ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
Engineering Procurement and Construction Contract
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ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
Engineering Procurement and Construction Contract
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ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
US Geothermal, Inc.
Ormat Nevada, Inc.
Dated as of December 5, 2005
LIST OF EXHIBITS
ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT (“ Contract ”) dated as of December 5, 2005, is made by and between:
A. Company is developing a thirteen (13) MW geothermal power plant in the Raft River Known Geothermal Resource Area in the State of Idaho and desires to retain Contractor to provide certain construction related services and to supply equipment in relation to such power plant.
B. Contractor desires to be retained by Company to provide construction related services and supply equipment in relation to Company’s power plant.
THEREFORE, Company and Contractor (each individually, a “ Party ” and together, the “ Parties ”) agree as follows:
ARTICLE 1. DEFINITIONS, INTERPRETATION AND CONTRACT DOCUMENTS
In addition to the terms defined elsewhere in this Contract, the definitions of certain terms used in this Contract with initial letters capitalized are as set forth herein.
“ Affiliate ” means, with respect to any person or entity, any other person or entity (including any officer, director, shareholder, partner, employee, agent or representative of such person or entity) that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first person or entity. For purposes of this definition, “ control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person or entity, whether through the ownership of voting securities, partnership or other ownership interests, by contract, by Law or otherwise.
“ Approved Vendors ” means the vendors set forth in Exhibit F, as amended from time-to-time pursuant to Section 17.3.
“ As-Built Drawings ” has the meaning given to it in Section 9.3.
“ Capacity Test ” has the meaning given to it in Exhibit D.
“ Certificate of Final Completion ” means the certificate issued by Contractor to Company under this Contract, pursuant to Section 4.4.
“ Certificate of Substantial Completion ” means the certificate issued by Contractor to Company under this Contract, pursuant to Section 4.3.
“ Change in the Work ” means a change to the Work as provided in Article 8.
“ Change of Law ” means any Law, official interpretation thereof or manner of interpretation thereof, that is amended or modified, is enacted, adopted, promulgated or otherwise becomes effective or is repealed, revoked, suspended or not renewed after the Effective Date and which increases Contractor’s cost of performing the Work, delays Contractor’s performance of the Work or otherwise adversely affects Contractor’s performance of its obligations under this Contract.
“ Change Order ” means a written change order based on the form set forth in Exhibit L describing the Change in the Work and its effect, if any, on the Contract Price, the Milestone Payment Schedule, the Schedule and any other provision of this Contract that is affected.
“ Commencement Date ” has the meaning given to it in Section 4.2.
“ Company ” has the meaning set forth in the introductory paragraph to this Contract .
“ Company Default ” means the failure or delay of Company or its representatives, agents, subcontractors or suppliers (other than Contractor and its Subcontractors and their agents and employees) to meet Company’s material obligations under this Contract, including the obligations identified in Section 3.1.
“Company Indemnified Party” has the meaning set forth in Section 15.1.
“ Company Permits ” means the Permits to be obtained by Company as described in Exhibit G and, other than the Contractor Permits, any Permits otherwise necessary for the construction, operation and maintenance of the Project.
“ Company’s Representative ” has the meaning given to it in Section 3.2.
“ Contract ” means this Engineering, Procurement and Construction Contract together with the Exhibits attached hereto, as the same may be amended or otherwise modified from time-to-time as permitted herein.
“ Contract Price ” means the total aggregate price payable to Contractor by Company as set forth in Exhibit B, and as adjusted pursuant to the provisions of this Contract.
“ Contractor ” has the meaning given to it in the Preamble.
“ Contractor Hazardous Materials ” has the meaning given to it in Section 2.2(h) .
“ Contractor Permits ” means the Permits to be obtained by Contractor as described in of Exhibit G.
“ Contractor’s Representative ” has the meaning given to it in Section 2.3.2.
“ Correction Curves ” has the meaning(s) given to it in Exhibit D and shall be used to adjust Facility performance from variations from the Design Conditions and/or other specified factors (e.g., degradation) as provided therein.
“ Day ” means a twenty-four (24) hour period beginning and ending at 12:00 midnight .
“ Defect ” or “ Defective ” means any Work, including any part or component thereof, that: (i) contains improper or inferior workmanship; (ii) fails to conform in any material respect with the relevant Drawings or Specifications, including any Change in the Work; (iii) is not manufactured in any material respect with the applicable Drawings and the Specifications; and (iv) is not free from defects in material and workmanship.
“ Defect Remedy Work ” means Contractor’s repair or replacement of any Defect or Work that is Defective.
“ Delay Liquidated Damages ” has the meaning given to it in Section 4.6.1.
“ Delayed Payment Rate ” means a per annum rate of interest equal to the lesser of (i) twelve percent (12%) and (ii) the maximum rate permitted by applicable Law.
“ Design Conditions ” means the design operating conditions for the Facility as set forth in Exhibit C.
“ Documents ” means any design, drawing (including the Drawings), certificate, specification (including the Specifications), report, studies, model, program, record, pattern, sample, written information and data and other document of whatever nature (including a record thereof in software form).
“ Dollars ” or “ $ ” means the lawful currency of the United States of America.
“ Drawings ” means the Facility drawings set forth in Exhibit C or otherwise provided by Contractor to Company pursuant to Article 9 or other terms of this Contract, including the As-Built Drawings.
“ Effective Date ” means the date of this Contract.
“ Facility ” means the unit number one geothermal power plant and related infrastructure to be located the Raft River Known Geothermal Resource Area in Cassia County in the State of Idaho to be constructed as part of the development of the Project on the Site, all as more particularly described in Exhibits A and C, but for avoidance of doubt excludes the
interconnection facilities, geothermal production, re-injection and cooling tower make-up water wells, the gathering system and other portions of the Project outside of the power plant island.
“ Final Completion ” means the satisfaction or deemed satisfaction of each of the following: (a) Substantial Completion has occurred; (b) Contractor has delivered final lien waivers and releases from Contractor and Contractor’s Subcontractors to Company; (c) all Documents which are to be delivered to Company, by Contractor on or before the Final Completion Date pursuant to this Contract have in-fact been delivered to Company; (d) all of Contractor’s supplies, personnel, rubbish and Contractor Hazardous Materials have been removed from the Site; and (e) all Work other than Punch List Items have been completed in accordance with this Agreement.
“ Final Completion Date ” means the earlier of (a) the date upon which the Certificate of Final Completion was issued by Contractor to Company pursuant to Section 4.7 (provided that such Certificate of Final Completion has been subsequently countersigned by Company pursuant to Section 4.8) or (b) the date upon which Final Completion is deemed to have occurred under this Contract pursuant to Section 4.8 or Section 6.4.3.
“ Financing Parties ” means (a) any and all lenders providing senior or subordinated construction, interim or long-term debt financing or refinancing; and (b) any and all equity investors providing leveraged lease-financing or refinancing, and in each case any trustee or agent acting on their behalf, for the Facility. Company shall provide written notice to Contractor of the names of all of the Financing Parties.
“ Force Majeure ” means any war, declared or not, invasion, armed conflict or act of public enemy, blockage, embargo, revolution, insurrection, riot, civil commotion, act of terrorism, or sabotage provided that any such event occurs within or directly involving the United States or any individual state, or any other country from which machinery, equipment or material for the Facility are procured or transported through, an act of God, including, but not limited to, lightning, fire, earthquakes, volcanic activity, floods, storms or unusual weather conditions, cyclones, typhoons, or tornadoes, labor disputes including strikes, or slowdowns, or lockouts that extend beyond the Facility or are widespread or nationwide, or any other event or circumstances or combination of event(s) or circumstances beyond the reasonable control of a Party, that have a real, quantifiable and adverse impact on cost or performance of the Work.
“ Gross Invoice Amount ” has the meaning given to it in Section 5.3.1.
“ Governmental Authority ” means any local, state, regional, central or national government administrative, judicial or executive organs, but excluding any similar foreign or multinational entity, that has or purports to have or asserts or attempts to assert, jurisdiction to legislate, decree, adjudicate or enforce any decision related to, or bearing on, the Facility or the Work.
“ Guaranteed Final Completion Date ” means the Guaranteed Final Completion Date identified in the Schedule, as the same may be amended from time-to-time in accordance with this Contract.
“ Guaranteed Substantial Completion Date ” means the Guaranteed Substantial Completion Date identified in the Schedule, as the same may be amended from time-to-time in accordance with this Contract.
Hazardous Materials ” means any hazardous or toxic
substances, materials and wastes which are regulated or are
classified as hazardous or toxic by any Governmental Authority
having jurisdiction over the Site, including, but not limited to,
those substances included in the definitions of “Hazardous
Substances,” “Hazardous Materials,” “Toxic
Substances,” “Hazardous Waste,” “Solid
Waste,” “Pollutant,” or “Contaminant
“ Information ” means any Drawings, Specifications or other information furnished directly or indirectly by the other Party hereto in connection with the Contract and the Facility and the Project whether such Information has been furnished prior to, during or following termination of the Contract in connection with the performance of this Contract.
“ Insolvency Event ” means the bankruptcy, insolvency, liquidation, administration or other receivership or dissolution of a Party and any equivalent or analogous Proceedings by whatever name known and in whatever jurisdiction and any step taken (including the presentation of a petition or the passing of a resolution) for or with a view to any of the foregoing.
“ Law ” means any federal, state, commonwealth, local or other constitution, charter, act statute, law, ordinance, treaty, resolution, directive (to the extent having the force of law), code, rule, regulation, order, specified standards or objective criteria contained in any applicable permit or approval, which standards or criteria must be met in order for the Facility to be constructed and operated lawfully, and other legislative or administrative action of any Governmental Authority, or a final decree, judgment or order of a court, or any applicable engineering, construction, safety or electrical generation code.
“ Letter of Credit ” means a stand-by letter of credit procured: (i) by Company, or (ii) through one or more of the Financing Parties for the benefit of Company and in favor of Contractor, and which shall be sufficient to pay Contractor any balance of sums owed to Contractor by Company pursuant to this Contract (as such Letter of Credit may be updated from
time-to-time), but in particular with respect to the payment terms set forth in Section 5.3.1 and the Schedule.
“ Liability ” or “ Liabilities ” means any fine, penalty, damage, loss, cost, claim or expense or other liability (including any related fees, expenses and disbursements of a Party’s counsel).
“ Liquidated Damages ” means Delay Liquidated Damages, Performance Liquidated Damages, Shortfall Generation Liquidated Damages and Net Performance Liquidated Damages.
“ Major Vendor ” means any vendor engaged directly by Contractor to provide equipment for incorporation into the Work at the Site, whose Work is valued in excess of One Million Dollars ($1,000,000).
“ Materials ” means all equipment, supplies, apparatus, instruments, machinery (including the OEC), parts, tools, components, appliances, spare parts and appurtenances thereto to be supplied under this Contract by Contractor as described in or required by the Scope of Work.
“ Milestone Payment Schedule ” means the payment schedule for payment of the Contract Price as set forth in Exhibit B.
“ Minimum Payment ” has the meaning given to it in Section 5.3.1.
“ Month ” means a period beginning at 12:00 midnight on the last Day of the preceding calendar month and ending at 12:00 midnight on the last Day of the calendar month.
“ MW ” means megawatts.
“ Net Deliverable Capacity ” has the meaning given to it in Exhibit D.
“ Net Performance Liquidated Damages ” means the Performance Liquidated Damages less the amount of Shortfall Generation Liquidated Damages paid or payable by Contractor to Company pursuant to Section 4.10.
“ Notice to Proceed ” means the notice issued by Company to Contractor authorizing Contractor to commence the Work under this Contract.
“ O&M Manual ” means the operation and maintenance manual to be provided by Contractor to Company pursuant to Section 9.6.
“ OEC ” means the Ormat Energy Converter.
“ Party ” and “ Parties ” have the meanings given to them in the Preamble.
“ Performance Bonus ” has the meaning given to it in Section 11.1.3.
“ Performance Guarantee ” means the guaranteed minimum level of Net Deliverable Capacity to be attained as specified in Exhibit D.
“ Performance Liquidated Damages ” has the meaning given to it in Section 11.1.1.
“ Performance Tests ” means the Synchronization Test, the Trip Test, the Capacity Test, the Reliability Test, and the Turbine Run Back Test (all as are defined in Exhibit D) to be carried out to determine whether the Facility satisfies the performance requirements set forth in this Contract.
“ Permits ” means the permits, approvals and licenses required from Governmental Authorities necessary for the construction, operation and maintenance of the Facility and the performance of the Work.
“ PPA ” means the Firm Energy Sales Agreement in effect between Idaho Power Company and US Geothermal Inc. under which the output from the Facility would be delivered and bought.
“ Proceeding ” means any claim, suit, demand, allegation, arbitration, dispute or other action process, or proceeding whether actual or threatened.
“ Project ” means the geothermal power generation project unit number one to be constructed in the Raft River Known Geothermal Resource Area in Cassia County in the State of Idaho, including the Facility and the related substation, geothermal production and re-injection wells and the gathering system, all as more particularly described in the Power Plant Design Criteria document included in Exhibit C.
“ Prudent Industry Practices ” means those practices, methods, equipment, specifications and standards of safety and performance, as the same may change from time-to-time, as are commonly used in operations of privately-owned geothermal electric power generation facilities similar to the Facility, which in the exercise of reasonable judgment and in light of the facts known at the time the decision was made, are considered good, safe and prudent practice in connection with the operation and maintenance of geothermal electric power generation facilities similar to the Facility. Prudent Industry Practices are not intended to be limited to the optimal practices, methods, equipment, specifications and standards, but rather to be the practices, methods, equipment, specifications and standards generally accepted in the privately-owned geothermal electric power industry.
“ Punchlist Items ” means unfinished items of Work (such as Spare Parts, painting, fine-finish grading or clean-up, updating of Drawings, manuals or other Documents) the lack of which or the failure of which to complete (considered individually or in the aggregate of all Punchlist Items) does not or will not adversely affect the, safety or integrity of the Facility and does not impact the performance of the Facility.
“ Safety Plans ” has the meaning given to it in Section 2.3.4.
“ Safety Report ” has the meaning given to it in Section 2.3.4.
“ Schedule ” means Exhibit B, as it may be amended from time-to-time as set forth in this Contract, which sets forth the Work performance and payment milestone schedule for the Facility.
“ Schedule Bonus ” has the meaning given to it in Section 4.6.2.
“ Scope of Work ” means the specific delineation of items of Work to be performed by Contractor as set forth in Exhibit A, which may be modified pursuant to a Change Order pursuant to Article 8, and which shall conform to the Drawings and the Specifications.
“ Shortfall Generation Liquidated Damages ” has the meaning given to it in Section 4.10.3.
“ Site ” means the site more specifically described in Exhibit C, together with spaces, surface water, ground water, diversion weirs, roads, easements, privileges, access rights, rights-of-way and other rights and interests in land and water acquired or to be acquired by Company to develop, engineer, build, own, operate or maintain the Facility and appurtenant facilities, including any associated working and laydown areas for Contractor.
“ Spare Parts ” means the spare parts for the Facility to be provided by Company as described in Exhibit C.
“ Specifications ” means the system descriptions, technical specifications and performance specifications and standards for the Facility and the performance of the Work as set forth in Exhibit C.
“ Synchronization Test ” means a test whereby the Facility OEC is synchronized to the power grid, as described in Exhibit D.
“ Subcontract ” means an agreement between Contractor and a Subcontractor for the performance of any portion of the Work.
“ Subcontractor ” means any person or entity, other than Contractor’s employees, engaged by Contractor to perform services relating to the Work.
“ Substantial Completion ” means the performance of the Work requirements specified in Section 4.3.
“ Substantial Completion Date ” means the earlier of (a) the date upon which the Certificate of Substantial Completion was issued by Contractor to Company pursuant to Section 4.3 (provided that such Certificate of Substantial Completion is subsequently countersigned by Company pursuant to Section 4.4) or (b) the date upon which Substantial Completion is deemed to have occurred under this Contract pursuant to Section 4.5.
“ Tax ” means any present or future tax, charge, levy, impost or duty of any kind whatsoever, or any amount payable on account of or as security for any of the foregoing,
imposed by any Governmental Authority together with any penalties, additions, liens, surcharges and interest relating thereto.
“ Trip Test ” has the meaning given to it in Exhibit D.
“ Warranty Period ” has the meaning given to it in Section 10.2.
“ Work ” means all of the work, services and other duties, obligations and responsibilities that are to be carried out by or under the direction of Contractor pursuant to this Contract, including that work specifically described as Contractor liabilities in the Scope of Work.
1.2.1 Where the context requires, words importing the singular shall include the plural and vice versa, and words importing persons shall include entities.
1.2.2 A reference in this Contract to any Article, Section, Exhibit, Clause or Paragraph is, except where it is expressly stated to the contrary, a reference to such article, section, exhibit, clause or paragraph in this Contract.
1.2.3 Headings are for convenience of reference only.
1.2.4 Each reference to this Contract shall include a reference to each agreed variation of or supplement to this Contract as may be amended, varied or supplemented from time-to-time.
1.2.5 Where the context requires, any reference to a person, entity or Party shall include such person’s, entity’s or Party’s successors and permitted assigns.
1.2.6 References to the word “include” or “including” are to be construed without limitation.
1.3 Documents Included
This Contract shall consist of this document and the following Exhibits, which are specifically incorporated herein and made a part hereof by this reference.
ARTICLE 2. CONTRACTOR RESPONSIBILITIES
2.1 General Responsibilities
2.1.1 Except as otherwise expressly set forth in this Contract, Contractor, in consideration of the Contract Price, shall provide, furnish and perform, or cause to be provided, furnished or performed, engineering and design services, Materials, consumables and utilities, and supervision, labor and services required for the development, design, engineering, procurement, manufacturing, transport to Site, quality assurance, inspection, erection, construction, commissioning and performance testing of the Facility as specified in the Scope of Work and in accordance with the provisions of this Contract.
2.1.2 Contractor shall diligently prosecute the Work in a good and workmanlike manner in accordance with the Schedule and in accordance with the provisions of this Contract.
2.2 Specific Responsibilities
Without limiting the generality of Section 2.1.1 and subject to the terms and conditions set forth in this Contract, Contractor shall at its own expense furnish, undertake, provide or cause to be furnished, undertaken or provided the following:
(a) preparation of the conceptual design and integrated detail design and engineering for the Facility such that the Facility conforms to the Scope of Work and meets the performance and other requirements described in this Contract;
(b) obtain the Contractor Permits from the applicable Governmental Authorities;
(c) coordinate its activities pursuant to this Contract with those activities of Company’s other contractors as requested by Company; provided, however, that such coordination does not delay or otherwise unreasonably interfere with Contractor’s performance of the Work in accordance with the Schedule;
(d) clearing, excavation, backfilling, compaction, consolidation and removal or importation of related materials required with respect to preparation of the Site in accordance with the Scope of Work;
(e) procurement, supply and transportation to the Site of all Materials necessary to complete the Facility;
(f) supervision and direction of construction and other Work activities on the Site, including construction by Subcontractors, and the coordination of the Work under this Contract;
(g) keep the Site from waste materials or rubbish caused by Contractor’s activities and in a reasonably presentable condition given the nature of the Work. Contractor may store all rubbish and construction debris in an authorized disposal area furnished by Company as provided in Section 3.1(i) . Contractor shall be responsible for the containment of any such material within such area. All rubbish and construction debris caused by Contractor’s activities shall be disposed through a licensed waste hauler, or in a licensed waste disposal site.
(h) remediate and dispose of in accordance with applicable Law any Hazardous Materials generated, transported or released by Contractor or any Subcontractor on or about the Site (“ Contractor Hazardous Materials ”);
(i) training, in the operation and maintenance of the Facility, of a reasonable number of operating and maintenance personnel furnished by Company pursuant to Section 3.1(f) . Such training shall be carried out in conjunction with the normal commissioning, start-up operations and testing activities of Contractor;
(j) provide periodic reports to Company, not less frequently than monthly, regarding the progress of the Work, including a Gantt Chart in MS Project format in sufficient detail to allow a reasonably experienced engineer to evaluate the progress of the Work;
(k) commission and test the Facility as detailed in Exhibit D; and
(l) clearance of the Site of temporary structures, surplus Materials and tools that were delivered or created by Contractor through the course of the Work, upon completion of field work; provided that Contractor shall offer to sell to Company at cost any such temporary structures, surplus Materials and tools that Contractor does not want to retain.
2.3 Contractor’s Personnel and Labor Relations
2.3.1 Contractor shall ensure that there are at all times at the Site while the Work is being performed at the Site there are sufficient suitably qualified and experienced personnel to supervise and perform such Work.
2.3.2 Contractor shall designate, by written notice to Company, a representative who shall act as a single point of contact with Company in all matters relating to the Work (“ Contractor’s Representative ”). Contractor’s Representative shall have full authority to act on behalf of Contractor for all purposes in connection with this Contract.
2.3.3 Company shall be entitled by written notice to Contractor to object to any representative or person employed by Contractor (including Contractor’s Representative) or any
Subcontractor in the execution of the Work who, in the reasonable opinion of Company, is incompetent or negligent, or engaged in misconduct, and Contractor shall promptly remove such person from the Work and appoint a suitable replacement, or ensure that the relevant Subcontractor does so.
2.3.4 Contractor shall develop, present to Company and implement a safety plan for its own construction activities on the Site and for emergency situations prior to the commencement of Work at the Site (“ Safety Plans ”). During performance of the Work, Contractor shall publish work safety rules for the Site in compliance with the Safety Plan, which safety rules shall apply to any and all visitors to the Site, including representatives of Company. Each week (or other interval mutually agreeable to Company and Contractor), Contractor shall prepare and provide to Company a written report (“ Safety Report ”) listing (i) any breaches or violations of the Safety Plan, (ii) a description of any incidents resulting therefrom, (iii) incidents related to safety issues at the Site, (iv) the cause of any such incident, (v) the nature of such incident, (vi) the severity of such incident, and (vii) the remedial actions planned to remedy such incident and prevent such incident from occurring in the future.
2.3.5 Contractor shall be responsible for the security and protection (i) of its equipment, supplies and tools used in connection with the Work through the Final Completion Date, and (ii) for all of the other property owned or leased by Contractor or any of its Subcontractors located at the Site at areas thereon provided by Company or stored or warehoused off the Site through the Final Completion Date. Contractor shall use due care to protect any of Company’s property at any time in its possession or under its control while performing the Work which shall not be less than the care exercised by Contractor with its own property and Contractor shall be responsible for any damage to such property resulting from its failure to use such care.
2.3.6 Contractor shall conduct all of its activities within the boundaries of the Site. Contractor, its Subcontractors, agents and employees shall observe all pertinent and reasonable regulations and rules issued by Company to Contractor which are in effect at the Site, as the case may be, regarding passes, badges and proper conduct on such Site. Company may issue reasonable modifications to such regulations and rules from time-to-time.
2.3.7 Company and its agents, employees and other contractors shall observe all pertinent and reasonable regulations and rules issued by Contractor, including the Safety Plan, which are in effect at the Site, as the case may be, regarding passes, badges and proper conduct on such Site. Contractor may issue reasonable modifications to such regulations and rules from time-to-time.
2.4 Representations and Warranties of Contractor
Contractor represents and warrants to Company that:
(a) Contractor is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware and has the requisite legal power and authority to execute, deliver and perform this Contract;
(b) the execution, delivery and performance by Contractor of this Contract has been duly authorized by all requisite action of Contractor, and there is no provision in its charter documents requiring further consent for such action by any other person or entity; and
(c) this Contract constitutes the legal, valid and binding obligation of Contractor, enforceable against Contractor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, reorganization, moratorium or similar laws affecting or limiting creditors’ rights generally or by equitable principles relating to enforceability.
2.5 Use of Spare Parts
Spare parts may be withdrawn by Contractor from the Spare Parts for the purposes of the Work. Contractor shall be responsible, at its cost, for replacing any such withdrawn Spare Parts as soon as reasonably practicable and in any event no later than the expiration of the Warranty Period.
ARTICLE 3. COMPANY RESPONSIBILITIES
3.1 General Responsibilities
Company shall, at Company’s expense, furnish, undertake, provide or cause to be furnished, undertaken or provided the following:
(a) make available to Contractor and its Subcontractors by the time specified in the Schedule, and continuing until the end of the Warranty Period, the Site, including space for all construction facilities, laydown and storage areas, and roads and other means of access to and from the Site in a timely manner and in accordance with Contractor’s reasonable requirements regarding amount, weight and dimensions of equipment to be transported and the size and layout of the laydown and storage areas;
(b) obtain and maintain in effect all Company Permits from the Governmental Authorities in a timely manner as required to permit Contractor and its Subcontractors to proceed with the Work in accordance with the Schedule;
(c) prepare and/or obtain all environmental impact assessments, studies and statements and geotechnical reports required in connection with the ownership, financing, construction, operation and maintenance of the Facility and the performance of this Contract;
(d) furnish to Contractor copies of any environmental impact assessment, studies and statements and geotechnical reports prepared or obtained as provided in Section 3.1(c) and any information, a power of attorney (if required) and any other items reasonably necessary for Contractor to obtain the Contractor Permits or perform the Work in a timely manner as required to permit Contractor and its Subcontractors to proceed with the Work in accordance with the Schedule;
(e) arrange for electricity, water and other utilities to be available to Contractor at then current market terms for the same for use in the construction, start-up, testing
and commissioning of the Facility, in a timely manner as required to permit Contractor and its Subcontractors to proceed with the Work in accordance with the Schedule;
(f) provide a reasonably sufficient number of operating personnel, including their supervisors, for training by Contractor as provided in Section 2.2(i), and for participating in the start-up, testing, commissioning, maintenance and upkeep of the Facility through to Final Completion. Each person designated for training by Company shall be a qualified technician and said trainees shall not be deemed employees or Subcontractors of Contractor;
(g) provide the geothermal heat resource in the quantity and quality detailed in the Design Conditions, and in the time frame as required to permit Contractor and its Subcontractors to proceed with the Work in accordance with the Schedule;
(h) provide or make arrangements for the tie-in point to the electricity grid (or any other defined electricity consumer) to be ready in a timely manner in accordance with the Schedule;
(i) provide to Contractor a rubbish and construction debris (but not for Contractor Hazardous Materials) storage area on or adjacent to the Site. Disposal of such Contractor materials stored therein shall be the responsibility of the Contractor, pursuant to Section 2.2 (g).
(j) any removal or disposal of the existing transite pipe on the Site exposed during the Work; and
(k) remediate and dispose of in accordance with applicable Law any Hazardous Materials that are found or are uncovered on or about the Site other than Contractor Hazardous Materials that are the responsibility of Contractor as provided in Section 2.2(h) .
3.2 Company’s Representative
Company shall designate by written notice to Contractor a representative who shall act as a single point of contact with Contractor in all matters relating to the Work (“ Company’s Representative ”). Company’s Representative shall have full authority to act on behalf of Company for all purposes in connection with this Contract.
3.3 Representations and Warranties of Company
Company represents and warrants that:
(a) Company is a corporation duly organized and validly existing under the Laws of the State of Idaho and has all requisite legal power and authority to execute, deliver and perform this Contract;
(b) the execution, delivery and performance by Company of this Contract have been duly authorized by all requisite corporate action of Company and there is no provision
in its charter documents requiring further consent for such action by any other person or entity; and
(c) this Contract constitutes the legal, valid and binding obligation of Company, enforceable against Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, reorganization, moratorium or similar laws affecting or limiting creditors’ rights generally or by equitable principles relating to enforceability.
3.4 Sale of Project
If prior to the expiry of the Warranty Period (or any extension thereof) Company elects to convey or otherwise transfer its right, title and interest in and to the Project or in and to the owner of the Project, Company shall provide written notice of such intent to Contractor. Transfer to any third party shall not relieve Company of any obligation hereunder, whether such obligation arises prior to or after the transfer.
3.5 Future Projects
In the event that Company or its Affiliates elect to pursue up to two (2) additional geothermal power plants in its expansion of the Project, Company or its Affiliates shall have the option to acquire from Contractor, and Contractor shall have the option to provide to Company or its Affiliates, the services and equipment of the type provided by Contractor under this Contract for a lump-sum payment for each power plant equal to the Contract Price subject to adjustment as follows. The Contract Price, for purposes of this Section 3.5, may be adjusted to reflect changes in applicable materials and labor prices as determined from relevant published cost indices from the Effective Date of this Contract, to the effective date of the subsequent contract(s). The services and equipment provided by Contractor with respect to the power plants described above shall be provided and subject to an EPC agreement with terms and conditions substantially the same as set forth in this Contract.
In the event that Company elects to pursue the installation of the two such additional power plant in its expansion of the Project at the same time, Company or its Affiliates shall have the option to acquire from Contractor and Contractor shall have the option to provide to Company or its Affiliates the services and equipment of the type provided by Contractor under this Contract with respect to such power plant for a lump-sum payment equal to (a) two (2) times the Contract Price subject to adjustment as provided above minus, (b) a reasonable discount, determined by Contractor in its sole discretion, that reflects the economies of scale in performing EPC contract services and equipment for the simultaneous supply of the two geothermal power plants. The option provided to each of Company (and its Affiliates) and Contractor if such parties have not entered into a definitive EPC agreement or EPC agreements reflecting such terms and conditions on or before December 31, 2007.
ARTICLE 4. COMMENCEMENT OF WORK
4.1 Notice to Proceed
Company shall issue a Notice to Proceed to Contractor only at such time as Company has arranged financing reasonably satisfactory to Contractor as being sufficient for Company to be able to meet its obligations under this Contract and to develop the Project and pays to Contractor simultaneously with the issuance of such Notice to Proceed the amount specified for the first payment milestone set forth in the Schedule. The Notice to Proceed shall not be issued by Company prior to February 1, 2006 and Contractor shall have the right to terminate this Contract if the Notice to Proceed has not been provided by June 1, 2006.
Subject to Section 4.1, Contractor shall commence performance of the Work promptly upon receipt of a Notice to Proceed from Company (“ Commencement Date ”). Contractor shall thereafter proceed diligently to perform the Work and furnishing sufficient forces, construction plant and equipment to perform the Work in accordance with the Schedule.
4.3 Substantial Completion
Contractor shall achieve Substantial Completion of the Facility on or before the Guaranteed Substantial Completion Date. When all of the following conditions have been met with respect to the Facility, Contractor shall issue to Company a Certificate of Substantial Completion in substantially the same form as that set forth in Exhibit H:
(a) all of the Work, except for completion of insulation, painting, final grading, the As-Built Drawings, training and any other portion of the Work not affecting the operability, safety, mechanical and/or electrical integrity of the Facility, have been properly constructed, installed, correctly adjusted and tested, are mechanically, electrically and structurally sound and comply with the Drawings and the Specifications, and can be used safely;
(b) all Documents which are to be delivered to Company by Contractor on or before the Substantial Completion Date pursuant to this Contract have, in fact, been delivered to Company (including, but not limited to, a waiver and release of Contractor’s and all of its Subcontractor’s mechanics’ liens through such date (which may be conditioned upon payment by Company));
(c) Contractor has made training available to Company’s personnel (or other nominees of Company) and written operating procedures sufficient to safely start-up and continuously operate the Facility; and
(d) the Synchronization Test has been satisfactorily completed.
4.4 Substantial Completion Certificate
Within ten (10) Days following the receipt of the Certificate of Substantial Completion, Company shall inspect the Facility and review all Work and services performed by Contractor with respect thereto, and shall either (i) deliver to Contractor the Certificate of Substantial Completion countersigned and certifying that the requirements of this Contract applicable to Substantial Completion have been fully satisfied for the Facility and Substantial Completion of the Facility has accordingly been achieved or (ii) if reasonable cause exists for doing so, notify Contractor in writing that Substantial Completion of the Facility has not been achieved, stating in detail the reasons therefore. In the event that Company determines that Substantial Completion has not been achieved and Contractor has not disputed Company’s determination, Contractor shall promptly take such corrective action or perform such additional Work or other services as shall achieve Substantial Completion of the Facility and shall issue to Company another Certificate of Substantial Completion. Such procedure shall be repeated until Substantial Completion of the Facility has been achieved; provided, however, that Company shall respond to any such subsequent Certificate of Subsequent Completion within five (5) Days following the receipt thereof.
4.5 Deemed Substantial Completion
Deemed completion may occur under one (1) or both of two (2) circumstances, when: (a) Company fails to provide the countersigned Certificate of Substantial Completion as contemplated in Section 4.4 within the period referenced therein; or (b) Contractor’s conduct or completion of the Synchronization Test is delayed from the date on which such test would otherwise have commenced, been conducted or completed due to a Company Default and Contractor has completed all of the other requirements set forth in Section 4.3. In the event of (b), Contractor shall notify Company of having achieved deemed Substantial Completion pursuant to Section 4.4.
4.6 Delay Liquidated Damages and Bonus
4.6.1 The Parties agree that it would be extremely difficult and impracticable under the presently known and anticipated facts and circumstances to ascertain and fix the actual damages that Company would incur should Contractor fail to achieve Substantial Completion by the Guaranteed Substantial Completion Date, and accordingly, the Parties hereby agree that if Contractor fails to so achieve Substantial Completion by the Guaranteed Substantial Completion Date, then Company shall be entitled to recover from Contractor as liquidated damages for such delay, and not as a penalty, the amounts set forth in Section 1 of Exhibit K (“ Delay Liquidated Damages ”). The Delay Liquidated Damages are, subject to Section 4.10 and Article 19, Company’s sole and exclusive remedy in the event Contractor fails to achieve any of the milestones for the Facility, including Substantial Completion, by the dates set forth in the Schedule. Company and Contractor further agree that the Delay Liquidated Damages are a good faith estimate of the damages Company would suffer.
4.6.2 If the Substantial Completion Date occurs prior to the Guaranteed Substantial Completion Date, Company shall pay to Contractor a bonus, for each Day which
shall elapse between the Substantial Completion Date and the Guaranteed Substantial Completion Date, the amounts set forth in Section 2 of Exhibit K (“ Schedule Bonus ”).
4.7 Final Completion
When all of the following conditions have been met with respect to the Facility, Contractor shall issue to Company a Certificate of Final Completion in substantially the same form as that set forth in Exhibit I:
(a) except for the Punchlist Items and As-Built Drawings, the Facility and Work has been completed and complies with the Scope of Work, the Drawings, the Specifications and applicable Laws, and Contractor has made training available to Company’s personnel (or other nominees of Company);
(b) the Facility has satisfied or, pursuant to Sections 6.4.2, 6.4.3 or 6.7 is deemed to have satisfied, the checks and tests under Exhibit D, including the Performance Guarantee or, if the Performance Guarantee was not met, the Performance Liquidated Damages have either been paid or agreed and shall be deducted from the final payment of the Contract Price;
(c) any amount finally determined due for Delay Liquidated Damages has either been paid or agreed and shall be deducted from the final payment of the Contract Price;
(d) the list of Punchlist Items (if any) for the Facility have been identified by Contractor and provided to Company as provided in Section 4.9;
other deliverables identified in this Contract with respect to the
Facility (except for the As-Built Drawings or deliverables
appearing in the Punchlist Items provided by Contractor), including
the O&M Manual and other documents and materials described in
Article 9, have been completed in accordance with the provisions
hereof and have been provided to Company
(f) all rubbish accumulated by Contractor in the Company-designated disposal area has been removed and disposed in accordance with Section 2.2(g) .
4.8 Final Completion Certificate
Within fifteen (15) Days following the receipt of the Certificate of Final Completion, Company shall inspect the Facility and review all Work and services performed by Contractor with respect thereto, and shall either (i) deliver to Contractor the Certificate of Final Completion countersigned and certifying that the Work requirements of this Contract (other than the Punchlist Items identified by Contractor and the As-Built Drawings) have been fully satisfied for the Facility and Final Completion of the Facility has accordingly been achieved, or (ii) if reasonable cause exists for doing so, notify Contractor in writing that Final Completion of the Facility has not been achieved, stating in detail the reasons therefore. In the event that Company determines that Final Completion has not been achieved and Contractor has not disputed Company’s determination, Contractor shall promptly take such corrective action or perform such
additional Work or other services as shall achieve Final Completion of the Facility and shall issue to Company another Certificate of Final Completion. Such procedure shall be repeated until Final Completion of the Facility has been achieved; provided, however, that Company shall respond to any such subsequent Certificate of Final Completion within five (5) Days following the receipt thereof. If Company fails to provide the Certificate of Final Completion or as contemplated in (ii) above within the aforementioned period, Final Completion of the Facility shall be deemed to have been achieved.
Contractor shall provide to Company a list of all Punchlist Items and the estimated cost thereof prior to the issuance of the Certificate of Final Completion. Within fifteen (15) Days following the receipt of this list of Punchlist Items, Company shall notify Contractor in writing whether Company has any objections to that list or the estimates thereof. If Company has any objections, including additions, the Parties shall use good faith efforts to resolve such objections. If no agreement can be reached, the provisions of Article 14 shall be invoked to resolve the dispute. Two hundred percent (200%) of the estimated value of such Work, as reasonably decided by Company, shall be retained or deducted from the Contract Price by Company or, at Contractor’s option, paid to Company by Contractor pending satisfactory rectification and/or completion. Contractor shall rectify or complete to the reasonable satisfaction of Company within the time stated in the Certificate of Final Completion any such Punchlist Items listed. In the event Contractor fails to rectify or complete any Punchlist Items listed, Company may arrange for the outstanding work to be done and the cost thereof shall be certified by Company and deducted from the Contract Price or, at Contractor’s option, paid to Company by Contractor. Upon satisfactory rectification and/or completion of such Work, the money retained, deducted or paid under this Section 4.9 in relation thereto shall be reimbursed to Contractor by Company. During the period after Final Completion, Contractor and Company shall cooperate to ensure that the performance of the Work does not unreasonably interfere with the commercial operation of the Facility and at the same time allowing the remaining Work to be performed in a prompt and efficient manner. As soon as practicable after the completion of all Punchlist Items, Contractor shall remove all of its equipment and Materials and complete the removal of all Work-related waste material and rubbish from and around the Site.
4.10 Failure to Achieve Final Completion by the Guaranteed Final Completion Date
4.10.1 If the Final Completion Date has not occurred on or before the Guaranteed Final Completion Date and if the Net Deliverable Capacity is less than the Performance Guarantee, and Contractor elects to make corrections to the Facility and continue repeating Performance Tests pursuant to Exhibit D, then Contractor shall be liable for liquidated damages to the Company for the shortfall in generation in the amount calculated as described below until such time that Contractor has performed the final Capacity Test pursuant to Exhibit D so that there can be a determination as to whether Performance Liquidated Damages or a Performance Bonus is payable as provided in this Contract.
4.10.2 The shortfall in generation for purposes of Section 4.10.1 shall be calculated as the lesser of: (a) the Net Deliverable Capacity Deficiency, as defined in Schedule A of Exhibit D; and (b) the difference between what the Facility would have been able to generate and sell to Idaho Power Company had the Facility met the Performance Guarantee, and that which it was actually able to sell as a result of the Facility not meeting the Performance Guarantee. The shortfall in generation shall be calculated between the Guaranteed Final Completion Date and the actual Final Completion Date. Any shortfall generation attributable to the Company, whether because the Facility was unable to operate or to only operate at a reduce power output, shall not be included in the shortfall generation for which the Contractor is liable.
4.10.3 The Shortfall in Generation liquidated damages that the Company shall be entitled to recover from Contractor, and Contractor shall pay to Company, shall be calculated as the shortfall in generation calculated as provided in Section 4.10.2 multiplied by the PPA rate for the power (“ Shortfall Generation Liquidated Damages ”).
ARTICLE 5. COMPENSATION AND PAYMENT
5.1 Contract Price
5.1.1 As compensation for the performance of the Work, Company shall pay Contractor, in the manner and at the times hereinafter specified, the Contract Price, which amount may be subject to adjustment in accordance with the terms of this Contract.
5.1.2 The Contract Price includes any and all Taxes imposed directly or indirectly by any Governmental Authority including export taxes, importation duties and income Taxes imposed on Contractor, but excludes State of Idaho and local sales and use taxes.
5.1.3 Contractor shall be responsible for paying all State of Idaho sales and use taxes due as a result of the Work in the construction of the Facility to the State of Idaho on behalf of the Company. Company shall reimburse Contractor for any such taxes so paid. The State of Idaho sales and use taxes paid by Contractor since the previous invoice shall be stated separately and shown on all invoices as a separate line item and shall be paid by Company to Contractor.
5.1.4 Upon request of Company, Contractor shall:
(a) promptly provide to Company evidence of its remittance to the applicable Governmental Authority of all state and local sales and use taxes that Contractor collects from Company under this Contract; and
(b) provide Company with sufficient level of detail such that Company is able to claim any State of Idaho sales and use tax refund for geothermal energy projects for which it may be eligible under State of Idaho law.
5.2 Payment Milestones
Exhibit B sets forth the payment installments payable by Company in respect of Work performed by Contractor. The Schedule shall be used as the basis for preparation of invoices and for payments. Any cumulative acceleration of the Milestone Payment Schedule of more than fourteen (14) Days must reflect a reciprocal acceleration in the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date.
5.3.1 Upon the completion of any of the payment milestones described in the Schedule, Contractor shall present to Company the invoice and any other Documents described for payment of such milestone in the Schedule. Except as provided below in this Section 5.3, invoices that are presented for payment shall be paid within thirty (30) Days of Company’s receipt of such invoice. All invoices presented for payment by Contractor to Company shall set forth the following information, the: (i) aggregate Contract Price related committed costs for the period represented by such invoice as provided in the Milestone Payment Schedule (“ Gross Invoice Amount ”); (ii) minimum cash payment required to be paid by Company pursuant to such invoice as provided in the Milestone Payment Schedule (“ Minimum Payment ”); and (iii) aggregate payments made by Company to Contractor as of the invoice date. Contractor agrees to forebear the requirement for payment of the Gross Invoice Amount and shall accept payment of the Minimum Payment with respect to such invoice; provided, that Company shall provide to Contractor a Letter of Credit in a form, and issued by a financial institution, acceptable to Contractor, for the: (a) aggregate of the Gross Invoice Amount less the Minimum Payment, and (b) any outstanding balances owed to Contractor by Company in relation to prior invoices where Company paid Contractor a Minimum Payment.
5.3.2 Within ten (10) Days of its receipt of an invoice and such Documents, Company’s Representative shall give written notice to Contractor of any objections that Company’s Representative has with regard to the accomplishment of such milestone. If Company’s Representative fails to provide such notice within such ten (10) Day period, the milestone shall be deemed accomplished and Contractor shall be entitled to payment. If Company’s Representative provides written notice of objection to the accomplishment of such milestone and said Documentation within the period described above, and the contents of Company’s Representative’s notice is not in dispute, Contractor shall resubmit the corrected invoice and/or Documentation, and the above-described approval process shall reapply except that the response time shall be five (5) Days rather than ten (10) Days.
5.3.3 If pursuant to Section 5.3.2, Company’s Representative disputes any amounts invoiced by Contractor within the specified time period, Company shall promptly pay to Contractor the undisputed amount of such invoice in the manner provided in Section 5.3.1, and any disputed amount that is ultimately determined to have been payable shall be paid with interest from the date the item was payable to and including the date of payment, in accordance with the provisions of Section 5.8. The Parties shall resolve their differences regarding the disputed amount in accordance with the dispute resolution procedures set forth in Article 14.
5.3.4 The Letter of Credit will provide that Contractor is entitled to draw under the Letter of Credit the amount of the applicable Minimum Payment upon presentation of a certificate signed by Contractor stating that Company has failed to pay to Contractor a Minimum Payment when due and that such payment is not subject to a bona fide dispute subject to the dispute resolution procedures set forth in this Contract. The Letter of Credit will also provide that Contractor is entitled to draw the full amount of the Letter of Credit upon presentation of a certificate signed by Contractor stating that one of the events described in Section 19.2.1 of this Contract has occurred and Company has failed to cure such default within the time periods specified in Section 19.2.1.
5.4 Final Completion Payment for the Facility
No later than thirty (30) Days after the Final Completion Date, Contractor shall submit to Company a statement summarizing and reconciling all previous invoices, payments and Changes in the Work, with respect to the Work, and a waiver of liens as provided in Section 5.7 from Contractor for the Facility and such other data as Company may reasonably request establishing payment of or surety for payment of such unpaid Contractor obligations. Within thirty (30) Days of the receipt of such statements and lien waiver, Company shall pay Contractor the remaining portion of the Contract Price (except with respect to amounts remaining to be paid by Company under the Contract for Punchlist Items and less any unpaid Liquidated Damages owing by Contractor). Any disputes regarding a final payment shall be handled in accordance with the procedure set forth in Article 14.
5.5 Payments Not Acceptance of Work
No payment made by Company to Contractor shall be considered or deemed to represent that Company has inspected the Work or checked the quality or quantity of the Work and shall not be deemed or construed as an approval or acceptance of any Work or as a waiver of any claim or right Company may have hereunder.
5.6 Payment of Subcontractor
Contractor shall promptly pay, in accordance with the terms and conditions set forth in the respective Subcontract, each Subcontractor the amount to which said Subcontractor is entitled. Contractor shall, by an appropriate agreement with each Subcontractor, require each Subcontractor to make timely payments to its laborers, suppliers and subcontractors in a similar manner.
5.7 Waiver of Liens
As a condition precedent to the making of the final Milestone Payment Schedule payment by Company hereunder, Contractor shall be required, upon request by Company, to supply Company with a waiver and release of liens and security interests to the extent of such payment in the form attached as Exhibit J, duly executed by Contractor.
Amounts not paid by either Party to the other when due under any provision of this Contract, including the provisions of this Article 5, shall bear interest, from the date payment was due to and including the date of payment, at the Delayed Payment Rate. For the purposes of this Agreement, interest shall not accrue on sums owed to Contractor by Company that are secured by a Letter of Credit pursuant to Section 5.3.1.
5.9 Security Interest
Notwithstanding anything to the contrary herein, Contractor hereby reserves and Company hereby grants Contractor, a purchase money security interest in the Work as security for the due and punctual performance of all of Company’s obligations hereunder. The security interest referred to above shall be satisfied by payment in full of the Contract Price and any other amounts payable to Contractor hereunder. Company hereby agrees to execute such documents to evidence and perfect such security interest as Contractor may reasonably request from time-to-time. Company hereby appoints each of Contractor’s officers as Company’s duly authorized agent for the purpose of taking any and all such action, including execution of financing statements on Form UCC-1 and other documents deemed reasonably necessary by Contractor for the perfection and enforcement of the security interest granted hereby.
ARTICLE 6. TESTING
Development and implementation of tests procedures shall be the responsibility of Contractor. Contractor shall be responsible for providing all supplies required for carrying out such tests, except to the extent heat resource, testing power and water is required to be supplied by Company in accordance with this Contract. Company may, at its expense, require independent calibration of any and all instruments used by Contractor and/or supply Company’s own instruments to be used in addition to those of Contractor.
6.2 Test Procedures
The Performance Tests shall be performed under normal operating conditions as described in Exhibit D hereto and in accordance with all applicable Laws in effect on the date thereof, and the test results shall be adjusted pursuant to the Correction Curves for deviations from the Design Conditions and shall be adjusted for other deviations as set forth in Exhibit D. Contractor may conduct the Performance Tests after the Substantial Completion Date.
6.3 Notice of Testing
Contractor shall notify Company at least fourteen (14) Days in advance of the actual date that Contractor shall start conducting the initial Performance Test. Company’s Representative shall be entitled to attend at the time and place appointed and Company shall instruct its operating personnel to follow the directions of Contractor in connection with the performance of the Performance Tests. If Company’s Representative fails to attend at the time and place
appointed for the Performance Tests, Contractor shall be entitled to proceed with the Performance Tests in their absence. The Performance Tests shall then be deemed to have been made in the presence of Company’s Representative.
6.4 Delayed Tests; Deemed Completion
6.4.1 In the event that Contractor’s conduct or completion of the Performance Tests is delayed for less than sixty (60) Days from the date on which such test would otherwise have commenced, been conducted or completed due to the failure of Company to fulfill any of its obligations under this Contract, then Company shall issue a Change Order extending the Schedule Day-for-Day for each Day of delay for those Schedule items that are affected by the Company’s failure to fulfill its obligations and compensating Contractor for its additional costs incurred as a result of such delay.
6.4.2 In the event that Contractor’s conduct or completion of the Performance Test is delayed for thirty (30) Days from the Substantial Completion Date due to a Company Default, then Company shall pay to Contractor fifty percent (50%) of the payment milestone set forth in the Milestone Payment Schedule for the Final Completion payment milestone.
6.4.3 In the event that Contractor’s conduct or completion of the Performance Test is delayed for sixty (60) Days from the Substantial Completion Date due to a Company Default, then the Facility shall then be deemed to be completed for all purposes under this Contract, Company shall pay to Contractor the remainder of the Contract Price less only the amounts withheld for Punchlist Items pursuant to Section 4.10 and Final Completion shall be deemed to have occurred.
6.4.4 Subject to Section 6.4.5, prior to the commencement of the Performance Tests or, if the Performances Tests have been delayed as provided in this Section 6.4, if and when the events that prevented the commencement of the Performance Tests cease, the Parties shall inspect the Facility and:
Subject to the foregoing, such Performance Test(s) shall be conducted in accordance with the terms of this Contract and the results of the final Capacity Test conducted during such period, if any, shall be subject to the payment of Net Performance Liquidated Damages or Performance Bonus in accordance with the terms set forth in Article 11. Contractor shall be paid all additional costs and expenses, if any, from those costs and expenses anticipated in the Contract Price that arise directly from such prevention and delay, including without limitation those costs and expenses reasonably incurred for demobilization and remobilization and increased costs and expenses incurred for rescheduling of the testing.
6.4.5 Subject to extension as provided elsewhere in this Agreement, Contractor’s obligations under this Section 6.4 shall cease one hundred eighty (180) Days from the Substantial Completion Date if Contractor has not been able to commence the Performance Tests before the end of that period.
Except as expressly set forth in Section 3.1, Section 6.3 and the Scope of Work, Contractor shall be responsible for the provision of all necessary labor, supervision, consumables, materials and equipment necessary to carry out properly the Performance Tests.
6.6 Repeat Performance Tests
The terms governing the repetition of the Performance Tests are provided in Exhibit D, Section 4.
6.7 Certification or Disagreement as to Test Results
The terms governing the certification of the Performance Tests and resolution of disputes thereof pursuant to Article 14 of the Contract are provided in Exhibit D, Section 6.
ARTICLE 7. INTENTIONALLY OMITTED
ARTICLE 8. CONSTRUCTION SUSPENSION AND ACCELERATION; CHANGE ORDER
8.1 Construction Suspension and Acceleration
8.1.1 Company may order Contractor to suspend the Work, or any part thereof, for such a time and in such a manner as Company may consider necessary or desirable. Contractor, during such a suspension, shall properly protect and secure the Work, or such part
thereof, so far as is necessary in the opinion of Company. In the event of such order to suspend the Work, or any part thereof, and such suspension is not the result of a Contractor default, Contractor shall be entitled to a Change Order for adjustments pursuant to this Article 8 in the Contract Price and the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) as may be affected by such suspension.
8.1.2 Company may order Contractor to accelerate the progress of the Work, or any part thereof, for such a time and in such a manner as Company may consider necessary or desirable provided that such acceleration is reasonably practicable. In the event of such order to accelerate the Work, or any part thereof, and such acceleration is not the result of Contractor’s default, Contractor shall be entitled to a Change Order for adjustments pursuant to this Article 8 in the Contract Price as may be affected by such acceleration.
8.2 Change Orders
Company, without invalidating this Contract, may order Change in the Work that are reasonably related to and do not materially reduce or increase the Scope of Work, in which event one or more of the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) and other such parts of the Contract as may be affected by such Change in the Work shall be adjusted as necessary. If Company decides not to issue a Change Order after having requested a Change in the Work, unless such Change Order request is issued in response to a Contractor Change Order notice as set forth in Section 8.3.2, Contractor shall be entitled to reasonable compensation for providing engineering services necessary to respond to Company’s Change Order request. Such reasonable compensation is defined to mean Contractor’s actual direct cost of providing such engineering services plus a fifteen percent (15%) mark-up for overhead and profit. All Changes in the Work shall be authorized by a Change Order and only Company or Company’s Representative may issue Change Orders.
8.3 Procedure for Change Orders.
8.3.1 As soon as reasonably possible, but in no event later than fourteen (14) Days after Contractor becomes aware, through the exercise of reasonable diligence, of any circumstances which Contractor has reason to believe may constitute a Change in the Work, Contractor shall issue to Company a Change Order notice using the Change Order Request form set forth in Exhibit M. All Change Order notices shall include preliminary documentation sufficient to enable Company to determine (i) the factors necessitating the possibility of a Change Order; (ii) the impact which the Change Order is likely to have on the Contract Price; and (iii) the impact which the Change Order is likely to have on the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date). Failure to give such proper and timely Change Order notice shall, to the extent Company is prejudiced by such failure, constitute a waiver of Contractors right to an adjustment.
8.3.2 If Company desires to make a Change Order in response to a Change Order notice, it shall submit a Change Order request to Contractor using the Change Order Request form set forth in Exhibit M. Contractor shall promptly review the Change Order request and notify Company promptly in writing of the options for implementing the proposed Change
Order (including, if possible, any option that does not involve an extension of time) and the effect, if any, each such option would have on the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date), or any other such part of the Contract as may be affected. The preparation and provision of information to Company in response to a Change Order request shall be at Contractor’s expense if such Change Order request is issued in response to a Change Order notice issued by Contractor pursuant to this Section 8.3.2 and otherwise Contractor shall be reimbursed for such expense as provided in Section 8.2.
8.3.3 If Company agrees that a Change Order is in order and accepts Contractor’s statement of the effect of such Change Order on any one or more of the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date), or any other such part of the Contract as may be affected, Company shall issue a Change Order. In the event Company disagrees with Contractor’s statement of the effect of such Change Order on any one or more of the Contract Price, the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date), or any other such part of the Contract as may be affected, Company may proceed to issue the Change Order in accordance with Section 8.8.
8.4 Change Orders Due to Contractor Error
Except as provided in Sections 8.5, 8.6 or 8.7, no Change Order shall be issued and no adjustment of any one or more of the Contract Price or the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) shall be made to the extent resulting from any delay, failure of performance, correction of errors, and flaws or errors in design, omissions, deficiencies or improper or defective Work, machinery, equipment, materials, systems, supplies or other items on the part of Contractor or any Subcontractor in the performance of the Work or provisions of, or delay in provisions of Materials or other items of the Work where such delay was within the reasonable control of Contractor or any Subcontractor, or any failure of Contractor or any Subcontractor to comply with the Contract. To the extent any delay or failure of performance was concurrently caused by Company and Contractor, Contractor shall be entitled to an adjustment of the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) for that portion of the delay or failure of performance that was concurrently caused, but Contractor shall not be entitled to any adjustment of Contract Price for such concurrent delay.
8.5 Change Orders Due to Changes in Law
Any Change in the Work necessitated by any Change of Law enacted after the Effective Date (excluding therefrom any change in applicable Law relating to taxation of Contractor’s income) shall be treated as a Change Order under Section 8.3.
8.6 Effect of Force Majeure; Excused Performance
If Contractor’s performance hereunder is wholly or partially prevented due to the occurrence of a Force Majeure affecting Contractor and such Force Majeure has caused an extension of the Guaranteed Substantial Completion Date or any other date under the Schedule,
Contractor shall provide to Company a written description of Contractor’s plan to make-up Days lost under the Schedule due to the occurrence of such Force Majeure, including an estimate of the costs of such plan. In the event of the occurrence of a Force Majeure, Contractor shall be entitled to a Change Order for adjustments pursuant to this Article 8 in the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) and other such parts of the Contract as may be affected by such Force Majeure; provided, however, that there shall be no adjustment in the Contract Price for the first two (2) events of Force Majeure declared by a Party or any event of Force Majeure that arises from a failure of Contractor’s vendor, Ormat Systems Ltd., to timely perform its obligations that are being performed outside of the United States of America under its OEC supply agreement with Contractor. To the extent that Company desires to pay for the costs of acceleration of the Work or change to the Schedule (including the Guaranteed Substantial Completion Date and the Guaranteed Final Completion Date) set forth in Contractor’s proposal in order to compensate for delays in the work caused by such Force Majeure, Company shall authorize a Change Order increasing the Contract Price and adjusting the Schedule (in addition to any automatic adjustments of the Guaranteed Substantial Completion Date). To the extent Contractor (a) is compensated for the effect of a Force Majeure by insurance maintained pursuant to this Contract, or (b) would have been so compensated, but for Contractor’s failure to provide such insurance as required under this Contract, Contractor shall not be entitled to a Change Order to the Contract Price in connection with such Change Order issued for such Force Majeure. Except for the obligations of either Party to make any required payment then due and owing under this Contract, if either Party is rendered wholly or partially unable to perform its obligations under this Contract because of a Force Majeure, then such Party’s obligations that are so affected shall be excused and suspended to the extent and during the continuance of the Force Majeure. If the Force Majeure continues for six (6) consecutive months or more, this Contract may be terminated by either Party pursuant to Section 19.3. This Section 8.6 is subject to and conditioned upon the following:
(a) the non-performing Party, by exercise of due foresight, could not reasonably have been expected to avoid, or that by the exercise of reasonable due diligence could not have been able to overcome, such Force Majeure;
(b) the non-performing Party gives the other Party notice describing the particulars of the occurrence, with notice given promptly after the occurrence of the Force Majeure, and in no event more than fifteen (15) Days after the affected Party becomes aware of such occurrence; within thirty (30) Days after such occurrence, the non-performing Party shall give the other Party written notice estimating the expected duration and probable impact on the performance of such Party’s obligations hereunder, and continues to furnish timely regular reports with respect thereto during the continuation of the Force Majeure;
(c) the non-performing Party shall forecast the duration of its non-performance, provided that it shall be no more than is reasonably required by the Force Majeure;