ENGINEERING, PROCUREMENT, CONSTRUCTION AGREEMENT

Construction Agreement

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Alcoa Inc | BECHTEL POWER CORPORATION | TXU US HOLDINGS COMPANY

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Title: ENGINEERING, PROCUREMENT, CONSTRUCTION AGREEMENT
Governing Law: Texas Date: 11/14/2007
Industry: Electric Utilities Sector: Utilities

ENGINEERING, PROCUREMENT, CONSTRUCTION AGREEMENT, Parties: alcoa inc , bechtel power corporation , txu us holdings company

EXHIBIT 10(b)

CONFIDENTIAL TREATMENT REQUESTED.

CONFIDENTIAL PORTIONS OF THIS DOCUMENT

HAVE BEEN REDACTED AND HAVE BEEN FILED

WITH THE COMMISSION.

ENGINEERING, PROCUREMENT, AND CONSTRUCTION AGREEMENT

by and between

TXU US HOLDINGS COMPANY,

a Texas corporation (“Owner”)

and

BECHTEL POWER CORPORATION,

a Nevada corporation (“Contractor”)

dated May 26, 2006

EXECUTION COPY

		TABLE OF CONTENTS	Page
1.	DEFINITIONS AND RULES OF INTERPRETATION		1
	1.1	Definitions	1
	1.2	Exhibits	17
	1.3	Interpretation	17
	1.4	Headings	18
	1.5	Conflicts in Documentation	18
	1.6	Documentation Format	18

2.	RESPONSIBILITIES OF OWNER		18
	2.1	Project Representative	18
	2.2	Operating Personnel	18
	2.3	Ministerial Assistance	19
	2.4	Owner Acquired Permits	19
	2.5	Access to Project Site	19
	2.6	Project Site Preparation	19
	2.7	Owner Provided Facilities and Services	20
	2.8	Operating Consumables and Commodity Scheduling	20
	2.9	Scheduling and Delivery of Output	20
	2.10	Subcontractor Communication	20
	2.11	Taxes	21
	2.12	Required and Operational Spare Parts	21
	2.13	Time and Manner of Owner’s Performance	21

3.	RESPONSIBILITIES OF CONTRACTOR		21
	3.1	Turnkey Basis	21
	3.2	Performance of Work	21
	3.3	Design and Construction of Project	21
	3.4	Project Manager	22
	3.5	Utilities and Services	22
		3.5.1 Provision of Services	22
		3.5.2 Payment	22
		3.5.3 Supply of Construction Facilities	22
		3.5.4 Operating Consumables	22
	3.6	Inspection by Contractor	23
	3.7	Organization	23
	3.8	Contractor Acquired Permits	23
	3.9	Maintenance of Project Site	24
	3.10	Hazardous Materials Disposal System	24
	3.11	Project Site Security	24
	3.12	Safety	24

EXECUTION COPY

		TABLE OF CONTENTS	Page
	3.13	Expediting	25
	3.14	Applicable Laws and Permits	26
	3.15	Quality Assurance Programs	26
	3.16	Access	26
	3.17	Project Site Activities	26
	3.18	Delivery of Documents; Owner Review	27
		3.18.1 Drawings and Specifications	27
		3.18.2 Operational Documents	27
	3.19	Training of Operating Personnel	27
		3.19.1 Commencement of Training	27
		3.19.2 Design and Review of Training Program	27
	3.20	Spare Parts.	28
		3.20.1 Spare Parts Schedule	28
		3.20.2 Start-up Spare Parts	28
		3.20.3 Spare Parts Procurement	28
	3.21	Start Up Personnel	28
	3.22	Commodity Scheduling	29
	3.23	Financial Reporting	29

4.	COVENANTS, WARRANTIES AND REPRESENTATIONS		29
	4.1	Contractor	29
		4.1.1 Organization, Standing and Qualification	29
		4.1.2 Professional Skills	29
		4.1.3 Due Authorization; Enforceability	30
		4.1.4 No Conflict	30
		4.1.5 Government Approvals	30
		4.1.6 No Suits, Proceedings	30
		4.1.7 Intellectual Property	30
		4.1.8 Business Practices	30
		4.1.9 Owner Provided Information	31
		4.1.10 Legal Requirements	31
		4.1.11 Financial Condition	31
		4.1.12 Licenses	32
	4.2	Owner	32
		4.2.1 Organization, Standing and Qualification	32
		4.2.2 Due Authorization; Enforceability	32
		4.2.3 No Conflict	32

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		TABLE OF CONTENTS	Page
		4.2.4 Governmental Approvals	32
		4.2.5 No Suits, Proceedings	32
		4.2.6 Business Practices	33
		4.2.7 Access to Project Site	33
		4.2.8 Waivers from Adjacent Property Owners	33
		4.2.9 Permit Status	33
		4.2.10 Owner Provided Information	33

5.	COST OF WORK		33
	5.1	Contract Price	33
	5.2	Cancellation Cost Schedule and Payment Schedule	34
	5.3	All Items of Work Included	34
	5.4	Texas Sales and Use Taxes	34
		5.4.1 Separated Contract	34
		5.4.2 Texas Direct Payment Permit and Other Matters	34
		5.4.3 Certain Reimbursements	35
		5.4.4 Statements and Other Information	35
		5.4.5 Cooperation	35
	5.5	Bonuses	36
		5.2.1 Schedule Bonus	36
		5.5.2 Performance Bonus	37
		5.5.3 Payment of Bonuses	37

6.	TERMS OF PAYMENT		37
	6.1	Monthly Payments	37
	6.2	Progress Assessment	38
	6.3	Progress Reporting	38
	6.4	Contractor’s Invoices	38
	6.5	Owner Review	39
	6.6	Payments	39
		6.6.1 Monthly Payments and Withholding	39
		6.6.2 Payment of Withheld Amounts	39
		6.6.3 Owner’s Right to Offset	39
		6.6.4Payment; Performance of the Work; Payment of Subcontractors	40
		6.6.5 TSA Payments	40
	6.7	Retainage Security	40
	6.7.1	Retainage Security	40
	6.7.2	Draws on Retainage Security	40

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iii

		TABLE OF CONTENTS	Page
		6.7.3 Release of Retainage Security	41
		6.7.4 Interest on Excess Drawings	42
	6.8	Final Payment	42
	6.9	Method of Payment	42
	6.10	Disputes	43
	6.11	Holdbacks	43
		6.11.1 Owner Holdbacks	43
		6.11.2 Notice of Withholding; Notice of Correction	44
		6.11.3 Payment Following Notice of Correction	44
		6.11.4 Limitation on Contractor’s Rights	44
	6.12	Application of Monies	44
	6.13	Release of Liability	45
	6.14	Contract Interest Rate	45

7.	COMMENCEMENT AND SCHEDULING OF THE WORK		45
	7.1	Notices to Proceed	45
		7.1.1 Limited Notice to Proceed	45
		7.1.2 Full Notice to Proceed	45
	7.2	Contractor’s Acknowledgment	46
	7.3	Prosecution of Work	46
	7.4	Project Schedule	46
		7.4.1 Project Schedule	46
		7.4.2 Milestone Summary Schedule	46
	7.5	Acceleration Plan	47
	7.6	Meetings	47
	7.7	Acceleration of Work When Not Delayed	48
	7.8	Termination if Limited Notice to Proceed Cap is Exceeded	48

8.	FORCE MAJEURE AND EXCUSABLE EVENTS		48
	8.1	Force Majeure	48
	8.2	Notice	49
	8.3	Scope of Suspension; Duty to Mitigate	49
	8.4	Removal of Force Majeure	50
	8.5	Responsibility of Contractor	50
	8.6	Contractor’s Remedies	50
		8.6.1 Force Majeure	50
		8.6.2 Excusable Event	50

EXECUTION COPY

		TABLE OF CONTENTS	Page
	8.7	Rights to Terminate	51

9.	SUBCONTRACTORS AND VENDORS		51
	9.1	Use of Subcontractors	51
		9.1.1 Subcontractors	51
		9.1.2 Major Subcontractors	51
		9.1.3 Qualification	51
	9.2	Assignment	52
	9.3	Information and Access	52
	9.4	Terms in Subcontracts	52
	9.5	Minority and Women-Owned Businesses	53

10.	LABOR RELATIONS		54
	10.1	General Management of Employees	54
	10.2	Worker Recruitment and Training Program	54
	10.3	Labor Disputes	54
	10.4	Personnel Documents	54
	10.5	Key Personnel	54
	10.6	Replacement of Employees and Other Persons at Owner’s Request	55

11.	INSPECTION; EFFECT OF REVIEW AND COMMENT		55
	11.1	Requirement To Remedy Defect	55
	11.2	Inspection	55
	11.3	Contractor Submittals Table	56
	11.4	Owner Review of Documents	56
	11.5	Errors and Omissions	56

12.	PROJECT SITE CONDITIONS		56
	12.1	Project Site Conditions	56
	12.2	Differing Project Site Conditions	56
	12.3	Unforeseen Project Site Conditions	57

13.	PERFORMANCE GUARANTEES AND TESTS		57
	13.1	Performance Guarantees and Other Requirements	57
	13.2	Start up and Commissioning Procedures	57
	13.3	Acceptance Test Procedures	57
	13.4	Acceptance Test Schedules	58
	13.5	Testing	58
		13.5.1 Upon Mechanical Completion	58

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		TABLE OF CONTENTS	Page
		13.5.2 Temporary Facilities	58
		13.5.3 Conduct/Test and Test Reports	58
	13.6	Non-Conforming Work	59
	13.7	Revenues	59
	13.8	Notice of Minimum Stable Load	60
	13.9	Notice of Mechanical Completion	60
	13.10	Post Test Modifications	60

14.	SUBSTANTIAL COMPLETION AND FINAL COMPLETION		60
	14.1	Punchlist	60
		14.1.1 Creation of Punchlist	60
		14.1.2 Completion of Punchlist	61
		14.1.3 Owner’s Punchlist Option	61
	14.2	Substantial Completion	62
	14.3	Notice of Substantial Completion	62
	14.4	Final Completion	63
	14.5	Notice of Final Completion	65
	14.6	Contractor’s Access After Substantial Completion and Final Completion	65
	14.7	Subcontractor Air Quality Performance Requirements	65

15.	LIQUIDATED DAMAGES AND CURE PERIOD		66
	15.1	Liquidated Damages for Delay in the Substantial Completion Dates	66
	15.2	Liquidated Damages for Failure to Satisfy the Reliability Guarantee	66
	15.3	Liquidated Damages for Failure to Satisfy Certain Performance Guarantees	66
	15.4	Actions During the Cure Period	67
		15.4.1 Buy-Down Not Available	67
		15.4.2 Buy-Down or Cure	67
		15.4.3 Election of Option	68
		15.4.4 Submission of Remedial Plan	68
		15.4.5 Minimum Requirements for Remedial Plan	68
		15.4.6 Approval of Remedial Plan	68
		15.4.7 Prosecution of Remedial Plan	69
		15.4.8 Additional Remedial Plans	69
		15.4.9 Access During Cure Period	69
		15.4.10Payment of Performance Liquidated Damages or Performance Bonuses	69
		15.4.11 Contractor’s Buy-Down Option	70
		15.4.12 Operation During Cure Period	70

EXECUTION COPY

		TABLE OF CONTENTS	Page
	15.5	Offset and Draws on Security	71
	15.6	Sole Remedy; Liquidated Damages Not a Penalty	71
	15.7	Enforceability	72
	15.8	Extension of Cure Period	72

16.	CHANGES IN THE WORK		72
	16.1	Change In Work	72
	16.2	By Owner	73
	16.3	By Contractor	73
	16.4	Owner Initiated Change In Work	73
	16.5	Execution of Change In Work Form	74
	16.6	No Obligation or Payment Without Executed Change In Work Form	74
	16.7	Owner Directives	74
		16.7.1 Non-Major Change In Work	75
		16.7.2 Major Change In Work	75
		16.7.3 Prosecution of Owner Directive	75
		16.7.4Pricing of Changes In Work Related to Owner Directives	75
		16.7.5 True-Up	76
	16.8	Express Waiver	76
	16.9	No Suspension	76
	16.10	Evidence of Funds for Payment	76
	16.11	Change for Contractor’s Convenience	76
	16.12	Audit Rights	77

17.	WARRANTIES CONCERNING THE WORK		77
	17.1	Work Warranty	77
	17.2	Materials Warranty	78
	17.3	Warranty Period	78
	17.4	Enforcement by Owner	78
	17.5	Exclusions	79
	17.6	Subcontractor Warranties	79
	17.7	Correction of Defects	80
		17.7.1 Notice of Warranty Claim	80
		17.7.2 Owner Performance	80
		17.7.3 Equipment and Materials Testing and Demonstrations	81
		17.7.4 Chronic Failure	81
		17.7.5 Owner’s Warranty Option	81
	17.8	Limitations on Warranties	82

EXECUTION COPY

vii

		TABLE OF CONTENTS	Page
18.	EQUIPMENT IMPORTATION; TITLE		82
	18.1	Importation of Equipment and Materials	82
	18.2	Title	82
		18.2.1 Condition	82
		18.2.2 Transfer	83
		18.2.3 Custody During Performance	83
	18.3	Protection	83
	18.4	Owner Possession	83

19.	DEFAULTS AND REMEDIES		83
	19.1	Contractor Events of Default	83
	19.2	Owner’s Rights and Remedies	85
	19.3	Damages for Contractor Default	86
	19.4	Owner Event of Default	86
	19.5	Contractor’s Remedies	87

20.	TERMINATION AND SUSPENSION		88
	20.1	Termination for Convenience; Payment	88
	20.2	Limitation on Payment	88
	20.3	Adjustment for Defects	88
	20.4	Owner’s Right to Elect to Assume Obligations with Subcontractors	88
	20.5	Contractor Conduct	89
	20.6	Nature of Termination Payments	89
	20.7	Suspension by Owner	89
		20.7.1 Adjustments Due to Suspension	89
		20.7.2 Contractor’s Termination Right	90
		20.7.3 Extension of Time and Compensation Rights	90
		20.7.4 Claims for Payment	91

21	INSURANCE		91
	21.1	Contractor’s Insurance	91
	21.2	Limits of Liability	91
	21.3	General Requirements	91
	21.4	Subcontractors’ Insurance	92
	21.5	Subrogation Waivers	92
	21.6	Insurance Coverages	92
	21.7	Failure to Maintain Insurance	92
	21.8	Claims Compensation	93
	21.9	Owner’s Insurance	93

EXECUTION COPY

viii

		TABLE OF CONTENTS	Page
22.	RISK OF LOSS OR DAMAGE		93
	22.1	Contractor Assumption of Risk	93
		22.1.1 Risk of Loss; Deductible	93
		22.1.2 Repair or Replacement	93
	22.2	Risk of Loss After the Turnover Date	93

23	INDEMNIFICATION		94
	23.1	By Contractor	94
	23.2	By Owner	96
	23.3	Patent Infringement And Other Indemnification Rights	97
	23.4	Claim Notice	98
	23.5	Survival of Indemnity Obligations	99

24.	TREATMENT OF CONFIDENTIAL INFORMATION		100
	24.1	Confidential Information	100
	24.2	Competitor Representative	100
	24.3	Excluded Information	101
	24.4	Acknowledgments of Proprietary Operating Information	101
	24.5	Non-Disclosure	102
	24.6	Applicable Law Disclosures	102
	24.7	Ownership of Confidential Information	102
	24.8	Remedies	103

25.	INVENTIONS AND LICENSES		103
	25.1	Invention, License	103
	25.2	Contractor Deliverables	104
	25.3	Software Licenses	104
	25.4	Warranty	104

26.	ASSIGNMENT BY OWNER		104
	26.1	Assignment	104
		26.1.1 Assignment to Financing Entities	104
		26.1.2 Assignment to Other Persons	105
		26.1.3 Owner Indemnitee to Include Successors and Assigns	107
	26.2	Transfer of Work; Third-Party Beneficiaries	107

27	ASSIGNMENT BY CONTRACTOR		108

28.	HAZARDOUS MATERIALS		108

EXECUTION COPY

		TABLE OF CONTENTS	Page
	28.1	Use or Disposal by Contractor	108
	28.2	Remediation by Contractor	108
	28.3	Notice of Hazardous Materials	108
	28.4	Hazardous Materials not brought on the Project Site by Contractor	109
	28.5	Losses related to Hazardous Materials	109

29.	NON-PAYMENT CLAIMS		109

30.	NOTICES AND COMMUNICATIONS		110
	30.1	Requirements	110
	30.2	Representatives	111

31.	LIMITATIONS OF LIABILITY AND REMEDIES		111
	31.1	Limitations on Damages	111
	31.2	Limitations on Contractor’s Liability	112
		31.2.1 Maximum Liability Amount	112
		31.2.2 Maximum Liquidated Damages	112
		31.2.3 Calculation of Liability	112
	31.3	Specific Performance	112
	31.4	Limitation on Owner’s Liability	113
	31.5	Releases, Indemnities and Limitations	113
	31.6	Representations and Remedies	113
	31.7	Limitation on Remedies	113

32.	DISPUTES		114
	32.1	Management Negotiations	114
	32.2	DISPUTE RESOLUTION; CONSENT TO JURISDICTION AND VENUE	114
	32.3	Work to Continue	115

33.	MISCELLANEOUS		115
	33.1	Severability	115
	33.2	Governing Law	115
	33.3	Survival of Termination	115
	33.4	Amendments and Modifications	115
	33.5	No Waiver	115
	33.6	Review and Approval	115
	33.7	Time is of the Essence	116
	33.8	Third Party Beneficiaries	116

EXECUTION COPY

	TABLE OF CONTENTS	Page
33.9	Financing Matters	116
	33.9.1 Contractor Cooperation	116
	33.9.2 Documents Requested by Financing Entities	117
33.10	Other Assistance	117
33.11	Further Assurances	117
33.12	Record Retention	117
33.13	Binding on Successors, Etc	117
33.14	Merger of Prior Contracts	118
33.15	Counterparts	118
33.16	Opinions of Counsel	118
33.17	Set-Off	118
33.18	Attorneys’ Fees	118
33.19	Announcements; Publications	118
33.20	Independent Contractor	118

EXECUTION COPY

	TABLE OF CONTENTS (CON’T)

EXHIBITS
A	Scope Book
B	Provisional Items
C	Payment Schedule
D	Change In Work Form
E	Form of Contractor’s Invoice
F 1	Conditional Waiver and Release Upon Progress Payment
F 2	Conditional Waiver and Release Upon Final Payment
F 3	Unconditional Waiver and Release Upon Final Payment
G	Milestone Summary Schedule
H	Key Personnel
I	Contingency Program
J	Project Site Description
K-1	Contractor Provided Insurance
K-2	Owner Provided Insurance
L	Subcontractors and Vendors
M	Required Owner Activities
N	Form of Letter of Credit
O	Certificate of Contractor Regarding Certain Subcontracts
P	Form of TXU Generation Waiver and Release
Q	Separated Contract Price

EXECUTION COPY

xii

This ENGINEERING, PROCUREMENT, AND CONSTRUCTION AGREEMENT (this “ Agreement ”) is made and entered into as of this 26th day of May 2006, by and between TXU US HOLDINGS COMPANY, a Texas corporation (the “ Owner ”), and BECHTEL POWER CORPORATION, a Nevada corporation (the “ Contractor ”). Each entity is sometimes individually referred to herein as a “ Party ” and both entities are sometimes collectively referred to herein as the “ Parties .”

RECITALS

A. Owner desires to develop, finance, construct, own and operate an approximately 564.65 megawatt (net load) lignite coal-fired, circulating fluidized bed power generation facility, to be known as Sandow Steam Electric Station Unit 5, to be located near the City of Rockdale, County of Milam, State of Texas, adjacent to existing power generation facilities known as Sandow Units 1 through 4 (“ Units 1-4 ”) and nearby an aluminum smelter, of which the aluminum smelter and Units 1-3 are owned and operated by Alcoa Inc. (“ Alcoa ”) and Unit 4 is owned and operated by an Affiliate of Owner, and other facilities operated in support of Units 1-4 and the smelter.

B. Owner desires to engage Contractor to design, engineer, procure, install, construct, test, commission and start up the Project and to train the persons who will operate and maintain the Project, all on a fixed price and date certain to complete basis, and Contractor desires to provide such services, all in accordance with the terms and conditions set forth in this Agreement.

C. Contractor has reviewed the design basis information provided by Owner, inspected the real property on which the Project shall be constructed, and performed or reviewed such other investigations, studies, and analyses as possible as of the date hereof that Contractor has determined to be necessary or prudent in connection with entering into this Agreement.

D. Contractor is willing to guarantee the timely completion and operating performance of the Project, in accordance with the terms and conditions hereof.

NOW, THEREFORE, in consideration of the sums to be paid to Contractor by Owner and of the covenants and agreements set forth herein, the Parties agree as follows:

AGREEMENT

1. DEFINITIONS AND RULES OF INTERPRETATION

1.1 Definitions . For the purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the following meanings.

“ Abandons ” means for the purposes of Section 19.1(l) , that Contractor has substantially reduced personnel at the Project Site or removed required equipment from the Project Site such that, in the reasonable opinion of Owner, Contractor would not be capable of maintaining progress sufficient to achieve Substantial Completion by the Substantial Completion Guaranteed Date.

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“ Abnormally Severe Weather Conditions ” means storms and other climatic and weather conditions that are abnormally severe or extreme, taking into consideration the period of time when, and the area where, such storms or conditions occur.

“ Acceleration Plan ” shall have the meaning set forth in Section 7.5 .

“ Acceptance Tests ” means the Performance Tests, the Ammonia Consumption Rate Test, the Limestone Consumption Rate Test, and the Emission Tests.

“ Acceptance Tests Procedures ” means the written test procedures, standards, protective settings, and testing programs for the Acceptance Tests as set forth in Section 13.3 and Part I, Section 8.2 of the Scope Book.

“ Affiliate ” means with respect to any Person, another Person that is controlled by, that controls, or is under common control with, such Person. For purposes of this definition, “control” with respect to any Person shall mean the ability to effectively control, directly or indirectly, the operations and business decisions of such Person whether by voting of securities or partnership interests or any other method. Without limiting the foregoing, an Affiliate of a Person shall include any other Person in which such Person holds twenty percent (20%) or more of the outstanding equity or ownership interests.

“ Agreement ” means this Engineering, Procurement, and Construction Agreement, including all Exhibits hereto, as the same may be modified, amended, or supplemented from time to time in accordance with the terms hereof.

“ Alcoa ” has the meaning set forth in the Recitals hereto.

“ Ammonia Consumption Rate Guarantee ” means the guarantee as set forth in Part I, Section 8.1.4 of the Scope Book.

“ Ammonia Consumption Rate Test ” means the test for measuring ammonia consumption as described in Part I, Section 8.2.4 of the Scope Book.

“ Applicable Laws ” means and includes any applicable statute, license, law, rule, regulation, code, ordinance, judgment, decree, writ, legal requirement, order or the like, of any national, federal, provincial, state or local court or other Governmental Authority, and all rules and regulations promulgated thereunder, as any of the same may be amended, modified, codified, replaced or reenacted, and the written interpretations thereof, including any statute, law, rule, regulation, code, ordinance, judgment, decree, writ, order or the like, regulating, relating to or imposing liability or standards of conduct concerning: (i) Contractor, the Project Site or the performance of any portion of the Work or the Work taken as a whole, or the operation of the Project; or (ii) safety and the prevention of injury to persons and the damage to property on, about or adjacent to the Project Site or any other location where any other portion of the Work shall be performed; or (iii) protection of human health or the environment or emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment including ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals,

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Hazardous Materials or other industrial, toxic materials or wastes, as now or may at any time hereafter be in effect; for the avoidance of doubt, “Applicable Laws” excludes Applicable Permits and Permit Requirements.

“ Applicable Permits ” means each and every national, state, local or other license, consent, appraisal, authorization, ruling, exemption, variance, order, judgment, decree, declaration, regulation, certification, filing, recording, permit or other approval with, from or of any Governmental Authority, including each and every environmental, construction, operating or occupancy permit and any agreement, consent or approval from or with any other Person, that is required by any Applicable Law or that is otherwise necessary for the performance of the Work or operation of the Project, including the Owner Acquired Permits and the Contractor Acquired Permits.

“ Benchmark Performance ” means the performance of the Project, or a component or system thereof, as determined by the Benchmark Test conducted prior to the performance of any Corrective Action.

“ Benchmark Test ” means any test of a component or system proposed by Contractor in a Remedial Plan to determine Benchmark Performance, which has been accepted by Owner, or in the absence of such a component or system test, a Performance Test.

“ Business Day ” means a day, other than a Saturday or Sunday or a public holiday, on which banks are generally open for business in Dallas, Texas and New York, New York.

“ Cancellation Cost Schedule ” means a schedule of cancellation costs based on the month in which termination of this Agreement occurs as included in the Payment Schedule.

“ Change In Law ” means (a) with respect to the Work performed under the TSA and prior to the date of this Agreement, the enactment, adoption, promulgation, modification (including change in written interpretation by a Governmental Authority), or repeal after January 27, 2006 of any Applicable Law and (b) with respect to the Work performed after the date of this Agreement, the enactment, adoption, promulgation, modification (including written change in interpretation by a Governmental Authority), or repeal after the date of this Agreement of any Applicable Law, or the issuance or modification (including written change in interpretation by a Governmental Authority) after the date of this Agreement of any Owner Acquired Permit or Contractor Acquired Permit issued or promulgated by any Governmental Authority that establishes requirements that materially and adversely affect Contractor’s costs or schedule for performing the Work; provided , however it shall not be a Change In Law pursuant to this Agreement if there is a change in any national, federal, provincial or any other income tax law or any other law imposing a tax, duty, levy, impost, fee, royalty, or similar charge based on the importation or exportation of any item or service for which Contractor is responsible hereunder, except to the extent the aggregate increase resulting from all such changes in such taxes, duties, levies, imposts, fees, royalties and similar charges exceeds One Million Dollars ($1,000,000).

“ Change In Work ” means a change in the Work as defined in Section 16.1 .

“ Change In Work Form ” means the form attached hereto as Exhibit D .

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“ Claim Notice ” shall have the meaning set forth in Section 23.4 .

“ Common Facilities ” means the existing equipment and systems, including all corridors and access reasonably required by Contractor to perform the Work, used or utilized by any of Units 1-4 and to be interconnected to the Project, all as more particularly described in Part I, Reference 7-3 of the Scope Book.

“Competitor Representatives ” shall have the meaning set forth in Section 24.2 .

“ Conditional Waiver and Release Upon Final Payment ” means a written statement in the form attached hereto as Exhibit F-2 , containing a waiver and release of liens prepared and executed by Contractor or a Major Subcontractor, as applicable, pursuant to which a Person conditionally waives and releases all mechanic’s liens, stop notices and bond rights with respect to all Work, conditioned only upon final payment.

“ Conditional Waiver and Release Upon Progress Payment ” means a written statement in the form attached hereto as Exhibit F-1 , containing a waiver and release of liens prepared and executed by Contractor or a Major Subcontractor (whose contract or contracts with Contractor or any of its Subcontractors require total payments by Contractor or such Subcontractor of Five Million Dollars ($5,000,000) or more (in the aggregate)), as applicable, pursuant to which a Person conditionally waives and releases all mechanic’s liens, stop notices and bond rights with respect to all Work, for which Contractor requested payment in the current Contractor’s Invoice conditioned only upon payment of the amount set forth therein.

“Confidential Information ” means information, including Proprietary Operating Information, ideas or materials now or hereafter owned by or otherwise in the possession or control of, or otherwise relating to, one Party or any of its Affiliates, including proprietary or non-public information concerning such Party’s or its Affiliates’ business, operations, financial condition, projections, or assets, historical information, inventions, business or trade secrets, know-how, techniques, data, reports, drawings, specifications, blueprints, flow sheets, designs, or engineering, construction, environmental, operations, marketing or other information, together with all copies, summaries, analyses, or extracts thereof, based thereon or derived therefrom, disclosed by one Party (the “ transferor ”) to the other Party or any of its Affiliates or any of their respective directors, employees or agents (the “ transferee ”), or any such information identified in writing as “Confidential” at the time of such disclosure by transferor; provided , however , “ Confidential Information ” of Owner shall also mean information, ideas or materials related to the Work or the Project that are obtained, developed or created by or for Contractor directly through the use of Owner’s Confidential Information in connection with the Work, subject to the provisions of Article 24 .

“ Contingency Program ” shall have the meaning set forth in Section 5.1 .

“ Contract Interest Rate ” means, for any date, two percent (2%) over the per annum rate of interest equal to the prime lending rate as may from time to time be published in the Wall Street Journal (Eastern edition) under “Money Rates”; provided the Contract Interest Rate shall never exceed the maximum lawful rate permitted by Applicable Laws.

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“ Contract Price ” means the fixed price amount for performing the Work that is payable to Contractor, and subject to adjustments, in accordance with Section 5.1 .

“ Contractor ” shall have the meaning set forth in the preamble.

“ Contractor Acquired Permits ” shall have the meaning set forth in Section 3.8 .

“ Contractor Deliverables ” means all of the design criteria, system descriptions, Required Manuals, drawings, specifications, design calculations, quality assurance reports and all other material documents relating to the Project to be delivered to Owner for review and comment, and approval, where applicable, in accordance with the requirements of Part I, Sections 2.3, 2.4, 2.5, 2.8, 2.9 and 2.10 of the Scope Book, and Section 11.3 , which shall be made available to Owner in hard copy or electronically, including native files as mutually agreed, if requested by Owner.

“ Contractor Event of Default ” shall have the meaning set forth in Section 19.1 .

“ Contractor Lien ” shall have the meaning set forth in Article 29 .

“ Contractor Submittals Table ” means the table of Contractor Deliverables to be prepared by Contractor in accordance with Section 11.3 of this Agreement.

“ Contractor’s Indemnitee ” shall have the meaning set forth in Section 23.2 .

“ Contractor’s Invoice ” means an invoice from Contractor to Owner in accordance with Section 6.4 and in the form of Exhibit E hereto.

“ Corrective Actions ” means all Work necessary to make the Project meet the applicable Performance Guarantees.

“ Critical Path Item(s) ” means the items identified as critical path items on the Milestone Summary Schedule.

“ Cure Period ” means the period beginning on the Substantial Completion Date and ending one hundred eighty (180) days later, as adjusted pursuant to Section 15.8 .

“ Defect ” means any design, engineering, Equipment and Materials, or installation or other Work which, in Owner’s reasonable judgment: (a) does not conform to this Agreement or the then current drawings and specifications; (b) is of improper or inferior workmanship or material in that it fails to comply with Industry Standards, as applicable; or (c) is otherwise inconsistent with Industry Standards, and in each case satisfies either of the following conditions: (i) could materially and adversely affect the mechanical, electrical or structural integrity of the Project; or (ii) could materially and adversely affect the continuous or safe operation of the Project (as determined by the Independent Engineer).

“ Delay Liquidated Damages ” shall have the meaning set forth in Section 15.1 .

“ Delay Notice ” shall have the meaning set forth in Section 8.2 .

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“ Demonstration Tests ” shall mean the demonstration tests as set forth in Part I, Section 8.2 of the Scope Book.

“ Dollars ” or “ $ ” means United States dollars.

“ Emissions Guarantees ” shall have the meaning set forth in Part I, Section 8.1.5 of the Scope Book.

“ Emissions Tests ” means the tests set forth in Part I, Section 8.2.5 of the Scope Book to determine whether the Project satisfies the Emissions Guarantees.

“ Equipment and Materials ” means all materials, supplies, apparatus, devices, machinery, equipment, parts, tools, special tools, components, instruments, appliances, spare parts and appurtenances thereto, that are required for the design, construction or operation of the Project in accordance with Industry Standards, including as such are described in, required by or inferable from the Scope Book or the drawings and specifications issued for construction, except Owner Provided Facilities and Services, Common Facilities, Shared Site Facilities and the spare parts provided by Owner pursuant to Section 2.12 . For purposes of clarity, “ Equipment and Materials ” shall exclude any of the foregoing provided by Contractor and its Subcontractors in the course of the Work which do not become a permanent part of the Work and for which title is not intended to pass to Owner in accordance with the terms hereof.

“ Equivalent Availability Factor ” means the percentage of hours during the Reliability Test in which the Project is available, as calculated in accordance with Part I, Section 8.2.6 of the Scope Book.

“ Excusable Event ” means: (a) Owner’s failure or delay to perform any covenant or contractual obligation of Owner hereunder (including as a result of an event of Force Majeure affecting Owner but not including such failures or delays resulting from actions of Contractor or any Person acting on Contractor’s behalf or from Owner’s exercise of its rights under this Agreement, including the exercise by Owner of the right to have defective or nonconforming Work corrected or re-executed); (b) Owner’s failure to substantially complete the activities identified on Exhibit M attached hereto or to make the facilities identified on Exhibit J available to Contractor to perform its Work on or before the dates indicated on such Exhibits to the extent Owner’s delay causes a delay in the construction schedule of Contractor or causes Contractor to incur additional out of pocket costs; (c) Units 1 and 2 have not ceased operations by April 25, 2007 and Unit 3 has not ceased operations by August 25, 2007; (d) a Change In Law; (e) an Unforeseen Project Site Condition or other material difference between the Owner Provided Information and the conditions or terms actually existing; or (f) the encountering of Hazardous Materials as provided in Section 28.3(d) , in each case (a) through (f) above, to the extent such event actually, demonstrably and adversely impacts Contractor’s performance of the Work. In each case of clause (d) and (e) above, such an event shall be an Excusable Event only if Contractor notifies Owner thereof within ten (10) days after Contractor becomes aware of such Unforeseen Project Site Condition, material difference between Owner Provided Information and the conditions or terms actually existing or an impact caused by such Change in Law, as the case may be.

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“ Exhibits ” means each Exhibit attached hereto.

“ Final Completion ” means satisfaction by Contractor or waiver by Owner of all of the conditions for Final Completion set forth in Section 14.4 .

“ Final Completion Date ” means the date on which Final Completion of the Project occurs.

“ Final Completion Guaranteed Date ” means the date that is three hundred sixty-five (365) days after the Substantial Completion Date, as such date may be modified in accordance with the terms hereof.

“ Final Contractor’s Invoice ” means the final Contractor’s Invoice submitted for Final Payment in accordance with Section 6.8 .

“ Final Payment ” means the final payment made by Owner or the Financing Entities to Contractor in accordance with Section 6.8 .

“ Financing Entities ” means the holders of, or the agent(s) or trustee(s) representing the holders of, any debt, lease, or equity financing for, of or secured by the Project, including any Person(s) that owns the Project or any portion thereof and leases the Project or such portion to Owner or an Affiliate of Owner, as applicable, under a lease, sale leaseback or synthetic lease structure, or the Person(s) providing a letter or letters of credit or other guarantees or insurance in support of any such debt, lease or equity financing or providing any other letter of credit in connection with the construction or development of the Project.

“ Force Majeure ” means any event, matter, or thing that prevents or delays the performance of any obligation arising under this Agreement (other than any Excusable Event), but only to the extent such event, matter or thing is demonstrably beyond the reasonable control or expectation of the Person claiming the same and the effect of such event, matter or thing would not have been avoided had such Person used reasonable care or acted in compliance with Industry Standards. Subject to the foregoing, such events, matters or things include occurrences such as: war, blockade, revolution, insurrection, riot, act of terrorism, or public disorder or acts of emergency; expropriation, requisition, confiscation, or nationalization; export or import restrictions (but not to the extent due to an increase in export or import duties or taxes) by any Governmental Authority; embargoes or sanctions; closing or accidents to harbors, docks, canals, or other assistances to or adjuncts of the shipping or transportation industry; rationing or allocation, at the request or insistence of any Governmental Authority; action or inaction of Governmental Authority; fire; flood; earthquake; volcano; tide, tidal wave, or perils of the sea; Abnormally Severe Weather Conditions; an epidemic or quarantine; acts of God; a failure of any Person providing electric transmission service to accept delivery of energy from the Project (except due to Owner’s failure to nominate and schedule such delivery in accordance with Section 2.9 ); or labor strikes, disputes or disruptions; provided , further , that the following events, matters or things shall not constitute an event of Force Majeure: (i) the absence of sufficient financial means to perform obligations, or the absence of sufficient financial means of Contractor or any Subcontractor to perform any of the Work, including the insolvency or bankruptcy of any Subcontractor; (ii) any labor disturbance, strike or dispute of Contractor’s workers or personnel

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or any Subcontractor’s workers or personnel or any independent contractor engaged by Contractor or any of its Subcontractors occurring at the Project Site (unless such event is part of a national or regional disturbance, strike or dispute or is in breach or violation of any applicable national, industry or construction supplementary labor or union agreement) or any labor disturbance, strike or dispute limited to employees of Contractor; (iii) mechanical failures unless caused by an event of Force Majeure; (iv) storms and other climatic or weather conditions other than Abnormally Severe Weather Conditions; and (v) the unavailability or shortages of labor or Equipment and Materials unless itself caused by an event of Force Majeure.

“ Full Notice to Proceed ” means a written Notice signed by a duly authorized representative of Owner to Contractor authorizing Contractor to commence and complete all Work under this Agreement.

“ Full Notice to Proceed Date ” means the Business Day that Owner provides Contractor with the Full Notice to Proceed.

“ Governmental Authorities ” means applicable national, federal, state, provincial, and local governments and all agencies, authorities, departments, instrumentalities, courts, corporations, other authorities lawfully exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, or other subdivisions of any of the foregoing having or claiming a regulatory interest in or jurisdiction over the Project Site, the Project, the Work or the Parties.

“ Gross Negligence ” means an act or omission: (a) which when viewed objectively from the standpoint of the actor at the time of its occurrence involves an extreme degree of risk, considering the probability and magnitude of the potential harm to other; and (b) of which the actor has actual, subjective awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others .

“ Guaranteed Amount ” shall have the meaning set forth in Section 26.1.2(d) .

“ Hazardous Materials ” means any substance or material regulated or governed by any Applicable Permit, or any substance, emission or material now or hereafter deemed by any Governmental Authority to be a “regulated substance,” “hazardous material,” “hazardous waste,” “hazardous constituent,” “hazardous substance,” “toxic substance,” “radioactive substance,” “pesticide” or any similar classification, including by reason of deleterious properties, ignitability, corrosivity, reactivity, carcinogenicity or reproductive toxicity.

“ Indemnitee ” means an Owner Indemnitee or a Contractor Indemnitee, as the context may require.

“ Independent Engineer ” means a contractor mutually agreed upon by the Parties, which shall be a reputable, experienced contractor in the major power plant construction business that does not have a material direct or indirect financial interest in either Party or any of their respective Affiliates and is not a former or present agent, representative, advisor, consultant or contractor of either Party or any of their Affiliates.

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“ Industry Standards” or “Industry Grade ” means those standards of design, engineering, construction, operation, maintenance, workmanship, Equipment and Materials, and components specified in Exhibit A ; provided , however , if the relevant standard is not so specified or is ambiguous therein, “ Industry Standards ” or “ Industry Grade ” shall mean those standards of care and diligence normally practiced by engineering and construction firms in performing services of a similar nature for similar industrial grade power projects in the United States and in accordance with good engineering design practices, Applicable Laws, Applicable Permits, or that conform in all material respects to the manufacturer’s operation and maintenance guidelines, in each case as applicable to the equipment in question, taking into account such equipment’s size, service and type; provided , notwithstanding anything to the contrary herein, Contractor’s obligation with respect to Applicable Laws and Applicable Permits governing emissions from the Project is limited to compliance with the Emissions Guarantees.

“ Intellectual Property Claim ” means a third party claim or legal action for unauthorized disclosure or use of any trade secret, patent, copyright, trademark or service mark arising from Contractor’s performance (or that of its Affiliates or Subcontractors) under this Agreement that: (a) concerns any Equipment and Materials or other items or services provided by Contractor, any of its Affiliates, or any Subcontractor under this Agreement; (b) is based upon or arises out of the performance of the Work by Contractor, any of its Affiliates, or any Subcontractor, including the use of any tools or other implements of construction by Contractor, any of its Affiliates, or any Subcontractor; or (c) is based upon or arises out of the design or construction of any item by Contractor under this Agreement or the operation of any item according to directions embodied in Contractor’s final process design, or any revision thereof, prepared or approved by Contractor.

“ Intellectual Property Rights ” means all licenses, trade secrets, copyrights, patents, trademarks, proprietary information and other ownership rights related to the Work or otherwise necessary for the ownership and maintenance of the Project, including all Project-related documents, models, computer drawings and other electronic expressions, photographs and other expressions.

“ Intended Purposes ” shall have the meaning set forth in Section 24.1 .

“ Invention ” shall have the meaning set forth in Section 25.1 .

“ Key Personnel ” means the natural persons named and assigned to the identified positions set forth on Exhibit H .

“ Limestone Consumption Rate Guarantee ” means the guarantee relating to limestone consumption as set forth in Part I, Section 8.1.3 of the Scope Book.

“ Limestone Consumption Rate Test ” means the test for measuring limestone consumption as described in Part I, Section 8.2.3 of the Scope Book.

“ Limited Notice to Proceed ” means a written Notice from Owner to Contractor directing Contractor to begin production of the drawings and specifications described in Section 3.18.1 and to commence such other portions of the Work as indicated in such Limited Notice to Proceed.

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“ Limited Notice to Proceed Date ” means the Business Day that Owner provides Contractor with a Limited Notice to Proceed.

“ Loss(es) ” means subject to Section 31.1 , any and all liabilities (including liabilities arising out of the application of the doctrine of strict liability), obligations, losses, damages, penalties, claims, actions, suits, judgments, costs, expenses and disbursements (including legal fees and expenses and costs of investigation), and whether arising in equity, at common law, or by statute, or under the law of contracts, torts or property, of whatsoever kind and nature, including claims for property damage, personal injury (including emotional distress) and third-party economic loss, and whether or not involving damages to the Project or the Project Site.

“ Major Change In Work ” shall have the meaning set forth in Section 16.7.1 .

“ Major Subcontractor ” means a Subcontractor whose contract or contracts (in the aggregate) with Contractor, or any of its Subcontractors require payments by Contractor (or Subcontractor) of at least One Million Dollars ($1,000,000).

“ Materials Warranty ” means the warranty of Contractor under Section 17.2 .

“ Maximum Total Liability ” shall have the meaning set forth in Section 31.2 .

“ Mechanical Completion ” means satisfaction of the following requirements to Owner’s reasonable satisfaction:

(a) the Project is mechanically, electrically, and structurally constructed in accordance with the requirements of this Agreement, the Scope Book and Industry Standards, except for Non-Critical Deficiencies;

(b) the Project and each sub-system thereof, including all emissions or environmental compliance systems and all other critical systems, is mechanically and electrically complete and ready for initial operations, adjustment and testing, except for Non-Critical Deficiencies; and

(c) all components and systems that are directly related to the production and delivery of electrical energy to the high side of the main step-up transformer have been properly checked-out, adjusted or tested, as appropriate, in preparation for start-up and commissioning.

“ Milestone Item(s) ” means a discrete portion of the Work to be completed by the applicable date set forth in the Milestone Summary Schedule.

“ Milestone Summary Schedule ” means the schedule prepared by Contractor in the form of Exhibit G attached hereto describing the Critical Path Items and other Project activities, as such schedule may be modified in accordance with the terms of this Agreement.

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“ Minimum Performance Criteria ” means at least *** percent (***%) of the Net Capacity Guarantee during the Net Capacity Test and not more than *** percent (***%) of the Net Heat Rate Guarantee during the Net Heat Rate Performance Test, while in compliance with applicable constituents of the Emissions Guarantees as provided in Part I, Section 8 of the Scope Book.

“ Minimum Stable Load ” means the Project has achieved at least *** percent (***%) of the nominal net plant capacity over a four (4) hour period during which each boiler must have operated at *** percent (***%) steam flow (or such greater percentage), in accordance with the terms of Part I, Section 8.2.7 of the Scope Book.

“ Minimum Tangible Net Worth ” shall have the meaning set forth in Section 26.1.2(a) .

“ Monthly Payment ” shall have the meaning set forth in Section 6.6 .

“ MOU ” shall have the meaning set forth in Section 33.14 .

“ Net Capacity ” means the capacity of the Project in kilowatts equal to the sum of the steam turbine generator output minus generator transformer losses and auxiliary power losses.

“ Net Capacity Guarantee ” means the Net Capacity of the Project shall be at least *** kilowatts, at the conditions specified in Part I, Section 8.2.1 of the Scope Book, or, as applicable, corrected to the guaranteed conditions provided in Part I, Section 8.4 of the Scope Book.

“ Net Heat Rate ” means gross heat input to the steam generator divided by the sum of generator output minus generator transformer losses and auxiliary power usage.

“ Net Heat Rate Guarantee ” means the Net Heat Rate of the Project shall be no greater than *** Btu/kWh, at the conditions specified in Part I, Section 8.2.2 of the Scope Book, or, as applicable, corrected to the guaranteed conditions provided in Part I, Section 8.4 of the Scope Book.

“ Non-Critical Deficiencies ” means each item of Work that: (a) Owner or Contractor identifies as requiring completion or containing defects; (b) does not, in Owner’s reasonable judgment, impede the safe operation of the Project in accordance with Industry Standards; and (c) does not, in Owner’s reasonable judgment, affect the operability, safety or mechanical or electrical integrity of the Project.

“ Notice ” or “ notice ” means a written communication between the Parties required or permitted by this Agreement and conforming to the requirements of Article 30 .

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

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