ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

Exhibit 10.6

***CONFIDENTIAL TREATMENT REQUESTED – CONFIDENTIAL PORTIONS

OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN

SEPARATELY FILED WITH THE COMMISSION***

ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

Dated as of March 26, 2007

by and between

Agrupación Solar Llerena-Badajoz 1, A.I.E.,

as Owner

PowerLight Systems S.A.,

as Contractor

and

Solarpack Corporación Tecnológica, S.L.

 

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TABLE OF CONTENTS

 

 

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ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

This ENGINEERING, CONSTRUCTION AND INSTALLATION AGREEMENT, dated as of March 26, 2007 (“ Agreement ”), is executed in Seville (Spain) by and between Agrupación Solar Llerena-Badajoz 1, A.I.E., an “ agrupación de interés económico ” formed under the laws of Spain (“ Owner ”), PowerLight Systems S.A., a corporation formed under the laws of Switzerland (“ Contractor ”), and Solarpack Corporación Tecnológica, S.L. (“ Solarpack ”), a limited liability company duly incorporated under the laws of Spain.

RECITALS:

WHEREAS, Solarpack is a developer of projects pursuing the creation of solar photovoltaic (“ PV ”) parks in Spain owned by individual equity investors (“ Investors ”) that will each own installations of no more than 100 kW AC nominal inverter rating, which is equivalent to approximately 120kWp DC nameplate rating of PV modules; and

WHEREAS, Contractor designs and builds PV installations and as such is able to engineer and construct solar PV parks consisting of a field of PV modules, inverters, trackers and all the necessary ancillary systems to make available electric energy to the utility grid; and

WHEREAS, Solarpack has collected equity from the Investors ¹ and has incorporated Owner, and acts as agent of Owner for the purposes of organizing and supervising the construction and operation of the Park; and

WHEREAS, Owner leases or owns facilities in the municipality of Llerena, (Badajoz), Spain as more fully described in Schedule 4.1 hereto (the “ Site ”); and

WHEREAS, Owner desires to engage Contractor to supply and install at the Site a PV park divided in installations of no more than 100 kW AC nominal inverter rating. As used in this Agreement, “ Unit ” shall mean each of such independent PV module installations of 120kWp and 100kWe to be supplied and installed by Contractor at the Site pursuant to the provisions of this Agreement, each of which meet the requirements of the Spanish legislation to earn the feed-in tariff. As used in this Agreement, “ Park ” shall mean the aggregation of forty (40) Units which will be located at the Site that share a common fence and security infrastructure with an aggregated power of 4.8 MWp (4 MWe). The scope of this Agreement is limited to the Park, as described in Schedule 4.1 hereto; and

WHEREAS, Contractor desires to provide such supply and installation services, all in accordance with the terms and conditions set forth in this Agreement; and

 

¹ This EPC and its Annexes shall be disclosed to the Investors provided that such Investors have executed a confidentiality agreement agreed by PowerLight and Solarpack.

 

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NOW THEREFORE, in consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

AGREEMENT:

1. Definitions .

Unless otherwise required by the context in which any term appears: (a) capitalized terms used in this Agreement shall have the respective meanings set forth in this Section 1; (b) the singular shall include the plural and vice versa; (c) the word “including” shall mean “including, without limitation”, (d) references to “Sections”, “Schedules” and “Exhibits” shall be to sections, schedules and exhibits hereof; (e) the words “herein”, “hereof” and “hereunder” shall refer to this Agreement as a whole and not to any particular section or subsection hereof; and (f) references to this Agreement shall include a reference to all schedules and exhibits hereto, as the same may be amended, modified, supplemented or replaced from time to time.

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

“ Applicable Law ” shall mean, with respect to any Governmental Authority, any constitutional provision, law, directive, statute, rule, regulation, ordinance, treaty, order, decree, judgment, decision, certificate, injunction, registration, license, permit, authorization, guideline, governmental approval, consent or requirement of such Governmental Authority, as construed from time to time by any Governmental Authority.

“ Applicable Permits ” shall mean each and every European, national, autonomic, regional and local license, authorization, certification, filing, recording, permit or other approval with or of any Governmental Authority, including, without limitation, each and every environmental, construction or operating 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 Units.

“ Bank ” shall mean the agent appointed by the financing entities which are financing the Work on a project finance basis by virtue of a facility agreement executed between Owner and such financing entities, a copy of which has been delivered to Contractor prior to the Effective Date.

“ Change Order ” shall mean a written document signed by the Owner and Contractor authorizing an addition, deletion or revision to the Work or an adjustment of the Contract Price or Construction and Milestone Payment Schedule issued after execution of this Agreement.

“ Condition Precedent ” shall mean the fulfillment by Owner of the following conditions precedent for each Unit of the Park:

 

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(a)

Owner has submitted to Contractor a copy of the execution version of the facility agreement entered into between Owner and the Bank, among others, to finance the construction of the Park;

 

(b)

Owner has submitted to Contractor a certificate issued by the Bank confirming (i) that the conditions precedent for the availability of the full project funding (including the disbursement of equity by the Investors) and the drawdowns under the facility agreement executed between Owner and the Bank, among others, have been fulfilled, and (ii) that the Bank has received the final version of the legal due diligence report issued by the legal advisor to the Bank confirming all the Applicable Permits which may be required to commence the construction of each Unit of the Park (other than the Operational Permits) have been obtained and are in full force and effect; and

 

(c)

Owner has submitted to Contractor a copy of the Applicable Permits which may be required to commence the construction of each Unit of the Park (other than the Operational Permits).

“ Construction and Milestone Payment Schedule ” shall mean the schedule for prosecution of, and payment for, the Work, in each case as set forth on Schedule 1A .

“ Contract Documents ” shall mean this Agreement, the exhibits and schedules hereto, and drawings, specifications, plans, calculations, models and designs that are part of Exhibit 1 and that have been prepared by Contractor or any Subcontractor exclusively for the Work.

“ Contract Price ” shall mean the amount for performing the Work that is payable to Contractor as set forth in Section 17.1 , as the same may be modified from time to time in accordance with the terms hereof.

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

“***”

“ Contractor Representative ” shall mean the individual designated by the Contractor in accordance with Section 3.2 .

“ Developer Subcontract ” shall mean the subcontract executed on the date hereof by PowerLight Systems Spain, S.L. (C.I.F. B-84795319), a Spanish subsidiary wholly-owned by Contractor, and Solarpack by virtue of which Solarpack undertakes, as Subcontractor of Contractor, to diligently prosecute and obtain *** and, in the event that Solarpack fails to timely obtain any ***.

 

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“ Disclosing Party ” shall have the meaning set forth in Section 34 .

“ Dispute ” shall have the meaning set forth in Section 32.1 .

“ Effective Date ” shall mean March 20, 2007.

“ Equipment ” shall mean (a) all materials, supplies, apparatus, machinery, equipment, parts, tools, components, instruments, appliances, spare parts and appurtenances thereto that are required for prudent design, construction or operation of the Units in accordance with Industry Standards and (b) all materials, supplies, apparatus, machinery, equipment, parts, tools, components, instruments, appliances, spare parts and appurtenances thereto described in, required by, reasonably inferable from or incidental to the Work or the Contract Documents.

“ Euribor ” shall mean the Euro Monetary Market reference rate at or about eleven o’clock (11:00) a.m. (Central European Time) on the second business day immediately preceding the scheduled date for any payment under this Agreement that results from the application of the convention in force at any time, under the sponsorship of the FBE ( Federation Bancaire de l’Union Européene ) and the Financial Market Association (ACI), and currently published on Reuter’s EURIBOR 01 page, or such other page that may replace it, applicable to financings with disbursement of deposits two (2) business days following the date for setting the interest rate, pursuant to the TARGET (Trans-European Automated Real-Time Gross Settlement Express Transfer System) schedule for deposits in Euros, for a period of time equal to one (1) month.

“ Euro ” shall mean the lawful currency of Spain.

“ Final Completion ” shall mean satisfaction or waiver of all of the conditions for the Park set forth in Section 6 .

“ Force Majeure Event ” shall mean, when used in connection with the performance of a Party’s obligations under this Agreement, any act or event (to the extent not caused by such Party or its agents or employees or subcontractors) which is unforeseeable, or being foreseeable, unavoidable and outside the control of the Party which invokes it, and which renders said Party unable to comply totally or partially with its obligations under this Agreement. In particular, any of the following shall be considered a Force Majeure Event:

 

(a)

war (whether or not war is declared), hostilities, revolution, rebellion, insurrection against any Governmental Authority, riot, terrorism, acts of a public enemy or other civil disturbance;

 

(b)

acts of God, including but not limited to, storms, floods, lightning, earthquakes, hailstorms, ice storms, tornados, typhoons, hurricanes, landslides, volcanic eruptions, fires, excessive winds (20 m/s) , and objects striking the earth from space (such as meteorites), sabotage or destruction by a third party (other than any contractor retained by or on behalf of the Party) of facilities and equipment relating to the

 

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performance by the affected Party of its obligations under this Agreement; and

 

(c)

strikes, walkouts, lockouts or similar industrial or labor actions or disputes (any of them whether local, regional, national or sectorial, but only if affecting Contractor or Subcontractors or Suppliers and to the extent affecting employees working at the Site, or the logistics of the equipment or materials needed for the Works).

“ Governmental Authority ” shall mean any European, national, autonomic, regional, province, town, city, or municipal government, whether domestic or foreign, or other administrative, regulatory or judicial body of any of the foregoing.

“ Hazardous Material ” shall mean oil or petroleum and petroleum products, asbestos and any asbestos containing materials, radon, polychlorinated biphenyl’s (“PCBs”), urea formaldehyde insulation, lead paints and coatings, and all of those chemicals, substances, materials, controlled substances, objects, conditions and waste or combinations thereof which are now or become in the future listed, defined or regulated in any manner by any federal, state or Applicable Law.

“ Health and Safety Coordinator ” shall have the meaning set forth in Section 3.1 .

“ Health and Safety Manager ” shall have the meaning set forth in Section 3.2 .

“ Health and Safety Plan ” shall have the meaning set forth in Section 8.4 .

“ Health and Safety Study ” shall have the meaning set forth in Section 8.4 .

“ Indemnified Party ” shall have the meaning set forth in Section 25.4 .

“ Indemnifying Party ” shall have the meaning set forth in Section 25.4 .

“ Industry Standards ” shall mean those standards of care and diligence normally practiced by solar engineering, construction and installation firms in performing services of a similar nature in jurisdictions in which the Work will be performed and in accordance with good engineering design practices, Applicable Permits, and other standards established for such Work.

“ Investors ” shall have the meaning set forth in the first recital.

“ Operational Permits ” shall mean, jointly, the *** for the medium voltage infrastructure and the grid connection for each Unit, the definitive registration of each Unit within the Administrative Register of Power Facilities Included within the Special Regime ( Registro Administrativo de Instalaciones de Producción de Energía Eléctrica Acogidas al Régimen Especial, or “RAIPRE” ) and the municipal operation license for each Unit ( licencia municipal de funcionamiento ).

 

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

“ Owner’s Representative ” shall mean the individual designated by Owner in accordance with Section 3.1 .

“ Park ” shall have the meaning set forth in the sixth recital.

“ Park’s EPC Rated Value ” shall mean the total aggregated Wp set forth in the fifth recital.

“ Park’s Final Rated Value ” shall mean the total aggregated Wp stated in the manufacturers’ Flash Test Data of the PV modules finally delivered at Substantial Completion of the Full Park.

“ Party ” shall mean, individually, each of the parties to this Agreement.

“ Person ” shall mean any individual, corporation, partnership, company, joint venture, association, trust, unincorporated organization or Governmental Authority.

“ Receiving Party ” shall have the meaning set forth in Section 32 .

“ Retention ” shall have the meaning set forth in Section 18.2 .

“ Site ” shall have the meaning set forth in the fifth recital, and is more fully described in Schedule 4.1 hereto.

“ Site Lessor ” shall mean the counterpart of Owner under any lease agreements (or surface rights agreements) executed in connection with the Site.

“ Solarpack ” shall mean Solarpack Corporación Tecnológica, S.L.

“ Subcontractor ” shall mean any Person, other than Contractor and Suppliers, retained by Contractor to perform any portion of the Work (including any Subcontractor of any tier) in furtherance of Contractor’s obligations under this Agreement.

“ Substantial Completion ” shall mean, for each Unit of the Park, satisfaction or waiver of all of the conditions set forth in Section 13.3 .

“ Substantial Completion Date ” shall mean the actual date on which the Substantial Completion of the Full Park, as defined in Section 13.4 , has occurred.

“ Substantial Completion of the Full Park ” shall mean satisfaction or waiver of all of the conditions set forth in Section 13.4 .

“ Suppliers ” shall mean those Equipment suppliers with which Contractor contracts to build the Park.

 

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“ Technical Advisor to the Bank ” shall mean the independent engineering firm appointed by Owner, which appointment shall be approved by the Bank, to supervise the completion of the commissioning tests and execute the certificates approving any commissioning test contemplated in Section 4.6 .

“ Technical Dispute ” shall have the meaning set forth in Section 32.2 .

“ Unit ” shall have the meaning set forth in the sixth recital.

“ Unit Price ” shall mean the result of dividing the Contract Price between the number of Units of the Park.

“ Unit Warranty ” shall mean the warranty of Contractor set forth on Schedule 23 .

“ Unit’s EPC Rated Value ” shall mean 120kWp.

“ Unit’s Final Rated Value ” shall mean the total aggregated Wp stated in the manufacturers’ Flash Test Data of the PV modules that comprise the Unit at Substantial Completion of such Unit.

“ Work ” shall mean all obligations, duties, and responsibilities assigned to or undertaken by Contractor and described on Schedule 4.1 with respect to each Unit of the Park.

2. Scope .

Contractor shall provide on a turnkey basis all professional design and engineering services, Equipment procurement, supervision, labor, materials, equipment, tools, construction Equipment and machinery, utilities and transportation up to the general protection cabinet (“ Caja General de Protección ”) and revenue meter for each Unit, and procurement of the ***, and other facilities, items and services, in each case to the extent necessary for the proper execution and completion of each Unit, in accordance with the Contract Documents, which are each made a part hereof.

Contractor shall supervise and direct the Work in accordance with Industry Standards. Contractor shall have sole control over the engineering, design and construction means, methods, techniques, sequences, and procedures and for coordination of all portions of the Work under this Agreement unless the Agreement specifically provides otherwise.

3. Representatives .

3.1 Owner Representatives . Owner designates, and Contractor agrees to accept, Mr. *** as Owner Representative for all matters relating to Contractor’s performance of the Work (except for the execution of the certificates approving any commissioning test contemplated in Section 4.6 ). However, for the exclusive purposes of executing the certificates approving any commissioning test contemplated in Section 4.6 , Owner

 

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unconditionally and irrevocably appoints the Technical Advisor to the Bank as its representative. Owner shall notify Contractor of such appointment in accordance with Section 33 at least one (1) month prior to the beginning of the first commissioning test contemplated in Section 4.6 . The actions taken by Owner Representative regarding such performance shall be deemed the acts of Owner and shall be fully binding for Owner.

The Owner shall appoint a coordinator for health and safety labor matters during the performance of the Work (the “ Health and Safety Coordinator ”). The Health and Safety Coordinator shall perform the functions set out in Section 8.4 .

Owner may, upon written notice to Contractor, pursuant to Section 33 hereof, change the designated Owner Representative, Technical Advisor to the Bank or Health and Safety Coordinator. However, the replacement of the Technical Advisor to the Bank shall be notified to Contractor at least one (1) month prior to the beginning of the first commissioning test contemplated in Section 4.6 .

3.2 Contractor Representatives . Contractor designates, and Owner agrees to accept, Mr. Marco Miller as Contractor Representative for all matters relating to Contractor’s performance under this Agreement. The actions taken by Contractor Representative shall be deemed the acts of Contractor.

Additionally, before commencement of the Work on Site, Contractor shall appoint (i) as Project Manager to supervise all matters related to the performance of the Work, and (ii) a Construction Manager with the necessary experience in order to supervise the construction of the Park. The Construction Manager shall be based on the Site. The Project Manager shall be based in Spain from commencement of the Work on Site.

Not later than thirty (30) days before commencement of the Work on Site, Contractor shall appoint a health and safety manager (the “ Health and Safety Manager ”) to supervise all matters related to health and safety during the performance of the Work. The Health and Safety Manager shall be in permanent contact with the Health and Safety Coordinator and shall perform his functions as set out in Section 8.4 .

Contractor may, upon written notice to Owner, pursuant to Section 33 hereof, change the designated Contractor Representative or the Health and Safety Manager.

3.3 The Parties shall vest their Representatives with sufficient powers to enable them to assume the obligations and exercise the rights of Contractor or Owner, as applicable, under this Agreement.

3.4 Notwithstanding Sections 3.1 and 3.2 , all amendments, Change Orders, notices and other communications between Contractor and Owner contemplated herein shall be delivered in writing and otherwise in accordance with Section 33 .

4. The Work .

 

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4.1 Subject to Section 21 , Contractor shall perform the Work in accordance with the express description thereof in Schedule 4.1 . In particular, the Work shall include the following:

 

(i)	*** and obtaining and maintaining in force all insurances identified as Contractor’s responsibility on Schedule 24 .

 

(ii)	Basic and detail engineering (preliminary design and system design engineering). The Geotechnical, Hidrologic and Topographic Studies have been delivered to Contractor by Owner.

 

(iii)

Civil works, Site grading, landscaping, foundations and all necessary earth and other preparatory work if required to prepare the part of the Site where the Park is located.

 

(iv)

Supply and manufacture of Equipment and materials, including the supply and manufacture required for erection, installation and operation of the Units at the Park including, but not limited to, PV modules, inverters, GPT-0 PowerTracker components and steel, GPT-0 PowerTracker construction *** and electrical subcontractors. The Work shall include up to the general protection cabinet (“ Caja General de Protección ”) and revenue meter for each Unit, which are included within the scope of the Work but which constitute the limit of such scope. Technical Specifications are attached as Schedule 4.1 .

 

(v)	Monitoring systems as specified in Schedule 4.1 .

 

(vi)	Up to two (2) days per Site of on-site operation and maintenance training of Owner’s personnel (which shall be the same personnel for any Park built by Contractor on the same Site, even if the owners of such other Parks are different from the Owner).

 

(vii)

Supply of sufficient spare parts for the Unit Warranty period stipulated in Schedule 23.

Contractor shall supply, under this Agreement, a total number of forty (40) Units, with a total installed power of 4.80 MWp and 4 MWe.

4.2 Contractor shall perform all Work in accordance with Industry Standards and all relevant EU and national regulations and specifications, including homologation of equipment and installations to EU Directives and national standards, and all relevant specifications as contained in the Applicable Permits, especially the “Declaración de Impacto Ambiental” ( Schedule 4.2 ).

4.3 Contractor shall perform engineering and design services, using qualified architects, engineers and other professionals selected and paid for by Contractor, in each case as are necessary to prepare all Contract Documents and submit the Contract Documents to Owner for its review and approval.

 

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4.4 ***. Owner shall file any documents required to obtain any necessary Applicable Permits and obtain all such Applicable Permits ***. Owner, at its expense, shall file any documents required to obtain such Applicable Permits on a timely basis. Owner shall pay for all taxes, fees and costs required of Owner in order to obtain the Applicable Permits for which the Owner is responsible under this Section 4.4. In particular, Owner represents and warrants to Contractor that Owner has obtained all permits, licenses and other authorizations which may be required to commence the construction of each Unit of the Park.

4.5 Contractor, at its expense, shall purchase, transport, deliver, inspect to the extent it deems necessary, and construct and install all Equipment necessary or useful in order to complete each Unit. Owner will be the importer of record and shall separately pay all VAT. The status of Owner as importer of record shall in no way diminish Contractor’s status as a turnkey contractor or alter the risk of loss otherwise allocated to Contractor pursuant to Section 4.10 below. Contractor will (a) provide all the necessary administrative assistance to process the importation of goods on behalf of Owner; and (b) indemnify Owner for any liabilities, penalties or other damages that Owner may incur (excluding Owner’s obligation to pay VAT) as a result of its status as importer of record. Pursuant to Section 23 , Contractor will provide Owner with a standby letter of credit in accordance with the model of Schedule 23 (b) and for the amount contemplated in Section 23.3 . Such standby letter of credit will secure Contractor’s warranty performance obligations in accordance with Section 23 (a)  and ***. The aforementioned standby letter of credit shall remain in force from the Substantial Completion Date and for the two (2) year period during which the Contractor’s warranties for any of the Units remain in force.

Contractor shall obtain and maintain standard manufacturer’s and supplier’s warranties for the Equipment, which shall be according to that stipulated under Section 23.2 hereof. With respect to a Unit, Contractor shall assign to Owner all of Contractor’s right, title and interest in the Equipment as per Section 4.10 (a), free and clear of any lien, encumbrance or charge of any kind created by Contractor or resulting from Contractor’s actions. In addition, manufacturer’s and/or supplier’s warranties for each Unit shall be expressly permitted to be assigned and, upon Substantial Completion of the Unit, Contractor shall assign to Owner all related manufacturer’s and/or supplier’s warranties for each Unit.

4.6 Contractor shall startup each Unit and perform the commissioning tests for each Unit and for the Park described on Schedule 4.6 .

Owner shall provide such electricity and consumables as may be required to carry out the tests. The Contractor’s technical personnel (or, when applicable the installer and/or manufacturer’s personnel, with Contractor’s supervision) shall operate each Unit during the tests, although Owner (and the Owner’s personnel) shall be entitled to be present during any test. The Technical Advisor to the Bank and any third party entrusted with the supervision, vigilance and quality control of Contractor shall be entitled to attend at and witness the tests. Contractor shall notify with at least two (2) week notice the start of the relevant tests for Substantial Completion in order to allow Owner’s Representative and the Technical Advisor to the Bank to organize properly the test attendance. Contractor shall also notify the number of Units that will be tested on such date.

 

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Upon completion of the relevant commissioning tests, Contractor shall submit to the Technical Advisor to the Bank the certificate of the results thereof for its approval or rejection. Owner and Contractor agree that the approval or rejection by the Technical Advisor to the Bank shall fully bind Owner, and that no certificate of the results of the commissioning tests executed by the Owner’s Representative (and not by the Technical Advisor to the Bank) shall be a valid approval or rejection of such commissioning tests.

If the results of the test can be obtained on Site following the performance of the test and the test has been completed successfully, Technical Advisor to the Bank and Contractor’s Representative shall execute the relevant certificate including the results achieved in the test. If the results of the test cannot be obtained on Site following the performance of the test, Contractor shall promptly submit to Technical Advisor to the Bank the relevant certificate containing the results of such test. Technical Advisor to the Bank shall promptly review such certificate and results and shall determine whether the test has been successfully completed within five (5) business days following receipt of such certificate.

If any Unit fails to complete any test, the Technical Advisor to the Bank and Contractor’s Representative shall execute the relevant certificate including the results achieved in the relevant test for such Unit. Contractor shall repeat the test for such Unit one or several times before the Substantial Completion Date. Contractor shall take all corrective actions so that such Unit may successfully complete the tests, without prejudice to the Owner’s rights and remedies in accordance with this Agreement.

Any approval or rejection of the results of the commissioning tests made by the Technical Advisor to the Bank shall always be deemed to be made by Owner and, in the event that any Dispute regarding the commissioning tests arises, Contractor shall be entitled to settle the Dispute in accordance with Section 32 . If the independent expert or the Tribunal decide that any test has been completed successfully, such decision shall prevail and shall be binding for Owner, Contractor and the Technical Advisor to the Bank and, therefore, the relevant test shall be approved for all the purposes contemplated in this Agreement.

4.7 Contractor shall provide to Owner a copy of the operations and maintenance manual per Park. Contractor shall provide the drafts and the final version of the operations and maintenance manual on or before the dates contemplated in Section 4.12 . Before Final Completion, Contractor shall remove debris, Equipment and surplus materials from the relevant part of Site where the Park is located.

4.8 Owner shall be solely responsible to pursue and obtain any subsidies, rebates or other incentives that may be available from any Governmental Authority pursuant to or in connection with the purchase of each Unit or otherwise, and Contractor makes no representation or warranty to Owner as to the availability of any of such incentives. Contractor shall provide Owner reasonable assistance upon request; provided that Owner shall reimburse Contractor, upon demand by Contractor, for any expense incurred by Contractor in providing such assistance.

 

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4.9 Exclusions .

Contractor shall not perform any work or activity beyond the scope of the Work, as defined in this Agreement. In particular, the following shall not be included in the Work and therefore shall be performed by Owner:

 

(a)

Owner shall provide the Site for the Work, and suitable access thereto so that Contractor may gain access to the Site to perform the Work as soon as any necessary work permits, licenses and authorizations are obtained, as well as to the Technical Advisor to the Bank for the purposes of the commissioning tests. Access to the Site will be done by the ways located on the (north-west; south-west; north) roads, which shall be sufficient to enable the access to the Site of the trucks and the Equipment that Contractor may need to use in the performance of the Work in accordance with Industry Standards applicable to these kind of projects;

 

(b)

Owner shall select its own personnel so that it is present at the tests of the Work prior to the date of Substantial Completion of the first Unit of the Park and operation of the Units;

 

(c)

Owner shall be responsible for hiring any third party entrusted with the supervision, vigilance and quality control of Contractor;

 

(d)

Owner shall obtain every necessary Applicable Permit (including, in particular, the Operational Permits), ***, and Owner shall pay for all fees related to any permits, licenses or authorizations and costs incurred (except for the costs of Contractor’s personnel -including Contractor’s drafting any documents that may be necessary- and the costs of any third parties subcontracted by Contractor to prosecute *** in order to obtain any Applicable Permits, including ***;

 

(e)

Owner shall be solely responsible for securing and paying for all asset management services relating to the Parks, and will not require any such services from Contractor;

 

(f)

Owner shall provide the fence, gates, lighting and security infrastructure for the Park;

 

(g)

Owner shall be responsible for any engineering, work, Equipment and materials from the general protection cabinet (“ Caja General de Protección ”) and revenue meter for each Unit (which are included within the scope of the Work but which constitute the limit of such scope) to the grid connection; and

 

(h)

Contractor shall not be responsible for any environmental liabilities relating to the Site, except for such pollution, toxic emissions, etc. as are caused by Contractor during construction of the Park. However, Contractor shall be required to comply with all applicable environmental laws and regulations during

 

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construction of the Park, including the Declaración de Impacto Ambiental (Schedule 4.2), and without prejudice to the provisions of Section 27.2 .

As a consequence, any work or activity necessary for the Substantial Completion of the Park, and not included in this Article 4.9, shall be considered as part of the scope of supply of Contractor.

4.10 Title; Risk of Loss .

 

(a)

Owner shall take title of PV modules, inverters, steel, tracker and other equipment (“Category 1 Items”) after receipt of payment and release of Original Bill of Lading by Contractor.

Owner shall take title of the remaining parts of the Park (“Category 2 Items”) as payments are received by Contractor; provided, however, that except as otherwise expressly contemplated in this Agreement (and subject to Section 4.10 (d)  below), risk of loss for the Units shall remain with Contractor until Substantial Completion of such Unit.

 

(b)

From the Effective Date and until the date of Substantial Completion in respect of each Unit, and subject to paragraphs (c), (d) and (e) of this Section 4.10 , Contractor assumes risk of loss and full responsibility for the cost of replacing or repairing any damage to such Unit and all materials, Equipment, supplies and maintenance equipment (including temporary materials, equipment and supplies) that are purchased by Contractor for permanent installation in or for use during construction of such Unit, regardless of whether Owner has title thereto under this Agreement; and

 

(c)

Except when attributable to the performance by Contractor or Subcontractors of any of the Works or Services contemplated in the two (2) year warranty provided by Contractor under Section 23, Owner shall bear the risk of loss and full responsibility in respect of each Unit from and after the date of Substantial Completion of such Unit, and if any portion of such Unit is lost or damaged for whatever reason, then Contractor shall restore or rebuild any such loss or damage and complete the Work in accordance with this Agreement at the sole cost and expense of Owner; provided , however , that Contractor shall not be obligated to restore or rebuild any such loss or damage unless Owner has properly carried and maintained the insurance that Owner is required to maintain pursuant to Section 24 and Contractor has received reasonable assurances from Owner that Owner will prosecute such claim in a commercially reasonable manner and Contractor will receive the insurance proceeds, if any, paid under such Owner-maintained insurance coverages in accordance with the disbursement provisions of this Agreement.

 

(d)

Notwithstanding anything herein to the contrary, Contractor shall bear the risk of loss and full responsibility for the cost of restoring or rebuilding any damage to such Unit and all materials, Equipment, supplies and maintenance equipment (including temporary materials, equipment and supplies) that are purchased by Contractor or Owner for permanent installation in or for use during construction

 

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of such Unit to the extent caused by a Force Majeure Event occurred from the Effective Date until the date Substantial Completion of the relevant Unit in respect of such Unit. For these purposes, and under its responsibility, Contractor will contract a builder’s risk policy in accordance with Schedule 24 . Specific Force Majeure Events NOT covered by such builder’s risk policy, and not assumed by Contractor, are war (whether or not war is declared), hostilities, revolution, rebellion, insurrection against any governmental authority, riot, terrorism, acts of a public enemy or other civil disturbance.

 

(e)

Notwithstanding anything herein to the contrary, Owner shall bear the risk of loss and full responsibility for the cost of replacing or repairing any damage to such Unit and all materials, Equipment, supplies and maintenance equipment (including temporary materials, equipment and supplies) that are purchased by Contractor or Owner for permanent installation in or for use during construction of such Unit to the extent caused by the negligent, grossly negligent or wilful acts of the Site Lessor, the Owner or their respective agents, employees or representatives.

4.11 Training of Owner’s personnel .

 

(a)

Contractor shall provide the Owner’s personnel with up to two (2) days per Site of on-site operation and maintenance training. The Owner’s personnel will have the qualifications needed for the performance of their activities and will be hired by Owner. Contractor shall use its best efforts to enable the Owner’s personnel to take part in the Commissioning with the Contractor’s personnel, provided that the Owner’s personnel follows the instructions of Contractor, does not risk the safety of the tests and does not disturb Contractor’s or Subcontractor’s regular work.

 

(b)

The schedule for the training lessons will be coordinated with Owner, provided that the operation and maintenance manuals and such training will be provided within the thirty (30) days following the Substantial Completion Date, but not after Contractor has left the Site. The planning of training lessons will be agreed between Owner and Contractor, but will ensure compliance with the Construction and Milestone Schedule.

 

(c)

Contractor will propose to Owner, with enough time in advance, the dates when the Owner’s personnel must be at its disposal for the training lessons.

4.12 Technical Contract Documents to be delivered by Contractor .

Contractor undertakes to deliver Owner the following technical documents on or prior to the following dates:

 

For the avoidance of doubt, the final operation and maintenance manuals in Spanish and the as-built drawings shall be included in the punchlist items contemplated in Section 13.4 for the Park.

 

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5. Inspection . All Work performed by Contractor and all Equipment shall be subject to the inspection by Owner and by the Technical Advisor to the Bank, but such right of inspection of the Work or Equipment shall not relieve Contractor of responsibility for the proper performance of the Work or Equipment to the extent provided under this Agreement. Contractor shall provide to Owner or Owner’s designee or the Technical Advisor to the Bank access to Contractor’s facility or facilities where the Work is being performed upon reasonable prior notice (at least forty-eight (48) hours), during business hours, and subject to compliance with Contractor’s safety rules and policies. Owner shall ensure that the inspections and tests do not affect the normal performance of this Agreement.

6. Final Completion . Final Completion of the Park shall be deemed to have occurred only if punchlist items for the Park contemplated in Section 13.4 have been completed or waived. Upon Final Completion of the Park, Contractor shall submit to Owner a written statement requesting acknowledgement of the Final Completion of the Park. The acknowledgment shall be executed by Owner within five (5) business days after the receipt of the written statement unless Owner provides written notice of Contractor’s failure to achieve Final Completion of the Park. Execution of the acknowledgment or failure of the Owner to provide written notice of Contractor’s failure to achieve Final Completion of the Park within five (5) business days shall constitute Final Completion of the Park.

7. Changes and Extra Work .

7.1 Without invalidating this Agreement, Owner may initiate a change in the Work on a Unit by advising Contractor in writing of the change believed to be necessary. As soon as practicable after notice, Contractor shall prepare and forward to Owner in writing the price for the extra or changed Work on such Unit in accordance with Schedule 1B and any required adjustment to the Construction and Milestone Payment Schedule or any other term or condition of this Agreement. Except for minor modifications in the Work not involving extra cost and not inconsistent with the purposes of the Work, and except in an emergency endangering life or property, all authorized extra Work or changes, and the agreed to price, shall be confirmed through a Change Order to this Agreement in respect of the relevant Unit. No change or extra Work shall be effective without a Change Order signed by Owner and accepted in writing by Contractor and the Technical Advisor to the Bank, subject to the provisions of Section 27.2 . The price shall include all costs associated with performing the extra Work or changes, including the impact on the original

 

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scope of Work, inefficiencies created by the extra Work or changes, and overhead associated with the extra Work or changes.

7.2 All extra Work and changes shall be performed in accordance with the provisions and conditions of this Agreement, except as provided in the Change Order.

7.3 All Change Orders shall be paid by the Owner on a cost plus fifteen percent (15%) basis. Contractor will use commercially reasonable efforts to secure at least two (2) bids for any subcontract work required for all Change Orders.

7.4 Contractor may propose Change Orders to Owner if those Change Orders improve the Units or are otherwise advisable for the Work. This shall not affect the obligation of Contractor to perform the Work and to deliver the Units in the form agreed in this Agreement. Any changes to the Units or the Work requested by any Governmental Authority as a condition to issue an Applicable Permit shall entitle Contractor to request a Change Order in accordance with this Section 7, Sections 7.1, 7.2 and 7.3 shall apply mutatis mutandis.

8. Protective Measures .

8.1 Contractor shall be responsible for all injury or damage to individuals or property that may occur as a result of its fault or negligence or that of its Subcontractors (other than Solarpack) in connection with the performance of the Work. Contractor shall be responsible for the proper care and protection of all Equipment and materials furnished by Contractor and the Work performed until Final Completion of the Work for each Unit. Given that Owner is responsible for providing the fence, gates, lighting and security infrastructure for the Park, Owner shall arrange for the adequate protection for adjacent property to the extent required by law or by this Agreement, including protection of any Work existing in public property.

8.2 Contractor shall take all reasonably necessary precautions for the safety of its employees on the relevant part of the Site where the Park is located and prevent accidents or injury to individuals on, about, or adjacent to the premises where the Work is being performed.

8.3 Contractor shall keep the relevant part of the Site where the Park is located and surrounding areas free from accumulation of waste materials or rubbish caused by the Work, and upon Final Completion of the Park, shall remove from the relevant part of the Site where the Park is located all waste materials, rubbish, tools, Equipment, machinery and surplus materials.

8.4 Health and Safety

Owner shall undertake and prepare a health and safety study (the “ Health and Safety Study ”) and Contractor shall implement it through a health and safety plan (the “ Health and Safety Plan ”), as required under Applicable Law. Contractor shall provide the Health and

 

19

 

Safety Coordinator with a draft of the Health and Safety Plan and of the Health and Safety Study that it intends to put in place for the Owner’s information and comments, although Contractor shall remain responsible for the correctness and completeness of the Health and Safety Study and its implementation through the Health and Safety Plan.

Contractor will adopt, maintain and supervise all measures and programs required to ensure the safety of all the persons present in the relevant part of the Site where the Park is located. Unless otherwise agreed, Contractor shall, from the commencement of the Work on the Park until Final Completion: (i) provide proper fencing, gates, lighting, security infrastructure and warnings in the Park; (ii) provide proper temporary roadways, footways; and (iii) take all steps to protect the environment on and off the relevant part of the Site where the Park is located and to avoid damage and nuisance to persons or to properties resulting from pollution, including noise or other causes arising as a consequence of its method of operation.

Contractor assumes responsibility for the health and safety of its workers and those of its Subcontractors.

9. Force Majeure . Contractor shall promptly notify Owner in writing of any delay or anticipated delay in Contractor’s performance of this Agreement due to a Force Majeure Event, and the reason for and anticipated length of the delay. If reasonably feasible, Contractor shall deliver such notice within forty-eight (48) hours of when Contractor becomes aware of such delay. Contractor shall be excused for any delays or defaults in the performance of its obligations under this Agreement that are the result of a Force Majeure Event or any other event outside the reasonable control of Contractor. Contractor shall be entitled to a reasonable extension of time for delays due to a Force Majeure Event; provided that any Force Majeure Event that prevents performance, or is reasonably expected to prevent performance, for more than ninety (90) days shall entitle either Party to terminate this Agreement, in which case, Section 11.4 shall apply. Any modification to the Construction and Milestone Payment Schedule pursuant to this Section 9 shall be documented by a written Change Order to this Agreement.

10. Unanticipated Conditions . If any unusual or unanticipated conditions exist or arise at the Site (such as hazardous materials, environmental conditions, pollution or archeological findings), which conditions would involve the incurrence by Contractor of any expenses to correct such conditions, Contractor shall submit a request for approval of the corrective work and payment of the related expenses to Owner, which approval shall not be unreasonably withheld, conditioned or delayed. The additional work resulting therefrom will be paid for by Owner as extra Work pursuant to Section 7 . ***

11. Termination .

11.1 Termination by Owner :

Contractor agrees that Owner shall be entitled to terminate this Agreement upon the occurrence of any of the following circumstances:

 

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(a)

Contractor abandons the entire Work without justified reason for more than three (3) weeks or does not start the Work without justified reason for more than three (3) weeks from Effective Date, or

 

(b)

Contractor shall assign this Agreement in whole without the written authorization of Owner, unless otherwise expressly permitted under this Agreement, or

 

(c)

Contractor violates in any material respect any of the provisions of this Agreement, which violation remains uncured for thirty (30) days following Contractor’s receipt of written notice thereof from Owner, or

 

(d)

the Substantial Completion of the Full Park is delayed for more than *** months from the Effective Date hereof as a result of Contractor’s default or a default of its Subcontractors, but at least thirty (30) Units have achieved Substantial Completion and such Units have also achieved Substantial Completion of the Full Park, and Owner decides not to grant more time to Contractor to achieve Substantial Completion of the Full Park for every Unit of the Park, or

 

(e)

fewer than thirty (30) Units of the Park achieve Substantial Completion within the *** months following the Effective Date as a result of Contractor’s default or a default of its Subcontractors, and Owner decides not to grant more time to Contractor to achieve Substantial Completion of the Full Park for every Unit of the Park, or

 

(f)

***

 

(g)

Contractor executes this Agreement in bad faith, or

 

(h)

any Force Majeure Event that prevents performance, or is reasonably expected to prevent performance, for more than ninety (90) days, or

 

(i)

the Condition Precedent is not fulfilled on or before May 20, 2007 and Contractor decides not to grant more time to Owner to achieve the fulfillment of the Condition Precedent,

Owner may instruct Contractor to discontinue all or any part of the Work, and Contractor shall thereupon discontinue the Work of such parts thereof. Owner shall thereupon have the right to continue and complete the Work or any part thereof, by contract or otherwise. Upon the occurrence of any of the circumstances contemplated in paragraphs (a), (b), (c), and (g) above, Contractor shall be liable to Owner, unless otherwise contemplate herein, for any and all damage and excess cost incurred by Owner in completing the Work, in each case to the extent caused by Contractor’s material breach of this Agreement. Upon the occurrence of any of the circumstances contemplated in paragraphs (d), (e) and (f) above, the Parties shall proceed as follows:

 

(1)	upon the occurrence of the circumstance contemplated in paragraph (d) above:

 

(I)

the Contract Price shall be reduced to reflect those Units of the Park which have achieved Substantial Completion and Substantial Completion of the Full

 

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Park as of the *** month deadline, and Contractor will return the portion of the Contract Price received in excess, according to the new Contract Price, within the following deadlines:

 

-

the portion of the Contract Price received in excess for the Category 1 Items of such Units will be returned within *** months following the Owner’s demand; and

 

-

the portion of the Contract Price received in excess for the Category 2 Items of such Units will be returned at Substantial Completion Date; and

 

(II)

in addition, Contractor will pay the Owner, within two (2) months following the Owner’s demand, (a) a lump sum payment equal to all Common Expenses for the Park as of the *** month deadline and (b) an amount equal to the Financing Costs as of the *** month deadline. Owner shall promptly transfer the payment described in clause (b) to its Investors who are not able to participate in ownership of the partially completed Park. As used herein, “Common Expenses” means the net present value of that pro rata portion of the uncompleted Park’s costs, land lease and security, calculated by Deloitte or any other prestigious international audit firm chosen by Contractor among the three (3) presented by Owner. As used herein, “Financing Costs” means (x) the financing expenses of any Investors of the Owner who are associated with the uncompleted portion of the Park to carry their loan for a period of up to one year following the *** month deadline, assuming such expenses were incurred and (y) the finance charges associated with any early prepayment of loans from such Investors who do not elect to carry their loan. Title to all property and equipment provided by Contractor for the uncompleted Units shall be transferred to Contractor. The Bank shall provide a detailed and justified liquidation of the expenses and charges contemplated in sections (x) and (y) above. Contractor shall review this liquidation taking into account the executed copy of the facility agreement entered into by Owner and the Bank, which has been delivered to Contractor prior to the Effective Date. Contractor undertakes to acknowledge that the liquidation made by the Bank is correct and firm if made in accordance with the provisions of the aforementioned executed facility agreement and, therefore, undertakes to pay the corresponding amount within *** months following the Owner’s demand.

 

(2)

upon the occurrence of the circumstance contemplated in paragraph (e) above, within *** months following the Owner’s demand, Contractor will return all the payments received from Owner pursuant to this Agreement. In such event title to all property, materials and Equipment provided by Contractor for the Park shall be transferred to Contractor.

 

(3)	upon the occurrence of the circumstance contemplated in paragraph (f) above, Owner shall be entitled to reject such Unit and receive a repayment of such Unit Price for the

 

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Unit for which ***, subject to the following provisions:

 

(I)

If *** have not been achieved for any Unit due to any reason attributable to Contractor’s performance of the Work: (a) first, Solarpack will return on demand *** of all payments then received by Solarpack in connection with its services regarding such Park at any time, to the relevant payer (including those payments made by PowerLight Systems Spain, S.L. under the Developer Subcontract); and (b) second, Contractor, within *** months following the Owner’s demand, will return the payments received for the applicable Unit Price. A partial or non-fulfillment of (a) in no way diminishes obligation (b) by Contractor.

 

(II)

If *** have not been achieved for any Unit due to any reason not attributable to Contractor: (a) first, Solarpack will return on demand one hundred per cent (100%) of all payments then received by Solarpack in connection with its services regarding such Park at any time, to the relevant payer (including those payments made by PowerLight Systems Spain, S.L. under the Developer Subcontract); and (b) second, Contractor within *** months following the Owner’s demand, will return the payments received for the applicable Unit Price. ***. A partial or non-fulfillment of (a) in no way diminishes obligation (b) by Contractor.

For the purposes of allowing Contractor to make the payments contemplated in Sections (3) (I) (b) or (3) (II) (b) above, title to all property, materials and Equipment provided by Contractor for such Unit shall be transferred to Contractor.

For the avoidance of doubt, Contractor shall not be responsible for the Owner’s delay in obtaining, or any failure to obtain, in due time and manner the relevant “acta de puesta en marcha definitiva” for the medium voltage infrastructure and the grid connection for each Unit or any other Applicable Permit ***.

The remedies herein shall be inclusive and additional to any other remedies that may be available under Applicable Law, and no action by Owner shall constitute a waiver of any such right or remedy.

11.2 Termination by Contractor :

Owner agrees that Contractor shall be entitled to terminate this Agreement upon the occurrence of any of the following circumstances:

 

(a)	Owner shall assign this Agreement, or sublet any part thereof, without the written authorization of Contractor, unless otherwise expressly permitted under this Agreement, or

 

(b)	the Work is suspended for a period exceeding ninety (90) days pursuant to Section 19.1 or two (2) months pursuant to Section 19.2 , or

 

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(c)

Owner fails to pay any amount due under this Agreement provided that a one (1) month period has elapsed since the date the amount was due, or payment by Owner has been delayed during a minor term of at least ten (10) days at least three (3) times, although this shall not entitle Contractor to termination when said amount is under dispute according to Section 32 hereof, or

 

(d)	Owner violates in any material respect any of the provisions of this Agreement, which violation remains uncured for thirty (30) days following Owner’s receipt of written notice thereof from Contractor, or

 

(e)	Owner executes this Agreement in bad faith, or

 

(f)	any Force Majeure Event that prevents performance, or is reasonably expected to prevent performance, for more than ninety (90) days, or

 

(g)	If Owner fails to assume, within thirty (30) days following the termination of the Force Majeure Event, the cost of restoring or rebuilding any damage arising under such specific Force Majeure Events NOT covered by Contractor’s builder’s risk policy pursuant to Section 4.10 (d), or

 

(h)	the Condition Precedent is not fulfilled on or before May 20, 2007 and Contractor decides not to grant more time to Owner to achieve the fulfillment of the Condition Precedent,

Contractor shall have all rights and remedies that may be available under Applicable Law against Owner with respect to this Agreement, including without limitation the right to suspend performance of the Work, to terminate this Agreement, to require Owner to immediately post payment bonds, and/or Contractor to file mechanics’ liens.

11.3 Once this Agreement is terminated due to any circumstance contemplated in paragraphs 11.1 (a), (b), (c), or (g) above, the Parties will execute a verification certificate ( acta de comprobación ) of the Work carried out by Contractor as of that date, settling t