and maintain any such Government Approval;
Page 6
(e) An
order or other action by a Government Authority that was not caused
by the Party claiming the Force Majeure;
(f) Delay
due to accidents in shipping or transportation of major or
specialized equipment or materials for which substitutes are not
readily available, provided that Owner or Contractor and its
Subcontractors (as applicable) acted reasonably in their selection
and direction of the party or parties that provide such shipping or
transportation services; and
(g) Any
reasonably necessary precautionary actions (including evacuation)
taken in connection with the foregoing. Subject to all conditions
set forth herein, Force Majeure includes the failure of any
Subcontractor to deliver Equipment or perform Work to the extent
such failure is caused by one of the above described events or
circumstances; however, if a Subcontractor’s failure to
deliver or perform is not caused by such an event or circumstance,
then such failure to deliver or perform will not constitute a Force
Majeure event. For purposes of clarification, it is expressly
agreed that Force Majeure includes the failure of Westinghouse to
provide Nuclear Fuel and Related Services as required under the
Contract for the Supply of Nuclear Fuel and Related Services,
between Westinghouse and Owner entered into as of the Effective
Date, to the extent such failure is caused by one of the above
described events or circumstances; however, if Westinghouse’s
failure to provide Nuclear Fuel and Related Services as required
under the above mentioned Fuel Supply Contract is not caused by
such an event or circumstance, then such failure to deliver or
perform will not constitute a Force Majeure event. Force Majeure
does not include economic hardship or financial inability to make a
payment; and does not include an event or condition that is the
result of the willful misconduct, negligence or unlawful conduct
of, or the breach of this Agreement by the Party claiming Force
Majeure or its Subcontractors performing Work at the Site or Nearby
Work Areas or otherwise under the Party claiming Force
Majeure’s control at such Party’s facilities. "Full
Notice to Proceed" means the written notice that Owner gives to
Contractor fully authorizing Contractor to proceed with all Work.
"G&A" has the meaning set forth in Exhibit K to
this Agreement. "Good Industry Practices" means any of the
practices, methods, standards and acts engaged in and generally
acceptable to the nuclear power industry in the United States
(including practices related to providing the design, construction,
manufacturing and delivery of electrical, steam, environmental, and
other equipment, facilities and improvements and related technical
services and training for nuclear facilities in the United States
similar to the Facility) prevailing at the time the Parties entered
into this Agreement or, if higher, at the time Contractor performs
any Work under this Agreement that, in the exercise of reasonable
judgment in light of the facts known or that should have been known
at the time a decision was made, could have been expected to
accomplish the desired result, consistent with Laws, good business
practices, reliability, economy, safety and expedition. Provided,
that if subsequent to entering into this
Page 7
Agreement changes occur in Good Industry Practices which require
Contractor to change from the originally anticipated plans and
practices and which result in Contractor being obligated to use new
or revised plans or practices or have greater cost or difficulty,
then such a change shall be treated as a Change for purposes of
this Agreement and Article 9 . "Government Approval"
means any authorization, consent, approval, clearance, license,
ruling, permit, tariff, certification, exemption, filing, variance,
order, judgment, no-action or no-objection certificate,
certificate, decree, decision, declaration or publication of,
notices to, confirmation or exemption from, or registration by or
with any Government Authority relating to the design, engineering,
procurement, transporting, delivering, construction, testing,
financing, completion, ownership or operation of the Facility or
any part thereof. "Government Authority" means any federal, state,
county, city, local, municipal, foreign or other government or
quasi-governmental authority or any department, agency,
subdivision, court or other tribunal of any of the foregoing that
has jurisdiction over Owner, Contractor, the Facility or the
activities that are the subject of this Agreement. "Guaranteed
Substantial Completion Date" for each Unit means the date set forth
for such event in the Milestone Performance Schedule.
"Hazardous Materials" means any substance or material
regulated or governed by any Governmental Authority, or any
substance, emission or material now or hereafter deemed by any
court or Governmental Authority having jurisdiction to be a
"regulated substance", "hazardous substance", "toxic substance",
"pesticide", "hazardous waste", or any similar classification,
including by reason of deleterious properties, ignitability,
corrosivity, reactivity, carcinogenicity, or reproductive toxicity,
and shall include those substances defined as a "source", "special
nuclear" or "by-product" material pursuant to Section 11 of
the AEA (42 U.S.C. Section 2014 et seq.) and those substances
defined as "residual radioactive material" in Section 101 of
the Uranium Mill Tailings Radiation Control Act of 1978 (42 U.S.C.
Sections 7901 et seq .). "Incentive Program
Milestone Dates" means the dates specified for the completion of
the Incentive Program Milestones listed in Attachment 2 to
Exhibit H . "Industry Codes and Standards" means the
codes and standards of any technical society, organization or
association, or codes and standards of any Governmental Authority:
(a) that are set forth or referenced in the DCD and applicable
Specifications, or (b) that may otherwise apply to performing
the Work in accordance with Good Industry Practices, including the
codes and standards referenced in Exhibit N .
"Insolvent" means, with respect to a Person, that such Person
(a) makes any general assignment or any general arrangement
for the benefit of creditors, (b) files a petition or
otherwise commences, authorizes, defaults as to or acquiesces in
the commencement of a case, petition, proceeding or cause of action
under any bankruptcy, insolvency or similar law for the protection
of debtors or creditors, or has such a case, petition, proceeding
or cause of action involuntarily filed or commenced against it and
such case, petition, proceeding or cause of action is not withdrawn
or dismissed within sixty (60) Days after such filing,
(c) otherwise becomes adjudicated a debtor in bankruptcy or
insolvent (however evidenced), (d) is unable (or admits in
Page 8
writing its inability) generally to pay its debts as they become
due, (e) is dissolved (other than pursuant to a consolidation,
acquisition, amalgamation or merger), (f) has a resolution
passed for its winding-up, official management or liquidation
(other than pursuant to a consolidation, acquisition, amalgamation
or merger), (g) seeks, or becomes subject to the appointment
of an administrator, provisional liquidator, conservator, assignee,
receiver, trustee, custodian or other similar entity or official
for all or substantially all of its assets, (h) has a secured
party take possession of all or substantially all of its assets or
has a distress, levy, execution, attachment, sequestration or other
legal process levied, enforced or sued on or against all or
substantially all of its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within sixty (60) Days
thereafter, (i) causes or is subject to any event with respect
to which, under the applicable laws of any jurisdiction, said event
has an analogous effect to any of the events specified in clauses
(a) to (h) (inclusive); or (j) takes any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts. "ITAAC" means the
inspections, tests and analyses and their associated acceptance
criteria which are approved and issued by the NRC for the Facility
pursuant to 10 CFR §52.97(b)(1). "Key Personnel" means those
Contractor personnel performing Work under this Agreement as
defined in Section 3.5(b) . "Law" means (a) any
constitution, statute, law, rule, regulation, code, treaty,
ordinance, judgment, decree, writ, order, concession, grant,
franchise, license, agreement, directive, guideline, policy,
requirement, or other governmental restriction or any similar form
of decision of or determination by, or any binding interpretation
or administration of any of the foregoing by, any Government
Authority, whether now or hereafter in effect or (b) any
requirements or conditions on or with respect to the issuance,
maintenance or renewal of any Government Approval or applications
therefore, whether now or hereafter in effect. "Licensing Basis"
means the NRC requirements applicable to the Facility as set forth
in, until such time as the COL is issued, the DCD and, upon its
issuance, the COL. "Lien" means any lien, mortgage, pledge,
encumbrance, charge, security interest, option, right of first
refusal, other defect in title or other restriction of any kind or
nature arising out of the supply or performance of the Work by
Contractor or its Subcontractors. "Maintenance Procedures" means
the procedures, written or electronic, required to perform
predictive, corrective, and preventive maintenance of the Facility
systems, Equipment, components and structures, and those procedures
required for calibration and testing of instrumentation and
measurement systems and other Equipment and components that are
required for operation and maintenance of the Facility. "Major
Subcontractor" means any Subcontractor that is listed in
Exhibit P-1 that is eligible to supply and actually
supplies, the Equipment or Services identified in such Exhibit.
Eligibility requirements for Major Subcontractors are set forth in
Section 3.7 of this Agreement. "Mandatory Spare Parts"
means those spare parts as set forth in the completed list of
Mandatory Spare Parts, such list to be provided by Contractor in
accordance with Section 3.6(d)(i) .
Page 9
"Master Contract" means, (a) with regard to Westinghouse,
Master Contract Number 3382 (General Terms and Conditions for
Furnishing Equipment and Services) between Carolina Power &
Light Company and Westinghouse Electric Company, LLC, effective as
of November 1, 2000, as amended; and (b) with regard to
Stone & Webster, Master Contract Number 300968 between Progress
Energy Service Company, LLC as agent for Progress Energy Carolinas,
Inc. and Progress Energy Florida, Inc. and Stone & Webster
dated February 14, 2007. "Maximum Liability Amount" has the
meaning assigned in Section 17.2 . "[***] has the
meaning assigned in Section 11.5(e)(ii). "[***]" has
the meaning set forth in Section 11.5(i) . "Mechanical
Completion" has the meaning assigned in Section 12.2(a)
. "Member" has the meaning set forth in Section 27.4 .
"Milestone Payment" means the payment due with respect to a
completed Payment Milestone. "Milestone Payment Schedule" means the
schedule of Milestone Payments to be paid by Owner after completion
of each Payment Milestone for the [***] portions of the Work, as
set forth in Exhibit F-1 . "Milestone Performance
Schedule" means the schedule of Performance Milestones for
completion of the Work as set forth in Exhibit E.
"[***]" shall have the meaning set forth in
Section 11.5(d)(iv) . "[***]" has the meaning assigned
in Section 11.5(d)(iv) . "Moisture Carryover" has the
meaning assigned in Section 11.5(e)(i). "Moisture
Carryover [***]" has the meaning assigned in
Section 11.5(e)(ii) . "Moisture Carryover Test" has the
meaning assigned in Section 11.5(e)(i). "Nearby Work
Areas" means the premises that are owned, controlled or leased by
the Owner that are adjacent to the Site where the Facility is to be
built, as more specifically described in Exhibit R-2.
"Net Unit Electrical Output" means the electrical power of the Unit
operating under normal conditions as specified in
Exhibit L , measured at the high voltage side of the
main step up transformer, after deducting the auxiliary electrical
loads of the Unit as specified in Exhibit L . "Net Unit
Electrical Output Guarantee" has the meaning assigned in
Section 11.5(d)(ii) . "Net Unit Electrical Output Test"
means the electric output test or tests that are performed in
accordance with Section 11.5(d)(i) .
Page 10
"Notice" has the meaning assigned in Article 28 .
"NRC" means the U.S. Nuclear Regulatory Commission and its staff.
"Non-Standard Plant" means the portions of the Facility that are
not part of the Standard Plant. "Non-Standard Plant Design
Documentation" has the meaning set forth in
Section 3.8(b) . "NSSS Thermal Performance Test" has
the meaning assigned in Section 11.5(k) . "Nuclear
Fuel" means the nuclear fuel designed and fabricated for the
Facility. "Nuclear Fuel and Related Services" means the fabricated
nuclear fuel, nuclear fuel assemblies and any related services to
be supplied by Westinghouse under the Contract for Supply of
Nuclear Fuel and Related Services between Westinghouse and Owner
entered into as of the Effective Date. "Nuclear Incident" means any
occurrence that causes bodily injury, sickness, disease or death,
or loss of or damage to property, or loss of use of property,
arising out of or resulting from the radioactive, toxic, explosive,
or other hazardous properties of source material, special nuclear
material, or by-product material which is used in connection with
the operation of the Facility. "Source material", "special nuclear
material", and "by-product material", as applicable to this
Agreement shall have those meanings assigned by the AEA. "NuStart"
means NuStart Energy Development, LLC. "NuStart Work" has the
meaning set forth in Section 3.2(c) . "Operating Cycle"
means the time period beginning, and the time period subsequently
ending, when the breaker is closed after the Unit has completed a
scheduled refueling outage. The first Operating Cycle begins on the
date that the Unit achieves Substantial Completion. "Operating
Procedures" means the procedures, written or electronic, required
to operate the Facility under normal, abnormal, emergency, shutdown
or startup conditions. "Operator" means the Owner and/or operator
of the Facility, it being understood that Contractor shall not be
deemed to be the Operator of the Facility under any circumstances.
"Optional Spare Parts" means those spare parts (other than
Mandatory Spare Parts) that (a) may be recommended for the
Equipment in connection with major maintenance of such Equipment,
such as periodic overhaul, or (b) based on Good Industry
Practices, could reasonably be expected to fail and the procurement
of which, based on Good Industry Practices, could reasonably be
expected to require longer lead times to obtain from the original
equipment manufacturers. "OSHA" has the meaning assigned in
Section 23.3 . "OSHA Standards" has the meaning
assigned in Section 23.3(b) . "Owner" has the meaning
set forth in the opening paragraph of this Agreement.
Page 11
"Owner Controlled Insurance Program" or "OCIP" shall have the
meaning set forth in Section 16.2(a) . "Owner Designated
Person" has the meaning set forth in Section 5.7 .
"Owner Engineer" means the Person(s) who is anticipated to or will
have access to Contractor Proprietary Data (including
Non-Disclosable Information), and who is selected by Owner to
perform construction and design and/or plant operation phase
services for Owner in connection with the Facility and solely for
Facility Purposes, who is subject to the prior written approval of
Contractor and who has entered into a non-disclosure agreement with
Contractor and Owner relative to AP1000 Facility Information, the
terms of which are equivalent to those set forth in Exhibit
O . "Owner Held Contingency" or "OHC" means [***] being held by
Owner in accordance with the provisions of Section 9.1
and Exhibit H . "Owner Hold Points" means the points
during the performance of the Work where Contractor is required to
cease further Work in a particular area until Owner has conducted
specific inspections or surveillance of the Work as set forth in
Section 5.9 . "Owner Permits" means the Governmental
Approvals identified in Exhibit C as being
Owner’s responsibility, as well as all other Governmental
Approvals that are required to be obtained by Owner for the
licensing, ownership or operation of the Facility. "Owner’s
Project Director" means the Person who Owner designates in writing
to act on behalf of Owner under this Agreement. "Owner’s
Property" has the meaning set forth in
Section 24.4(b)(ii) . "Owner Witness Points" means the
points during the performance of the Work where Contractor is
required to provide Owner Notice and an opportunity to conduct
specific inspections or surveillance of the Work as set forth in
Section 5.9 . "Owner Witness and Hold Points" means
collectively the Owner Hold Points and the Owner Witness Points.
"Parent Company Guarantee" means each of the guarantees to be
supplied by Westinghouse and Stone & Webster to Owner as
provided in Section 8.6 of this Agreement. "Party" and
"Parties" has the meaning set forth in the opening paragraph of
this Agreement. "Payment Milestone" means any one of the specified
events in the execution of the Work as set forth in
Exhibit F-1 . "Performance Guarantees" means [***], the
Net Unit Electrical Output Guarantee, [***]. "Performance Incentive
Plan" means the performance incentive plan described in
Exhibit H .
Page 12
"Performance Liquidated Damages" means the liquidated damages
paid pursuant to Section 11.5 for failure to meet the
respective Performance Guarantees. "Performance Milestone" means
any one of the specified events in the execution of the Work as set
forth in Exhibit E . "Performance Tests" means each of
the Performance Tests to be conducted as provided in Section
11.5 . "Performance Test Procedures" has the meaning assigned
in Section 11.5(a) . "Permitted Contractor Change" has
the meaning set forth in Section 9.5(a) . "Permitted
Use" means use solely in connection with the Facility, including
but not limited to for the purpose of constructing, operating,
licensing, trouble-shooting, maintaining, modifying, repairing,
moving fuel, decommissioning, testing, or ensuring the safety of
the Facility, redundant systems, training systems and simulators
associated with the Facility, training Permitted Users and their
employees, or complying with applicable Law. "Permitted Users"
means Owner, its employees, Owner Engineer, seconded employees and
staff augmentation contractors, through multiple tiers, engaged by
Owner who have executed a written non-disclosure agreement
substantially in the form set forth in Exhibit O or are
otherwise under an obligation to Owner consistent with the
provisions of Exhibit O to maintain the confidentiality
of Owner’s or Owner’s suppliers’ proprietary
information. For purposes of this definition, Owner’s
seconded contractors shall not include Contractor’s
competitors, unless such competitors are permitted access to
Contractor’s Proprietary Data pursuant to this Agreement.
"Person" means any individual, corporation, company, partnership,
joint venture, association, trust, unincorporated organization or
Government Authority. "Personnel" means, with respect to a Person,
such Person’s employees, agents, personnel, representatives,
invitees, subcontractors, vendors and any other third party
independent contractors with whom such Person has employed or
contracted, and its agents’, representatives’,
invitees’, subcontractors’, vendors’ or third
party independent contractors’ respective employees, agents,
personnel, representatives, invitees, subcontractors, vendors or
third party independent contractors. "Phase I" means the portion of
the Work described in Section 3.2 . "Phase II" means
the portion of the Work described in Section 3.3 .
"Preferential Rights Agreement" has the meaning set forth in
Section 19.1(b). "Plant Conversion Work" has the
meaning set forth in Section 22.7(c) . "Preferred Major
Subcontractor" has the meaning set forth in
Section 3.7(a) . "Preoperational Test Completion" has
the meaning set forth in Section 12.3(a) .
Page 13
"Preoperational Tests" means the tests conducted as provided in
Section 11.3 . "Price Adjustment Provisions" means the
terms set forth in Article 7 and Exhibit J
. "Prime Rate" means, as of a particular date, the prime rate of
interest as published on that date in the "Money Rates" section of
The Wall Street Journal, and generally defined therein as "the base
rate on corporate loans posted by at least seventy-five percent
(75%) of the nation’s 30 largest banks." If The Wall Street
Journal is not published on a date for which the interest rate must
be determined, the prime interest rate shall be the prime rate
published in The Wall Street Journal on the nearest-preceding date
on which The Wall Street Journal was published. If The Wall Street
Journal discontinues publishing a prime rate, the prime interest
rate shall be the prime rate announced publicly from time to time
by Bank of America, N.A. or its successor. "Profit" means the
aggregate of the profit for Contractor for each element of the
Contract Price as determined in accordance with
Exhibit H . "Progress Payments" has the meaning set
forth in Exhibit F-1 . "Project Execution Plan" or
"PEP" has the meaning set forth in Section 3.5(m) .
"Project Insurance Manual" means the manual that describes the OCIP
or CCIP (as applicable) and related administrative procedures to be
followed by all Enrolled Parties, as more fully described in
Exhibit BB . "Project Policies and Procedures" means
the policies and procedures that generally apply to and govern all
activities at the Site and Nearby Work Areas, to be established by
the Parties in accordance with the provisions set forth in
Section 3.12 of this Agreement. "Project Schedule"
means the detailed schedule for performance of the Work to be
established by Contractor and Owner under
Section 3.4(c) . "Proprietary Data" means any and all
information, Documentation, software, matter or thing of a secret,
confidential or private nature relating to the business of the
Providing Party or its Affiliates, including matters of a technical
nature (such as know-how, processes, data and techniques), matters
of a business nature (such as information about costs, profits,
markets, sales, customers, suppliers, the parties’
contractual dealings with each other and the projects that are the
subject-matter thereof), matters of a proprietary nature (such as
information about patents, patent applications, copyrights, trade
secrets and trademarks), other information of a similar nature, and
any other information which has been derived from the foregoing
information by the Receiving Party; provided, however, that
Proprietary Data shall not include information which: (a) is
legally in possession of the Receiving Party prior to receipt
thereof from the Providing Party; (b) the Receiving Party can
show by suitable evidence to have been independently developed by
the Receiving Party or its Affiliates or their Personnel;
(c) enters the public domain through no fault of the Receiving
Party or others within the Receiving Party’s control;
(d) is disclosed to the Receiving Party, without restriction
or breach of an obligation of confidentiality to the Providing
Party or (e) is legally required to be disclosed provided that
the Receiving Party subject to an order requiring such disclosure
uses its commercially reasonable efforts to notify the Providing
Party of any request or subpoena for the production of any
Proprietary Data and
Page 14
provides such other Party with an opportunity to resist such a
request or subpoena, obtain a protective order, or minimize the
amount of information that is to be produced. Information that is
disclosed in a written or other fixed form must be clearly marked
as proprietary, confidential or the like, in order to be considered
Proprietary Data. Information that is disclosed verbally must be
reduced to writing, clearly marked as proprietary, confidential or
the like, and delivered to the Receiving Party by the Providing
Party within ten (10) Days from the date of disclosure in
order to be considered Proprietary Data. "Proprietary Data
Agreement" has the meaning set forth in Section 19.1(h)
. "Providing Party" has the meaning set forth in
Section 19.1(a) . "Pro Rata Profit" means the portion
of the Profit that is associated with a specific portion of the
Work. "Punch List" has the meaning assigned in
Section 12.6 . "Qualified Entity" has the meaning set
forth in Exhibits M-1 and M-2 . "Qualified Lender" is a
commercial lender in the business of providing financing for power
generation projects that has executed a non-disturbance agreement,
in form and substance reasonably acceptable to Contractor, in which
lender agrees that it will not dispute or disturb
Contractor’s rights under this Agreement except as permitted
under the terms and conditions of this Agreement, and agrees to
exercise any foreclosure or other transfer of ownership interest
rights in a manner so that the "replacement owner" meets the
criteria of a Qualified Replacement Owner. "Qualified Replacement
Owner" means a Person that: (a) prior to and immediately
following the relevant sale, merger, acquisition or consolidation
will have a creditworthiness and financial ability to make the
payments under this Agreement that is equal to or greater than that
of Owner, (b) has the operational ability and experience
necessary to perform the other obligations of the Owner under this
Agreement, and (c) has executed an enforceable written
agreement in which such Person assumes all obligations and
liabilities of Owner under this Agreement that may arise on and
after the effective date of such agreement. "Quality Assurance
Program" has the meaning set forth in Section 5.1(a) .
"[***]" has the meaning set forth in Section 11.5(g) .
"Reactor Coolant Pump Flow Measurement Tests" means the tests to be
conducted as provided in Section 11.5(g) . "Ready for
Performance Test Date" has the meaning set forth in
Section 11.6 . "Ready for Start-up Test Date" has the
meaning set forth in Section 11.4(d) . "Reasonably
Prudent Contractor" means a reasonably prudent contractor
experienced in the design, supply, installation or construction of
nuclear-fueled electric-generating power facilities in the United
States or, to the extent applicable, other nuclear-fueled electric
power generation facilities and exercising Good Industry
Practices.
Page 15
"Receiving Party" has the meaning set forth in
Section 19.1(a) . "Recipient" has the meaning set forth
in Section 19.1(h) or (j) . "Restructured Award
Agreement" has the meaning set forth in Section 3.2(c)
. "Sales Tax" means any Florida or other Government Authority
sales, use or similar tax imposed on Contractor, any Subcontractor
or Owner with respect to the Work. "Scope of Work" means the scope
of work and supply and division of responsibilities between Owner
and Contractor set forth in Exhibit A . "Services"
means the labor, transportation, packaging, storage, designing,
drawing, creating, engineering, architectural, management,
demolition, site preparation, construction, commissioning,
installing, testing, equipping, verification, training, procurement
and other work, services and actions performed by Contractor
(whether at the Site, the Nearby Work Areas or otherwise) under
this Agreement but excluding any Nuclear Fuel and Related Services.
Without limiting the generality of the foregoing, design work
performed by Contractor hereunder shall include applicable AP1000
Nuclear Power Plant design work performed by Contractor or its
Subcontractors that is associated with the Facility, irrespective
of the fact that it was performed prior to the Effective Date.
"Services Warranty" has the meaning set forth in
Section 14.2(a) . "Services Warranty Period" has the
meaning set forth in Section 14.4(b) . "SGA" means
Westinghouse’s sales, general and administrative costs
developed as provided in Exhibit K . "Shaw" means The
Shaw Group, Inc. "Short Operation Period" has the meaning set forth
in Section 11.5(k) . "Site" means the premises (or
portion thereof) owned, controlled or leased by the Owner on which
the Facility will be located, as more specifically described in
Exhibit R-1 . "Site, Nearby Work Areas and
Transportation Assumptions" means the Site, Nearby Work Areas and
transportation assumptions that are described in or referenced in
Section 3.5(l) . "Site Subcontractor List" has the
meaning set forth in Section 3.7(d) . "Software" means
the computer programs, procedures, rules or routines embodied in
computer programs, databases (excluding Configuration Data) and
related computer files provided to Owner by Contractor or its
Subcontractors in performance of the Work, as furnished and as
installed as a part of each Unit as of the date of Final
Completion. Software shall also mean bug
Page 16
fixes, error-correction releases, updates, upgrades,
enhancements, modifications, changes, new versions and replacements
thereof if provided from time to time by or on behalf of Contractor
or its Subcontractors either before or after the date of Final
Completion. Software includes: (a) " Base Software ", which
consists of the standard AP1000 Nuclear Power Plant programs and
tools that provide basic Facility system functions. Base Software
includes tools used to develop control strategies (e.g., function
blocks, standard control algorithms, rules, etc.), operator
graphics (e.g., symbol libraries), and database entries. (b) "
Application Software ", which consists of the
project-specific implementation of the Facility requirements using
the object code and tools provided by the Base Software or
Third-Party Software. The Application Software is specific to a
particular Unit, which shall be delivered to Owner in human
readable and machine readable formats. (c) " Third-Party
Software ", which consists of that portion of the Software
which is developed and owned by a third party. "Software
Documentation" means any: (i) materials created by or on
behalf of Contractor or its Subcontractors and furnished to Owner
as a part of the Work that describe or relate to the functional,
operational, or performance capabilities of the Software regardless
of whether such materials be in written, printed, electronic or
other format; and (ii) user, operator, system administration,
technical, support and other manuals relating to the Software,
including but not limited to functional specifications, help files,
flow charts, logic diagrams, programming comments, and acceptance
plans, if any. "Software Warranty" means the Software Warranty set
forth in Section 14.7 . "Software Warranty Period" has
the meaning assigned in Section 14.7 . "Specifications"
means the design specifications and associated drawings, and
changes thereto, prepared by Contractor or its Subcontractors and
associated with the Work or the Facility. "Staffing Plan" has the
meaning set forth in Section 9.1(h). "Standard
Equipment Warranty Period" shall have the meaning set forth in
Section 14.4(a)(i) . "Standard Plant" means the plant design
features and buildings or structures of the AP1000 Nuclear Power
Plant as shown and described in Figure 1 of Exhibit A ,
as further described in the DCD. "Standard Plant Design
Documentation" has the meaning set forth in
Section 3.8(a) . "Start-up Tests" means the tests
conducted as provided in Section 11.4 . "Start-up Test
Completion" has the meaning set forth in
Section 12.4(a) . "[***]" has the meaning assigned in
Section 11.5(h) ."Steam Generator Zero Leakage Tests"
means the tests to be conducted as provided in
Section 11.5(h) .
Page 17
"Stone & Webster" has the meaning set forth in the opening
paragraph of this Agreement. "Stop Work Order" has the meaning set
forth in Section 5.13 . "Subcontract" means any
contract, purchase order or other writing between Contractor and
any Subcontractor under which the Subcontractor performs or
provides any portion of the Work. "Subcontractor" means any Person
other than Contractor performing or providing any portion of the
Work, hired by Contractor or hired by a Person hired by Contractor
and including any subcontractor of every tier, and every
materialman, vendor or supplier of every tier. "Substantial
Completion" means that the Unit and to the extent applicable the
Ancillary Facilities shall have achieved all the conditions set
forth in Section 12.5(a) . "System" means each discrete
set of Equipment and/or structure (or, where appropriate, an
individual piece of Equipment and/or structure) that will be turned
over to Owner after satisfactory completion of all applicable
Construction and Installation Tests, as provided in
Section 12.1(a) . "Target Price" means the portion of
the Contract Price identified as the Target Price portion in
Article 6 as described in Exhibit H , and
as such amount is adjusted pursuant to the terms hereof. "Target
Price Basis" means Work performed by Contractor for which it will
be compensated under the Target Price. "Target Price Work" means
Work to be performed on a Target Price Basis. "Taxes" means all
present and future license, documentation, recording and
registration fees, and certain other taxes (including payroll,
sales, use, personal property (tangible and intangible), and
similar charges and withholdings of any nature whatsoever), imposed
by any Government Authority. "Taxes" does not include any tax
imposed on gross or net income or any income, franchise or similar
tax that is imposed or based upon gross receipts. "Technical
Direction" means the furnishing of technical guidance, advice and
counsel to be supplied by Contractor to Owner or its Personnel at
the Site and Nearby Work Areas, and includes recommending a course
of action with respect to Owner’s operation of the Unit or
the Facility based upon current design, engineering, construction
and testing practices, but does not include or require any
supervision, regulation or control of Owner’s Personnel.
"Termination Costs" means the aggregate of the following costs:
(a) for
Westinghouse, (i) any unpaid amounts (whether invoiced or not)
with respect to Payment Milestones that have been completed and/or
with respect to Work performed on a Target Price Basis and a Time
and Materials Basis that has been completed, and/or with respect to
Progress Payments and other payment obligations that have accrued
on or before the date of termination, (ii) plus the other
Direct Costs, not yet paid, (including Direct Costs associated with
partially complete Payment Milestones) that were reasonably
incurred by Westinghouse prior to the date of termination,
(iii) plus the Direct Costs reasonably incurred by
Page 18
Westinghouse to demobilize and modify or cancel Equipment or
materials orders, and modify or terminate lease agreements,
including cancellation fees that Westinghouse cannot reasonably
avoid, (iv) plus other reasonably incurred Direct Costs
incurred in accordance with Section 22.6 ,
(v) plus other reasonably incurred Direct Costs that are
approved in advance by Owner, (vi) minus any Deductions,
(vi) plus SGA and Pro Rata Profit on the net amount described
in this Subsection (a) to the extent SGA and Profit has not
already been included therein; and
(b) for
Stone & Webster, (i) any unpaid amounts (whether invoiced
or not) with respect to Payment Milestones that have been completed
and/or with respect to Work performed on a Target Price Basis and
Work performed on a Time and Materials Basis that has been
completed, and/or with respect to Progress Payments and other
payment obligations that have accrued on or before the date of
termination, (ii) plus the other Direct Costs (at the rates
set forth in Exhibit G ) reasonably incurred by Stone
& Webster, not yet paid, (including Direct Costs associated
with partially completed Payment Milestones) that were incurred by
Stone & Webster prior to the date of termination
(iii) plus the Direct Costs (at the rates set forth in
Exhibit G ) reasonably incurred by Stone & Webster
to demobilize and cancel or modify Equipment or materials orders,
and modify or terminate lease agreements, including cancellation
fees that Stone &Webster cannot reasonably avoid,
(iv) plus reasonably incurred Direct Costs (at the rates set
forth in Exhibit G ) in accordance with
Section 22.6 , (v) plus other reasonably incurred
Direct Costs (at the rates set forth in Exhibit G ) as
approved in advance by Owner as necessary to protect the Work and
bring the Work to an orderly conclusion, (vi) minus any
Deductions. "Third Party Claim" means any claim, demand or cause of
action of every kind and character by any Person other than
Contractor, Contractor’s Affiliates, Owner, Owner’s
Affiliates, or any Facility co-owner. "Threshold" means
(i) for a monetary Claim or counterclaim (as such Claim or
counterclaim may be consolidated or bifurcated under
Section 27.8(c) ), that a Party has in good faith
alleged that such Claim involves an amount in controversy of
greater than [***] and/or (ii) for a Claim or counterclaim
involving an adjustment to the Project Schedule (as such Claim or
counterclaim may be consolidated or bifurcated under
Section 27.8(c) ), that a Party has in good faith
alleged that such Claim or counterclaim involves an adjustment to
the Project Schedule greater than [***]. If a Claim or counterclaim
alleges both an amount and an adjustment to the Project Schedule in
controversy, such Claim or counterclaim will be considered as
meeting the Threshold if either (i) the amount in controversy
is greater than [***] or (ii) the adjustment to the Project
Schedule in controversy is greater than [***]. "Time and Materials
Basis" means Work performed by the Contractor for which it will be
compensated for the charges for Personnel and its charges for
equipment, materials and other expenses pursuant to
Exhibit G . "Time and Materials Charges" means the
portion of the Contract Price identified as the Time and Materials
Charges portion in Article 6 as described in
Exhibit H , and as such amount is adjusted pursuant to
the terms hereof. "Toshiba" means Toshiba Corporation.
Page 19
"Turnover" has the meaning assigned in
Section 12.1(a) . "Turnover Package" means the drawings
(including as-built drawings), start-up procedures, log sheets,
settings, bill of materials, Equipment database, Software
Documentation (as applicable), and spare parts list (as required by
Section 3.5(d) ) and other items, submitted by
Contractor to Owner pursuant to Section 3.5(d) and
12.1(a) . "Unit" means all systems, components and facilities
at the Site and Nearby Work Areas that are used to generate
electricity for one AP1000 Nuclear Power Plant. "Unit Termination
Fee" shall have the meaning assigned in Section 22.7 .
"Updated Claim Notice" has the meaning set forth in
Section 27.7(c)(i) . "Warranties" means the obligations
of Contractor under Article 14 . "Warranty Period" has
the meaning set forth in Section 14.4(c) . "Warranty
Work" means the portion of the Work to be performed under the
Warranties. "Westinghouse" has the meaning set forth in the opening
paragraph of this Agreement. "Whistleblower Provisions" has the
meaning assigned in Section 24.6 . "Work" means the
Services, Systems, material, Equipment, tools, vehicles, delivery,
design, engineering, and other things and actions to be supplied by
or through Contractor and its Subcontractors necessary to furnish
and install the Facility at the Site or Nearby Work Areas
consistent with the Contractor’s Scope of Work. ARTICLE 2
— INTERPRETATION A. Titles, headings, and subheadings of
the various articles and paragraphs of this Agreement are used for
convenience only and shall not be deemed to be a part thereof or be
taken into consideration in the interpretation or construction of
this Agreement. B. Words importing the singular only shall also
include the plural and vice versa where the context
requires. Words in the masculine gender shall be deemed to include
the feminine gender and vice versa . C. Unless the context
otherwise requires, any reference to a document shall mean such
document as amended, supplemented or otherwise modified and in
effect from time to time. D. Unless otherwise stated, any reference
to a party shall include its successors and permitted assigns, and
any reference to a Government Authority shall include any entity
succeeding to its functions. E. Wherever a provision is made in
this Agreement for the giving of notice, consent or approval by any
person, such notice, consent or approval shall be in writing, and
the word "notify" shall be construed accordingly.
Page 20
F. This Agreement and the Documentation to be supplied hereunder
shall be in the English language. All references to monetary
amounts shall mean United States Dollars. G. Unless the context
requires otherwise any reference contained herein to this Agreement
or any other agreement or any schedule, Exhibit or attachment
hereto or thereto shall mean this Agreement or such other agreement
or such schedules, Exhibits and attachments, as they may be amended
or supplemented, unless otherwise stated. Unless the context
requires otherwise, any reference to completion dates, schedule
dates, or deadlines including Milestone Performance Schedule dates
and Guaranteed Substantial Completion Date shall mean the specified
dates as they may be amended or modified from time to time in
accordance with the applicable provisions of this Agreement. H.
Words and abbreviations not otherwise defined in this Agreement
which have well-known nuclear industry meanings in the United
States are used in this Agreement in accordance with those
recognized meanings. The word "include" or "including" shall at all
times be interpreted to mean "including but not limited to." I.
Neither Contractor nor Owner shall assert or claim a presumption
disfavoring the other by virtue of the fact that this Agreement was
drafted primarily by legal counsel for the other, and this
Agreement shall be construed as if drafted jointly by Owner and
Contractor and no presumption or burden of proof will arise
favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. ARTICLE 3 — SCOPE
OF WORK AND SCHEDULE 3.1
General.
(a) Contractor
will perform the Work identified as Contractor’s
responsibility in the Scope of Work ( Exhibit A ) and
will perform all other obligations and responsibilities of
Contractor as set forth in this Agreement. The Work will be
performed in two phases, as more fully described in
Sections 3.2 and 3.3 of this Agreement. Contractor
agrees to design, engineer, supply, equip, construct and install a
complete and fully operational Facility, including the Equipment to
be incorporated therein and the Services to be provided in
connection therewith.
(b) If
there is a dispute as to whether certain work related to the
Facility is within the Contractor’s Scope of Work, then in
exigent circumstances Owner shall have the right to require
Contractor by written Notice to begin to perform such work and
Contractor will be paid on a Time and Materials Basis for such work
until the DRB makes a determination as to whether such work or a
portion thereof is within the Contractor’s Scope of Work. If
there is also no agreement between the Parties on the pricing or
the adjustment to the Contract Price in connection with such work,
then either Party may also submit to Dispute Resolution the
determination of the appropriate pricing or Contract Price change,
as applicable, relating to such work. If the DRB determines that
such work is within the Contractor’s Scope of Work, then the
DRB shall determine whether such work is priced [***], or on a Time
and Materials Basis as set forth in Exhibit H . If,
however, the DRB determines that such work is outside of
Contractor’s Scope of Work, then the DRB shall determine the
appropriate adjustment to the Contract Price pursuant to Section
9.4(c) .
Page 21
3.2 Phase I.
(a) The
Phase I portion of the Work is described in Section A.1
of Exhibit A . The Parties agree that: (i) all
work performed by Stone & Webster and Westinghouse under the
[***] and (iii) all work performed by Stone & Webster
under [***] shall be considered to be part of the Phase I portion
of the Work, and such [***] shall be subsumed by this Agreement as
contemplated by this Section 3.2(a) , and the work
product associated with [***] listed above that is incorporated
into the Work shall be subject to all terms and conditions hereof
in lieu of the terms and conditions of such [***], except for:
(i) matters related to compensation
and payment for the work performed under such [***], except as set
forth in Section 3.2(d) ;
(ii) matters concerning quality
assurance for work performed under such [***]; and
(iii) any commercial issues or
disputes that arose prior to the Effective Date.
(b) Contractor
has performed all Phase I Work as necessary to allow Owner to
submit a COLA for two (2) AP1000 Nuclear Power Plants
(submitted by Owner on July 30, 2008). Contractor shall
support NRC review, approval and issuance of the COL. Contractor
shall substantially complete the detailed design specifications and
construction level engineering with respect to the power block
prior to the placing of first safety related concrete for the power
block. Contractor shall substantially complete the detailed design
specifications and construction level engineering with respect to
the other structures prior to the commencement of construction on
the applicable structure. Contractor shall complete such design and
engineering as necessary to support the Guaranteed Substantial
Completion Date for each Unit.
(c) The
Parties intend to rely on the results of services Westinghouse is
performing under the NuStart/Westinghouse Restructured Award
Agreement by and between NuStart and Westinghouse effective
April 1, 2007 (the " Restructured Award Agreement ") as
part of the DOE’s Nuclear Power 2010 program (the "
NuStart Work ") as the basis for certain design, engineering
and technical issues with respect to the Standard Plant. Phase I of
the Work is intended only to include work that is outside the scope
of work Westinghouse is performing for NuStart or services that
Westinghouse will not complete for NuStart on a schedule suitable
for Owner’s needs. To the extent NuStart Work is performed
pursuant to the Restructured Award Agreement, Owner shall not have
an independent obligation to pay for the performance of such
NuStart Work. Westinghouse agrees that any and all NuStart Work
that is incorporated into the COLA, the Facility, or into the
AP1000 Facility Information will be covered by the same warranties,
indemnities and grants of licenses and intellectual property rights
as are applicable to the Facility and the other AP1000 Facility
Information provided under this Agreement.
Page 22
(d) All
monies paid by Owner to Westinghouse [***] shall be applied to and
are shown as payments made against the Contract Price as set forth
in Exhibit H . All other [***] shall not be applied to
or considered as payments made against the Contract Price.
3.3 Phase II. Phase II of the
Work will consist of the remainder of the Work as described in
Exhibit A , to commence upon issuance of the Full Notice to
Proceed substantially in the form set forth in
Exhibit I , and to continue until Final Completion,
unless the Agreement is earlier terminated in accordance with
Article 22 . The Parties acknowledge that Phase II may
commence prior to the receipt of the COL by Owner to the extent
permitted under applicable Law and NRC regulations, and that the
failure by Owner to receive the COL by an agreed date will give
rise to termination rights in accordance with
Article 22 . 3.4
Schedule for Completion of the Facility.
(a) The
Milestone Performance Schedule is attached to this Agreement as
Exhibit E . Owner and Contractor shall each perform its
respective obligations under this Agreement in accordance with the
Milestone Performance Schedule, as modified in accordance with the
terms of this Agreement.
(b) Contractor
has made reasonable allowances in the Project Schedule for normal
hindrances and delays that do not qualify as Force Majeure events
(such as rain that is not unusual or inconsistent with normal
weather patterns) and do not otherwise entitle Contractor to a
Change, and Contractor shall not be entitled to a Change in the
Milestone Performance Schedule or the Contract Price on account of
such normal hindrances and delays of the type that commonly occur
in connection with construction projects, even if such hindrances
and delays are beyond Contractor’s control. This
Section 3.4(b) is not intended to waive or supersede
any other provision of this Agreement.
(c) Unless
otherwise mutually agreed, Contractor shall provide to Owner for
its review a detailed schedule for performance of the Work (the "
Project Schedule ") on or before the later of (i) the
date [***] after Owner issues the Full Notice to Proceed or (ii)
[***]. The Project Schedule shall be organized on a discipline by
discipline basis (e.g., civil, mechanical, and electrical), shall
be in a Primavera P3E format or higher, and shall be a "Level 2"
schedule with a summary or roll-up of a "Level 3" schedule on a
System by System basis; provided, that it shall be a schedule that
is two (2) levels below a milestone schedule. Portions of the
Project Schedule shall be updated on a rolling twelve
(12) month schedule. The Project Schedule shall incorporate
all of the Performance Milestones and associated dates as set forth
in the Milestone Performance Schedule. In addition, the Project
Schedule shall include planning, procurement, engineering, design
and manufacturing activities, as well as Equipment shipment and
preparation for actual mobilization of Contractor Personnel to the
Site and Nearby Work Areas. The Project Schedule shall also include
a resource-loaded schedule for Work at the Site and Nearby Work
Areas, the sequence for Turnover of each System, and demobilization
of Contractor personnel after the Work is complete. Owner’s
Project Director and Contractor’s Project Director shall work
together to establish a mutually acceptable final Project Schedule
that will include the work to be performed by Owner and its other
contractors. The Project Schedule shall be updated by Contractor
from time to time as provided in Section 3.5(h)(iii) .
However, no changes to the Milestone Performance Schedule shall be
made without Owner’s prior written consent, which shall be
documented by a written amendment to this Agreement.
Page 23
(d) Contractor
shall provide to Owner a full description of each System (including
a list of Equipment). Each System description to be supplied by
Contractor will be sufficient for Owner to develop and perform
operator training for each System and the Units. Each System
description will be delivered to Owner on a schedule to be
established by mutual written agreement of Owner’s Project
Director and Contractor’s Project Director. The mutually
agreed upon schedule for delivery of each System description shall
support the fuel load date for each Unit, and will support the
Owner’s operator training requirements to support the startup
and operation of each Unit in accordance with the Owner’s
training schedule.
(e) Turnover
of each System will be in accordance with the Project Schedule as
provided in Section 12.1 . It is the intent of the
Parties that substantially all Equipment shall be included as part
of one System or another, but shall not be included in more than
one System. For Systems that are part of the Non-Standard Plant,
Owner’s Project Director and Contractor’s Project
Director shall work together to establish System definitions that
will promote efficient and expeditious prosecution of the Work. It
is the intent of the Parties that, to the greatest extent possible,
each System will include Equipment that works together to perform
specific function(s) within the Facility, or that are otherwise
mechanically integrated.
(f) If
the actual progress of the Work or the Project Schedule shows that
completion of a Performance Milestone is more than [***] behind the
Milestone Performance Schedule for reasons other than an Owner
caused delay or an event of Force Majeure, Owner’s Project
Director may require Contractor to submit a written acceleration
plan and supplementary schedules. Such written plan and
supplementary schedules shall be presented to Owner as soon as
reasonably practical, not to exceed thirty (30) Days from the
date of Owner’s request, shall be subject to mutual agreement
by the Parties, and shall be a reasonable acceleration plan for
timely completing the Facility consistent with the Milestone
Performance Schedule to the extent reasonably practical. Such plan
shall contain the information and level of detail that can
reasonably be obtained within the specified time period. If the
Parties cannot reach agreement on the acceleration plan, the
Parties may submit the disagreement to the DRB and shall be bound
to accept and implement the DRB’s decision. Contractor shall
diligently undertake the actions of such plan in accordance with
the requirement of such acceleration plan and this
Section 3.4(f) . If Contractor provides an acceleration
plan that is mutually agreed to by the Parties or approved by the
DRB, and Contractor is diligently undertaking the actions of such
plan in accordance with the requirements of such acceleration plan
and this Section 3.4(f) , then the delay shall not
constitute a separate event of default and shall not provide a
right to terminate this Agreement; however, if Contractor does not,
present a written acceleration plan and supplementary construction
schedules that are mutually agreed to by the Parties or approved by
the DRB as required by this Section 3.4(f) that
provides reasonable assurance that compliance with the Milestone
Performance Schedule will be established to the extent reasonably
practical, or if Contractor fails to diligently undertake the
actions in accordance with such written acceleration plan and
supplementary construction schedules, Owner may terminate this
Agreement under Section 22.2 . The failure of
Owner’s Project Director to request a written plan and
supplementary construction schedules shall not relieve Contractor
of its obligation to ensure the rate of progress required by this
Agreement. [***].
Page 24
(g) If
Contractor is in material breach of this Agreement and fails to
cure the breach within [***] if such material breach involves
performing Work relating to the systems, components, or structures
that are actively engaged in the generation of electricity)
following Notice of such breach or, if such breach is not capable
of being cured within such [***] period, as applicable, such longer
period as is reasonably necessary so long as Contractor has given
Owner a detailed written plan within such [***] period, as
applicable, describing how the breach is to be cured that is
reasonably acceptable to Owner, and further provided that
Contractor has failed to commence the cure within such [***]
period, as applicable, and thereafter fails to diligently pursue
the cure in accordance with the reasonably acceptable written plan,
Owner may at its option perform the applicable Work or portion(s)
thereof required in order to achieve the timely completion of the
Facility in accordance with the Milestone Performance Schedule to
the extent reasonably practical, and Contractor shall pay
Owner’s backcharges for such Work. The Parties shall
negotiate in good faith to make any appropriate modifications to
this Agreement that will result from Owner’s performance of
such Work, including the work procedures and the cost of such Work
as well as any appropriate modifications to Delay Liquidated
Damages, Performance Guarantees, and Warranties under this
Agreement. Such terms and conditions and Agreement modifications
shall be set forth in a Change Order pursuant to
Article 9 .
(h) The
exclusive remedies for delays in the performance of the Work are
set forth in Section 3.4(f) , 3.4(g) ,
Article 13 , Section 22.2 and Exhibit
H , subject to the limitations set forth in
Section 37.2. 3.5
Contractor’s General Responsibilities.
(a)
Industry Standards . Subject to Article 9 ,
Contractor shall perform and complete its obligations under this
Agreement in accordance with applicable Laws, this Agreement,
Project Policies and Procedures, Industry Codes and Standards and
Good Industry Practices. In the event of any conflict between any
of the authorities in the foregoing sentence, they shall have
priority and be controlling in the order listed (e.g. the first one
listed, applicable Laws, shall have priority over all others and
the second one listed shall have priority over all others except
for the first one listed and so forth.)
(b)
Contractor’s Key Personnel . Exhibit B
contains a chart of Contractor’s intended organization for
its performance under this Agreement. Contractor’s Project
Director and Contractor’s Site Construction Manager and other
"Key Personnel" are listed in Exhibit B . All Key
Personnel supplied by Contractor under this Agreement who shall be
subject to the prior approval of Owner are identified in
Exhibit B . Contractor shall not change its
organization (as depicted in Exhibit B ) or its Project
Director, Construction Manager or other Key Personnel without
Owner’s prior written approval, not to be arbitrarily
withheld or unreasonably delayed. Contractor agrees to supply
resumes, and other information concerning Key Personnel as
requested by Owner, for Owner’s review and approval. At
Owner’s request, Contractor shall arrange an interview of any
Person under consideration to serve as one of the Key Personnel, at
a location selected by Owner. Contractor’s Project Director
shall act as Contractor’s liaison with Owner and shall have
the authority to administer and manage this Agreement on behalf of
Contractor. Owner may consult with Contractor’s Project
Director at all reasonable times, and Contractor’s Project
Director’s instructions, requests and decisions
Page 25
that are in writing (except as otherwise provided in this
Agreement) shall be binding upon Contractor as to matters
pertaining to this Agreement. The Parties shall work to develop a
mutually agreed schedule for filling key leadership positions
identified in Exhibit B .
(c)
AP1000 Facility Information .
(i) Contractor shall supply all
AP1000 Facility Information to Owner in accordance with the
requirements of Exhibit A and the Project Schedule.
(ii) Contractor shall also provide
Owner with hard copies of each item of AP1000 Facility Information
Deliverables (A) identified in Table 2 to
Exhibit A in a reasonable number of copies as mutually
agreed by the Parties, or (B) required by applicable Law to be
maintained at the Facility. To the extent that hard copies of any
AP1000 Facility Information Deliverables must be kept or maintained
at the Site and/or Nearby Work Areas during construction of either
Unit pursuant to applicable Laws, Contractor shall keep and
maintain such copies in good order at the Site and/or Nearby Work
Areas in compliance with such applicable Laws.
(d)
Turnover Packages . For each System subject to Turnover,
Contractor will create, maintain, update, compile and deliver a
Turnover Package in accordance with Article 12 .
(e)
Control of Work. Contractor shall be solely responsible for
all construction means, methods, techniques, sequences, procedures,
safety and quality assurance, and quality control programs in
connection with the performance of the Contractor’s Work with
the advice and consultation of Owner, subject to all requirements
and provisions of this Agreement.
(f)
Emergencies . In the event of any emergency endangering life
or property, Contractor shall take all actions as may be reasonable
and necessary to prevent, avoid or mitigate injury, damage or loss
and shall promptly report in writing each such emergency, and
Contractor’s responses thereto, to Owner.
(g)
Office Facilities . During construction, Contractor shall
provide Owner with office facilities on the Site as specified in
Exhibit A .
(h)
Periodic Reports and Meetings .
(i) Status Report . Within ten
(10) Days after the end of each calendar month, Contractor
will submit to Owner’s Project Director a written status
report covering the prior month. The report shall be prepared in a
manner and electronic format reasonably acceptable to Owner and
shall include (A) a description of the progress of the Work;
(B) a statement of any significant issues which remain
unresolved and Contractor’s recommendations for resolving the
same; (C) a summary of any significant Facility events which
are scheduled or expected to occur during the following interval;
(D) a summary of the key risk factors that may affect schedule
or cost, including a description of any efforts being
Page 26
undertaken by Contractor to eliminate or overcome those risk
factors; (E) changes in regional craft labor market
conditions, craft availability impacts and Contractor’s plans
to mitigate current or anticipated craft labor shortfalls; and
(F) additional information reasonably requested by Owner. In
the event the Work is behind schedule or there is another problem
with the Work, the Owner may require Contractor to provide more
frequent status reports and updates with respect to the matters
related to such delay or other problem. After Contractor has
control of the Site and Nearby Work Areas as provided under
Section 23.1(a) , by Wednesday of each week, or as
mutually agreed by Owner’s Project Director and
Contractor’s Project Director, Contractor shall submit to
Owner’s Project Director a weekly construction progress
report concerning the construction schedule, budget and charges to
contingency. Following the beginning of each shift, Contractor
shall supply a labor force report to Owner’s Project Director
indicating the number of workers on the Site and Nearby Work Areas.
(ii) Attendance and
Participation . From the issuance of the Full Notice to Proceed
until Final Completion, Contractor shall attend and participate in
regular meetings with Owner which shall occur at least monthly, and
at least weekly after construction begins at the Site and/or Nearby
Work Areas (or upon such other interval as the Parties agree), for
the purpose of discussing the status of the Work and anticipating
and resolving any problems. Such meetings shall normally be at the
Site, but may by mutual agreement be held by conference call or
video conference. Contractor shall prepare and promptly deliver to
Owner written minutes of each meeting, to which Owner shall respond
promptly in writing should it have any comments.
(iii) Schedule Requirements;
Updates . Contractor shall make the Project Schedule available
to Owner at the Site and such other locations as is mutually agreed
upon by the Parties. The Project Schedule shall include a project
earned value management system which shall include commodity
installation curves, manpower histograms by craft and total
workers, and a physical percent complete curve using an earned
value system, which supports the Performance Incentive Plan
described in Exhibit H . Unless otherwise mutually
agreed upon by the Parties, Contractor shall update the Project
Schedule on a monthly basis for the purpose of illustrating
progress on the Work and status of critical path activities, and
shall provide a copy to Owner, which may be provided
electronically. Any changes to the Project Schedule that affect
Owner’s Scope of Work shall be subject to the approval of
Owner. No changes to the Project Schedule shall excuse Contractor
from its obligation to perform the Work in accordance with the
Milestone Performance Schedule, which can only be changed by a
written amendment to this Agreement.
(i)
Full Disclosure . Contractor acknowledges that Owner is
relying upon the expertise, experience, education, knowledge,
research, development, testing, quality control and quality
assurance of Contractor and its Subcontractors to provide the Work.
If Contractor encounters a condition, issue or other concern at
another AP1000 project that is reasonably expected to impact the
cost, schedule, quality or functionality of the Facility being
constructed
Page 27
pursuant to this Agreement, then Contractor will provide Owner
with information regarding such condition, issue or other concern
subject to appropriate confidentiality limitations and protections.
To the extent that a condition, issue or concern at the Facility is
reasonably expected to impact cost, schedule, quality or
functionality at another AP1000 project, the Contractor may provide
the owner of such other AP1000 project with information regarding
such condition subject to appropriate confidentiality limitations,
protections and conditions that are reasonably acceptable to Owner.
(j)
Tie-ins and Connections . Contractor and Owner acknowledge
that the Facility will tie into other structures and systems that
are Owner’s responsibility to supply and construct.
Contractor and Owner agree to coordinate all tie-ins and connection
to such Owner supplied and constructed structures and systems,
consistent with mutually agreed upon procedures and the Project
Schedule. The Parties agree that some of the Equipment will be shop
fabricated and shop sub-assembled to obtain the most economical
fabricated and installed cost for the Facility.
(k)
Owner Information . Contractor shall not begin any part of
the Work which requires Contractor to perform in accordance with
Owner-provided information until such information has been
furnished to Contractor. Owner acknowledges that Contractor is
relying upon the expertise, experience, education, knowledge,
research, development, testing, quality control and quality
assurance of Owner and its other contractors to provide the
Owner’s Scope of Work and the Owner-provided information.
Contractor shall check the Owner-provided dimensions, elevations
and quantities that are relevant to the interfacing or integration
of Owner-provided information or facilities with the Work of
Contractor. If Contractor becomes aware of any material error or
omission in the Owner-provided information or facilities or
Contractor becomes aware of a material discrepancy, contradiction
or ambiguity between the provisions of this Agreement and the
Owner-provided information, or between the Owner-provided
information and the conditions at the Site or Nearby Work Areas,
then Contractor shall notify Owner of such error, omission,
discrepancy, contradiction or ambiguity. Owner shall promptly
correct or otherwise resolve any such error, omission, discrepancy,
contradiction or ambiguity. Upon completion of the Work, Contractor
shall return all Owner-provided information to Owner after
indicating any Contractor changes to reflect the "as-built"
condition of the Work.
(l)
Site, Nearby Work Areas and Transportation Assumptions .
(i) Contractor in consultation with
Owner and in accordance with Good Industry Practices has identified
and listed on Exhibit A , prudent Site assessment and
Site diligence activities required to confirm the ability of
Contractor and its Subcontractors to perform the Work at the Site.
Such Site assessment and Site diligence includes assessment of
(a) conditions bearing upon access, egress, transportation
(subject to Section 3.5(l)(iii) ), waste disposal,
water disposal, handling, laydown, parking, storage and roads;
(b) the availability, nature and conditions of water,
electricity and other utilities; (c) the physical condition of
the Site and Nearby Work Areas, and (d) local, normal weather
conditions.
Page 28
(ii) Contractor represents that it
has taken or will undertake the site assessment and site diligence
Work in Contractor’s Scope of Work as specified on
Exhibit A . In addition to the site assessment and site
diligence Work that Contractor has completed as of the Effective
Date, Contractor has also reviewed the information provided by or
on behalf of Owner with respect to the Site and Nearby Work Areas,
including information related to certain Site, Nearby Work Areas
and Transportation Assumptions, relating to both the surface and
subsurface conditions of the Site and Nearby Work Areas. Contractor
acknowledges that the results of the Site assessments and Site
diligence it has performed together with the Site assessments and
Site diligence performed by Owner or its other contractors, that
Contractor has reviewed and reasonably relied upon, do not indicate
the need for additional Site assessments and Site diligence beyond
those activities which are described on Exhibit A ,
provided that the Parties acknowledge that a substantial amount of
the Site assessment and Site diligence work with respect to the
Facility has not been performed as of the Effective Date and the
results of such assessments and diligence when received may
indicate the need for additional assessments, tests and diligence
and/or indicate the need for other modifications to the Work or the
Facility. If such results do indicate the need for additional
assessments, tests and diligence and/or indicate the need for other
modifications to the Work or the Facility, then Contractor shall be
entitled to a Change. (iii) Site,
Nearby Work Areas and Transportation Assumptions are set forth in
Exhibit S . If the conditions at the Site or at the
Nearby Work Areas are not as specified in the Site, Nearby Work
Areas and Transportation Assumptions, and such deviation adversely
impacts Contractor or its Subcontractors’ cost or ability to
perform the Work or otherwise meet the Project Schedule,
performance or other obligations under this Agreement, then
Contractor shall be entitled to a Change.
(m) Contractor
shall develop a Project Execution Plan (" PEP ") as outlined
in Exhibit D . The initial PEP shall be submitted to
the Owner for review and Acceptance, which Acceptance shall not to
be unreasonably withheld, [***] or less after the Effective Date,
and the PEP will be updated periodically by Contractor to support
the Project Schedule.
(n)
Regulatory Support . Contractor agrees to supply on a Time
and Materials Basis pursuant to a mutually agreeable Change Order
any information, testimony or other Services as required by Owner
during the term of this Agreement in connection with any
proceedings before any Governmental Authority.
(o)
Covenant not to Transfer Equipment . Contractor covenants
and agrees that it shall not transfer any Equipment to another
project without Owner’s prior written consent, except for
materials and equipment purchased on a bulk basis.
3.6 Owner’s General
Responsibilities. Owner shall perform the responsibilities set
forth in this Article 3 and elsewhere in this Agreement
identified as Owner’s Scope of Work, including
Exhibit A , at its own expense and in accordance with
the Project Schedule.
Page 29
(a)
Owner’s Representative . Owner shall appoint
Owner’s Project Director (and shall have the right to appoint
any successor or replacement Project Director) with whom Contractor
may consult at all reasonable times, and whose instructions,
requests and decisions that are in writing (except as otherwise
permitted in this Agreement) shall be binding upon Owner as to all
matters pertaining to this Agreement, subject to the restrictions
set forth in Section 9.3 .
(b)
Site and Nearby Work Areas Access . From and after the time
the Project Schedule indicates that Contractor is required to have
access to the Site and/or Nearby Work Areas, Owner shall provide
Contractor, at no additional charge or fee to Contractor, rights of
access to such portions of the Site and/or Nearby Work Areas as
Contractor may reasonably require for the construction of the
Facility and for Contractor’s office, warehouse, shop
buildings, welding facilities, Construction Equipment storage, lay
down area, and employee parking. The location and conditions
associated with such use and access to the Site and Nearby Work
Areas shall be consistent with the descriptions in Exhibits
R-1 and R-2 and the Site, Nearby Work Areas and
Transportation Assumptions as such items may be modified by mutual
agreement of the Parties. Owner and Contractor shall cooperate with
each other so as to minimize disruption of Contractor’s
performance of the Work and Owner’s other activities at the
Site and Nearby Work Areas, and Contractor shall cooperate with
Owner so as to minimize disruption of the operation of the
Facility. Contractor’s access to the Site and Nearby Work
Areas is subject to the Project Policies and Procedures, and all
other terms and conditions of this Agreement.
(c)
Fuel and Utilities . Owner shall provide the electrical
interconnect for power to be exported from the Facility at the
interconnection points identified or to be identified in
Exhibit A , as well as all back feed electrical power
necessary for construction and testing of the Facility at the times
required pursuant to the Project Schedule. Contractor will build
the potable water System and sewage treatment System and following
completion and Turnover of such Systems, Owner will operate such
Systems and allow Contractor and its Personnel use of such Systems.
The Scope of Work in Exhibit A specifies the division
of responsibilities between Owner and Contractor for utilities
during construction and for the provision of certain consumables
and services by Owner during construction and testing of the
Facility. Westinghouse is responsible to supply Nuclear Fuel and
Related Services under a separate contract with Owner dated as of
the Effective Date.
(d) Spare
Parts. (i) Mandatory Spare
Parts . As Contractor completes the design of each System,
Contractor shall provide to Owner an initial list of the Mandatory
Spare Parts, and Contractor shall update such list on at least a
quarterly basis. Within eighteen (18) months after
finalization of the AP1000 Nuclear Power Plant design as specified
in the Project Schedule, Contractor shall provide Owner with the
completed list of the Mandatory Spare Parts and their associated
pricing. The list of Mandatory Spare Parts provided to Owner will
be consistent with that developed for the AP1000 Standard Plant
while taking into consideration the actual selection of equipment
suppliers used for the Owner’s Facility. The pricing for the
Mandatory Spare Parts shall be provided at the system commodity
code
Page 30
level and not for individual spare parts. The pricing shall be
consistent with the pricing methodology used to develop the pricing
specified in this Agreement for the associated Equipment for which
Mandatory Spare Parts are required with respect to the application
of costs (including labor, material, transportation), SGA, risk,
contingency and profit rates. As soon as practical after
Owner’s receipt of the completed list of Mandatory Spare
Parts and associated pricing (not to exceed one hundred eighty
(180) Days or as needed to support the Start-up Tests), Owner
shall issue a Change Order to Contractor to purchase the Mandatory
Spare Parts or portion(s) thereof in accordance with
Article 9 . As part of Contractor’s Scope of
Work, Contractor shall deliver the purchased Mandatory Spare Parts
to Owner DDP (delivered duty paid) to the Facility prior to
commencement of the Start-up Tests or as otherwise specified in the
Project Schedule. Owner shall make such Mandatory Spare Parts
available to Contractor from the delivery of such spare parts
through the end of the applicable Equipment or Service Warranty
Period, subject to Sections 3.6(d)(iii) and
3.6(d)(iv) . If Owner has not purchased a Mandatory Spare
Part identified in the completed list of the Mandatory Spare Parts
or if a Mandatory Spare Part is not otherwise readily available for
use by Contractor (for any reason other than such part having been
used on a prior repair of the Facility or having been transferred
to another AP1000 Nuclear Power Plant pursuant to a request by
Contractor), and Contractor requires such Mandatory Spare Part for
the performance of the Work, then the Contractor shall be entitled
to a Change Order pursuant to Article 9 to address the
impact on cost and schedule, if any.
(ii) Optional Spare Parts .
Within eighteen (18) months after finalization of the AP1000
Nuclear Power Plant design as specified in the Project Schedule,
Contractor shall provide Owner with a list and the associated costs
of Optional Spare Parts that are recommended by Contractor and
vendors of Equipment comprising the Facility. At Owner’s
election, Owner may procure any Optional Spare Parts on its own,
or, at least two years prior to the scheduled completion of the
Start-up Tests, or as otherwise agreed, Owner may identify to
Contractor which Optional Spare Parts Owner wants Contractor to
supply to Owner. (iii) Use and
Replacement of Spare Parts . Contractor shall have the right to
use Owner’s Mandatory Spare Parts or Owner’s Optional
Spare Parts for the Facility during the performance of the Work or
to remedy a Warranty item, and Contractor shall promptly repair or
replace any such spare part that it uses. Contractor shall not be
excused from its warranty obligations in the event that a Mandatory
Spare Part or an Optional Spare Part is not available for its use
for any reason. (iv) Sharing of
Spare Parts . Owner may maintain certain Mandatory Spare Parts,
(as well as any Optional Spare Parts it may choose to purchase),
under a pooling agreement with a consortium of utilities that are
constructing AP1000 Nuclear Power Plants. Upon request by Owner,
Contractor and Owner agree to work together, and with other
utilities that are constructing AP1000
Page 31
Nuclear Power Plants, to establish an arrangement to share
Mandatory Spare Parts in a manner that will satisfy the need to
have reasonably quick, convenient access to Mandatory Spare Parts
while minimizing Owner’s costs. Optional Spare Parts may be
shared with other utilities in Owner’s sole discretion.
(v) Other Spare Parts .
Contractor will supply a limited quantity of spare parts for
Contractor’s use during construction of the Facility, which
are included in the Contract Price. Upon Substantial Completion of
the Facility, or as otherwise agreed by the Parties, Contractor
shall provide any such spare parts to Owner that were not used by
Contractor during construction of the Facility. Contractor agrees
to supply a list of these spare parts to Owner upon Owner’s
request.
(e)
Operation and Maintenance Staff . For those activities
conducted by Owner under Contractor’s Technical Direction,
Owner shall provide qualified operation and maintenance personnel
for training, testing, operation and maintenance of the Facility
consistent with Contractor’s requirements as determined
during Phase I and as set forth upon such determination in
Exhibit A , Table 4 . If as a result of
circumstances encountered during testing, Contractor determines
that additional operation and maintenance personnel are needed (and
provided that such determination has been made in accordance with
Good Industry Practices), Contractor shall have the right to
require that additional operation and maintenance personnel be
provided by Owner upon reasonable advance notice to, and following
discussions with, Owner. Contractor shall conduct Construction and
Installation Tests with support from the Owner. Owner shall conduct
the Preoperational Tests and Start-up Tests in accordance with the
Project Schedule with Technical Direction from the Contractor.
Contractor will develop a training program for these personnel as
provided in Exhibit A .
(f)
Site and Nearby Work Areas Safety and Environmental Rules .
From the date the Contractor assumes control of the Site and Nearby
Work Areas until Substantial Completion of the applicable Unit, and
subject to Owner’s obligations under the COL and applicable
Law, Owner and its Personnel shall abide by the Site and Nearby
Work Area safety and environmental plan and associated rules
promulgated by Contractor and accepted by Owner under
Section 23.3(e) .
(g)
Storage . Contractor and Owner will establish delivery dates
for the Equipment in the Project Schedule, consistent with the
Milestone Performance Schedule and the Milestone Payment Schedule.
In the event that such schedules indicate or Owner and Contractor
agree that Equipment ordered during Phase I should be delivered
prior to Contractor having access to and control of the Site or
Nearby Work Areas, Owner shall provide a secure area at the Site or
Nearby Work Areas for storage of such Equipment, or shall be
responsible for the payment of secure storage of such Equipment at
a location other than the Site or Nearby Work Areas. In either
circumstance, Contractor shall supply Owner with Maintenance
Procedures on how the Equipment is to be stored and maintained,
prior to delivery. If Owner elects to store Equipment at a location
other than the Site or Nearby Work Areas, Owner shall be
responsible to ensure that maintenance requirements are met. Once
Contractor assumes control of the Site or Nearby Work Areas,
Contractor will become responsible for the storage and related
maintenance obligations with respect to the Equipment at the Site
or Nearby Work
Page 32
Areas. The Parties understand and agree that actual deliveries
will frequently take place a little before or a little after the
date set forth in the Project Schedule. However, if Equipment is
delivered prior to the Contractor having access to and control of
the Site or Nearby Work Areas and more than [***] prior to the
scheduled delivery date for such Equipment, then the Contractor
shall be responsible for the additional, incremental storage and
maintenance cost incurred by Owner from the date of such delivery
until the date [***] prior to the scheduled delivery date.
(h)
Owner Information . Owner shall provide the information
described in Exhibit A in accordance with the timing and
other requirements set forth therein and in accordance with the
provisions of the Project Schedule. If Contractor notifies Owner of
a material discrepancy, contradiction or ambiguity within the
provisions of this Agreement and the Owner drawings or other
Documentation, or between the Owner drawings and the conditions at
the Site or Nearby Work Areas, or of any error or omission in the
Owner drawings, then Owner shall promptly correct or otherwise
resolve any such discrepancy, contradiction or ambiguity and
Contractor shall be entitled to request a Change in accordance with
Section 9.1 . 3.7
Subcontracting.
(a) The
Parties have agreed upon the list of approved Major Subcontractors
for specified portions of the Work as set forth in
Exhibit P-1 . Subject to Section 3.7(b) ,
Contractor shall have the right to have that portion of the
Services identified in Exhibit P-1 performed by any approved
Major Subcontractor of Contractor’s choice for such Service,
and shall have the right to purchase Equipment identified in
Exhibit P-1 from any approved Major Subcontractor of
Contractor’s choice for such Equipment, in each case without
any further approval from Owner. The approved Major
Subcontractor(s) selected by Contractor to perform a specific
portion of the Work shall be referred to herein as the "
Preferred Major Subcontractor " for such portion of the
Work.
(b) In
situations where more than one approved Major Subcontractor is
identified in Exhibit P-1 for providing a Service or
providing specified Equipment, Contractor shall give Owner Notice
of Contractor’s Preferred Major Subcontractor at least five
(5) Business Days prior to Contractor making a commitment to
such Preferred Major Subcontractor. Wherever practical, Contractor
shall select Major Subcontractors that supplied (or will supply)
Equipment for other Units delivered (or to be delivered) to Owner
or Owner’s Affiliates. For Equipment, such Notice shall
identify the primary manufacturing facility where the Equipment is
to be manufactured or assembled, and shall include relevant quality
information. For Services, such Notice shall include known and
available information concerning the Preferred Major
Subcontractor’s relevant quality information, and with
respect to Major Subcontractor’s providing on Site or Nearby
Work area Services, known and available information regarding the
safety record. Contractor shall also supply any additional
information that may be requested by Owner that may be reasonably
obtained by Contractor. The selection of any Preferred Major
Subcontractor shall be subject to rejection by Owner based upon
specific, supportable reasons that are specified by Owner in
writing within such five (5) Business Day notice period, or five
(5) Business Days after all additional information requested
by Owner is supplied by Contractor. If any Preferred Major
Subcontractor is rejected
Page 33
by Owner based on specific, reasons that are specified in
writing by Owner within the five (5) Business Day period,
Owner and Contractor shall confer as necessary to select a mutually
acceptable replacement to the Preferred Major Subcontractor to
perform the Work. If Owner rejects a Preferred Major Subcontractor
that is nominated by Contractor, then Contractor shall be entitled
to a Change under the provisions of Article 9 with
respect to any additional costs or other impacts attributable to
replacing the Preferred Major Subcontractor; provided, however, if
using the Preferred Major Subcontractor selected by Contractor from
the approved Major Subcontractor list would have constituted or
caused a material impairment to the safety or quality of the
Facility or would have resulted in a breach of Contractor’s
obligations under this Agreement, then no Change Order shall be
issued in connection with such replacement.
(c) The
Parties acknowledge that maintaining the standardization of the
AP1000 Nuclear Power Plant is important for cost, schedule and
implementation efficiencies from which all Parties benefit, and
these considerations may lead Contractor to propose that it select
alternative Major Subcontractors for the supply of Equipment or
Services to those listed in Exhibit P-1 . If Contractor
desires to engage any such alternative Major Subcontractor that is
not identified in Exhibit P-1 to perform Services or
provide Equipment identified in Exhibit P-1 , then,
before Contractor enters into any contract with, or otherwise
engages, such alternative Major Subcontractor to perform such
Services or provide such Equipment, Contractor shall deliver to
Owner (i) the name of the alternative Major Subcontractor that
Contractor proposes to use in the performance of such Services or
purchase of such Equipment, (ii) a statement of the reasons
why it is preferable to use the requested alternative Major
Subcontractor rather than an applicable approved Major
Subcontractor, and (iii) a statement of the estimated impact,
if any, on [***]Work. Such alternative Major Subcontractor shall be
subject to the prior written approval of Owner, which approval
shall not be unreasonably withheld. In determining whether to
approve such Major Subcontractor, Owner shall take into
consideration among other factors the following: the capability of
the proposed alternative Major Subcontractor to perform the Work in
accordance herewith and the need to maintain the standardization of
the AP1000 Nuclear Power Plant and consistency of Equipment between
Units at the Facility as well as Units at Affiliate sites, and the
estimated impact on the [***]. [***].
(d) Any
Work that is to be performed at the Site and/or Nearby Work Areas
using Subcontractors other than approved Major Subcontractors
shall, to the extent commercially reasonable, be performed using
Subcontractors on the list of EPC Subcontractors for Site and
Nearby Work Areas Construction and Related Field Services that is
set forth in Exhibit P-2 (the " Site Subcontractor
List "). Contractor and Owner agree that the Site Subcontractor
List may be modified from time to time by mutual agreement of the
Project Directors based on the experience of both Parties. The
Parties shall endeavor to add local contractors to Exhibit
P-2 who are capable of performing Work in accordance with the
requirements of this Agreement. Contractor may also use
Subcontractors that are not on the Site Subcontractor List on an
emergency basis, provided that none of the Subcontractors on the
Site Subcontractor List are qualified and available to perform the
Work in a timely manner, and provided that Contractor exercises
reasonable efforts to consult with Owner prior to entering into the
Subcontract. If Owner removes a Subcontractor from the Site
Subcontractor List, and such deletion adversely affects Contractor
or another Subcontractor’s ability to perform the Work,
increases the cost of the Work, or otherwise negatively affects
Contractor’s obligations under this Agreement, then
Contractor shall be entitled to a Change in accordance with the
Page 34
provisions of Article 9 ; provided, however, if
using the Subcontractor previously listed on the Site Subcontractor
List would have constituted or caused a safety or other breach of
Contractor’s obligations or covenants under this Agreement,
then no Change Order shall be issued in connection with such
removal.
(e) Contractor
shall include in its Subcontracts those provisions and covenants
that in Contractor’s reasonable judgment would be appropriate
and useful to have as express Subcontractor obligations, consistent
with Contractor’s obligations under this Agreement, including
the right of Owner to require the assignment of Contractor’s
rights and obligations under such Subcontracts to Owner without the
prior consent of the Subcontractors as provided for in
Sections 22.2(c), 22.3(c), 22.4(e) and 22.7(a)(ii) . If
a Subcontractor does not agree to include in its Subcontract such
an assignment provision, Contractor shall promptly notify Owner,
and where commercially reasonable Contractor shall support
Owner’s efforts to obtain such Subcontractor’s
agreement to such assignment provision. Contractor shall continue
to be responsible for performance of the Work in accordance with
the requirements of this Agreement. It is understood that the
subcontracts that Contractor will have with ABB Ltd. and Emerson
Process Management for the supply of instrumentation and control
related Equipment shall not be directly assignable to Owner in the
event of termination of this Agreement.
(f) No
contractual relationship shall exist between Owner and any
Subcontractor with respect to any of the Work. Contractor shall not
be relieved from any of its obligations or liabilities under this
Agreement because of the acts, omissions, failures or faults of the
Subcontractors nor shall Contractor be relieved of any of its
obligations hereunder because of its hiring Subcontractors to
perform portions of the Work.
(g) Contractor
shall take commercially reasonable efforts to enter into
subcontracts with Major Subcontractors that are terminable for
convenience, and that any related termination fees thereunder are
(a) commercially reasonable in light of the value of the
Services or Equipment provided at the time and when the termination
fee applies, and (b) do not include any payment for damages,
injuries or claims of the type disclaimed in
Section 17.1 . 3.8
Design and Engineering.
(a)
Design Documentation for Standard Plant . The NuStart Work
has been and will continue to be subject to the review and comment
process set forth in the NuStart agreements. For documents that
have not already been finalized pursuant to the Parties’
prior efforts as a part of the NuStart Work, Contractor shall
continue to submit to Owner via the NuStart Engineering Committee
for their review and comment the remaining AP1000 Facility
Information for the Standard Plant (the " Standard Plant Design
Documentation "). Owner shall complete its review of, and
provide any comments via the NuStart Engineering Committee to
Contractor with respect to, the Standard Plant Design Documentation
within thirty (30) Days of receiving such Standard Plant
Design Documentation from Contractor or such longer period of time
as mutually agreed. Owner shall submit any comments or changes that
are unique to its Facility which it may have, arising out of
regulatory requirements associated with the Facility and its COL,
directly to Contractor; provided, that if such change increases
Contractor’s costs or impacts the Milestone Performance
Schedule or the Incentive Program Milestone Dates, Contractor shall
be entitled to a Change Order under Article 9 . It is
the intent of the Parties to
Page 35
preserve the design for the Standard Plant, including the
approach to the supply chain, construction, licensing, operation
and maintenance of the Standard Plant to the greatest extent
practical. Accordingly, Contractor will give due consideration to
the comments of the NuStart Engineering Committee to the Standard
Plant Design Documentation and, to the extent consistent with such
intent to preserve the standardization of the AP1000 Nuclear Power
Plant, shall not unreasonably withhold its approval of any changes
suggested by such comments. If Contractor revises any Standard
Plant Design Documentation, Contractor shall resubmit it for review
and input in accordance herewith, provided that the period of
review for the first or any subsequent re-submittal shall be no
more than fifteen (15) Days or such other number of Days as
may be agreed to by the Parties taking into account the complexity
of the resubmission, the criticality of the schedule and the volume
of submissions under review. Notwithstanding the foregoing,
Contractor shall not be required to change the certified design of
the Standard Plant or any documents submitted with the COL, except
to the extent required by differences in applicable Laws, the COL,
or specific Site and/or Nearby Work Area related requirements
provided, that if such change increases Contractor’s costs or
impacts the Milestone Performance Schedule or the Incentive Program
Milestone Dates, Contractor shall be entitled to a Change Order
under Article 9 .
(b)
Design Documentation for Non-Standard Plant . Contractor
shall submit to Owner for its review and approval (which approval
shall not be unreasonably withheld) AP1000 Facility Information for
portions of the Facility that are not part of the Standard Plant
(the " Non-Standard Plant Design Documentation ") consisting
of plant layout drawings, design criteria, general arrangement
drawings, P&IDs, design specifications, system specification
documents (or equivalent) and electrical one line drawings. AP1000
Facility Information shall be provided either in electronic form or
in such other form as mutually agreed, consistent with customary
practices for power plant construction projects. When required by
the Owner, Contractor shall transmit to Owner, technical
submittals, shop drawings, including supporting catalog cuts,
samples, manufacturer’s literature, sketches or drawings,
calculations and other pertinent data, in sufficient detail to
enable Owner to review the information and determine that
Contractor clearly understands the requirements of the Agreement.
Owner shall complete its review of, and provide any comments to
Contractor with respect to, the Non-Standard Plant Design
Documentation within thirty (30) Days of receiving such
Non-Standard Plant Design Documentation from Contractor. Other
AP1000 Facility Non-Standard Plant Design Documentation will be
submitted to Owner for its use and records. In each instance where
any Non-Standard Plant Design Documentation fails to comply with
the applicable requirements of this Agreement, (including where a
re-submittal fails to comply), Contractor shall correct such
Non-Standard Plant Design Documentation and shall resubmit it for
Owner’s review in accordance herewith, provided that
Owner’s period of review for such re-submittal shall be no
more than fifteen (15) Days or such other number of Days as
may be agreed to by the Parties taking into account the complexity
of the resubmission, the criticality of the schedule and the volume
of submissions under review.
(c)
Review Processes and Design Changes . To the extent the
review process described in Section 3.8(a) or
(b) above results in a change to the design that is not a
change caused by a Contractor error or deficiency in the design of
the Facility, or other noncompliance with the requirements of this
Agreement, Contractor or Owner (as applicable) shall be entitled to
a Change Order with respect to the impacts of such delay or design
change.
Page 36
(d)
Responsibility for Errors . Any review by Owner of any
AP1000 Facility Information shall not relieve Contractor from any
obligation or responsibility under this Agreement. If errors,
omissions, ambiguities, inconsistencies, inadequacies or other
defects are found in the AP1000 Facility Information, they and the
related Work shall be corrected at Contractor’s cost, unless
(i) such Work is performed on a Target Price Basis under this
Agreement or (ii) such Work is performed on a Time and
Materials Basis under this Agreement, in which case such correction
shall be performed on a Time and Materials Basis without any profit
component included therein. Performance of design, engineering,
procurement or fabrication Work by Contractor prior to Owner review
and approval of the associated drawings, Specifications and
documentation for which Owner has review and approval rights, shall
be at Contractor’s own risk.
(e)
Units of Measure . Where metric units are used to describe
important dimensions or calculation results, American unit
equivalents will also be included.
(f)
As-Built Drawings . Prior to Final Completion of the
Facility, Contractor shall supply Owner with "as-built" drawings
for the portions of the Facility constructed or installed by
Contractor. 3.9 Project
Controls.
(a) Contractor
shall provide a "full time" Site-based staff within [***] following
mobilization to the Site through Substantial Completion. The
Contractor’s staff shall be responsible for all project
control activities, including without limitation, project
management, scheduling, cost reporting, quantity tracking, and
Change Order management. Contractor shall select only those persons
who are qualified by the necessary education, training, licensing
and experience to provide a high quality performance of the project
control activities.
(b) Contractor
shall coordinate the incorporation of all schedule activities and
interface points between all parties. Owner will provide progress
updates with regard to the activities under the Owner’s Scope
of Work as necessary to allow Contractor to establish and maintain
the Project Schedule. 3.10
Responsibility for Work. Contractor shall be responsible for
taking reasonable precautions necessary to prevent damage or injury
to the Work of Contractor, Owner, or any of their employees, other
contractors, or members of the general public. These measures shall
include, but not be limited to, laying drop cloths, constructing
shields and guard fences, and any other measures included in the
Project Policies and Procedures. 3.11
Site and Nearby Work Areas Cleanup. During the performance
of the Work, and subject to Article 20 , Contractor
shall remove and properly dispose of all construction related waste
materials, rubbish, debris and other garbage, and liquid and
nonliquid materials whether spilled, dropped, discharged, blown out
or leaked, from the Site and the Nearby Work Areas (to the extent
applicable). Contractor shall employ adequate dust control
measures. Before Final Completion, Contractor shall remove from the
Site and the Nearby Work Areas (to the extent applicable) waste
materials and rubbish generated by Contractor during its
performance of the
Page 37
Work and Contractor shall otherwise leave the Facility, the
Site, and the Nearby Work Areas (to the extent applicable and
included in Contractor’s Scope of Work) in a neat and clean
condition. If Contractor fails to perform such housekeeping
services, Owner, following notice and a reasonable opportunity for
Contractor to cure, may perform such services, and Contractor shall
reimburse Owner for [***] of the Owner’s actual wage cost
incurred in connection therewith, or at Owner’s option, such
amount may be deducted from any amount owed to Contractor.
3.12 Establishment of Project
Policies and Procedures. The Parties agree to jointly
establish, as a minimum, the Project Policies and Procedures listed
in Exhibit Y that are consistent with the requirements
of this Agreement, Good Industry Practice, and applicable Laws.
Project Policies and Procedures shall generally apply to and govern
activities at the Site and the Nearby Work Areas (to the extent
applicable) with respect to the general topics listed in
Exhibit Y to this Agreement, as well as other subjects
as agreed to by the Parties. Drafts of Project Policies and
Procedures shall be developed by Contractor and delivered to the
Owner for review and comment on a mutually agreed schedule in order
to support on-site Work in a timely fashion. Approval of applicable
Project Policies and Procedures shall not be unreasonably withheld
or delayed. Approval of applicable Project Policies and Procedures
shall not constitute a waiver of any rights or remedies under this
Agreement. ARTICLE 4 — FACILITY LICENSES, PERMITS AND
APPROVALS 4.1 Owner
Permits. Except as otherwise provided herein, Owner shall be
responsible for obtaining, maintaining and paying for Owner Permits
(including the COL) and for all communications with any Government
Authorities regarding Owner Permits. Contractor shall provide
support to Owner in connection with approvals of Owner Permits, or
any proceedings before the Florida Public Service Commission,
including making personnel available to testify at formal and
informal government proceedings, and providing such documents and
information reasonably requested by Owner, including review and
comment to sections prepared by others, and any amendments thereto,
to address formal questions from any Government Authority on a
schedule that supports the Project Schedule and licensing support
services. [***] in accordance with the requirements of this
Agreement. Owner shall provide as much advance notice as practical
for the testimony of Contractor’s Personnel at proceedings
before Government Authorities. For the avoidance of doubt,
Contractor shall be responsible for performing its obligations
under this Agreement, but provides no guarantee that the COL or any
other Owner’s Permit required to be obtained by Owner will be
obtained by Owner. The Milestone Performance Schedule is based on
the COL being obtained by January 1, 2012 and that the deep
excavation work, diaphragm wall and pressure grouting can proceed
prior to the issuance of the COL in accordance with the Milestone
Performance Schedule. Other Owner Permits shall be obtained in time
to support the Project Schedule. 4.2
Contractor Permits. Contractor shall be responsible for
obtaining, maintaining, paying for and complying in its performance
of the Work with the Contractor Permits. Owner shall provide
Contractor reasonable cooperation and assistance in obtaining and
maintaining Contractor Permits. Contractor shall communicate with
Owner as to what permits it will be obtaining in advance of
application therefore so that communications with the Government
Authority that will issue the permits can be coordinated.
Contractor agrees not to obtain permits on Owner’s behalf or
for the Facility without the prior concurrence of Owner. Contractor
agrees
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to immediately notify Owner’s Project Director of any
violation of any Contractor Permits that it becomes aware of, and
agrees to keep Owner’s Project Director informed as to any
remedial actions that are to be taken by Contractor.
4.3 ITAACs.
(a) Contractor
shall be responsible for those ITAACs that are set forth in the
Design Control Document that are designated in the
Exhibit A Scope of Work as being the responsibility of
Contractor (the " Base ITAAC "). Any new or additional
ITAAC, or any changes or modification to any ITAAC as delineated in
the Design Control Document shall either be the responsibility of
Owner or shall be added to Contractor’s Scope of Work
pursuant to a Change Order in accordance with Article 9
. Unless otherwise agreed to by the Parties, modifications to any
Base ITAAC or any additional ITAAC that should logically be added
to Contractor’s Scope of Work shall be added to
Contractor’s Scope of Work pursuant to a Change Order in
accordance with the provisions of Article 9 , and
following such ITAAC addition shall be considered a Base ITAAC for
all purposes under this Agreement.
(b) Contractor
shall be responsible for conducting, or causing to be conducted the
inspections, tests and analyses associated with each Base ITAAC.
Upon completion of such inspections, tests and analyses, Contractor
shall be responsible for preparing and delivering to Owner the
Documentation or other deliverables to demonstrate and confirm that
the related acceptance criteria associated with each Base ITAAC has
been met. All such Documentation shall be maintained by Contractor
through Final Completion and shall be readily retrievable within a
reasonable time upon request by Owner. If upon completion of the
relevant inspections, tests and analyses the Unit fails to satisfy
any Base ITAAC requirements, then Contractor shall be responsible
to perform the Work that may be necessary for the Facility to
satisfy such Base ITAAC requirements at Contractor’s cost.
Contractor shall perform such remedial Work such that the Facility
shall satisfy the failed Base ITAAC requirements within [***] of
the failure, or within a reasonable time after [***] if such Work
is being prosecuted diligently, but cannot reasonably be completed
with [***]. No failure of Contractor to satisfy any Base ITAAC
requirement shall be considered an event of Force Majeure, or
entitle Contractor to seek a Change Order under
Section 9.1, unless a cause of the failure qualifies as
grounds for a Change Order under Article 9 .
(c) For
ITAACs that are not within Contractor’s responsibility,
Contractor agrees to promptly supply the information or assistance
that is reasonably requested by Owner, and Owner will pay
Contractor for such information or assistance on a Time and
Materials Basis. ARTICLE 5 — QUALITY ASSURANCE; INSPECTION
OF WORK; 10 C.F.R. 21;
SAFEGUARDS INFORMATION 5.1
Quality Assurance Program.
(a) Contractor
has sole responsibility for the quality assurance and quality
control of the Work, including the Work performed by its
Subcontractors. Contractor has provided to Owner the Quality
Assurance Program either in hard copy or electronically via
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access to the deliverable AP1000 Facility Information. The "
Quality Assurance Program " means collectively, the
Westinghouse Quality Management System (" QMS ") and the
Shaw Stone & Webster Standard Nuclear Quality Assurance Program
(" SWSQAP ") each of which has been approved by the NRC. The
Quality Assurance Program and any changes thereto shall meet the
requirements of 10 CFR Part 50 Appendix B and ASME
NQA-1–1994, and be accepted by the NRC and Owner. The Quality
Assurance Program is subject to review and audit for compliance to
10 CFR Part 50 Appendix B and ASME NQA-1–1994 by
Owner. These audits and annual evaluations performed by Owner shall
be the basis for Acceptance by Owner. Contractor, with input from
Owner, has put together the project specific clarifications and
modifications with respect to the Quality Assurance Program and has
set forth such items in the Project Quality Assurance Program
Interface Plan (" PQAPIP "). The Quality Assurance Program
and the PQAPIP will collectively be the " Project Quality
Assurance Program " or " PQAP ". Owner’s review
and Acceptance of the PQAP shall not relieve Contractor from its
obligations to comply with the requirements of this Agreement and
10 CFR Part 50, Appendix B.
(b) Contractor
will provide Owner with five (5) controlled copies of the
PQAPIP and Quality Assurance Program or make it available
electronically as part of the deliverable AP1000 Facility
Information. Contractor will follow the PQAP throughout its
performance of the Work. The PQAP and associated policies and
procedures shall address the Work in a manner consistent with its
classification with respect to importance to nuclear safety (i.e.,
safety related, significant contributor to plant safety, non-safety
related) as classified in the DCD and subsequently the COL. In
addition, the PQAP shall address commercially critical items in
accordance with the provisions of Section 5.3 .
(c) Contractor
shall be entitled to a Change with respect to the cost and expense
of updating the PQAP on an on-going basis to reflect any changes in
ASME NQA-1 or NRC requirements or other regulatory changes or
changes related to the issuance of the COL that occur after the
Effective Date unless there is no incremental cost or other impact
with respect to the Work associated with the Facility that occurs
because of such regulatory change. If Contractor is entitled to one
or more Changes under this Section 5.1 , then the
provisions of Section 9.1(d) regarding possible cost
sharing among other AP1000 Nuclear Power Plant customers will be
applicable to the extent that such Change and the basis therefore
meet the requirements of such Section. The PQAP shall support
Owner’s compliance with 10 C.F.R. Part 50
Appendix B and shall be subject to review and audit by Owner
at its request. For purposes of the American Society of Mechanical
Engineers (ASME) Code, Contractor shall be designated as
Owner’s agent. 5.2 Augmented
Quality Controls for Non-Safety Related Structures, Systems and
Components. For non-safety related structures, systems and
components that are significant contributors to plant safety and
for associated Services, Contractor shall implement quality
assurance requirements consistent with their design classification
in the AP1000 Design Certification and Section 17.5.II.V of
NUREG-0800 (March 2007). 5.3
Augmented Quality Controls for Commercially Critical Items.
For other non-safety related items and services that are listed on
Exhibit CC , Contractor shall implement quality
assurance controls to the extent necessary to assure the quality of
the items or services
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being supplied, consistent with Good Industry Practices.
Contractor will provide Owner a copy of the program description for
implementing the quality assurance controls for Owner’s
review and Acceptance. 5.4
Subcontractor Quality Assurance. In accordance with the
PQAP, Contractor shall also require Subcontractors performing Work
within the scope of 10 CFR Part 50 Appendix B or which
provide materials, services or both that are nuclear safety related
or which perform Work governed by the augmented quality controls
referred to in Section 5.2 or 5.3 , to establish,
implement and maintain appropriate quality assurance programs at
each location where Work is being performed (which may either be
the PQAP or another quality assurance program capable of being
audited to the PQAP requirements for the scope of supply),
consistent with the nuclear safety quality classification of their
portion of the Work. Contractor shall be responsible for the
performance by Subcontractors of Work within the scope of the PQAP,
10 CFR Part 50 Appendix B (the " Appendix B
Subcontractors ") or the applicable augmented quality controls
referred to in Sections 5.2 and 5.3 hereof.
Appendix B Subcontractors’ audit reports shall be made
available for review by Owner or its designee. At its own cost,
Owner or its representative may participate in scheduled audits of
Subcontractors performed by Contractor. Contractor will quarterly
provide Owner a list of the upcoming Contractor scheduled audits of
the Appendix B Subcontractors and audits of the Subcontractors
listed on Exhibit P-1 , and Owner may designate which
of such audits it would like to attend. Following
Contractor’s receipt of notice that Owner intends to attend
an audit, Contractor will keep Owner informed of any material
changes to the time, location or substance of such audit. Where
required by Law, and for the commercially critical items listed in
Exhibit CC , Contractor shall include in the applicable
Subcontracts access rights at each tier of a procurement, so that
the procurement documents provide for access to the applicable
Subcontractors’ plant facilities and records for inspection
or audit by Owner, its designated representative, and/or other
Persons authorized by the Parties. To the extent practical, Owner
will coordinate with Contractor in the exercise of such inspection
and audit rights so that Contractor has notice of Owner’s
exercise of such right and has an opportunity to be present during
such inspection or audit. 5.5
Contractor Quality Control and Inspection Activities.
Contractor shall be responsible to perform the quality control and
inspection activities and to create legible Documentation in
accordance with the PQAP. The quality control and inspection
activities will be consistent with the nuclear safety quality
classification of the Work under evaluation. The Persons performing
quality assurance or quality control functions for Contractor shall
have sufficient authority and organizational freedom to identify
quality problems; to initiate, recommend or provide solutions; and
to verify implementation of solutions. Such Persons performing
quality assurance or quality control functions shall report to a
management level such that this required authority and
organizational freedom, including sufficient independence from cost
and schedule when contrary to safety considerations, is provided.
5.6 Access and Auditing On-Site
and Other Facilities.
(a) Contractor
shall provide Owner and Owner designated Persons with access to the
Work at the Site and Nearby Work Areas when Work is being performed
and to portions of Contractor’s premises and working
facilities where Work is being performed, and with pertinent
Documentation and other necessary information and assistance
relating to the
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Work, for auditing of activities for conformance with the
requirements of this Agreement and the PQAP. Such audits shall be
coordinated with Contractor so that Contractor has reasonable prior
notice of such audit and has an opportunity to be present during
such audit. Contractor shall include in its Subcontracts with
(i) Major Subcontractors and (ii) Appendix B
Subcontractors a provision granting the access inspection and audit
rights required by ASME NQA1-1994 by Owner and Owner Designated
Persons at Major Subcontractors’ and Appendix B
Subcontractors’ premises and working facilities and shall
require such Subcontractors to include such rights in their
contracts with Major Subcontractors and Appendix B
Subcontractors. This right of access to the Site, Nearby Work Areas
and Contractor’s, Major Subcontractors’, and
Appendix B Subcontractors’ other facilities extends to
representatives of the NRC and other Owner Designated Persons for
the purpose of performing quality assurance and quality control
activities. Quality assurance and quality control activities at
Major Subcontractors’ and Appendix B
Subcontractors’ premises and working facilities under this
Agreement are defined as participation in scheduled audits, and
execution of Owner Witness and Hold Points, such as in-process
testing and final product review for Acceptance. In cases where
Contractor incurs additional cost from Subcontractors due to
Owner’s request to perform additional quality assurance and
quality control activities beyond these activities, Contractor
shall be entitled to a Change Order in accordance with the
procedures set forth in Article 9 .
(b) Quality
assurance and quality control inspections and audits of Major
Subcontractors and Appendix B Subcontractors includes
activities necessary to address quality issues which may arise at
the supplier and sub-supplier level. Contractor shall implement,
and require its (i) Major Subcontractors and
(ii) Appendix B Subcontractors to implement, measures
necessary to be taken to ensure compliance with this Agreement
where such measures are identified as a result of a quality
assurance audit or surveillance carried out by Owner or
Owner’s designees.
(c) The
rights of access described in this Section 5.6 are
subject to: (i) reasonable restrictions which may be
identified by Contractor or a Subcontractor related to access to
proprietary information, (ii) restrictions for reasons of
national security and restrictions of access by foreign (non-U.S.)
nationals, and (iii) additional costs for access beyond
scheduled audits and participation in Owner Witness and Hold
Points. If it is determined that the Work is not being done in
accordance with the requirements of this Agreement or there is a
pattern of non-conformances materially exceeding industry norms,
Owner shall not be liable for the cost and schedule impacts, if
any, related to such additional audits and Contractor shall not be
entitled to a Change Order with respect thereto.
5.7 Owner Designated Persons.
Throughout this Article 5 and elsewhere in this
Agreement, Owner is granted the rights, either directly or through
Owner designees, Owner authorized Persons and/or Owner’s
agents or representatives (collectively, the " Owner Designated
Persons "), to audit, inspect or witness the Work, related
facilities, policies and procedures. Owner covenants it will give
reasonable prior notice to Contractor of the identity of Owner
Designated Persons. Owner also agrees to exercise reasonable
efforts to designate, employ, authorize or appoint Owner Designated
Persons that are not Persons whose involvement would pose a
significant confidentiality or intellectual property security risk
to the Work or Contractor. To the extent that any of
Contractor’s competitors are granted access to the Work or
related facilities or information, such access will be subject to
reasonable restrictions and
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limitations as specified by Contractor. The confidentiality and
other obligations with respect to Owner and its actions in
connection with this Agreement shall be applicable to the Owner
Designated Persons and Owner shall be responsible for the breach of
such obligations by Owner Designated Persons.
5.8 Additional Access and Auditing
Requirements. Quality assurance, quality control and other
audit or inspection activities initiated by Owner, other than those
permitted under Section 5.6 , shall be accommodated by
Contractor to the extent practical. Any such additional quality
assurance, quality control and inspection activities requested by
Owner under this Section 5.8 shall be the basis for a
Change under Article 9 , unless it is determined that
the Work is not being done in accordance with the requirements of
this Agreement or there is a pattern of non-conformances materially
exceeding industry norms. 5.9
Owner Witness and Hold Points.
(a) Following
the selection of a specific Subcontractor for the components
identified in Exhibit Q , Contractor shall include
Owner Witness and Hold Points identified in Exhibit Q
in the respective manufacturing and fabrication plans for such
components. Contractor shall provide Owner access to or copies of
the applicable manufacturing and fabrication schedules and regular
updates to these schedules, such that Owner has advance notice of
approaching scheduled Owner Witness and Hold Points. Owner shall be
notified in writing by Contractor of Owner Witness and Hold Points
at least ten (10) Business Days prior to the scheduled
activity. Owner may designate additional Owner Witness Points
and/or Owner Hold Points. To the extent the aggregate amount of the
Owner Witness Points or Owner Hold Points exceeds the base line for
the Owner Witness and Hold Points, there shall be an adjustment to
the applicable terms and conditions of this Agreement through the
Change Order process as set forth in Article 9 .
(b) If
Contractor proceeds with the Work without giving Owner the ten
(10) Business Day written notice in accordance with
Section 5.9(a) above, then Contractor shall uncover the
Work and accommodate the Owner Witness or Hold Point inspection and
testing at Contractor’s expense as provided in
Section 5.10 , unless waived in writing by Owner.
(c) Work
may proceed beyond Owner Witness Points, in the absence of Owner or
its designee attending the specified inspection or surveillance
provided that Contractor gave the required ten (10) Business
Day notice in accordance with Section 5.9(a) above.
Work may not proceed beyond an Owner Hold Point without a written
waiver from Owner, provided that if Owner has been notified of the
scheduled Owner Hold Point at least ten (10) Business Days
prior to such Owner Hold Point in accordance with the terms of
Section 5.9(a) above, then delays incurred by Contractor as
a result of Owner’s failure to attend an Owner Hold Point
shall entitle Contractor to a Change Order subject to the
requirements of Article 9 . If the ten
(10) Business Day notice was given in accordance with the
terms of Section 5.9(a) above, then requests by Owner
to witness tests or conduct surveillance after the scheduled point
in time designated for an Owner Witness Point shall be accommodated
by Contractor only if technically feasible and shall entitle
Contractor to a Change Order in accordance with the procedures set
forth in Article 9 .
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(d) Witnessing
of tests or other surveillance by Owner shall be at Owner’s
expense. If Owner performs the surveillance or elects not to
perform a surveillance, such surveillance or waiver will not
relieve Contractor of its obligations under this Agreement.
5.10 Uncovering of Work;
Re-performance of Inspection and Testing. In the event Owner
requests in writing that any Work be uncovered to determine whether
such Work is deficient, Contractor shall uncover the Work as
requested and shall reperform any tests or inspection as required
by Owner. Contractor shall be entitled to a Change Order unless the
uncovering of Work is required pursuant to
Section 5.9(b) , or the Work is found to be deficient;
provided, that if Owner unreasonably delays delivery of its request
to uncover the Work then Contractor shall be entitled to a Change
Order with respect to the additional cost and/or schedule impacts
caused by Owner’s delay. Work is deficient or nonconforming
unless the applicable Documentation is complete, accurate and
reflects the Work performed in accordance with Good Industry
Practices and the PQAP. If the Work is found to be deficient or
nonconforming, Contractor shall address such deficiency or
nonconformance pursuant to Section 5.11(c) at
Contractor’s cost. During the Warranty Period, the provisions
of Article 14 shall apply to any Work that does not
conform to the Warranties. 5.11
Reporting of Defects and Non-compliance; 10 CFR 21.
(a) Contractor
shall comply and shall require its Subcontractors to comply with
the provisions of 10 CFR Part 21, "Reporting of Defects and
Noncompliance," in the performance of its obligations under this
Agreement. Without limiting the foregoing, Contractor shall act as
the "dedicating entity," as defined in 10 CFR § 21.3, and
comply with the requirements of 10 CFR § 21.21(c). Contractor
shall comply with the posting requirements of 10 CFR § 21.6 at
the Site.
(b) Contractor
shall permit the NRC to inspect records, premises, activities and
basic components as necessary to accomplish the purposes of 10 CFR
Part 21, including permitting the NRC the opportunity to
inspect records pertaining to basic components that relate to the
identification and evaluation of deviations, and the reporting of
defects and failures to comply, including any advice given to
purchasers or licensees on the placement, erection, installation,
operation, maintenance, modification, or inspection of a basic
component. Contractor shall provide Owner with copies of all
notices and other Documentation that Contractor discloses to the
NRC related to the Work concurrently with such disclosure to the
NRC, including those disclosed pursuant to 10 CFR Part 21 and
10 CFR Part 50.55(e) and (f).
(c) Work
that does not conform to specified requirements hereunder shall be
subject to controls implemented by Contractor to prevent
installation or use of such nonconforming Work. Such controls shall
provide for Contractor’s identification, documentation,
evaluation, segregation when practical and disposition of such
nonconforming Work. Nonconformance to contract requirements or
Owner approved documents, where the proposed disposition is repair
or use-as-is shall be submitted to Owner for review and approval.
Nonconformances submitted for Owner’s approval shall include
Contractor-recommended disposition and technical justification.
Disposition of nonconforming Work may include rework, use-as-is,
repair or reject, and/or scrap. Repaired Work shall be re-inspected
to verify conformance with the requirements specified by the
disposition, and re-performed Work shall be re-inspected to verify
conformance with the original, specified requirements
hereunder.
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5.12 Calibrations with respect
to Non-Safety Items. Measuring and test equipment ("
M&TE ") used to determine conformance to specified
requirements or to develop design criteria, shall be calibrated or
verified, as necessary to assure the capability and accuracy of the
M&TE. The M&TE shall be subject to the controls of the
Contractor’s Calibration Program as described in the PQAP.
5.13 Stop of Work. Owner
reserves the right through any Owner Designated Person to require
Contractor to stop performance of a portion of the Work (a "
Stop Work Order ") when significant conditions adverse to
the quality of such portion of the Work arise that: (i) cause
damage to the Work, (ii) prevent Owner from exercising its
inspection or audits rights hereunder, or (iii) cause
Contractor to not fulfill its obligations hereunder. Contractor
shall take prompt corrective actions to resolve such conditions
identified by Owner prior to Contractor’s resumption of its
performance of such stopped Work. To the extent practical, prior to
Owner’s exercise of such right, Owner shall formally notify
Contractor in writing of the reason for stopping such portion of
the Work and the expected conditions under which such portion of
the Work can resume. Significant conditions that may result in
stopping Contractor’s performance of a portion of the Work
include the following:
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(a)
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documented lessons learned indicate that Contractor’s
continued performance of such portion of the Work would result in a
nonconformance that could not be corrected to the condition
required hereunder or would require extensive or excessive time and
retrofit, repair or rework to correct;
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(b)
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Contractor has not established or implemented required controls
in accordance with the PQAP or the augmented quality controls
referenced in Sections 5.2 and 5.3 ;
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(c)
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Contractor is performing such portion of the Work in violation
of a requirement hereunder;
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(d)
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Contractor is using nonconforming Equipment or materials, which
Contractor has not corrected and such nonconforming Equipment or
materials have not been approved or conditionally released;
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(e)
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Contractor is using drawings, procedures or instructions that
require prior approval and has not received such approval or have
not been conditionally released or are not in accordance with PQAP
or this Agreement;
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(f)
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Contractor’s continued performance of such portion of the
Work is in violation of mandatory design changes;
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(g)
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drawings, procedures or instructions authorized to control such
portion of the Work in progress are not available;
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(h)
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Contractor has not established quality verification
Documentation in accordance with the PQAP or this Agreement, or
Contractor’s quality verification Documentation is incorrect
or is non-conforming with those requirements; or
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(i)
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such portion of the Work is being performed by
Contractor’s Personnel not qualified pursuant to the
requirements hereunder.
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If Owner issues a Stop Work Order, there will not be an
adjustment to the Milestone Performance Schedule, the Contract
Price or any other provisions of this Agreement, unless it is
determined that the circumstances at the time of the Stop Work
Order did not give Owner the right to issue a Stop Work Order under
this Section 5.13 . 5.14
Safeguards Information. Contractor and its Subcontractors
will have access to safeguards information as defined in 10 CFR
73.2 during performance of the Work. Contractor agrees that
safeguards information shall be handled and protected from
unauthorized disclosure in accordance with the requirements of 10
CFR 73.21, NRC Management Directive No. 12, and
Section 147 of the AEA. 5.15
Components and Welds. Welds that are performed on any
pressure boundary or on any component in the Unit that are subject
to pre-service and in-service inspection requirements shall be
accessible and inspectable after completion of the Facility,
including one hundred percent (100%) of the ASME code section XI
required volume and/or area, as applicable. When component design
precludes obtaining one hundred percent (100%) of the Code-required
volume, the minimum coverage may be ninety percent (90%) as
permitted by Code Case N-460. The basis for not being able to
obtain one hundred percent (100%) shall be documented in the design
package. Reactor head penetrations and nozzles shall be inspectable
to the FIRST REVISED NRC ORDER (EA-03-009), or an NRC-approved ASME
Code Case. Pre-service inspection shall be performed on the CRDM
nozzles and welds as required by ASME code section XI. During the
fabrication of Equipment or during construction of the Unit, all
pressure boundary welds shall be inspected by qualified personnel
using appropriate non-destructive examination methods in strict
accordance with applicable codes and standards. Contractor shall
maintain records of all such weld inspections, including all weld
repairs, and shall make such records available to Owner upon
Owner’s request. Repair records shall include the extent of
repairs (length, depth, and location) for each repair. Pre-service
inspection results shall be provided to the Owner, including those
recorded and retained in electronic format (e.g., UT and ECT).
ARTICLE 6 — CONTRACT PRICE
6.1 Components of the Contract
Price. The Contract Price as of the Effective Date for
Contractor’s Scope of Work for the Facility is Seven Billion,
Six Hundred Fifty Million Dollars ($7,650,000,000), as further
described in Exhibit H . The Contract Price shall be
subject to the Price Adjustment Provisions in Article 7
and Exhibit J , and subject to Changes under
Article 9 that may modify the Contract Price.
6.2 Price Breakdown.
Contractor shall provide Owner with a schedule of values covering
the pricing of the Work in accordance with Exhibits H and
K . In addition to other
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pricing and audit information requirements under this Agreement,
Contractor agrees to furnish, as requested by Owner, a breakdown of
the Contract Price or documentation sufficient to satisfy the
requirements of applicable Government Authorities, including the
Federal Energy Regulatory Commission, the NRC, the Florida Public
Service Commission, the Florida Department of Revenue, and other
applicable tax authorities. ARTICLE 7 — PRICE ADJUSTMENT
PROVISIONS The amounts payable to
the Contractor under [***] provisions of this Agreement, [***]
shall be subject to the [***]. ARTICLE 8 — PAYMENTS AND
SECURITY 8.1 Payments.
(a)
Payment for Time and Materials Work that is Not Construction
Work . During performance of the Work, Contractor shall invoice
Owner monthly for Work performed on a Time and Materials Basis that
is not construction Work for charges incurred during the prior
month. Invoices for each month shall be submitted by Contractor to
Owner by the tenth (10th) Day of the following month. Payment shall
be due from Owner within thirty (30) Days following receipt of
the invoice, subject to the conditions set forth below. Time and
Materials Work that is construction Work shall be invoiced and paid
for in accordance with Section 8.1(c) .
(b)
Milestone Payments for [***] Work . During performance of
the Work, Contractor shall be paid for the [***] Work in accordance
with the Milestone Payment Schedule in Exhibit F-1 . The
applicable portion of the [***] will be invoiced by Contractor upon
the completion (or substantially completed as provided below) of
each Payment Milestone. Submittal of each invoice by Contractor for
a Milestone Payment shall constitute a representation by Contractor
that it has performed and provided the Work required for such
payment in accordance with this Agreement or otherwise covered by
such invoice, and that Contractor has paid all Subcontractors for
all Work performed and Equipment supplied under all previous
Contractor invoices that are due and payable, and are not the
subject of a good faith dispute. Payment shall be due from Owner
within thirty (30) Days following receipt of the invoice,
subject to the conditions set forth below. Payment Milestones are
not required to be completed in the sequence set forth in
Exhibit F-1 , nor must invoices for completed Payment
Milestones be submitted in the sequence set forth in
Exhibit F-1 . Payment Milestones may be performed and
invoiced no more than [***] ahead of the time for the performance
of such Work under the Project Schedule; and further provided, that
Contractor shall not submit an invoice for a Payment Milestone to
the extent that the aggregate value of all invoices submitted for
Payment Milestones exceeds the sum of (i) the Milestone
Payments that were scheduled to be invoiced prior to the current
calendar year, plus (ii) [***] of the Milestone Payments scheduled
to be invoiced in the current calendar year. However, the actual
amount of the invoice in excess of [***] of the current calendar
year’s annual budget shall not exceed the year end cash flow
projection provided by Contractor to Owner by the last Business Day
of the third calendar quarter of that respective Year, unless
otherwise agreed in a Change Order. If agreed by Owner, Contractor
shall have the option to invoice for substantially completed
Payment
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Milestones on a pro rata basis and any such agreement between
Owner and Contractor shall be set forth in a Change Order.
Contractor shall keep Owner apprised of any material advancement in
the anticipated timing of Milestone Payment obligations.
(c)
Payment for Target Price Work and Time and Materials
Construction Work . By Tuesday, 12:00 p.m. Eastern Time of
each week during performance of the Work, Contractor will deliver
to Owner an invoice for Target Price Work and Time and Materials
Work for construction in an electronic form that is readable by
Owner’s computer system. The invoice shall cover
(i) labor and associated costs that were incurred and
committed by Contractor during the prior week, and (ii) other
costs, such as bulk materials, equipment, rentals, travel, living
expenses, mobilization and the like that have been invoiced to
Contractor and that are payable within the next thirty
(30) Days and have not previously been invoiced by Contractor
to Owner. Payment of invoices submitted by Contractor to Owner as
provided above shall be due from Owner by Thursday, 5:00 p.m.
Eastern Time of the same week in which the invoice is submitted.
Exhibit F-2 provides an estimated payment schedule for
Work to be performed on a Time and Materials Basis and a Target
Price Basis. 8.2 Final
Payment. Upon achievement of Final Completion, Contractor shall
submit to Owner an invoice for the final Milestone Payment and
other payments due under this Agreement (the " Final Payment
Invoice ") which shall set forth the remaining amounts due to
it pursuant to this Agreement. When submitting the Final Payment
Invoice, Contractor shall submit a final lien waiver in the form
set forth in Exhibit T-2 provided that the waiver shall
be conditioned on Contractor receiving payment pursuant to the
Final Payment Invoice. Payment of the Final Payment Invoice shall
be due within thirty (30) Days following receipt of a correct
invoice and the documentation specified above, subject to all other
applicable conditions set forth in this Agreement. [***].
8.3 Supporting Documentation;
Payment Disputes.
(a) Contractor
shall submit invoices in an agreed format. Contractor may designate
in the invoices that the amounts owed shall be paid in specified
amounts to designated accounts; provided, that [***] If
Toshiba’s Senior Unsecured Credit Rating falls below BBB- or
Baa3 from S&P and Moody’s respectively or if Shaw’s
Credit Rating falls below BBB- or Baa3 from S&P and
Moody’s respectively, then Contractor shall monthly for so
long as the applicable credit ratings remain below such thresholds
provide to Owner interim lien waivers substantially in the form
attached hereto as Exhibit T-1 executed by the
Subcontractors who have provided invoices that are due and payable
in an aggregate amount of goods and services in excess of [***].
Contractor shall make available such documentation and materials as
Owner may reasonably require substantiating Contractor’s
right to payment of any invoice. Milestone Payment invoices shall
clearly indicate the Payment Milestone which has been completed in
connection with such invoice. Invoices for Work performed by
non-craft personnel on a Time and Materials Basis or Target Price
Basis shall show each employee’s name, classification, hours
worked, task performed and applicable rate of compensation to
Contractor. Invoices for any Work performed by craft personnel on a
Time and Materials Basis or a Target Price Basis shall indicate
tasks performed and shall show each employee’s name,
classification, hours worked, applicable rate of compensation to
Contractor, and rate paid by Contractor to Contractor’s
employees. Prior to the time that the number of Contractor
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Personnel working at the Site and Nearby Work Areas exceeds an
average of one hundred (100) workers for any consecutive four
(4) week period, Contractor shall utilize a either a manual or
electronic "brassing" system to track entry and exit of its
Personnel at the Site and Nearby Work Areas for performance of the
Work, and provide electronic timesheet data to Owner for uploading
into Owner’s electronic timekeeping system. Once the average
number of Contractor Personnel reaches one hundred (100) or
more workers during four (4) consecutive weeks, Contractor
shall implement an electronic "brassing" or access control system
to track which Contractor Personnel are on the Site and Nearby Work
Areas performing Work. Such electronic "brassing" system shall feed
the tracking employee information into Contractor’s
electronic timekeeping system. Contractor shall also ensure that it
provides electronic timesheet data to Owner for uploading into
Owner’s electronic timekeeping system. In the event that
Contractor’s "brassing" system is not functional, Contractor
may provide Owner an alternate basis for the verification,
reasonably acceptable to Owner, of the quantity of workers located
on the Site and Nearby Work Areas. In the event that Contractor
does not provide such an alternate basis for verification,
reasonably acceptable to Owner, Contractor shall provide Owner with
access in order to conduct an audit to verify that the electronic
timesheet data regarding on-site labor corresponds to the quantity
of workers located on the Site and Nearby Work Areas. If Owner is
entitled to conduct such an audit pursuant to the foregoing,
Owner’s payment obligations under Section 8.1(c)
shall be extended by no more than three (3) additional
Business Days after the original due date of the applicable payment
required under Section 8.1(c) in order to provide Owner
adequate time to perform such audit prior to making such payment.
[***]. Bills of lading, and handling or shipping receipts for
Equipment and materials shall be attached, as applicable, to any
invoice requesting payment for such Equipment and materials. When
transportation is prepaid, transportation receipts must also be
attached to the invoices. If any Construction Equipment has been
used, the invoice must also specify the Construction Equipment
used, hours of usage, and rate of reimbursement for use. On-site
labor, material and equipment costs, and freight charges must
appear separately on the invoice. Any Tax paid on material or
Equipment must be shown separately from the sale or rental price of
those items.
(b) Payments
and invoices will include tax information as required by
Article 26 .
(c) If
any invoice is deficient in any material respect, Contractor may be
required by Owner to resubmit that invoice in proper form;
provided, however, that Owner shall pay any portion of the invoice
that is not deficient or subject to dispute, and shall pay any
disputed amount to the extent required by
Section 8.3(d) . Owner shall review each invoice and
shall identify exceptions, if any, by providing Contractor with
written notice stating the basis for such exceptions on or before
the due date, to the extent any exceptions are discovered prior to
the due date.
(d) Payment
shall not waive Owner’s right to dispute an invoice. Any
amount of an invoice that Owner disputes shall be resolved in
accordance with Article 27 .
(i) Should a payment dispute not be
settled within ten (10) Days of the due date, Owner shall pay
the disputed amount including, without limitation, amounts disputed
with respect to a Change, except Owner may [***].
Page 49
(ii) Once the dispute is resolved,
Owner shall pay any additional amount due or Contractor shall
refund any amount by which it was overpaid, as applicable, within
five (5) Business Days after the date of the final resolution,
together with interest at a rate equal to the [***] per annum,
applied from the original due date of the payment until paid, or in
the case of any overpayment, from the date paid until refunded by
Contractor.
(e) If
Owner fails to pay Contractor undisputed sums due and owing by the
due date or, fails to pay the required portion of any disputed
amounts by the date required as set forth in
Section 8.3(d)(i) above, Contractor shall notify Owner
of the overdue payment, and a late payment charge shall accrue at a
rate equal to the [***] per annum from the due date; provided, that
with respect to weekly payments owed in accordance with
Section 8.1(c) , no interest will accrue under this
Section 8.3(e) for the first [***] a payment is late
unless there have been two or more other late payments during the
[***] period prior to the due date.
8.4 [***]
8.5 No Acceptance by Payment.
Owner’s payment of any invoice does not constitute approval
or acceptance of any Work, item or cost in that invoice, nor shall
payment constitute a waiver of any rights or remedies, and shall
not be construed to relieve Contractor of any of its obligations
under this Agreement. 8.6 Security
for Payments from Contractor. As a material inducement for
Owner to enter into this Agreement, Westinghouse agrees to supply
to Owner a Parent Company Guarantee from Toshiba, and Stone &
Webster agrees to supply to Owner a Parent Company Guarantee from
Shaw, in the forms set forth as Exhibit W-1 and
Exhibit W-2 as applicable. Each Parent Company
Guarantee shall be signed by an officer of Toshiba and Shaw,
respectively, and shall be delivered to Owner on the Effective
Date. The Parent Company Guarantee by Toshiba and by Shaw shall
each be accompanied by a certificate of incumbency signed by the
Secretary (or equivalent) of Toshiba and Shaw, respectively,
certifying that the person signing each Parent Company Guarantee is
fully authorized to sign the guarantee on behalf of Toshiba and
Shaw. 8.7 Manner of Payment.
All payments due under this Agreement shall be paid by electronic
transfer to the accounts specified in a Notice from Contractor.
8.8 Cash Flow Accruals. The
Contractor shall provide monthly accruals to the Owner by no later
than noon on the last Business Day of the month. The accruals will
reflect (a) the estimated cost of Work that will be completed
during that month, which are to be reflected on the invoices issued
during the next month, and (b) the estimated total amount for
Work that will be invoiced, due, and payable by the end of the then
current Year. The accruals shall reflect the estimated project and
task totals in a manner consistent with the pricing in this
Agreement, identifying separately the price of Equipment, labor and
miscellaneous expenses. 8.9 Work
Completed Accruals. No later than noon on the last Business Day
prior to the end of each Year, Contractor shall supply to Owner an
estimate of the percentage of completion of Work being performed
[***] and the corresponding dollar value for such completed Work,
including Major Components and major modules that are being
manufactured, fabricated or assembled on or off the Site or Nearby
Work Areas.
Page 50
8.10 Cash Flow Covenant.
The Contractor shall work with Owner and shall use commercially
reasonable efforts to optimize Owner’s cash flow in order to
reduce Owner’s financing costs for the Work; provided,
however, that in no event shall Contractor be required to make any
changes or modifications that adversely impact Contractor’s
cost, cash flow, demonstrated risk or the execution of the Work
unless the Parties mutually agree to a Change Order pursuant to
Article 9 prior to implementing such changes or
modifications to Owner’s cash flow. The Parties will evaluate
potential impacts to cost and schedule in conjunction with proposed
changes to the cash flow. ARTICLE 9 — CHANGES IN THE
WORK 9.1 Requests for and
Entitlement to Change Orders.
(a)
Requests for Change Orders . Subject to the criteria in
Sections 9.1(b) and (c) the following occurrences or
circumstances shall entitle Contractor or Owner to a change to the
Work and/or related obligations hereunder in accordance with the
provisions of this Article 9 (each a " Change
"): (i) any addition to, deletion
from, or modification of the Facility requested by Owner or any
Change in the Work that is agreed to by the Parties in writing;
(ii) any Change that arises as a
result of the issuance of the COL;
(iii) an event of Force Majeure;
(iv) a Change in Law; [***];
(v) issuance of new ITAAC or
revisions to any ITAAC; (vi)
encountering conditions at or affecting the Site, Nearby Work Areas
or transportation that are inconsistent with the Site, Nearby Work
Areas and Transportation Assumptions or that a Reasonably Prudent
Contractor would not have discovered or otherwise been aware of
prior to the Effective Date; (vii) a
request by Owner that Contractor use a Subcontractor other than the
one proposed by Contractor, as provided in Section 3.7
; (viii) a request by Owner to
witness tests or conduct surveillance after-the-fact as provided
for in Section 5.9(c) , provided that the ten (10)
Business Day notification required under Section 5.9(a)
has been provided; (ix) uncovering of
the Work (unless the Work is found to be deficient) as provided for
in Section 5.10 ; (x) any
act, fault, omission, or breach with respect to Owner’s
obligations under this Agreement or any delay by Owner, including
any delay in giving any required approvals or in performing any of
the Owner’s responsibilities or obligations under this
Agreement;
Page 51
(xi) a suspension of the Work
pursuant to Section 22.1(a) ;
(xii) failure of Owner to issue the
Full Notice to Proceed on or before the date required under the
Milestone Performance Schedule, unless Contractor has exercised its
right to terminate the Agreement as a result of such delay pursuant
to Section 22.5 ; (xiii)
an instruction by Owner to Contractor to accelerate the Project
Schedule; provided, that for purposes of clarification, the Parties
agree that to the extent another provision of this Agreement
requires an acceleration and specifies how to allocate
responsibility for any affects of such acceleration, this
Section 9.1(a)(xiii) shall not be interpreted to
override or reallocate the responsibility for the impacts of such
acceleration; (xiv) Owner elects to
purchase Mandatory Spare Parts or Optional Spare Parts, or
Mandatory Spare Parts are unavailable as provided in
Section 3.6(d) ; (xv) the
DOE does not fully fund all amounts specified in the DOE and
Westinghouse Cooperative Agreement DE-FC07-07ID14779 Westinghouse
Electric Company Construction and Licensing Demonstration Project
in accordance with the dates specified for funding in such
agreement; (xvi) a change in Industry
Codes and Standards; or (xvii) any
other event or circumstance specifically identified in this
Agreement as constituting a Change or entitling Owner or Contractor
to seek a Change Order.
(b)
Contractor’s Entitlement to Change Order . To the
extent that the event or circumstance that is the basis for the
Change is not due to any act, fault, omission, or breach by
Contractor with respect to its obligations under this Agreement,
and provided that the event or occurrence adversely affects
Contractor’s or its Subcontractors’ ability to perform
the Work, increases the cost of the Work, affects the
Contractor’s ability to achieve the Performance Guarantees or
Warranties or any other obligations under this Agreement, or causes
Contractor to be unable to meet the requirements of the Milestone
Performance Schedule, Contractor shall, consistent with other
applicable terms and conditions of this Agreement, be entitled to
an adjustment as appropriate to the Contract Price, the Milestone
Performance Schedule, the Milestone Payment Schedule, the
Guaranteed Substantial Completion Date, the Scope of Work and/or
such other parts of this Agreement as may be affected by such
Change. Any such Change shall be authorized by a Change Order to be
issued by Owner under Section 9.4 .
(c)
[***]
(d) If
the basis for a Change that meets the criteria set forth in
Section 9.1(a) (except for
Section 9.1(a)(xv) , which is subject to the provisions
of Section 9.1(f) ) affects or
Page 52
will affect the Work of Contractor in designing, developing or
supplying the AP1000 Nuclear Power Plant for Owner [***], then any
adjustment to the Contract Price pursuant to Section 9.4
[***]. Any adjustment pursuant to Section 9.4 will take
into account other funds (whether supplied by any insurance
company, Government Authority or otherwise) that are actually
received by Contractor to pay all or a portion of the cost of such
Change. [***].
(e)
[***].
(f)
Change in connection with DOE Funding Shortfall [***] . If
DOE fails to fully fund obligations described in
Section 9.1(a)(xv) , then Contractor shall receive a
Change Order equal to [***] the dollar amount of such underfunding,
which amount shall be due and payable to Contractor within thirty
(30) Days of Owner’s receipt of Notice from Contractor
of such shortfall. [***].
(g)
Owner Held Contingency (OHC) Usage . [***].
(h)
[***]. 9.2 Owner-Directed
Changes.
(a)
Standard Plant . It is the intent of the Parties to preserve
the standard design for the AP1000 Nuclear Power Plant, including
the approach to the supply chain, construction, licensing,
operation and maintenance of the Standard Plant to the greatest
extent practical. Owner’s right to direct a Change in the
Standard Plant design for the Facility as provided in
Section 9.4 is limited to a Change that:
(i) is
requested by Owner or the First Wave Utility Customers, to be
considered by Contractor in the same manner and subject to the same
standards as Contractor applies to the design and engineering
comments received from Owner or the First Wave Utility Customers
under Section 3.8(a) ; or
(ii) is
reasonably necessary due to specific Facility related issues, or is
necessary to satisfy the requirements of the COL or any
Governmental Authority.
(b)
Other than Standard Plant . Owner may direct a Change
concerning any Work that is not part of the Standard Plant design
for the Facility as provided in Section 9.4 , so long
as it is technically feasible and in accordance with Good Industry
Practices. 9.3 No Oral
Changes. Contractor shall not comply with oral Owner-directed
Changes in the Work. If Contractor believes that any oral notice or
instruction received from Owner will involve a Change in the cost,
time to perform or integrity of the Work, it shall require that the
notice or instruction be given by Owner in writing and shall then
proceed according to the provisions of Section 9.4 .
Contractor shall neither be required to perform nor be entitled to
a Change Order with respect to any oral Owner-directed Change. Any
cost to perform oral Changes shall be for Contractor’s
account, and Contractor waives any and all rights to claim from
Owner for such costs or additional time to perform the Work as a
result of compliance by Contractor with such oral Changes.
Page 53
9.4 Change Orders.
(a) Subject
to Sections 9.1, 9.2 and 9.3 , Owner or Contractor (as
applicable) shall submit a Notice of any proposed Change to the
other Party. Promptly following such Notice, Contractor shall
provide Owner the following as such information becomes available:
(i) details of the effect of the
Change on the provisions of the Agreement, including any cost,
Project Schedule or Milestone Performance Schedule impacts;
(ii) options to mitigate the costs or
delays associated with the Change;
(iii) when required, an evaluation of
the impact on the Licensing Basis as of the date of the proposed
Change; (iv) a written description of
the proposed Change to the Work, including any adjustment(s) to the
Established Target Price (if applicable) and the Contract Price or
the Project Schedule or the Milestone Performance Schedule;
(v) a written proposal for executing
the Work as changed; provided such proposal shall to the extent
commercially reasonable have the aim to mitigate the impact of the
proposed Change on this Agreement, including the changes to the
Work taken as a whole; and (vi) any
proposed revisions to this Agreement. Contractor shall provide
Owner such supporting documentation for the foregoing as Owner may
reasonably request. Owner shall, as soon as practicable after
receipt of such submittal and supporting documentation, respond
with any comments or questions. If Owner responds with comments or
questions, Contractor shall endeavor to address such comments or
answer such questions as soon as practicable. [***].
(b) If
Owner accepts such written proposal (as the same may have been
modified by mutual agreement of the Parties), or the Parties
otherwise agree to a Change, Owner shall issue a written order to
Contractor setting forth the revisions to this Agreement as
provided in such agreed upon written proposal or as otherwise
agreed to by the Parties (the " Change Order "). If the
Parties cannot agree upon the revisions to this Agreement to be
effected as a result of a Change, Owner shall be entitled to issue
a Change Order (subject to the limitations set forth in this
Article 9 ) that Owner, in good faith, believes
complies with Section 9.4 , which revisions shall
include those revisions as the Parties may have agreed upon, and
Contractor shall perform its obligations hereunder as modified by
such Change Order and to the extent not in violation of applicable
Law, provided that such performance shall be without prejudice to
Contractor’s right to dispute the revisions to this Agreement
to which the Parties could not agree and the Parties shall resolve
the dispute in accordance with the Dispute Resolution procedures
set forth in Article 27 .
Page 54
(c) Notwithstanding
the provisions of Section 9.4(b) , but subject to the
provisions of Sections 9.1, 9.2 and 9.3 , in exigent
circumstances Owner may issue a Change Order to Contractor, with
respect to additional work that was not in the Contractor’s
original Scope of Work, in lieu of the Notice of proposed Change
described in Section 9.4(a) , and Contractor will
diligently proceed with the Work as changed. Promptly upon receipt
of any such Change Order, Contractor shall supply to Owner the
information described in Section 9.4(a) , and the
Change Order will be amended in writing as soon as practical
thereafter to comply with the requirements of
Section 9.4(b) . If Owner issues a Change Order under
this Section 9.4(c) or if a Change Order is issued under
Section 9.4(b) above but there is no agreement among
the Parties on the pricing or the adjustment to the Contract Price
in connection with such Change Order, then Contractor shall perform
the Work specified in the Change Order and shall be paid on a Time
and Materials Basis, using the rates in Exhibit G .
Either Party may submit to Dispute Resolution the determination of
the revisions to this Agreement to be effected as a result of a
Change under this Section 9.4(c) including the
appropriate price change relating to the portion of the Work
specified in such Change Order which Contractor has not completed
on or prior to the DRB’s decision. Until a ruling has been
issued pursuant to such Dispute Resolution process, Contractor
shall be paid on a Time and Materials Basis as described above.
(d) If
Contractor provides the Change Order proposal and/or information
required under Section 9.4(a) because of a request for
same from Owner or because of an event or circumstance that
ultimately results in a Change, then, a Change Order shall be
issued to reimburse Contractor for all reasonable costs and
expenses incurred by Contractor in complying with
Section 9.4(a) , including costs associated with
reviewing, evaluating and responding to such Notice of proposed
Change or Change Order and charges for estimating services, design
services and preparation of proposed revisions to this Agreement.
(e) The
Parties shall amend the Agreement from time to time to incorporate
agreed upon Change Orders into the Agreement.
9.5 Permitted Contractor
Changes.
(a) If
Contractor elects to make a change to the Work or a substitution of
Equipment or materials to support performance of the Work, whether
in the field or elsewhere, for purposes such as correcting
deficiencies, avoiding interferences or improving access or for
other similar circumstances and purposes, and such change or
substitution (i) does not require a change in the plant layout
drawings, design criteria, general arrangement drawings, functional
or performance aspects of P&IDs or design specifications,
electrical one line drawings or control wiring diagrams,
(ii) does not increase Owner’s maintenance costs,
(iii) does not reduce the reliability and quality of the
Equipment, and (iv) does not result in a difference between
the Units with respect to operation, maintenance or spare parts
requirements (each such change or substitution being a "
Permitted Contractor Change "), then Contractor may proceed
with such Permitted Contractor Change provided that Contractor
promptly provides Notice of such Permitted Contractor Change to
Owner, and where practical provides such Notice prior to commencing
such Permitted Contractor Change.
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(b) Such
Permitted Contractor Change shall not be contrary to the COL or the
DCD, or any other requirements of this Agreement, and such
Permitted Contractor Change shall be allowed upon
Contractor’s reasonable technical evaluation that such
Permitted Contractor Change does not adversely affect the form, fit
or function of any Equipment or System. Such Permitted Contractor
Change shall not result in a Change Order.
9.6 Optional Services and
Equipment. The Parties acknowledge and agree that
Exhibit A sets forth certain additional services and
equipment, one or more of which, at the option of Owner, shall be
included in the Work. If Owner desires to exercise such option, it
shall provide Contractor Notice thereof, in which case such item
shall be included in the Work and the Contract Price and such other
provisions shall be modified as set forth in Exhibit A
. ARTICLE 10 — FORCE MAJEURE
10.1 Performance Excused. No
Party shall be considered to be in default or in breach of its
obligations under this Agreement to the extent that performance of
such obligations is delayed by the occurrence of any Force Majeure
event. The financial inability of a Party to make a payment shall
not be a Force Majeure event, and a Force Majeure or other event
with causes or results in a Party’s financial inability to
make a payment shall not excuse or allow the delay of any payment
obligation due under this Agreement. Without limiting
Contractor’s right to a Change, to the extent the Work is
affected by an event of Force Majeure, Contractor shall use
commercially reasonable efforts to cure, remove, otherwise correct,
minimize and contain costs and expenses attendant on or arising
from each Force Majeure event. Contractor will provide written
periodic updates on its implementation of measures to mitigate the
impact of Force Majeure events. 10.2
Notice. If a Party’s performance of its obligations
under this Agreement is impacted or delayed by an event of Force
Majeure, then such Party shall provide Notice to the other Party of
the circumstances that the notifying Party claims to constitute an
event of Force Majeure, and the obligations, the performance of
which is impacted or delayed, and the nature and cause of the event
in writing within [***] after the notifying Party becomes aware of
the event of Force Majeure. The Party affected by an event of Force
Majeure shall provide the other Party with weekly updates
(i) estimating its expected duration, the cost of any remedial
action, and the probable impact on the performance of its
obligations hereunder, (ii) of the actions taken to remove or
overcome the event of Force Majeure and (iii) of the efforts
taken to mitigate or limit damages to the other Party. The Party
affected by a Force Majeure event shall also provide Notice to the
other Party when it ceases to be so affected. If a Party fails to
give the other Party timely Notice of an event of Force Majeure in
accordance with the Notice requirements of this Section 10.2
, [***]. ARTICLE 11 — TESTING; PERFORMANCE GUARANTEES
11.1 Scope and Objective of
Testing. The scope of testing associated with this Article
covers the testing which shall take place for each Unit at the Site
and Nearby Work Areas. The testing that will be performed on-site
consists of Construction and Installation Tests, Preoperational
Tests, Start-up Tests and the Performance Tests, each as described
in this Article 11 .
Page 56
All special test equipment and instrumentation shall be supplied
by Contractor, and shall be covered by the Contract Price. Existing
Unit instrumentation shall be used whenever practical.
11.2 Construction and Installation
Tests.
(a) The
adequacy of construction, installation, and preliminary operation
of Equipment and Systems shall be verified by a program of
Construction and Installation Tests. In this program, examples of
various electrical and mechanical tests that shall be performed
include the following:
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Valve testing
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Rotation checks.
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On a System basis, completion of this program shall demonstrate
that each System is ready for Preoperational Tests. Contractor will
develop the Construction and Installation Test procedures
consistent with its procedures for the Standard Plant and will
provide the Construction and Installation Test procedures to Owner
at least thirty (30) Days in advance of the testing for
Owner’s review and Acceptance, which Acceptance shall not be
unreasonably withheld. Owner will Accept such Construction and
Installation Test procedures or provide a written description of
its proposed changes thereto within fifteen (15) Days of its
receipt of such Construction and Installation Test procedures. If
Owner requests a change to the Construction and Installation Test
procedures that goes beyond the scope of the Standard Plant
procedures, then Contractor shall be entitled to seek a Change
Order pursuant to Article 9 . Contractor shall provide
the scheduled testing dates to Owner in writing at least fourteen
(14) Days in advance so that Owner may witness the tests.
Contractor shall not change the scheduled test dates without giving
Owner at least fourteen (14) Days prior Notice. Owner is not
required to witness these tests. Contractor shall perform the
Construction and Installation Tests, and shall supply detailed
Documentation, as specified in the test procedures, of the testing
and the test results to Owner within thirty (30) Days after
the test is completed. Should corrective work be necessary as a
result of the test, Contractor shall re-perform any testing at its
own cost promptly after the corrective work is performed, as
required by Good Industry Practices.
11.3 Preoperational Tests.
(a) Following
the successful completion of Construction and Installation Tests of
all relevant Equipment and Systems, and after the Unit has achieved
Mechanical Completion, Preoperational Tests shall be performed to
demonstrate that the Equipment and Systems of the Unit perform in
accordance with applicable design criteria so that initial Nuclear
Fuel loading, initial criticality, and subsequent power operation
can be safely undertaken. Notwithstanding the foregoing sentence,
Preoperational Tests may be performed prior to
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Mechanical Completion of the applicable Unit and prior to
completion of all Construction and Installation Tests for such
Unit, if the overall Unit configuration supports such
Preoperational Test(s) and any applicable ITAAC and the results of
such test(s) would be valid. Preoperational Tests at elevated
pressure and temperature are referred to as hot functional tests.
The general objectives of the Preoperational Test program are the
following:
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Demonstrate that essential Unit Equipment and Systems, including
alarms and indications, meet appropriate criteria based on the
design,
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Provide Documentation of the performance and condition of the
Equipment and Systems,
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Provide baseline test and operating data on Equipment and
Systems for future use and reference,
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Operate Equipment and Systems for a sufficient period to
demonstrate performance,
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Demonstrate that the Equipment and Systems operate on an
integrated basis, and
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Perform calibration, balancing and tuning of Equipment and
Systems as necessary to insure reliable operation for the specified
range of operational conditions.
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Abstracts for the Preoperational Tests for portions of
Systems/Equipment that perform safety-related functions; perform
defense-in-depth functions; contain, transport, or isolate
radioactive material; and for other applicable Systems/Equipment
are specified in Chapter 14 of the Design Control Document.
(b) Contractor
will develop the Preoperational Test procedures consistent with its
procedures for the Standard Plant, including any first of a kind
test requirements that may apply, and deliver them to Owner for
review and Acceptance, which Acceptance shall not be unreasonably
withheld, at least one hundred twenty (120) Days prior to
performance of the tests. Owner will Accept such Preoperational
Test procedures or provide a written description of its proposed
changes thereto within thirty (30) Days of its receipt of such
Preoperational Test procedures. Contractor will provide the final
Preoperational Test procedures to Owner at least thirty (30) Days
in advance of the testing. If Owner requests a change to the
Preoperational Test procedures that goes beyond the scope of the
Standard Plant procedures, then Contractor shall be entitled to
seek a Change Order pursuant to Article 9 . Owner is
responsible for conducting the Preoperational Tests with the
Technical Direction of Contractor in accordance with the Project
Schedule; provided, Contractor has performed its obligations under
this Article 11 that are the prerequisites to such
Preoperational Tests in accordance with the Project Schedule.
(c) Facility
Equipment and Systems used in the performance of Preoperational
Tests will be operated by Owner in accordance with Facility
Manuals.
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(d) Should
the results of the Preoperational Tests indicate that any System or
Equipment is not performing in accordance with the applicable
specification or the requirements of this Agreement, Contractor
shall promptly repair, replace or otherwise correct the deficiency
and re-perform any Construction and Installation Test on the
affected Equipment or System as required by Good Industry Practice.
The affected Preoperational Test will be re-performed unless waived
by Owner in writing. The Start-up Tests and the other Work and
obligations that follow the Preoperational Tests shall not be
delayed or held up for the completion of the Notices and Acceptance
documentation process described in Section 12.3(b) .
(e) Contractor
shall supply detailed Documentation, as specified in the test
procedures, of the Preoperational Tests and the test results to
Owner within thirty (30) Days after the Preoperational Tests
are completed. 11.4 Start-up
Tests.
(a) The
Start-up Test program shall begin with initial Nuclear Fuel
loading, after the Preoperational Tests have been successfully
completed and Mechanical Completion has occurred. Start-up Tests
can be grouped into four broad categories:
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Tests related to initial Nuclear Fuel loading,
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Tests performed after initial Nuclear Fuel loading but prior to
initial criticality,
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Tests related to initial criticality and those performed at low
power (less than 5 percent), and
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Tests performed at power levels greater than 5 percent.
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(b) The
general objectives of the Start-up Test program are:
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Install the Nuclear Fuel in the Unit vessel in a controlled and
safe manner,
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Verify that the Unit core and components, Equipment, and
Facility Systems required for control and shutdown have been
assembled according to design and meet specified performance
requirements,
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Achieve initial criticality and operation of the Facility at
power in a controlled and safe manner,
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Verify that the operating characteristics of the Unit core and
associated control and protection Equipment are consistent with
design requirements and accident analysis assumptions,
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Obtain the required data and calibrate Equipment used to control
and protect the Facility, and
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Verify that the Unit responds to the transient tests as
described in the COL.
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(c) Abstracts
of the Start-up Tests are provided in Chapter 14 of the Design
Control Document. Contractor will develop the Start-up Test
procedures per the guidelines documented in Chapter 14 of the
Design Control Document and consistent with the Standard Plant
procedures, including any first of a kind test requirements that
may apply, and such procedures shall be subject to review and
Acceptance, which Acceptance shall not be unreasonably withheld, by
Owner prior to performance of any Start-up Tests. Owner will Accept
such Start-up Test procedures or provide a written description of
its proposed changes thereto within thirty (30) Days of its
receipt of such Start-up Test procedures. Contractor will provide
the final Start-up Test procedures to Owner for its review and
approval at least sixty (60) Days in advance of the testing.
If Owner requests a change to the Start-up Test procedures that
goes beyond the scope of the Standard Plant procedures, then
Contractor shall be entitled to seek a Change Order pursuant to
Article 9 . Owner is responsible for conducting the
Start-up Tests in accordance with the Project Schedule after all
requirements for Ready for Start-up Test Date have been satisfied.
Contractor shall provide Technical Direction and consultation to
Owner during these tests.
(d) Contractor
shall give notice to Owner of the date (the " Ready for Start-up
Test Date ") when Mechanical Completion of the Unit has
occurred, Construction and Installation Testing of all relevant
Systems and Equipment have been satisfactorily completed,
Preoperational Testing has been satisfactorily completed, all
relevant Facility Manuals are finalized and delivered, and the Unit
is ready for start-up and performance of the Start-up Tests, or
would have been ready except for delays for which Contractor is not
responsible, for the Start-up Tests to begin. If delays for which
Contractor is not responsible delay any Start-up Test by more than
[***] from the Ready for Start-up Test Date, the Work shall be
deemed to have been suspended on the date that such [***] period
expires as if Owner had directed such suspension in accordance with
Section 22.1(a) . If such delays continue for an
additional [***] after the Ready for Start-up Test Date, then, 1)
Contractor shall be entitled to receive payments under the
Milestone Payment Schedule for those Milestone and Progress
Payments that would have come due through Substantial Completion,
2) Contractor’s obligations with respect to the Guaranteed
Substantial Completion Date shall have been met, and 3) the
commencement of the Warranty Periods associated with Substantial
Completion shall begin. Notwithstanding the foregoing, Owner will
not be required to make payment to Contractor for the Work of
performing Start-up Tests, Performance Tests or Punch List items
until such Start-up Testing and Performance Testing related Work or
Punch List items have been performed.
(e) Should
the Start-up Test results indicate that the Unit or any System or
Equipment is not performing in accordance with the applicable
Specifications or other requirements of this Agreement, Contractor
shall promptly repair, replace or otherwise correct the deficiency
and re-perform any Construction and Installation Test on the
affected Equipment or System as required by Good Industry Practice.
The affected Preoperational Test(s) will then be re-performed on
the affected Equipment or System unless deemed unnecessary by
Owner. After such corrective work and retesting has been performed,
Start-up Tests shall be re- performed on affected Equipment or
System(s) unless deemed unnecessary by Owner. The Performance
Testing and the other Work and obligations that follow the Start-up
Tests shall not be delayed or held up for the completion of the
Notices and Acceptance documentation process described in
Section 12.4(b) .
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(f) Contractor
shall supply detailed Documentation, as specified in the test
procedures, of the testing and the test results to Owner within
thirty (30) Days after the Start-up Tests have been completed.
11.5 Performance Tests, Other
Tests and Guarantees.
(a)
Performance Test Procedures . Contractor shall develop the
Performance Test procedures consistent with its procedures for the
Standard Plant and Contractor’s document APP-GW-T1R-600,
(AP1000 Performance Test Requirements and Bases), as revised as of
the Effective Date, and Contractor shall provide the Performance
Test procedures to Owner at least one hundred and eighty
(180) Days in advance of the Ready for Performance Test Date,
which shall be subject to the Owner’s Acceptance, which
Acceptance shall not be unreasonably withheld (the " Performance
Test Procedures "). The Performance Test Procedures shall be
sufficiently detailed for the Parties to conduct the Performance
Tests in a manner that will demonstrate compliance with the
Performance Guarantees, and shall include or reference the
methodologies for calculating the test results, including the
tolerances and correction curves to be applied to the test results.
After the Performance Test Procedures have been Accepted by Owner,
they shall not be revised without Owner’s prior written
concurrence. The Documentation with respect to the performance of
the tests and results of the tests shall be created and maintained
by Contractor and delivered to Owner within fifteen (15) Days
following Substantial Completion.
(b)
Owner and Contractor Responsibilities . During Performance
Testing, Owner shall provide all consumables, semi-skilled and
skilled labor, fully trained and licensed operators and such other
material or services that are reasonably requested by Contractor
for the tests in accordance with the Project Schedule. Contractor
shall maintain an adequate construction staff and labor on the Site
and Nearby Work Areas to support the performance testing process
and minor remedial efforts that may be required within
Contractor’s Scope of the Work.
(c)
Performance Tests . Subject to Section 11.6 ,
Owner shall perform the Performance Tests under the Technical
Direction of Contractor in accordance with the Performance Test
Procedures and as allowed by applicable plant operating procedures.
In accordance with APP-GW-T1R-600, (AP1000 Performance Test
Requirements and Bases), the Performance Tests [***] shall consist
of the following tests: (i) Net Unit Electrical Output Test,
(referred to as the Turbine Generator Output Test in
APP-GW-T1R-600), (ii) Moisture Carryover Test, and
(iii) the Cooling Tower Performance Test. The Reactor Coolant
Pump and Flow Measurement Tests and Steam Generator Zero Leakage
Tests shall be performed in accordance with the associated
manufacturing, Preoperational Test and Start-up Test procedures as
specified in Sections 11.5(g) and 11.5(h) ,
respectively. In addition, certain baseline performance data shall
be collected during the Performance Tests as set forth in
Sections 11.5(j) and 11.5(k) . The Performance Tests
may be accomplished concurrently and will not necessarily be
conducted as separate, sequential tests. Acceptance criteria
associated with specific Performance Tests are provided below. To
the extent such acceptance criteria are not covered below, such
acceptance criteria shall be as designated in the Performance Test
Procedures.
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(d) Net Unit Electrical Output Test and Related
Guarantees .
(i)
Net Unit Electrical Output Test . The " Net Unit
Electrical Output Test " shall be run to determine whether the
Unit meets the Net Unit Electrical Output Guarantee [***]. The Net
Unit Electrical Output Test for each Unit shall be conducted in
material compliance with Power Test Code 46 (PTC-46) with the Net
Unit Electrical Output [***] for the periods and duration described
in this Section 11.5(d)(i) . The Net Unit Electrical
Output Test shall consist of at least four (4) test runs of a
minimum of two (2) hours in duration per test run. Upon
evaluation of the data, if three (3) or more of the test runs
are found invalid, additional runs will be made after required
remedial work, if any, is performed by the responsible Party. The
measurement frequency shall be in compliance with PTC-46 throughout
the Net Unit Electrical Output Test. Data collected within each
test run will be averaged after each of the results is corrected to
guarantee reference conditions in accordance with PTC-46, and then
the Net Unit Electrical Outputs from the test runs that are found
valid shall be averaged for purposes of determining the applicable
Net Unit Electrical Output liquidated damages and bonuses.
(ii)
Net Unit Electrical Output Guarantee . Subject to the limits
of liability on liquidated damages set forth in
Section 11.5(d)(ii)(B) and subject to the provisions in
Section 11.5(d)(ii)(C) and Section 11.5(d)(iv) ,
Contractor guarantees that each Unit, when loaded with the Nuclear
Fuel and operated in accordance with Operating Procedures and
Maintenance Procedures and Facility Manuals, shall produce the Net
Unit Electrical Output of [***] MWe as evidenced by the Net Unit
Electrical Output Test (the " Net Unit Electrical Output
Guarantee ").
(A) In
the event a Unit [***] does not meet the Net Unit Electrical Output
Guarantee, Contractor shall engage in an engineering review and
analysis of the performance deficiency, in consultation with Owner,
to determine possible options to correct the deficiency or improve
the output.
(1) If
such identified performance correction or improvement would cost
less than the applicable Performance Liquidated Damages otherwise
payable hereunder, Contractor shall perform the correction or
improvement, at its own expense, on a schedule as mutually agreed
to by the Parties.
(2) If
such identified performance correction or improvement would cost
more than the applicable Performance Liquidated Damages otherwise
payable hereunder, then Contractor shall be liable to Owner for the
Performance Liquidated Damages specified in Section
11.5(d)(ii)(B) , or Owner may elect to direct Contractor to
make such performance corrections or improvements, provided that
Owner waives the collection of the
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applicable Performance Liquidated Damages and Owner pays
Contractor, on terms consistent with Article 8 , the
cost of the performance correction and improvement work which
exceeds the waived Performance Liquidated Damages amount. However,
any such payments for performance correction and improvement work
that exceeds the cost of the waived Performance Liquidated Damages
shall only include payment for Direct Costs plus SGA/G&A and
other mark-ups applied to such Direct Costs pursuant to
Exhibit G (without any Profit).
(3) If
the performance corrections or improvements are not performed or if
following such work the Unit fails to achieve the Net Unit
Electrical Output Guarantee when re-testing is performed, then the
Contractor shall be liable to the Owner for the Performance
Liquidated Damages specified in Section 11.5(d)(ii)(B)
to the extent the applicable Performance Liquidated Damages have
not been waived under Section 11.5(d)(ii)(A)(2) above.
If Contractor pays Performance Liquidated Damages with respect to
Net Unit Electrical Output, then following consultation with the
Owner regarding the scheduling of the work, Contractor shall be
permitted to make further repairs, replacements, adjustments or
modifications to improve the performance of the Unit. If such
repairs, replacements, adjustments or modifications by Contractor
cause the Unit to be able to meet the Net Unit Electrical Output
Guarantee or Contractor has been able to increase the Net Unit
Electrical Output from the level at which the Performance
Liquidated Damages were previously paid, in each case as
demonstrated by a Net Unit Electrical Output Test supported by
Contractor at its own expense, then Contractor shall be entitled to
a refund of all or the prorated portion of the Performance
Liquidated Damages paid by Contractor.
(B) The
Parties agree that Owner will suffer actual damages in the event
that a Unit fails to meet the Net Unit Electrical Output Guarantee
and that it would be extremely difficult and impracticable under
presently known and anticipated facts and circumstances to
ascertain and fix such actual damages Owner would incur, and,
accordingly, if a Unit does not meet the Net Unit Electrical Output
Guarantee due to Contractor’s failure to perform the Work in
accordance herewith after taking remedial efforts as may be
required under Section 11.5(d)(ii)(A) or 11.5(d)(iv) ,
Owner’s sole remedy (subject to the limitations in
Section 37.2 ) for such failure (but in addition to any
applicable remedies specified in Section 11.5(d)(iv) )
shall be to recover from Contractor as liquidated damages and not
as a penalty [***]. Contractor shall be liable to pay liquidated
damages as specified above for Net Unit Electrical Output
shortfalls that exist following completion of Contractor’s
remedial efforts per Section 11.5(d)(ii)(A) or
11.5(d)(iv) , as applicable, and subject to the limit of
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liability specified in Section 17.2 . Performance
Liquidated Damages shall be due thirty (30) Days following the
date Owner gives Notice to Contractor that Performance Liquidated
Damages are payable.
(C) The
Net Unit Electrical Output Guarantee is subject to the conditions
stated in Section 14.9 and to the following conditions:
(1) Owner has provided access to the
electrical grid and sufficient system load to perform the test.
(2) The Net Unit Electrical Output
Guarantee is based upon the Unit operating at the conditions
specified in Exhibit L . If conditions during the test
differ from those specified, appropriate adjustments shall be made
to the Net Unit Electrical Output using graphs, tables and other
data as set forth in Exhibit L and as set forth in the
Performance Test Procedures prepared by Contractor, and Accepted by
Owner in advance of performing the Performance Tests as provided in
Section 11.5(a) . (3)
Necessary auxiliary equipment for producing the Net Unit Electrical
Output shall include only the Equipment loads provided in
Exhibit L . (4) The Net
Unit Electrical Output Guarantee shall be demonstrated by the Net
Unit Electrical Output Test to be conducted at the times and
subject to the conditions set forth herein. Satisfactory completion
of such test or re-test or the payment of Net Unit Electrical
Output Performance Liquidated Damages to Owner subject to the
conditions set forth in this Section 11.5(d)(ii)(C)
shall relieve Contractor of any further obligation with respect to
the Net Unit Electrical Output Guarantee, but shall not affect or
diminish Contractor’s obligation to satisfy any other
Performance Guarantee or the Warranties set forth in
Article 14 .
(iii) Net Unit
Electrical Output Bonus . In the event that the Net Unit
Electric Output, as determined by the Net Unit Electrical Output
Test, exceeds the Net Unit Electrical Output Guarantee, then
Contractor shall be entitled to receive as a bonus an amount equal
to [***]. Contractor shall be entitled to invoice the Owner for any
bonus earned following completion of the Net Unit Electrical Output
Test, and payment from Owner shall be due within thirty
(30) days following receipt of such invoice.
(iv) [***].
(e)
Moisture Carryover Test [***].
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(i) Moisture Carryover Test
. The " Moisture Carryover Test ", shall be run to determine
whether the Unit meets the Moisture Carryover [***]. The steam from
the two (2) steam generators per Unit shall be sampled while
the Unit is operating at a nominal rating of one hundred percent
(100%) licensed thermal power. If the Unit is unable to reach one
hundred percent (100%) licensed thermal power, the test may be run
at a power level [***]. The " Moisture Carryover " is
measured using a tracer method. The method involves the addition of
a known quantity of a suitable tracer to the secondary system.
After a prescribed equilibrium time, samples are simultaneously
withdrawn from each steam generator blowdown line, the main steam
lines and the main feedwater lines. The concentration ratio of the
tracer found in the steam sample to that found in the liquid sample
is used to calculate the Moisture Carryover.
(ii) Moisture Carryover [***].
Contractor [***], subject to the provisions of this Agreement and
in accordance with the Operating Procedures, Maintenance Procedures
and Facility Manuals, that each Unit, when completed and loaded
with Nuclear Fuel, will produce steam with a Moisture Carryover
limit of less than or equal to 0.25 percent at the exit of the
steam generator dryers (the " Moisture Carryover [***] ").
[***]. [***]
(f)
Cooling Tower Performance Test [***] . A " Cooling Tower
Performance Test " shall be performed in accordance with
Cooling Technology Institute CTI-ATC-105 and ASME PTC-23 [***].
(g)
Reactor Coolant Pump and Flow Measurement Tests [***] .
Prior to shipping the reactor coolant pumps to the Site, each pump
shall undergo loop testing. During the Preoperational Tests and
Start-up Tests, (A) pressure measurements will be taken to
verify the pressure drops within the reactor coolant system are
within the specified design range set forth in the Preoperational
Test procedures and Start-up Test procedures, and (B) a
reactor coolant system flow measurement test shall be performed to
demonstrate that the reactor coolant pumps for each Unit produce a
reactor coolant system flow that falls within the Technical
Specifications flow requirements of such Unit [***].
(h)
Steam Generator Zero Leakage Test [*** ]. As part of the
manufacturing process for each steam generator, a hydrostatic test
shall be performed, in accordance with the standard steam generator
manufacturing specifications, to verify that there is no detectable
leakage from the primary side to the secondary side. If any steam
generator has any detectable leakage from the primary side to the
secondary side then Contractor shall perform, at its own expense,
such repair, replacement, adjustment or modification to the
affected steam generator as necessary so that there is no
detectable leakage. [***].
(i)
[***].
(j)
Major Equipment Operation and Collection of Performance Baseline
Data . In addition to data gathered as part of conducting the
Performance Tests, during the
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Performance Tests, data will be taken to allow verification of
the proper operation of and to obtain baseline performance data for
the following other major components of Equipment:
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Steam Turbine Generators
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Feedwater Pumps
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(k)
NSSS Thermal Performance Test . The " NSSS Thermal
Performance Test ", shall be run at [***] licensed thermal
power, if achievable, as indicated by the secondary calorimetric;
provided that, if the thermal power output [***] the Unit shall be
operating with a Net Unit Electrical Output [***] in order to
commence the NSSS Thermal Performance Test. The NSSS Thermal
Performance Test shall be run during a period of continuous
operation of [***]. Such test shall be satisfactorily completed
when the Unit has operated for such continuous period. The
measurement frequency shall be, at a minimum, every sixty
(60) minutes throughout the NSSS Thermal Performance Test. If
during the conducting of the NSSS Thermal Performance Test, the Net
Unit Electrical Output, as determined based on a rolling four
(4) hour average measured at one hour intervals [***], not due
to any action or inaction by Owner or its Personnel, or an event of
Force Majeure, then such [***] test shall be re-started once the
Net Unit Electrical Output returns to a value [***]. If, however,
during the conducting of the NSSS Thermal Performance Test, the Net
Unit Electrical Output is [***] due to any action or inaction by
Owner, its Personnel, or an event of Force Majeure or if there is a
delay in conducting the NSSS Thermal Performance Test that is due
to any action or inaction by Owner, its Personnel, or an event of
Force Majeure, the hours of continuous operation performed prior to
such reduction or delay shall be credited toward the period of
[***] of continuous operation once the NSSS Thermal Performance
Test is resumed. [***]. If the cumulative delays in conducting the
NSSS Thermal Performance Test or cumulative time periods of
reductions in Net Unit Electrical Output [***] during the
conducting of the NSSS Thermal Performance Test that are due to any
action or inaction by Owner, its Personnel or an event of Force
Majeure exceed [***] and the Unit has demonstrated the capability
of operating at a Net Unit Electrical Output [***] during the
Start-up Tests and any partially completed NSSS Performance Test,
then Contractor shall be entitled to receive the Milestone Payment
that would be due for achieving Substantial Completion and the
Warranty Periods associated with Substantial Completion shall
commence, provided that the other requirements of Substantial
Completion which are not related to the NSSS Thermal Performance
Test have been met. Such a payment shall not waive or affect any of
the other obligations of Contractor under this Agreement including
the obligation to complete the NSSS Thermal Performance Test. In
this circumstance once the reasons for such delays or reductions in
power have been resolved, if requested by Owner, Contractor shall
support Owner in conducting or completing the NSSS Thermal
Performance Test.
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(l)
Allowable Contractor Actions to Correct Performance
Deficiencies. After Unit Mechanical Completion has occurred and
prior to the Guaranteed Substantial Completion Date for a Unit,
Contractor shall have the right to take appropriate action(s)
consistent with the other requirements of this Agreement to correct
deficiencies and improve a Unit’s performance associated with
the Performance Guarantees of Section 11.5 . Contractor
shall have the right to take such action, in consultation with the
Owner and not require Owner’s prior approval, provided that
such action [***] is not contrary to the COL or the DCD, and
(v) otherwise complies with the requirements of this
Agreement. Otherwise, Contractor shall obtain Owner’s prior
approval which shall not be unreasonably withheld or delayed.
11.6 Readiness for Performance
Tests. Contractor shall give reasonable prior Notice to Owner
of the date (the " Ready for Performance Test Date ") when
the Unit is ready for the Performance Tests. However, if the Ready
for Performance Test Date has not occurred by the date [***] after
the Ready for Start-up Test Date, because of delays not caused by
or otherwise attributable to Contractor, then the date [***] after
the Ready for Start-up Test Date shall for all purposes of this
Agreement be the Ready for Performance Test Date.
(a) If
on or after the Ready for Performance Test Date there is a delay in
conducting the Performance Tests, that is caused by any action or
inaction by Owner, its Personnel, or an event of Force Majeure, the
Work shall be deemed to have been suspended by Owner on the Ready
for Performance Test Date as if Owner had directed a suspension
without cause in accordance with Section 22.1(a) . In
connection with such a delay the Parties shall determine as part of
the Change Order process such matters as (A) maintenance
procedures for the Unit to be followed by Owner until the
Performance Tests can occur, (B) whether or not Contractor
should demobilize its forces for the duration of the suspension,
and (C) if demobilization is to occur, Contractor Personnel
that shall either remain on the Site and Nearby Work Areas for the
purpose of monitoring the maintenance of the Units and/or be
permitted to examine the Unit and Owner’s maintenance records
on a routine basis to determine whether the agreed maintenance
procedures are being followed.
(b) If
a suspension of the Work under Section 22.1(a) or
22.1(c) and/or a deemed suspension under
Section 11.6(a) delays the Performance Tests by more
than [***] from the Ready for Performance Test Date, then (provided
the other requirements of Substantial Completion, which are not
related to or part of the delayed Performance Tests, have been met)
Contractor shall be entitled to the Milestone Payment and Progress
Payment that would be due upon Substantial Completion minus the
amount of the Milestone Payment or Progress Payment attributable to
the Technical Direction to have been provided by Contractor for
such Performance Tests. Payment of the specified Milestone Payment
or Progress Payment shall not waive or affect any of the
obligations of Contractor under this Agreement.
(c) In
the event after a suspension of Work under
Section 22.1(a) or 22.1(c) and/or a deemed
suspension under Section 11.6(a) , Owner is ready for
the Performance Tests to be conducted, Contractor shall (if
applicable) re-mobilize at the Site and Nearby Work Areas on a
mutually agreed date and shall proceed to conduct the Performance
Tests, followed by the other activities required to achieve
Substantial Completion and Final Completion. The Project Schedule
and Contract Price shall be revised subject to the Change Order
provisions of Article 9 to reflect the additional time
and cost, if any, that Contractor will require for the
performance
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of the Performance Tests as a result of changed circumstances in
its staffing and other factors resulting from the delay in
performance of the tests. Prior to initiating the Performance
Tests, Contractor shall have the right to assess whether any
degradation to the operational performance of the Unit has
occurred. To the extent that degradation to the operational
performance of the Unit has occurred for reasons other than due to
the acts or omissions of Contractor or its Personnel, such
degradation shall constitute a Change and Contractor shall be
entitled to seek a Change Order pursuant to Article 9
for the costs and time required to perform corrections to the Unit
to return it to a state ready for the Performance Tests, assuming
such correction can be reasonably performed. Should the Unit when
tested fail to fully meet any of the Performance Guarantees, the
applicable provisions of Section 11.5 shall apply.
Contractor shall promptly give Notice to Owner of the Unit’s
readiness for any required re-test, specifying the time and date of
such test, provided that such date shall provide Owner reasonable
time to prepare to support the re-test.
(d) If
a suspension of Work under Section 22.1(a) or
22.1(c) and/or a deemed suspension under
Section 11.6(a) , delays the Performance Tests by more
than [***] from the Ready for Performance Test Date, then, if the
Warranty Period has not already commenced, the Warranty Period
shall commence on such date unless the Parties have mutually agreed
to a Change Order that extends the Warranty Period or the
commencement thereof.
(e) If
a suspension of Work under Section 22.1(a) or
22.1(c) and/or a deemed suspension under
Section 11.6(a) , delays the Performance Tests by more
than [***] from the Ready for Performance Test Date, then
Contractor’s sole responsibility hereunder with respect to
such Performance Tests and the Performance Guarantees shall be to
provide Technical Direction for the testing on a Time and Materials
Basis. 11.7 Retesting. In the
event that any retesting is required under this Agreement, the
results of such retesting shall be adjusted to take into account
normal degradation of Equipment, wear and tear and other impacts to
the originally demonstrated level of performance of the Unit that
arise from the normal operation of the Unit or Facility.
11.8 [***].
11.9 Performance Guarantee
Remedies. Performance of remedies specified and payment of
Performance Liquidated Damages under the conditions specified in
this Article 11 shall be Owner’s sole and
exclusive remedy for a Unit’s failure to achieve the
applicable Performance Guarantee(s), subject to the limitations set
forth in Section 37.2 . ARTICLE 12 — STAGES OF
COMPLETION 12.1 Turnover.
(a) "
Turnover " is defined as the sequential operational
completion and Acceptance of each System and shall occur upon the
satisfaction of the following conditions:
(i) Such System shall be
mechanically, structurally, hydrostatically and electrically
sound;
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(ii) such System shall have passed
the applicable Construction and Installation Tests;
(iii) such System as installed shall
meet the requirements of the Specifications;
(iv) all applicable pre-Turnover Base
ITAAC requirements shall have been satisfied;
(v) Such System shall be completed,
necessary coatings applied, and the area cleaned;
(vi) The Construction and
Installation Test Documentation and quality assurance Documentation
shall have been delivered to and Accepted by Owner;
(vii) The Turnover Packages for the
System have been delivered by Contractor and Accepted by Owner; and
(viii) Owner has Accepted the System
as having achieved Turnover as provided in
Section 12.1(b) .
(b) When
Contractor believes that the provisions of
Section 12.1(a)(i) through (a)(viii) have been
satisfied with respect to a System, Contractor shall deliver Notice
of such determination to Owner with sufficient detail to enable
Owner to determine whether Contractor has achieved such
requirements. Owner shall Accept such System as having achieved
Turnover once all of the requirements specified in
Section 12.1(a)(i) through (a)(viii) have been met by
delivering Notice of Acceptance to Contractor. Owner shall endeavor
to deliver Notice to Contractor within five (5) Business Days
from receipt of Notice from Contractor that Turnover has occurred,
or notify Contractor why it disagrees that Turnover has occurred.
If Owner’s Notice is not delivered within such five
(5) Business Day period, then Contractor shall be entitled to
a Change with respect to such delay.
(c) Upon
Turnover of a System, Contractor shall turn over care, custody,
control and operation of such System to Owner in accordance with
Section 21.2. Upon Turnover, Owner shall assume
responsibility for maintenance and control of such System, but
Contractor shall remain responsible for any loss or damage caused
by or attributable to Contractor or its Subcontractors as provided
in Section 21.2 . 12.2
Mechanical Completion.
(a) "
Mechanical Completion " shall have occurred upon all Systems
needed for the commencement of Preoperational Testing having
achieved Turnover in accordance with Sections 12.1 and
12.2(b) or, with Owner’s written concurrence, addressed
as a Mechanical Completion follow up item.
(b) When
submitting its Notice of determination under
Section 12.112.1(b) for the Turnover of the final
System, Contractor shall include Notice that Mechanical Completion
will occur upon the Turnover of such System. Mechanical Completion
shall occur
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upon Owner Accepting Turnover of the final System as provided in
Section 12.1(b) and this Section 12.2(b) . Owner
shall Accept the Unit as having achieved Mechanical Completion, by
delivering to Contractor Notice of that Acceptance within five
(5) Business Days following receipt of Contractor’s
Notice regarding Turnover of the last System required for
Mechanical Completion; or alternatively, Owner may disagree that
Mechanical Completion has occurred by notifying Contractor in
writing of why it disagrees that Mechanical Completion has
occurred. 12.3 Preoperational Test
Completion.
(a) "
Preoperational Test Completion " shall have occurred upon
the Preoperational Tests having been satisfactorily completed with
acceptance criteria based on the objectives of the Preoperational
Tests as provided in Section 11.3(a) .
(b) Contractor
shall notify Owner when the provisions of
Section 12.3(a) have been satisfied. Such notification
shall include detailed Documentation demonstrating that all
acceptance criteria have been satisfied or, with Owner’s
written concurrence, addressed as a Preoperational Test Completion
follow-up item. Owner shall Accept the Unit as having achieved
Preoperational Test Completion, by delivering to Contractor Notice
of that Acceptance within five (5) Business Days following
receipt of Contractor’s Notice that Preoperational Test
Completion has occurred; or alternatively, Owner may disagree that
Preoperational Test Completion has occurred by notifying Contractor
in writing of why it disagrees that Preoperational Test Completion
has occurred. 12.4 Start-up Test
Completion.
(a) "
Start-up Test Completion " shall have occurred upon
(i) the Start-up Tests having been satisfactorily completed
with acceptance criteria based on the objectives of the Startup
Tests as provided in Section 11.4(b) ; (ii) the
Unit operating at [***] of licensed power in accordance with Good
Industry Practices without restrictions within Contractor’s
control; and (iii) Owner Accepting in writing, the Unit as
having achieved Start-up Test Completion based on meeting the
objective test criteria as stated in the Start-Up Test procedures.
If during the Start-up Tests the Unit does not reach [***] licensed
power in accordance with Good Industry Practices without
restrictions within Contractor’s control; but Owner Accepts
in writing the Unit as having achieved Start-up Test Completion
based on meeting the objective test criteria as stated in the
Start-Up Test procedures, and the Unit achieves a power level
output that is [***], then Contractor shall be obligated to work to
improve the power output in accordance with the requirements of
Section 11.5, but for all other purposes Contractor
shall be deemed to have achieved Start-up Test Completion and
Contractor shall continue with the completion of the remainder of
the Work.
(b) Contractor
shall notify Owner when the provisions of
Section 12.4(a) have been satisfied. Such notification
shall include detailed Documentation demonstrating that all
acceptance criteria have been satisfied or, with Owner’s
written concurrence, addressed as a Start-up Test Completion
follow-up item. Owner shall Accept such Unit as having achieved
Start-Up Test Completion, by delivering to Contractor Notice of
Acceptance within five (5) Business Days following receipt of
Contractor’s Notice that Start-Up Test Completion has
occurred; or alternatively, Owner may disagree that Start-up Test
Completion has occurred by giving Contractor Notice of why it
disagrees that Start-up Test Completion has occurred.
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12.5 Substantial
Completion.
(a) "
Substantial Completion " shall have occurred upon all of the
following criteria having been satisfied:
(i) the Performance Tests shall have
met the performance criteria in accordance with
Section 11.5(c) through (h) (including any re-testing)
or Contractor shall have paid any liquidated damages that may be
payable under such Sections, and the NSSS Thermal Performance Test
has been completed in accordance with Section 11.5(k) ;
(ii) Contractor has completed the
Work associated with the applicable Unit and related Ancillary
Facilities in accordance with the requirements of this Agreement,
except for (A) Punch List items, (B) obligations under
the Warranties, and (C) the Work described under
Section 11.5(d)(ii)(A) that is associated with
improving the Net Unit Electrical Output [***];
(iii) the Unit is operating [***]
consistent with Good Industry Practice without restrictions within
Contractor’s control; (iv) if
the Unit is operating below the Net Unit Electrical Output
Guarantee level [***], then Contractor, in accordance with
Section 11.5(d)(ii)(A) , shall have either
(A) engaged in an engineering review and analysis of the
performance deficiency, in consultation with Owner, to determine
possible options to correct the deficiency or improve the output
and submitted to Owner a plan describing what actions Contractor
will take to seek to improve the Net Unit Electrical Output, or
(B) paid the applicable Performance Liquidated Damages
associated with the shortfall; (v)
All Base ITAACs have been completed and fully satisfied in
accordance with this Agreement, the COL and NRC requirements; and
(vi) All Quality Assurance
Documentation, Facility Manuals and other AP1000 Facility
Information necessary for the commercial operation of the Unit
shall have been delivered to Owner in the required form.
(b) Contractor
shall give Notice to Owner that the provisions of
Section 12.5(a)(i) though (vi) have been satisfied,
after the Punch List has been established in accordance with
Section 12.6 or the Punch List has been referred to the
DRB. Contractor shall specify the date Contractor asserts that
Substantial Completion was achieved in such Notice to Owner. Owner
shall Accept such Unit as having achieved Substantial Completion,
by delivering to Contractor Notice of that Acceptance within five
(5) Business Days following receipt of Contractor’s
Notice that Substantial Completion has occurred; alternatively,
Owner may within such time period disagree that Substantial
Completion has occurred by giving Notice to Contractor of why it
disagrees that Substantial Completion has occurred. The date of
Substantial Completion shall be the date the Unit has achieved
Substantial Completion and not the date of Owner’s
Acceptance.
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12.6 Punch List. Prior to
Substantial Completion, Contractor shall submit to Owner for its
review and approval a comprehensive list of remaining punch list
Work, which shall be of a minor nature, does not impact full power
operation and does not prevent safe use and normal operation of the
Unit in accordance with the COL and Good Industry Practice (the "
Punch List "). Owner shall have the right for up to [***]
from receipt of the Punch List to fully inspect the Unit and add to
the Punch List items of remaining Work associated with such Unit,
or Work necessary for compliance with the applicable requirements
of the Agreement. Within fifteen (15) Business Days after the
finalization of the Punch List, Contractor shall submit to Owner in
writing for its approval (which approval shall not be unreasonably
withheld) the scheduled date for Final Completion. Owner shall have
the right to withhold from the Milestone Payment due upon
Substantial Completion an amount of money equal to [***] of the
expected price of completion of the Punch List, which amount if
otherwise payable, shall be released to Contractor upon Final
Completion. In lieu of the Punch List withholding described in this
Section 12.6 , Contractor shall have the option to
provide to Owner an original standby letter of credit for the
amount specified above for the completion of the Punch List, in
which case the amount withheld for the Punch List shall be released
to Contractor. The letter of credit shall be at Contractor’s
cost, shall be issued by a U.S. bank that is reasonably acceptable
to Owner, and must be in a form that is reasonably acceptable to
Owner. Any withholdings under this Section 12.6 shall
be in addition to any other amounts withheld by Owner under any
other provisions of this Agreement.
12.7 Final Completion.
(a) "
Final Completion " of the Unit shall have occurred upon:
(i) all requirements for Substantial Completion having been
satisfied, (ii) satisfactory performance of retesting, if any,
has been completed, and (iii) the completion of the Punch List
and the other Work required under the Agreement, including, if
applicable, the Work described under
Section 11.5(d)(ii)(A) that is associated with
improving the Net Unit Electrical Output [***], but excluding the
obligations under the Warranties.
(b) Contractor
shall notify Owner when it believes that the provisions of
Section 12.7(a) have been satisfied. Contractor shall
specify the date that Contractor asserts Final Completion occurred
in its Notice to Owner. Owner shall Accept the Unit as having
achieved Final Completion by delivering to Contractor Notice of
Acceptance within fifteen (15) Business Days following receipt
of Contractor’s Notice that all requirements for Final
Completion have been satisfied; alternatively, Owner may reject the
Unit as not having achieved Final Completion by giving Notice to
Contractor of why it disagrees that all requirements for Final
Completion have been satisfied. If such Notice is not delivered by
Owner within the specified time period, then Contractor shall be
entitled to a Change in accordance with Article 9 . The
date of Final Completion shall be the date the Unit has satisfied
all requirements for Final Completion and not the date of
Owner’s Acceptance. [***].
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(c) Achieving
Final Completion shall not relieve Contractor of any warranty or
other obligation of Contractor under this Agreement that by its
nature is intended to survive Final Completion.
(d) If
Contractor is unable to achieve Final Completion within [***]
following Substantial Completion, whichever occurs later, due
primarily to the fact that Owner limits Contractor’s access
to the Unit or otherwise does not allow Contractor to take the
necessary actions to achieve Final Completion, then Final
Completion will be deemed to have occurred. If Owner has provided
appropriate access but Contractor fails to achieve Final Completion
by the date that is [***] following the date set forth in the
Project Schedule for Final Completion, then Owner may hire third
party contractors at then current market rates to complete the
final Punch List items and apply the cost (including a reasonable
amount for Owner’s administration and overhead not to exceed
[***] of the cost of the third party contractor) of completing such
final Punch List items against the Punch List withholding described
in Section 12.6 above. To the extent additional funds
are required to complete the final Punch List items the Contractor
shall promptly pay Owner such additional amount; however, if any
portion of the Punch List withholding described in
Section 12.6 remains unused following Final Completion
then Owner shall promptly pay Contractor such remaining amount.
ARTICLE 13 — DELAY LIQUIDATED DAMAGES; LIQUIDATED DAMAGE
CAPS 13.1 Delay Liquidated
Damages. The Parties agree that Owner would suffer actual
damages if Contractor does not achieve Substantial Completion by
the date that is [***] after the Guaranteed Substantial Completion
Date, and that it would be extremely difficult and impracticable
under presently known and anticipated facts and circumstances to
ascertain and fix the amount of actual damages Owner would incur
and, accordingly, if Contractor does not achieve Substantial
Completion by the date that is [***] after the Guaranteed
Substantial Completion Date due to Contractor’s and/or
it’s Personnel’s fault, Owner’s remedy for such
delay shall be to recover from Contractor as liquidated damages,
and not as a penalty, a fixed amount for each Day or any portion of
a Day that Substantial Completion is delayed during such time
period beyond the Guaranteed Substantial Completion Date (the "
Delay Liquidated Damages ") as follows:
|
|
|
|
|
Number of Days After
|
|
|
|
Guaranteed Substantial
|
|
Delay Liquidated Damages
|
|
Completion Date
|
|
(per Day or partial Day)
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
If a delay in achieving Substantial Completion of a Unit is
[***] or less, [***]. If a delay in achieving Substantial
Completion of a Unit continues beyond [***] after the Guaranteed
Substantial Completion Date for such Unit, [***]; provided,
however, that Owner shall at such
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time have the right to terminate this Agreement under the terms
of Section 22.3 or to terminate a Unit under
Section 22.7 , except that Owner shall not owe
Contractor an Agreement Termination Fee or Unit Termination Fee, if
applicable. In no event shall the total Delay Liquidated Damages
due under this Agreement with respect to a Unit exceed [***].
13.2 Payment of Delay Liquidated
Damages. Delay Liquidated Damages, if due, shall be payable by
Contractor to Owner within thirty (30) Days following Notice
from Owner that such amounts are due or, if the payment of any such
amount is disputed, within thirty (30) Days following
resolution of the Claim in accordance with Article 27 .
Payment of Delay Liquidated Damages shall be Owner’s sole and
exclusive remedy for Contractor’s failure to achieve
Substantial Completion of a Unit by the date that is more than
[***] after the Guaranteed Substantial Completion Date for such
Unit, except that (a) Owner shall have a termination right in
accordance with Section 13.1 upon meeting the
conditions for termination set forth therein, (b) if
Contractor is otherwise in breach of this Agreement then Owner may
terminate under Section 22.2(a) upon meeting the
conditions for termination set forth therein [***]. ARTICLE 14
— WARRANTY 14.1
Equipment.
(a)
Equipment Warranty . Contractor warrants that the Equipment
furnished hereunder will be: (i) free from defects in design,
workmanship, construction and material, (ii) new, [***],
(v) in conformance with Good Industry Practices, and
(vi) in accordance with the requirements of this Agreement
(collectively, the " Equipment Warranty "); provided,
however, that to the extent an Extended Equipment Warranty Period
applies for the Equipment listed in Exhibit Z, such Extended
Equipment Warranty Period shall be subject to the terms of such
warranty (if any) that is established by the Parties in accordance
with Exhibit Z (the " Extended Equipment
Warranties "). The Equipment Warranty does not apply to the
expected, routine (i.e., a frequency typical in industry
experience) replacement of consumables such as, but not limited to,
gaskets, seals, filters, packing, fuses, transistors and light
bulbs. Owner shall have the right to obtain the Extended Warranties
as provided in Exhibit Z via the provisions of
Article 9 within the time period specified for the
exercise of such option.
(b)
Equipment Warranty Remedy . If Owner discovers that any
Equipment is nonconforming or fails during the Equipment Warranty
Period as provided in Section 14.4(a) , Owner shall, within
the Equipment Warranty Period, promptly notify Contractor of such
nonconformance or failure along with any evidence or information it
has with respect to the possible cause or causes thereof. Upon
receipt of such notice, Contractor shall at Contractor’s
expense: (i) repair, replace, redesign, modify or adjust the
affected Equipment as required to cure such nonconformance or
failure; and (ii) perform such tests as are reasonably
necessary to demonstrate the cure of such nonconformance or
failure. Contractor will perform the Warranty Work at a time
responsive to and consistent with the Owner’s reasonable
requirements for the safe, reliable and efficient operation of the
Facility. The decision to repair, replace, redesign, modify or
adjust will be made by Contractor with consultation from Owner and
consistent with the quality and performance requirements originally
applicable to such nonconforming Equipment, as specified in
applicable AP1000 Facility Information. If Owner requests that
Contractor cure such nonconformance or failure in a manner that
will cause Contractor to incur
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Direct Costs plus SGA/G&A, other mark-ups applied pursuant
to Exhibit G, and Pro Rata Profit on such Direct Costs
in excess of the costs and charges which Contractor would have
incurred in curing such nonconformance or failure in the manner
contemplated by Contractor, Contractor shall cure such
nonconformance or failure in the manner requested by Owner,
provided that such manner to cure such nonconformance or failure is
technically feasible and does not otherwise impact
Contractor’s ability to perform its other obligations under
this Agreement, provided further that Owner shall reimburse
Contractor for such excess costs and charges on a Time and
Materials Basis. Removal and reinstallation of the nonconforming
Equipment shall be performed by Contractor at its expense; provided
that Owner shall provide working access to the Equipment (which
shall include removing, disassembling, replacing and/or
reinstalling adjacent or interfering Equipment, systems or
structures in the Unit to the extent necessary to permit Contractor
to perform its warranty obligation on the nonconforming Equipment),
it being understood that such removal, disassembling, replacing
and/or reinstalling by Owner shall not adversely affect any
warranties and, at the request of Contractor, Owner shall furnish,
without cost to Contractor, plant support personnel and plant
facilities to assist in the removal, reinstallation, repair and
other activities occasioned by this warranty as specified in
Section 14.1(e) . Should investigation reveal that a
defect is not covered by the Equipment Warranty, Owner shall
reimburse Contractor for the work undertaken by Contractor pursuant
to this Section 14.1(b) on a Time and Materials Basis.
Contractor shall, at its own expense for all covered defects,
update appropriate AP1000 Facility Information to accurately
reflect any such replacement or modified item of the Equipment.
(c)
Warranty Work Deferral . At Owner’s option, Warranty
Work may be deferred until the time of the Unit’s next
regularly scheduled refueling outage, and the Warranty provisions
hereunder shall apply notwithstanding whether such outage occurs
after the end of the Equipment Warranty Period. If Contractor
advises Owner that deferral of the Warranty Work can reasonably be
expected to cause damage to the Unit and/or Equipment, Owner may
elect to use the Unit and/or Equipment at its own risk and expense,
without recourse against Contractor. In no event may Owner defer
the Warranty Work beyond the earlier of the next refueling outage
or [***] from the date Contractor Notified Owner it was ready to
perform the Warranty Work; provided, that if there is a Standard
Equipment Warranty Period extension pursuant to
Section 14.5(b) during such [***] period, and such
extension results in the next outage being delayed beyond the [***]
period, then the [***] period will be extended to the date [***]
beyond the start of the next outage, but in no case may such period
be extended by an amount that is greater than the amount of time
that the Standard Equipment Warranty Period is extended.
(d)
Additional Owner’s Obligations . If there is a
warranty claim under this Agreement:
(i) Owner shall, at
Contractor’s request, afford Contractor a reasonable
opportunity to review Owner’s system of developing and
recording data related to Facility performance, and Contractor
shall bear the cost of its review of such system, unless Contractor
is not responsible for the asserted warranty claim;
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(ii) Owner shall provide
authorized Personnel of Contractor and its Subcontractors and
Vendors reasonable access to relevant operation and maintenance
records of Owner concerning the affected portions of the Facility
and Contractor shall bear the cost of its review of such records,
unless Contractor is not responsible for the asserted warranty
claim; (iii) Owner shall provide
Contractor reasonable notice of the presentation(s) to any
Government Authority relating to the asserted warranty claim or
related issues; and (iv) The Parties
hereto shall cooperate in performing any root cause analysis.
(e)
Working Access to Equipment and Plant Support Activities to be
Provided by Owner . The plant personnel and facilities to be
provided by Owner in accordance with Sections 14.1(b) and/or
14.2(b) are listed below. Owner shall also provide this
support after Unit Mechanical Completion should Contractor be
required to repair or replace Equipment during the period from the
Unit Mechanical Completion through the end of the Warranty Period
and also with respect to any period in which Contractor is
performing Warranty Work under this Agreement.
(i) Operations support to establish
the required plant conditions (i.e., operating mode) for the
repairs; (ii) Make the plant systems,
structures, and components available and placed in the proper
configuration; (iii) Provide the
valve clearances and tag-outs necessary;
(iv) Provide the necessary licensed
operators in the control room and containment as required by the
COL; (v) Establish and maintain
appropriate and acceptable industrial safety conditions in
accordance with Laws, Good Industry Practices, and Operator policy
such that reasonably unencumbered access to the required work areas
is enabled for all personnel; (vi) As
appropriate, provide body harnesses and/or personal flotation
devices in sufficient quantities such that reasonably unencumbered
access to the required work areas is enabled for all personnel;
(vii) Provide scaffolding and
scaffolding materials meeting applicable OSHA standards (as
required); (viii) Provide reasonable
ambient lighting;
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(ix) Provide reasonable access to
the Site and Nearby Work Areas, including storage areas and
roadways, and floor conditions shall be suitable for crane and
truck operation to the extent allowed by the Facility design;
(x) Provide access such as remove and
reinstall cubicle plugs and other related plant facilities, such as
piping, ductwork, cable trays, platforms and insulation;
(xi) Provide logistics support and
labor for moving equipment and materials into and out of the
Facility; (xii) Provide lay down
areas for equipment storage, set-up, staging and operation (area
requirements will depend on the scope of services performed);
(xiii) Provide areas for storage of
low specific activity materials, and clean equipment boxes and/or
Sealands. The areas may vary depending on storage configurations
and scope of services; (xiv) Provide
anti-contamination clothing, lockers, change area, dosimetry,
health physics and radiation protection service and badging for
Site access as typically required;
(xv) Establish and maintain
appropriate and acceptable radiological conditions in accordance
with Laws, Good Industry Practices, and Operator policy, including,
but not limited to, any required decontamination to reasonable
limits that will allow Contractor to perform its obligations under
this Article 14 , such that reasonably unencumbered
access to the required work areas is enabled for all personnel;
(xvi) Dispose appropriately of
radioactive materials and waste from the Facility in accordance
with applicable Laws and Good Industry Practices;
(xvii) Provide official whole body
exposure data for Contractor’s Personnel upon
Contractor’s Personnel departure from the Site;
(xviii) Provide Gamma isotopic
analysis to determine releaseability of Equipment and waste;
(xix) Provide breathing air and
respiratory protection as necessary;
(xx) Provide plant compressed air as
required; (xxi) Provide air for
ventilation; (xxii) Provide 110V,
220V and 480V power as required;
(xxiii) Provide plant and deionized
water;
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(xxiv) Make available to
Contractor those special tools, as are available on-Site;
(xxv) Allow Contractor to access and
use machine shop, welding facilities, and hot tool crib, as
required and allow Contractor use of associated tradesmen;
(xxvi) Provide crane operators for
permanently installed cranes, including polar crane availability on
an as needed basis; (xxvii) Provide
for consumables such as wipes and rags, and disposal of all
contaminated materials; (xxviii)
Provide QA/QC coverage as required in the Owner approved procedures
to the extent such work is performed under the Owner quality
assurance program; (xxix) Provide
access to existing and available outside phone lines; and
(xxx) Provide sanitation
facilities and drinking water as available.
14.2 Services.
(a)
Services Warranty . Contractor warrants that the Services:
(i) will be performed in accordance with Good Industry
Practices using properly qualified personnel (taking into account
the work being performed), (ii) will be free from defects in
workmanship, [***], (v) will be performed in conformance with
Industry Codes and Standards applied in accordance with Good
Industry Practices and as specified in applicable Documentation,
and (vi) will be provided in compliance with the requirements
of this Agreement (the " Services Warranty ").
(b)
Services Warranty Remedy . If Owner discovers that any
portion of the Services required as part of the Work fails to
comply with the Services Warranty, Owner shall, within the Services
Warranty Period, promptly notify Contractor of such nonconformance
along with any evidence or information Owner has with respect to
the possible cause or causes thereof. Upon receipt of such Notice,
Contractor shall at Contractor’s expense (i) promptly
re-perform or otherwise correct the nonconforming Services and
perform any additional Work required to cause the Equipment to
comply with such re-performed or corrected Services pursuant to the
applicable provisions of Section 14.1 ; [***] and
(iii) perform such tests as are reasonably necessary to
demonstrate the cure of such nonconformance or failure. Contractor
shall perform the Warranty Work at a time responsive to and
consistent with the Owner’s reasonable requirements for the
safe, reliable and efficient operation of the Facility in
accordance with Owner’s operational requirements and needs.
The decision to repair, replace, redesign, modify or adjust will be
made by Contractor with consultation from Owner and consistent with
the quality and performance requirements originally applicable to
such nonconforming Services, as specified in applicable AP1000
Facility Information. If Owner requests that Contractor cure such
nonconformance in a manner that will cause Contractor to incur
Direct Costs plus SGA/G&A, other mark-ups applied pursuant to
Exhibit G, and Pro Rata
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Profit on such Direct Costs in excess of the costs and charges
which Contractor would have incurred in curing such nonconformance
or failure in the manner contemplated by Contractor, Contractor
shall cure such nonconformance or failure in the manner requested
by Owner, provided that such manner to cure such nonconformance or
failure is technically feasible and does not otherwise impact
Contractor’s ability to perform its other obligations under
this Agreement, provided further that Owner shall reimburse
Contractor for such excess costs and charges on a Time and
Materials Basis. Owner shall provide reasonable working access to
the Facility and reasonably available plant personnel and
facilities, if applicable, as specified in
Section 14.1(e) . Should investigation reveal that the
nonconformance is not covered by the Services Warranty, Owner shall
reimburse Contractor for the work undertaken by Contractor pursuant
to this Section 14.2 on a Time and Materials Basis.
(c)
Warranty Work Deferral . At Owner’s option, Warranty
Work that negatively impacts the operation of one or both Units may
be deferred until the time of the Unit’s next regularly
scheduled refueling outage and the Warranty provisions hereunder
shall apply notwithstanding whether such outage occurs after the
end of the Services Warranty Period. If Contractor advises Owner
that deferral of the Warranty Work can reasonably be expected to
cause damage to one or both Units and/or Equipment, Owner may elect
to use the Unit and/or Equipment at its own risk and expense,
without recourse against Contractor. In no event may Owner defer
the Warranty Work beyond the earlier of the next refueling outage
or [***] from the date Contractor Notified Owner it was ready to
perform the Warranty Work; provided, that if there is a Standard
Equipment Warranty Period extension pursuant to
Section 14.5(b) during such [***] period, and such
extension results in the next outage being delayed beyond the [***]
period, then the [***] period will be extended to the date [***]
beyond the start of the next outage, but in no case may such period
be extended by an amount that is greater than the amount of time
that the Standard Equipment Warranty Period is extended.
14.3 Warranty Fulfillment.
Contractor’s compliance with its Warranty obligations
described in Article 14 and any Extended Equipment
Warranty that is established in accordance with
Exhibit Z will constitute Contractor’s complete
fulfillment of its obligations under the Warranties (subject to the
limitations set forth in Section 37.2 , and Owner shall
not be entitled to any recovery or remedies with respect to such
Warranties other than those set forth in this
Article 14 and any Extended Equipment Warranty that is
established in accordance with Exhibit Z . Upon the
expiration of the applicable Warranty Period (including any
extension thereof), all obligations will terminate with respect to
the Equipment Warranty, the Services Warranty, or any Extended
Equipment Warranties, as applicable, for which a Notice of
nonconformance has not been provided prior to such expiration.
[***]. If Contractor is willing and able to promptly perform its
warranty obligations under this Article 14 , but Owner
elects to repair or remedy such Equipment or Services on its own or
through its other contractors, then Contractor will not be
responsible for the costs incurred for such repair or remedy.
14.4 Warranty Periods.
(a)
Equipment Warranty Period .
(i) Except for the Equipment listed
in Section 14.4(a)(iii) , the Equipment Warranty for a
Unit and its related Ancillary Facilities will commence
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upon the [***] and will expire on the date that is [***] (the "
Standard Equipment Warranty Period "); provided, further,
that if any Change that is not caused by Contractor’s breach
of its obligations under this Agreement, results in a delay in
reaching Substantial Completion thereby delaying the start of the
Equipment Warranty, then there will either (A) be a
modification to the Contract Price to compensate for the extension
of the Standard Equipment Warranty Period’s end date in
accordance with the provisions in Section 14.4(a)(ii)
below, or (B) if Owner elects to not accept the cost of the
warranty extension described in Section 14.4(a)(ii) below or
if the Parties are otherwise unable to obtain or agree upon pricing
for the Warranty Period extension, then the Standard Equipment
Warranty Period shall be reduced by the number of Days equal to the
amount of the delay in reaching Substantial Completion that was not
caused by Contractor’s breach of its obligations under this
Agreement. For those items of the Equipment listed in
Exhibit Z , and provided that an Extended Equipment
Warranty is obtained by Owner in accordance with
Exhibit Z , such Extended Equipment Warranties will
apply for the applicable period(s) set forth in
Exhibit Z (the " Extended Equipment Warranty
Period "). (ii) In the event that
after the pouring of first concrete for the Unit but prior to
Substantial Completion of such Unit, there is any delay in the
performance of the Work caused by Owner or their Personnel or
resulting from an event of Force Majeure, at Owner’s request,
Contractor shall use commercially reasonable efforts to determine
the cost of an extension to the standard equipment warranties and,
if such cost is accepted by Owner, endeavor to obtain such
extension to the equipment warranties from Vendors for Equipment
designated by Owner and will provide Owner the benefit of such
extensions. The cost of such extended warranties, if obtained,
shall be included in the Change Order which Contractor receives as
a result of such delay pursuant to Article 9 .
(iii) For the Equipment listed below
which is placed into service prior to Substantial Completion, the
Equipment Warranty will commence upon the date when an item listed
below is placed into service and will expire on [***]. If, however,
any such item of Equipment is placed into service prior to
Substantial Completion of the applicable Unit for the sole purpose
of being used by Contractor to support its performance of the Work,
the Equipment Warranty will commence upon the Substantial
Completion Date of such applicable Unit and will expire on [***].
Contractor shall give Notice to Owner within five (5) Business
Days after an item listed below has been placed into
service. List of Early Service Permanent Plant Equipment:
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Batteries for control power in switchgear
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480v Switchgear
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120v AC lighting
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6.9KV Switchgear
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Motor Control Centers
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Non Class 1E DCS and UPS systems (battery chargers and
inverters)
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2.
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Compressed Air Equipment (CAS) (service, instrument and control
air)
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3.
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Raw Water(RWS) / Potable Water (PWS) (pumps, valves, switchgear,
filtration systems, tanks, HVAC)
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4.
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Fire Protection System (FPS) (pumps, valves, switchgear, tanks,
HVAC, loops, hose houses, hydrants, fittings)
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5.
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Over Head Crane (Turbine Building, Aux/Reactor Building)
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6.
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Permanently Installed Cranes
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7.
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Wastewater System (WWS)
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8.
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Sanitary Drainage System (SDS)
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9.
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Service Water (to run Equipment)
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10.
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DCS (to run Equipment)
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11.
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Control Room HVAC
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12.
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Diesel Generator Building (building, HVAC, fuel oil system,
switchgear, etc.)
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13.
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Elevators
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14.
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13.8KV Loop Line (Site-specific portion of ECS system) for
construction power and energizing site permanent buildings
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15.
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Simulator Training System (STS)
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16.
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Switchyard and Relay House (ZBS)
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17.
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Hot Water Heating System (VYS)
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18.
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Annex/Aux Bldg. Non-Rad HVAC (VXS)
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19.
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Chill Water (VWS)
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20.
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Turbine Bldg. HVAC (VTS)
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21.
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RW Bldg. HVAC (VRS)
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22.
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Pump House HVAC (VPS)
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23.
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Nuclear Island Non-Rad HVAC (VBS)
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24.
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Plant Security System — portions (SES)
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25.
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Gravity and Roof Drain Collection System (RDS)
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26.
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Plant Lighting System (ELS)
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27.
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Grounding and Lightning Protection System (EGS)
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28.
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Communication Systems (portions) (EFS)
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29.
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Storm Drain System (DRS)
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30.
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Aux Steam Supply System (ASS)
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31.
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Welding Outlets
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32.
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Life/Safety Equipment
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(b)
Services Warranty Period . The Services Warranty will be
concurrent with the Standard Equipment Warranty Period (the "
Services Warranty Period ").
(c)
Warranty Period . Each of the Services Warranty Period, the
Standard Equipment Warranty Period and the Extended Equipment
Warranty Period are defined as the " Warranty Period ".
14.5 Warranty Period
Extension.
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(a)
Extension for Corrected Work . Any Work re-performed and any
part of the Facility that is reworked, repaired or replaced in
satisfaction of Contractor’s obligations in connection with
the Services Warranty, the Equipment Warranty (but not the Extended
Equipment Warranties as the terms for any extension of the Extended
Equipment Warranties will be established in accordance with
Exhibit Z ), as applicable, will be re-warranted by
Contractor pursuant to the same Warranty set forth in
Sections 14.1(a) and 14.2(a) , and Contractor
will have the same obligations in relation thereto as set forth in
those Sections, for a period equal to the longer of: [***].
(b)
[***]. 14.6 `Warranty of
Title. Contractor represents and warrants that the Work,
including the Equipment furnished by Contractor and its
Subcontractors that become part of the Facility or is otherwise
furnished to Owner shall be legally and beneficially owned by Owner
free from any Liens (other than Liens created by Owner, including
non-payment). In the event of a breach of this warranty of title,
Contractor shall have a duty to cure such breach in accordance with
the procedures set forth in Section 18.2 .
14.7 Software Warranty. During
the Standard Equipment Warranty Period for a Unit (referred to in
this Section 14.7 as the " Software Warranty
Period "), the Software and Configuration Data shall:
(i) be compatible with and operate in conjunction with the
Unit, the Facility and other Software and related Equipment as
indicated in the Software Documentation or as otherwise recommended
by Contractor in writing; (ii) conform to and perform without
material errors or interruption and in accordance with the Software
Documentation and Specification for the Unit; and (iii) shall
be technically acceptable with respect to software selection in
accordance with Good Industry Practices for the application for
which it is being used. Contractor shall not be liable for failure
to meet the foregoing warranty for the specific item of Software
exhibiting a non-conformance to the extent there have been:
(a) adaptations or modifications made to the Software,
including changes to hardware on which the Software is installed
and operates, by the Owner or others in a way that is not described
by the Documentation, or otherwise without authorization or
approval from Contractor, which are responsible for causing such
failure; or (b) misuse of the Software by Owner or others.
Contractor shall promptly notify Owner of any known defect in any
Software that may have an adverse impact on the Unit or Facility or
their operation. If the Software fails to satisfy the requirements
of this Software Warranty during the Software Warranty Period,
Contractor, with reasonable assistance from Owner, shall take
appropriate corrective action at no additional charge to Owner to
bring the Software into conformance and to remediate any damage to
the Equipment or the Facility, [***]. Contractor shall commence
correction of nonconforming Software within a reasonable period of
time after receipt of written notification of the nonconformance in
view of the impact of the defect on the operations of the Facility.
Contractor shall perform the corrective Work so that the Software
conforms to the standards set forth in (i), (ii) and (iii)
above in this Section 14.7 or replace such Software
with a suitable replacement. Should Contractor fail to bring the
Software into conformance within a reasonable time after written
notification of a nonconformance or fail to correct the
nonconformance so that it conforms to the standards set forth in
(i), (ii) and (iii) above in this
Section 14.7 in a commercially reasonable time after
such written notification and fails to replace such Software with a
suitable replacement, Contractor shall propose a commercially
reasonable alternative to
Page 82
Owner for Owner’s acceptance. In the event of a defect,
the Parties acknowledge that provision of a workaround by
Contractor may be an appropriate temporary or permanent manner of
reaching conformance, depending upon the type of defect and the
manner of the workaround. For purposes of this Section 14.7
, Software shall exclude commodity software provided by third
parties, such as Microsoft Corporation, except to the extent that
specific commodity software interferes with the functionality to
operate or control the Unit or Facility . Third-Party
Software shall be governed by the provisions of the specific
Third-Party Software licenses . The media on which the
Software, Configuration Data and Software Documentation is recorded
shall be substantially free from defects in material and
workmanship for the Software Warranty Period. Contractor will, at
no additional charge, replace any defective media, provided that
the applicable defect is not due to Owner’s misuse.
14.8 Assignment of Residual Third
Party Warranties. To the extent third party suppliers have
provided warranties on Services, Equipment and Software which
extend beyond the expiration of the Warranties provided by
Contractor under this Agreement, Contractor shall assign the
residual portion of such third party warranties, without recourse,
to Owner upon the expiration of the Contractor’s Warranty
applicable to such Equipment, Services and Software.
14.9 Limitations and
Disclaimers.
(a) THE
WARRANTIES AND REMEDIES SET FORTH IN THIS ARTICLE 14 FOR ANY
NONCONFORMANCE OF EQUIPMENT OR SERVICES ARE THE EXCLUSIVE
WARRANTIES AND REMEDIES FOR SUCH NONCONFORMANCE OF EQUIPMENT OR
SERVICES AND ARE IN LIEU OF ALL OTHER WARRANTIES AND REMEDIES FOR
SUCH NONCONFORMANCE OF EQUIPMENT OR SERVICES WHETHER STATUTORY,
EXPRESS OR IMPLIED (INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES
ARISING FROM COURSE OF DEALING OR USAGE IN TRADE) AND WHETHER
CLAIMS BY OWNER ARE BASED IN CONTRACT, IN TORT (INCLUDING FAULT,
NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, SUBJECT TO THE
LIMITATIONS SET FORTH IN SECTION 37.2 .
(b) Any
warranties not expressly made by Contractor in this Agreement are
expressly waived by the Owner.
(c) Notwithstanding
the foregoing provisions of this Article 14 ,
Contractor shall have no liability hereunder for nonconformance or
failure of Equipment, or performance, to the extent that such
nonconformance or failure results, in whole or in part, from any of
the following: (i) Operation of the
Facility outside of the design bases (as such term is defined in 10
CFR § 50.2) of the Equipment or integrated system;
(ii) Following Turnover of a system
or structure, improper use, operation in violation of
manufacturer’s written instructions, handling, storage,
maintenance, or operation of the Equipment or material therein
outside the guidelines of the Specifications or Good Industry
Practices;
Page 83
(iii) Alteration, abuse or misuse
of the Equipment by persons other than Contractor, its
Subcontractors and the employees and agents thereof, or without the
prior written approval of Contractor;
(iv) Any operation or maintenance of
the Equipment that is not in accordance with either of the
Operating Procedures or Maintenance Procedures;
(v) Operation or maintenance by
personnel not qualified in accordance with the Owner’s
standard qualification requirements for operating or maintenance
personnel; or (vi) Use of Nuclear
Fuel in the Unit (other than that supplied by Westinghouse) that
does not comply with the Nuclear Fuel design and fabrication
specifications that Contractor provided for the Facility or that is
otherwise unsuitable for use by the Unit.
(d) Contractor
shall be relieved from fulfilling its Warranty obligations as
specified in this Article 14 to the extent that:
(i) A Nuclear Incident occurs, and
(ii) The consequences, including
radiation, of such Nuclear Incident prevent Contractor from
performing such Warranty obligations; provided, however, that
Contractor shall be obligated to fulfill such Warranty obligations
at such time as Contractor or its Personnel are permitted to enter
the work area pursuant to applicable Law. In any action taken by
Contractor to satisfy a claim by Owner under any of the Warranties
specified herein, Contractor shall be entitled to whatever
financial relief is provided (if any) by the insurers pursuant to
Owner’s insurance policies that cover the occurrence that
caused the breach of Warranty.
(e)
[***], no statement made in this Article 14 or any
AP1000 Facility Information shall be construed to provide or imply
a warranty or guaranty that the Equipment or Facility will actually
operate or perform in accordance with its Specifications for its
stated design life, and Contractor shall otherwise have no warranty
obligation to repair any defects in the Equipment that are
discovered after expiration of the Standard Equipment Warranty
Period, or if applicable, any Extended Equipment Warranty Period.
(f)
[***]. ARTICLE 15 — INDEMNITY AND PROTECTION FOR NUCLEAR
INCIDENTS 15.1
Contractor’s General Indemnity. To the maximum extent
permitted by applicable Law, and except with respect to a Nuclear
Incident, Contractor shall at Contractor’s expense indemnify
and defend Owner and Owner Affiliates, their officers, directors,
employees and agents, from and against liability, loss, costs,
claims, damages, expenses (including reasonable attorneys’
fees and reasonable enforcement costs), judgments, awards, demands,
actions and/or disputes, arising or claimed to have arisen:
Page 84
(a) from
and to the extent of, (i)
the negligent or wrongful acts or omissions of Contractor or its
Subcontractors and their Personnel, acting within the scope of
their employment or for which applicable Law would otherwise hold
Contractor liable for such acts or omissions, or
(ii) [***], that result
in one or more Third Party Claims alleging:
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(x)
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injury to (including mental or emotional) or death of any
natural person (except to the extent covered by
Sections 15.1(b) or 15.2(b) ), or
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(y)
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damage to or destruction of any third party property, real or
personal (specifically excluding the Facility);
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(b) from
any injuries sustained and/or occupational diseases contracted by
Contractor’s or its Subcontractor’s Personnel of such a
nature and under such circumstances as to create liability by Owner
or its Affiliates or Contractor under the Workers’
Compensation Act, and all amendments thereto, of the state having
jurisdiction, including all claims and causes of action of any
character against Owner and its Affiliates by any Personnel of
Contractor, its Subcontractors or assignees, or the employer of
such Personnel, or any person or concern claiming by, under or
through them resulting from or in any manner growing out of such
injuries or occupational diseases, except to the extent such
injuries and/or occupational diseases are caused by the negligence
or wrongful acts of Owner, its Affiliates and/or their respective
Personnel; and
(c) from
demands, actions or disputes asserted by any Subcontractor arising
from Contractor’s breach of its Subcontract with such
Subcontractor regardless of whether such demands, actions or
disputes arise from activities at the Site, at Nearby Work Areas,
or at any other location; provided that Owner shall reimburse
Contractor for the costs and charges incurred by Contractor in
connection with its obligations under this clause (c) arising
from Target Price Work and Work performed on a Time and Material
Basis. [***]. Owner shall give Contractor prompt Notice of any
claims for which it seeks indemnity hereunder (along with any
information available to Owner that reasonably sets forth the basis
of Contractor’s obligation(s)); provided ,
however , that any failure to notify Contractor will not
relieve Contractor from any obligation hereunder unless Contractor
is prejudiced by such failure. Contractor shall promptly notify
Owner of any material litigation filed against Contractor arising
from Contractor’s performance of the Work that has the
potential to create liability for Owner. Contractor shall
investigate all such claims and preserve necessary evidence using
reasonable claims handling practices.
Page 85
15.2 Owner’s General
Indemnity. To the maximum extent permitted by applicable Law,
and except with respect to a Nuclear Incident (which shall be
subject to Section 15.6 ), Owner shall at Owner’s
expense indemnify and defend Contractor and Contractor Affiliates,
their officers, directors, employees and agents, from and against
liability, loss, costs, claims, damages, expenses (including
reasonable attorneys’ fees and reasonable enforcement costs),
judgments, awards, demands, actions and/or disputes, arising or
claimed to have arisen:
(a) from
and to the extent of the negligent or wrongful acts or omissions of
Owner or its Personnel (other than Contractor or its
Subcontractors) acting within the scope of their employment or for
which applicable Law would otherwise hold Owner liable for such
acts or omissions that result in one or more Third Party Claims
alleging: (i) injury to (including
mental or emotional) or death of any natural person (except to the
extent covered by Section 15.1(b) or 15.2(b) ), or
(ii) damage to or destruction of any
third party property, real or personal (specifically excluding the
Facility);
(b) from
injuries sustained and/or occupational diseases contracted by
Owner’s Personnel (excluding Contractor or its Subcontractors
and their Personnel) of such a nature and arising under such
circumstances as to create liability by Contractor or its
Affiliates or Owner under the Workers’ Compensation Act, and
all amendments thereto, of the state having jurisdiction, including
all claims and causes of action of any character against Contractor
and its Affiliates by any Personnel of Owner (excluding Contractor
or its Subcontractor and their Personnel), or any person or concern
claiming by, under or through them resulting from or in any manner
growing out of such injuries or occupational diseases, except to
the extent such injuries and/or occupational diseases are caused by
the negligence or wrongful acts of Contractor, its Affiliates, its
Subcontractors and/or their respective Personnel; and
(c) from
demands, actions or disputes asserted by any contractor of Owner
(other than Contractor or its Subcontractors) arising from
Owner’s breach of its contract with such contractor
regardless of whether such demands, actions or disputes arise from
activities at the Site, at Nearby Work Areas, or at any other
location. [***]. Contractor shall give Owner prompt Notice of any
claims for which it seeks indemnity hereunder (along with any
information available to Owner that reasonably sets forth the basis
of Owner’s indemnity obligation(s)); provided ,
however , that any failure to notify Owner will not relieve
Owner from any obligation hereunder unless Owner is prejudiced by
such failure. Owner shall promptly notify Contractor of any
material litigation filed against Owner arising from Owner’s
scope of work or in connection with the Facility that has the
potential to create liability for Contractor. Owner shall
investigate all such claims and preserve necessary evidence using
reasonable claims handling practices.
Page 86
15.3 Application of Insurance
Proceeds. The payment obligations of Contractor and Owner under
Article 15 shall be reduced by the proceeds of any
applicable insurance coverages that may be available.
15.4 Intellectual Property
Indemnity. Contractor, if notified promptly in writing and
given authority and assistance for the defense of same, at
Contractor’s expense, shall defend, or at its option settle,
any action brought against Owner to the extent based solely on a
claim that any item or Work furnished by it or Owner’s use
thereof infringes any patent, trademark, copyright, trade secret or
any other intellectual property right of any third party.
Contractor shall indemnify Owner and hold Owner harmless from all
damages and costs (including attorney’s fees) awarded in any
such suit or proceeding and shall pay the damages and costs awarded
therein against Owner. If a claim of infringement is made,
Contractor may, or if the use of the item is enjoined, Contractor
shall, at its expense and option, either procure for Owner the
right to continue using it, replace it with an equivalent
non-infringing item, or modify or replace it so it becomes
non-infringing without degrading its functionality or performance,
or as a last resort and with the prior written approval of Owner,
remove it and refund the purchase price. No modification or
replacement under this Section 15.4 shall in any way
amend or relieve Contractor from the Warranties set forth in this
Agreement or adversely affect the Contract Price or Project
Schedule or any license or permit affecting the Facility.
Notwithstanding the above, Contractor has no duty to defend or
indemnify Owner to the extent a claim of infringement is based upon
an item being furnished in accordance with specifications,
drawings, plans, or detailed designs supplied by Owner or by a
third party for Owner that caused Contractor to deviate from its
normal practices, or to the extent the infringement is caused by an
item being modified or combined by Owner or others with items not
furnished by Contractor hereunder in a manner not intended or
approved in writing by Contractor. THIS SECTION 15.4 IS AN
EXCLUSIVE STATEMENT RELATING TO INTELLECTUAL PROPERTY RIGHTS
INFRINGEMENT OR MISAPPROPRIATION AND ALL THE REMEDIES OF THE
PARTIES RELATING THERETO, SUBJECT TO THE LIMITATIONS SET FORTH IN
SECTION 37.2 . 15.5 Other
Indemnity Obligations of Each Party.
(a)
Environmental Indemnity . (i)
Except to the extent resulting from a Nuclear Incident, Contractor
shall defend, indemnify and hold harmless Owner (including its
Affiliates) from (A) any Third Party Claims for liabilities,
losses, costs (including attorney fees), or damages arising from
and to the extent of Contractor’s or its
Subcontractor’s use or management of Hazardous Materials, or
Contractor’s failure to comply with the applicable
requirements of Article 20 , and (B) any
governmental fines or penalties of any kind arising from and to the
extent of Contractor’s or its Subcontractor’s use or
management of Hazardous Materials, or Contractor’s failure to
comply with the applicable requirements of Article 20 .
(ii) Except to the extent resulting
from a Nuclear Incident (which shall be subject to
Section 15.6 ), Owner shall defend, indemnify and hold
harmless
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Contractor (including its Affiliates) from (A) any Third
Party Claims for liabilities, losses, costs (including attorney
fees), or damages arising from and to the extent of Owner’s
use or management of Hazardous Materials, or Owner’s failure
to comply with the applicable requirements of
Article 20 , and (B) any governmental fines or
penalties of any kind arising from and to the extent of
Owner’s use or management of Hazardous Materials, or
Owner’s failure to comply with the applicable requirements of
Article 20 .
(b)
Safety and Health . (i) Except
to the extent resulting from a Nuclear Incident, Contractor shall
indemnify and hold harmless Owner (including its Affiliates) from
(A) all Third Party Claims for liabilities, losses, costs
(including attorney fees), or damages as a result of the failure of
Contractor or any of its Subcontractors or their Personnel to
comply with OSHA Standards during the performance of the Work,
provided that any such Subcontractors were acting within their
scope of employment, and for the failure of any materials,
Equipment or Construction Equipment to comply with OSHA Standards
during the performance of the Work, or (B) any governmental
fines or penalties of any kind as a result of the failure of
Contractor or any of its Subcontractors or their Personnel to
comply with OSHA Standards during the performance of the Work, and
for the failure of any materials, Equipment or Construction
Equipment to comply with OSHA Standards during the performance of
the Work. (ii) Except to the extent
resulting from a Nuclear Incident (which shall be subject to
Section 15.6 ), Owner shall indemnify and hold harmless
Contractor (including its Affiliates) from (A) all Third Party
Claims for liabilities, losses, costs (including attorney fees), or
damages as a result of the failure of Owner or its Personnel (other
than Contractor or its Subcontractors) to comply with OSHA
Standards during performance of the Work, provided that any such
Personnel were acting within the scope of its employment, and for
the failure of any Owner’s materials or equipment to comply
with OSHA Standards, or (B) any governmental fines or
penalties of any kind as a result of the failure of Owner or its
Personnel (other than Contractor or its Subcontractors) to comply
with OSHA Standards during performance of the Work, and for the
failure of any Owner’s materials or equipment to comply with
OSHA Standards.
(c)
Other Violations of Law, Project Policies and Procedures .
(i) Except to the extent resulting
from a Nuclear Incident, Contractor shall defend, indemnify and
hold harmless Owner (including its Affiliates) from (A) any
Third Party Claims for liabilities, losses, costs (including
attorney’s fees), or damages arising out of and to the extent
of Contractor’s failure to comply with (x) any Law or
(y) any Project Policies and Procedure to the extent caused by
the negligent or wrongful acts or omission of Contractor, or
(B) any government fines or penalties arising out of and to
the extent of Contractor’ failure to comply with (x) any Law
or (y) any Project Policies and Procedures to the extent
caused by the negligent or wrongful acts or omissions of
Contractor.
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(ii) Except to the extent
resulting from a Nuclear Incident (which shall be subject to
Section 15.6 ), Owner shall defend, indemnify and hold
harmless Contractor (including its Affiliates) from (A) any
Third Party Claims for liabilities, losses, costs (including
attorney’s fees), or damages arising out of and to the extent
of Owner’s failure to comply with (x) any Law or
(y) any Project Policies and Procedures to the extent caused
by the negligent or wrongful acts or omissions of Owner, or
(B) any government fines or penalties arising out of and to
the extent of Owner’ failure to comply with (x) any Law
or (y) any Project Policies and Procedures to the extent
caused by the negligent or wrongful acts or omissions of Owner.
15.6 Nuclear Incidents.
(a)
General . Owner hereby waives and releases Contractor,
Contractor Interests or Subcontractors from any damage or loss of
any kind, whether on the Site or Nearby Work Areas, or off the Site
or Nearby Work Areas, or for any punitive damage or any direct,
consequential, indirect, special, or incidental loss, damage or
injury, whether arising in contract (including breach and
warranty), tort or otherwise, and whether or not based on any claim
of fault, negligence or strict liability, to the extent any of the
foregoing arises out of or results from a Nuclear Incident.
However, this waiver shall not apply to any rights Owner may have
against Contractor under Article 14 Warranty.
(b)
Nuclear Liability Insurance and Governmental Indemnity .
Notwithstanding anything in this Agreement to the contrary, the
Owner shall maintain "financial protection" to cover public
liability as such terms are defined in the AEA, where caused by or
arising from a Nuclear Incident, including master worker coverage.
Such financial protection shall be in such form and amount to meet
the financial protection requirements of Section 170 of the
AEA. Owner also shall enter into the governmental indemnity
agreement as required by Section 170 of the AEA. In the event
that the financial protection system contemplated by
Section 170 of the AEA is repealed or changed, Owner shall
exercise commercially reasonable efforts, consistent with Good
Industry Practices at that time, to maintain in effect liability
protection through governmental indemnity, limitation of liability,
insurance and/or other financial protection which will not result
in a material impairment of the protection afforded Contractor and
Contractor Interests by such nuclear liability protection system
which is in effect as of the Effective Date [***]. Owner shall
ensure that Contractor and Contractor Interests are included in the
omnibus definition of "insured" under such alternate insurance
coverage or are otherwise included as an additional insured at no
cost to Contractor or Contractor Interests.
(c)
Nuclear Property Insurance . Owner shall also maintain
property insurance with respect to the Facility and the site (as
defined in the policy) as may be available from Nuclear Electric
Insurance Limited (NEIL) or other sources consistent with the
requirements of the NRC and Good Industry Practices, providing
protection against loss or damage to the Facility. The limits of
insurance shall also be maintained in accordance with the
requirements
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of the NRC and Good Industry Practices. Such insurance shall
cover Contractor and Contractor Interests as their interests may
appear. Owner waives and shall require its insurers to waive all
rights of recovery against Contractor or any Contractor Interest on
account of any nuclear or non-nuclear loss or damage covered by
such property insurance during the Work and thereafter, whether
arising in contract, tort or otherwise, and irrespective of fault,
negligence or strict liability of any of the Contractor Interests.
In the event Owner recovers damages from a third party based on
losses at the Facility, the Site, or Nearby Work Areas resulting
from a Nuclear Incident, Owner shall indemnify Contractor and all
Contractor Interests against claims by such third party which are
based on Owner’s recovery of such damages. In addition, Owner
waives, and will require its insurers to waive, all rights of
recovery against Contractor and Contractor Interests for any and
all costs or expenses arising out of or in connection with the
investigation and settlement of claims or the defense of suits for
damage resulting from a Nuclear Incident during the Work and
thereafter.
(d)
Duration . The protection provided by Owner pursuant to this
Section 15.6 shall be in effect by the date that
Nuclear Fuel first arrives at the Site, and shall remain in effect
until the permanent decommissioning of the Facility.
15.7 Indemnity Procedures.
(a) The
indemnifying Party shall have the right to conduct and control,
through counsel of its own choosing, reasonably acceptable to the
indemnified Party, the defense of any Third Party Claim that is
covered by the indemnity. The indemnifying Party shall keep the
indemnified Party fully informed in the conduct of the proceeding.
The indemnified Party shall be entitled to participate at its cost
in any such action.
(b) The
indemnified Party may, at its election, participate in the defense
thereof at its sole cost and expense; provided, however, that if
(i) the indemnifying Party shall fail to defend any Third
Party Claim, (ii) the Parties mutually agree in writing to
allow the indemnified Party to assume the defense of such Third
Party Claim and forego any indemnity claimed under this Article,
(iii) in the reasonable opinion of legal counsel for the
indemnified Party, such Third Party Claim involves the potential
imposition of a criminal liability on the indemnified Party, its
directors, officers, employees or agents, or (iv) in the
reasonable opinion of legal counsel for the indemnified Party, an
actual or potential conflict of interest exists where it is
advisable for such indemnified Party to be represented by separate
counsel, then the indemnified Party shall be entitled to control
and assume responsibility for the defense of such Third Party
Claim, at the cost and expense of the indemnifying Party (except in
the case of (ii) above, in which the indemnified Party agrees
to forego the indemnity). The indemnifying Party may, in any event,
participate in such proceedings at its own cost and expense. The
indemnified Party shall not have the right to settle without the
written consent of the indemnifying Party (which consent shall not
be unreasonably withheld).
(c) The
indemnifying Party, in the defense of any such litigation, other
proceeding or other claim, shall have the right in its sole
discretion to settle such Third Party Claim only if (i) settlement
involves only the payment of money and execution of appropriate
releases of the indemnified Party, (ii) there is no finding or
admission of any violation of Law or violation of the rights of the
indemnified Party, and (iii) the indemnified Party will have
no
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liability with respect to such compromise or settlement.
Otherwise, no such Third Party Claim shall be settled or agreed to
without the prior written consent of the indemnified Party, which
shall not be unreasonably withheld.
(d) The
indemnified Party and the indemnifying Party (i) shall fully
cooperate in good faith in connection with such defense and shall
cause their legal counsel and accountants to do the same;
(ii) shall make available to the other Party all relevant and
non-privileged books, records, and information (in such
Party’s control) during normal business hours; and
(iii) shall furnish to each other, at the indemnifying
Party’s expense, such other assistance as the other Party may
reasonably require in connection with such defense, including
making employees of the indemnified Parties available to testify
and assist others in testifying in any such proceedings.
15.8 Extension of Liability and
Insurance Protections from Third Party Contractors.
(a) Owner
shall use commercially reasonable efforts to include in all
contracts which Owner enters into with third party contractors
relating to Owner’s Scope of Work or activities at the Site
or Nearby Work Areas, that all liability and insurance protections
which are afforded to Owner thereunder will be contractually
extended for the benefit of Contractor and its Affiliates,
including being a named insured on insurance, having the benefit of
any waivers of subrogation and of liability, and being a named
indemnitee and party defended under indemnification and defense
provisions.
(b) Contractor
shall use commercially reasonable efforts to include in all
Subcontracts relating to the Work at the Site or Nearby Work Areas,
that all liability and insurance protections which are afforded to
Contractor thereunder will be contractually extended for the
benefit of Owner and its Affiliates, including being a named
insured on insurance, having the benefit of any waivers of
subrogation and of liability, and being a named indemnitee and
party defended under indemnification and defense provisions.
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