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ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT PACIFICORP

Engineering Procurement and Construction Contract

ENGINEERING,
PROCUREMENT AND CONSTRUCTION
CONTRACT PACIFICORP | Document Parties: PACIFICORP /OR/ You are currently viewing:
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PACIFICORP /OR/

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Title: ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT PACIFICORP
Governing Law: Oregon     Date: 5/26/2004
Industry: Electric Utilities     Sector: Utilities

ENGINEERING,
PROCUREMENT AND CONSTRUCTION
CONTRACT PACIFICORP, Parties: pacificorp /or/
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CONFIDENTIAL PORTIONS OMITTED

 

 

 

 

Exhibit 10-1

 

 

 

 

ENGINEERING, PROCUREMENT

AND CONSTRUCTION CONTRACT

 

 

 

between

PACIFICORP

and

STONE & WEBSTER, INC.

 

 

 

dated as of February 10, 2004

 

 

 

FOR

THE CURRANT CREEK POWER STATION

 

 


 

ARTICLE   1

 

DEFINITIONS

1

 

 

 

 

1.1

 

D EFINED T ERMS

1

 

 

 

 

1.2

 

I NTERPRETATION

7

 

 

 

 

ARTICLE   2

 

CONTRACTOR’S WORK AND OTHER OBLIGATIONS

7

 

 

 

 

2.1

 

C OMMENCEMENT OF THE W ORK

7

 

 

 

 

2.2

 

T HE W ORK

7

 

 

 

 

2.3

 

H AZARDOUS S UBSTANCES AND O FF -S ITE I MPACTS

8

 

 

 

 

2.4

 

C OORDINATION W ITH R EGULATORS

9

 

 

 

 

2.5

 

B OOKS AND R ECORDS

9

 

 

 

 

2.6

 

S TANDARDS OF P ERFORMANCE

9

 

 

 

 

2.7

 

T ITLE

9

 

 

 

 

2.8

 

F ACILITY S ITE C ONDITIONS

10

 

 

 

 

2.9

 

N ATURE OF THE W ORK

10

 

 

 

 

2.10

 

S UBCONTRACTORS

10

 

 

 

 

2.11

 

C OOPERATION

12

 

 

 

 

2.12

 

C ONTRACTOR R ESPONSIBILITIES WITH R ESPECT TO O WNER F URNISHED E QUIPMENT

12

 

 

 

 

2.13

 

P ERMITS

12

 

 

 

 

2.14

 

C OORDINATION OF W ORK

12

 

 

 

 

ARTICLE   3

 

OWNER’S OBLIGATIONS

12

 

 

 

 

3.1

 

F ACILITY R EAL E STATE R IGHTS AND A CCESS TO F ACILITY S ITE

12

 

 

 

 

3.2

 

O WNER F URNISHED E QUIPMENT

12

 

 

 

 

3.3

 

P ERMITS

13

 

 

 

 

3.4

 

S TART-UP P ERSONNEL

13

 

 

 

 

3.5

 

S TART- U P AND T ESTING F UEL S UPPLY

13

 

 

 

 

3.6

 

O THER

13

 

 

 

 

ARTICLE   4

 

SCHEDULE

14

 

 

 

 

4.1

 

S CHEDULE

14

 

 

 

 

4.2

 

A LTERATIONS TO S CHEDULE

14

 

 

 

 

4.3

 

R EVISION OF S CHEDULE

14

 

 

 

 

ARTICLE   5

 

INSPECTION AND APPROVAL

14

 

 

 

 

5.1

 

O WNER’S R IGHT TO A TTEND C ONTRACTOR I NSPECTIONS

14

 

 

 

 

5.2

 

I NSPECTION AND R E- P ERFORMANCE

14

 

 

 

 

5.3

 

O WNER A PPROVAL

15

 

 

 

 

ARTICLE   6

 

TARGET PRICE AND PAYMENT

15

 

 

 

 

6.1

 

T ARGET P RICE

15

 

 

 

 

6.2

 

D IRECT C OSTS

15

 

 

 

 

6.3

 

T OTAL P AYMENTS

19

 

 

 

 

6.4

 

M ONTHLY D IRECT C OST P AYMENTS

19

 

 

 

 

6.5

 

F EE

22

 

 

 

 

6.6

 

P AYMENT N OT A CCEPTANCE

22

 

 

 

 

6.7

 

T AXES

22

 

 

 

 

6.8

 

R ECONCILIATION

22

 

 

 

 

6.9

 

L ATE P AYMENT / N ON- P AYMENT

23

 

i

 


 

ARTICLE   7

 

COMPLETION, ACCEPTANCE AND LIQUIDATED DAMAGES

23

 

 

 

 

7.1

 

G UARANTEED S UBSTANTIAL C OMPLETION D ATES

23

 

 

 

 

7.2

 

S UBSTANTIAL C OMPLETION

24

 

 

 

 

7.3

 

N OTICE AND R EPORT OF S UBSTANTIAL C OMPLETION

24

 

 

 

 

7.4

 

A CHIEVEMENT OF S UBSTANTIAL C OMPLETION

24

 

 

 

 

7.5A

 

L ATE S UBSTANTIAL C OMPLETION L IQUIDATED D AMAGES

25

 

 

 

 

7.5B

 

E ARLY S UBSTANTIAL C OMPLETION B ONUS

25

 

 

 

 

7.6A

 

P ERFORMANCE L IQUIDATED D AMAGES

26

 

 

 

 

7.6 B

 

P ERFORMANCE B ONUS

26

 

 

 

 

7.6 C

 

E XCLUSIVE N ATURE OF L IQUIDATED D AMAGES

26

 

 

 

 

7.7

 

T RANSFER OF P OSSESSION AND C ONTROL OF THE F ACILITY TO O WNER

26

 

 

 

 

7.8

 

C REATION OF P UNCH -L IST

26

 

 

 

 

7.9

 

F INAL C OMPLETION

27

 

 

 

 

7.10

 

U SE D OES N OT C ONSTITUTE A CCEPTANCE

27

 

 

 

 

ARTICLE   8

 

TESTING

28

 

 

 

 

8.1

 

T ESTING

28

 

 

 

 

8.2

 

R ESTORING OF F ACILITY

28

 

 

 

 

8.3

 

O UTPUT D URING T ESTING

28

 

 

 

 

ARTICLE   9

 

LIMITATION OF LIABILITY

28

 

 

 

 

9.1

 

A GGREGATE L IABILITY

28

 

 

 

 

9.2

 

C ONSEQUENTIAL D AMAGES

28

 

 

 

 

9.3

 

P ROOF OF A CTUAL D AMAGES IF L IQUIDATED D AMAGES G ELD U NENFORCEABLE

29

 

 

 

 

ARTICLE   10

 

WARRANTIES AND GUARANTEES

29

 

 

 

 

10.1

 

W ARRANTIES

29

 

 

 

 

10.2

 

W ARRANTY P ERIOD

29

 

 

 

 

10.3

 

R EPAIR OF D EFECTS

29

 

 

 

 

10.4

 

W ARRANTY P ERIOD E XTENSION

30

 

 

 

 

10.5

 

N O L IENS OR E NCUMBRANCES

30

 

 

 

 

10.6

 

S UBCONTRACTOR W ARRANTIES

30

 

 

 

 

10.7

 

L IMITATION OF W ARRANTY

30

 

 

 

 

ARTICLE   11

 

CHANGES

31

 

 

 

 

11.1

 

C HANGES

31

 

 

 

 

11.2

 

P ROCEDURE FOR C HANGES

32

 

 

 

 

11.3

 

C ONTINUED P ERFORMANCE P ENDING R ESOLUTION OF D ISPUTES

34

 

 

 

 

11.4

 

P RESERVATION OF S CHEDULE AND T ARGET C OSTS

34

 

 

 

 

ARTICLE   12

 

FORCE MAJEURE

34

 

 

 

 

12.1

 

F ORCE M AJEURE E VENT

34

 

 

 

 

12.2

 

E XCUSED P ERFORMANCE

34

 

 

 

 

12.3

 

C OSTS AND S CHEDULE

35

 

 

 

 

ARTICLE   13

 

INDEMNIFICATION

35

 

 

 

 

13.1

 

C ONTRACTOR’S I NDEMNITY

35

 

 

 

 

13.2

 

O WNER’S I NDEMNITY

36

 

ii

 


 

ARTICLE   14

 

SUSPENSION AND TERMINATION

36

 

 

 

 

14.1

 

R IGHT TO S USPEND W ORK FOR C AUSE

36

 

 

 

 

14.2

 

R IGHT TO S USPEND W ORK FOR C ONVENIENCE

36

 

 

 

 

14.3

 

T ERMINATION FOR C ONVENIENCE

37

 

 

 

 

14.4

 

T ERMINATION U PON C ONTRACTOR’S M ATERIAL B REACH

37

 

 

 

 

14.5

 

A CTIONS U PON T ERMINATION

38

 

 

 

 

14.6

 

T ERMINATION FOR C ONTRACTOR E VENT OF D EFAULT

38

 

 

 

 

14.7

 

C ONSEQUENCES OF T ERMINATION

38

 

 

 

 

14.8

 

S URVIVING O BLIGATIONS

38

 

 

 

 

14.9

 

C ONTRACTOR’S R IGHT TO S USPEND OR T ERMINATE

38

 

 

 

 

ARTICLE   15

 

SECURITY

38

 

 

 

 

ARTICLE   16

 

REPRESENTATIONS AND WARRANTIES

39

 

 

 

 

16.1

 

R EPRESENTATIONS AND W ARRANTIES OF C ONTRACTOR

39

 

 

 

 

16.2

 

R EPRESENTATION AND W ARRANTIES OF O WNER

40

 

 

 

 

ARTICLE   17

 

DISPUTE RESOLUTION

40

 

 

 

 

17.1

 

A PPLICABILITY OF R ESOLUTION P ROCEDURES

40

 

 

 

 

17.2

 

M ANAGEMENT D ISCUSSIONS

40

 

 

 

 

17.3

 

M EDIATION

40

 

 

 

 

17.4

 

A RBITRATION AND F INAL R ESOLUTION

41

 

 

 

 

17.5

 

A DJUDICATION

41

 

 

 

 

17.5

 

O BLIGATIONS C ONTINUE

41

 

 

 

 

17.5

 

I NJUNCTIVE R ELIEF

41

 

 

 

 

17.6

 

S URVIVAL

41

 

 

 

 

ARTICLE   18  

 

LABOR AND PERSONNEL

41

 

 

 

 

18.1

 

L ABOR AND P ERSONNEL

41

 

 

 

 

ARTICLE   19

 

INSURANCE

41

 

 

 

 

ARTICLE   20

 

MISCELLANEOUS

42

 

 

 

 

20.1

 

G OVERNING D OCUMENTS

42

 

 

 

 

20.2

 

A UTHORIZED R EPRESENTATIVES

42

 

 

 

 

20.3

 

A SSIGNMENTS

42

 

 

 

 

20.4

 

G OVERNING L AW

42

 

 

 

 

20.5

 

T IME IS A M ATERIAL E LEMENT

42

 

 

 

 

20.6

 

S EVERABILITY

42

 

 

 

 

20.7

 

N OTICES

42

 

 

 

 

20.8

 

A RTICLE AND S ECTION H EADINGS

43

 

 

 

 

20.9

 

N O W AIVER OF R IGHTS

43

 

 

 

 

20.10

 

D UTIES AND R EMEDIES L IMITED

43

 

 

 

 

20.11

 

N O D ISCLOSURE

43

 

 

 

 

20.12

 

E NTIRE A GREEMENT

44

 

 

 

 

20.13

 

A MENDMENTS

44

 

 

 

 

20.14

 

N O T HIRD P ARTY R IGHTS

44

 

 

 

 

20.16

 

R ELATIONSHIP OF THE P ARTIES

44

 

iii

 


 

 

 

 

 

20.17

 

C OUNTERPARTS

62

 

 

 

 

20.18

 

F URTHER A SSURANCES

62

 

List of Appendices

 

 

 

 

 

Appendix A :

  

Facility Site

 

 

 

 

 

Appendix B :

 

Approved Project Schedule

 

 

 

 

 

Appendix C :

 

Fuel Specifications

 

 

 

 

 

Appendix D :

 

Testing

 

 

 

 

 

Appendix E :

 

Payment, Direct Costs and Fee

 

 

 

 

 

Appendix F :

 

Insurance Requirements

 

 

 

 

 

Appendix G :

 

Performance Guarantees

 

 

 

 

 

Appendix H :

 

Permits/Consents

 

 

 

 

 

Appendix I :

 

Invoice

 

 

 

 

 

Appendix J :

 

Form of Contractor Parent Guarantee and Performance Security

 

 

 

 

 

Appendix K :

 

[RESERVED]

 

 

 

 

 

Appendix L :

 

Lien Release Forms

 

 

 

 

 

Appendix M :

 

Change Order Request Form

 

 

 

 

 

Appendix N :

 

Approved Bidders List

 

 

 

 

 

Appendix O :

 

Interface Points

 

 

 

 

 

Appendix P :

 

Form of Escrow Agreement

 

 

 

 

 

Appendix Q :

 

Scope of Work

 

 

 

 

 

Appendix R :

 

Owner Furnished Equipment

 

 

 

 

 

Appendix S :

 

Subcontractor standard terms and conditions

 

 

 

 

 

Appendix T :

 

Contractor and Owner Knowledge of claims or potential bases for Changes to Cost, Schedule and/or Scope of Work at time of Contract Execution

 

 

 

 

 

Appendix U :

 

[RESERVED]

 

 

 

 

 

Appendix V :

 

Adjudication

 

 

iv

 


ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT

THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT (this “Contract” ) is entered into as of the 10 th day of February, 2004, by and between PacifiCorp, a corporation organized under the laws of the state of Oregon, with offices at 201 South Main Street, Suite 2200, Salt Lake City, Utah 84111 ( “Owner” ) and Stone & Webster, Inc., a corporation organized under the laws of Louisiana with offices at 9201 East Dry Creek Road, Centennial, CO 80112 ( “Contractor” ).

W I T N E S S E T H :

WHEREAS, Owner intends to build, own and operate a 525 MW nominal natural gas fired combined cycle power plant known as the Currant Creek Power Station and located in Juab County near Mona, Utah (the “Project”); and

WHEREAS, Owner desires to engage Contractor to perform the Work for the Project upon the terms and subject to the conditions set forth in this Contract; and

WHEREAS, Contractor desires to undertake the Work for the Project upon the terms and subject to the conditions set forth in this Contract;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and agree as follows:

ARTICLE 1

Definitions

1.1 Defined Terms . As used in this Contract, the following terms shall have the following meanings (such meanings as necessary to be equally applicable to both the singular and plural forms of the terms defined unless the context otherwise requires):

“ACC” means the Air Cooled Steam Condenser to be procured and erected by Owner as more fully described in Appendix R.

“Actual Cost” or “AC” means the total of the Direct Costs at Final Completion.

“Adjudication” shall have the meaning set forth in Section 17.5, as more fully described in Appendix V.

“Aggregated Compensatory Damages” shall have the meaning set forth in Section 9.1.2.

“Aggregate Liquidated Damages” shall have the meaning set forth in Section 9.1.1.

“Applicable Laws” means the laws, treaties, ordinances, judgments, decrees, injunctions, writs and orders of any court, arbitrator or governmental agency or authority and rules, regulations, orders, interpretations and Permits of any federal, state, provincial, county, municipal, regional, environmental or other governmental body, instrumentality, agency, authority, or court having jurisdiction over Contractor, the design and construction of the Project, the Facility Site, performance of the Work or operation of the Facility as may be in effect or known to the parties to be pending at the time of the execution of the Contract and upon Final Completion.

“Applicable Permits” means all Permits (including Building Permits) as may be in effect from time to time required to be obtained or maintained in connection with construction of the Facility on the Facility Site, performance of the Work or operation of the Facility, as further delineated in Appendix H.

“Application for Monthly Payment” means Contractor’s official monthly request for payment of Direct Costs, as described in Section 6.4.2 and Appendix E .

 

1

 


“Approved Bidders List” means the list of Subcontractors in Appendix N that have been approved by Owner, as such list is amended from time to time by addition or deletion of Subcontractors by agreement of Owner and Contractor.

“Approved Project Schedule” means that certain approved project schedule set forth in Appendix B , as may be amended from time to time in accordance with the provisions of this Contract.

“Authorized Representative” means, with respect to each Party, the individual appointed by such Party under Section 19.2 to act on such Party’s behalf with respect to that Party’s duties and responsibilities under this Contract. “Balance of Plant Equipment” means all materials, workmanship, Work and equipment other than the Owner Furnished Equipment necessary to perform the Work.

“BOP Aux Electrical Load” has the meaning set forth in Appendix G.

“Building Permits” means those Permits required to be obtained or maintained in order for Contractor to perform the engineering, procurement, site clearing, civil works, construction and testing of the Facility on the Facility Site or the performance of the Work related to similar activities; provided, that if any such required Permits need to be obtained in the name of Owner and not in the Contractor’s or Subcontractors’ name, each of Owner and Contractor shall cooperate with the other as reasonably necessary to enable the party with responsibility to obtain a Permit to obtain such Permit in the Owner’s name. Building Permits shall not include Permits pertaining to (i) environmental regulation of the Facility Site (other than with respect to Contractor’s activities thereon in its performance of the Work), (ii) land use or zoning matters affecting the Facility Site, (iii) environmental regulation of start-up, testing or operation of the Facility, or (iv) ownership or operation of the Facility and the Project.

“Business Day” means any calendar day, except Saturdays, Sundays and national holidays, which are observed by Federal Reserve member banks in New York City, New York and Pioneer Day as observed by the state of Utah.

“Change” has the meaning set forth in Section 11.1.1.

“Change Order” has the meaning set forth in Section 11.1.2.

“Commencement Date” has the meaning set forth in Section 2.1.

“Commissioning Test” has the meaning set forth in Appendix D.

“Completion Tests” means all the tests required to establish compliance with the Contract in order to achieve Substantial Completion of Phase 1 or Phase 2, as applicable, and for the avoidance of doubt, includes the Performance Acceptance Tests and the Performance Tests.

“Construction Documents” has the meaning set forth in Section 2.2.2.4.

“Contingency” means the amount of [ * * * ] * as such amount may be adjusted pursuant to this Contract, which is available to cover Direct Costs if, in the aggregate, the Direct Costs exceed the Target Cost.

“Contract” means this Engineering, Procurement and Construction Contract, including the Appendices identified in the table of contents hereto, as the same may be amended, modified or supplemented from time to time.

“Contract Documents” has the meaning set forth in Section 20.1.

“Contractor” has the meaning set forth in the preamble to this Contract.

“Contractor Event of Default” has the meaning set forth in Section 14.4

“Contractor’s Excess Cost Liability” has the meaning set forth in Section 6.3.1

“Contractor Initiated Change” has the meaning set forth in Section 11.2.1

______________

* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC.

 

2

 


“Contractor Taxes” has the meaning set forth in Section 6.7.1.

“Contractor’s Personnel” means Contractor, its employees, agents and Subcontractors and each Subcontractor’s employees, agents and subcontractors.

“Contractor Critical Schedule Milestone” has the meaning set forth in Appendix B .

“Contractor Guarantor” means The Shaw Group Inc., or such substitute guarantor as Owner may approve in its discretion from time to time.

“Credit Requirement” means, in the case of Contractor, that Contractor meets the requirements of any one or more of clause (i) and clause (ii) below: (i) Contractor or

Contractor’s Guarantor maintains a senior unsecured debt rating from Standard & Poor’s of [ * * * ] * ; (ii) if Contractor or Contractor’s Guarantor has no debt rating, Contractor meets ALL of the following credit standards: a) tangible net worth equal to the projected maximum exposure under the Contract, b) no change in the condition of Contractor’s earnings, net worth, or working capital since the effective date of The Shaw Group, Inc.’s 10Q for the period ending November 30, 2003, which would reasonably be anticipated to impair the Contractor’s ability to meet its obligations under this Contract, and c) Contractor is not in default under any of its other agreements and is current on all of its financial obligations; and in the case of Owner, that Owner maintains a senior unsecured debt rating from Standard & Poor’s of [ * * * ] * or Moody’s Investor Services of [ * * * ] * .

“Design Development Documents” has the meaning set forth in Section 2.2.2.2.

“Delay LD Cap” has the meaning set forth in Section 7.5.

“Direct Costs” means the actual allowable costs and charges incurred by Contractor in the performance of the Work to be paid or reimbursed by Owner as more particularly set forth in Section 6.2.

“Excluded Obligations” has the meaning set forth in Section 9.1.5

“Facility” means all those components, including Phase 1 and Phase 2, comprising a nominal 525 MW natural gas fired combined cycle power plant and all systems relating thereto (as further described in the Contract Documents).

“Facility Site” means that certain parcel of land owned, leased, or to be owned or leased by Owner on which the Facility will be located, as further described in Appendix A .

“Fee” means the amount of [ * * * ] * , as such amount may be adjusted from time to time to reflect Material Changes to the Scope of Work instituted at Owner’s request pursuant to Section 11.2.2 of this Contract.

“Final Completion” has the meaning set forth in Section7.9.1.

“Final Completion Certificate” has the meaning set forth in Section 7.9.3.

“Force Majeure” has the meaning set forth in Section 12.1.

“Fuel” has the meaning established in Appendix C.

“Full Notice to Proceed” has the meaning established in Section 2.1.2.

“Gas Turbines” means the two General Electric Frame 7F combustion turbine generators and related equipment to be procured by Owner as more fully described in Appendix R.

“GSUs” means the three generation step up transformers and related equipment to be procured by Owner as more fully described in Appendix R.

______________

* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC.

 

3

 


“Guaranteed BOP Aux Electrical Load” has the meaning set forth in Section 7.6A.

“Guaranteed Substantial Completion Dates” has the meaning set forth in Section 7.1(ii).

“Hazardous Substance” means any and all chemicals, constituents, contaminants, pollutants, materials, and wastes and any other carcinogenic, corrosive, ignitable, radioactive, reactive, toxic or otherwise hazardous substances or mixtures (whether solids, liquids, gases), or any substances now or at any time subject to regulation, control, remediation or otherwise addressed as a hazardous substance under Applicable Laws, including those laws, regulations and policies relating to the discharge, emission, spill, release, or threatened release into the environment or relating to the disposal, distribution, manufacture, processing, storage, transport, treatment, transport, or other use of such substances.

“HRSGs” means the two heat recovery steam generators and related equipment (including the bypass stacks and dampers (if elected by Owner) and FAA lighting, if required) to be procured by Owner as more fully described in Appendix R.

“Interim Construction Agreement” means the Contract between PacifiCorp and Stone & Webster, Inc. for Currant Creek Initial Site Activities dated as of December 31, 2003.

“Late Substantial Completion LDs” has the meaning set forth in Section 7.5.

“Limited Notice to Proceed” has the meaning set forth in Section 2.1.1.

“Material Adverse Change” means that Contractor has, in the reasonable opinion of Owner, experienced a material adverse change in the ability to fulfill its obligations under this Contract, including, but not limited to, any such change that results in its failing to comply with the Credit Requirement.

“Milestone” means any and each of the milestones specified in the Milestone Fee Payment Schedule.

“Milestone Fee Payment” means the Fee payable to Contractor pursuant to the Milestone Fee Payment Schedule.

“Milestone Fee Payment Schedule” means the Fee payment milestone schedule contained in Appendix E.

“Minimum Performance Levels” means the Facility meets the performance standards applicable to the Facility for each of Phase 1 and Phase 2 required for Substantial Completion, as more fully set out in Appendix G.

“Monthly Progress Report” means a progress report containing the information required by Section 6.4.4.5

“Notice of Final Completion” has the meaning set forth in Section 7.9.2.

“Notice of Substantial Completion” has the meaning set forth in Section 7.3.

“Operation and Maintenance Manuals” means the instructions for the operation and maintenance of the Facility to be prepared by Contractor as described in Section 10.1, and as more fully described, as to form and substance, in the Scope of Work.

“Owner” has the meaning set forth in the preamble to this Contract, and shall include its successors and assigns.

“Owner Critical Schedule Milestones” has the meaning set forth in Appendix B.

“Owner’s Executive Representative” means the person to whom notices pursuant to Section 6.9.6 are to be delivered, as identified in Section 20.7 as the same may be amended from time to time.

“Owner Initiated Change” has the meaning set forth in Section 11.2.2

 

4

 


“Owner Subcontractors” means any party with whom Owner contracts for the provision of goods or services other than Contractor with respect to the Project.

“Owner(’s) Personnel” means Owner, its employees, agents and Owner Subcontractors and each Owner Subcontractor’s employees, agents and subcontractors.

“Owner Indemnitees” has the meaning set forth in Section 13.1.1.

“Owner Furnished Equipment” means the Gas Turbines, HRSGs, Steam Turbine, ACC, GSUs, Unit Aux Transformers and Switchyard, together with their related components, materials, supplies and parts, as further described in Appendix R .

“Owner Furnished Equipment Documents” means the purchase orders and other procurement documents for Owner Furnished Equipment.

“Parties ” means Owner and Contractor; “Party” means Owner or Contractor, as the case may be.

“Payment Escrow Account” shall have the meaning as set forth in Section 6.4.4.

“Payment Schedule” shall have the meaning as set forth in Appendix E, as further described in Section 6.4.1.

“Performance Acceptance Tests” means the tests for establishing compliance with the Minimum Performance Levels for each of Phase 1 or Phase 2, as applicable, required for Substantial Completion, as more fully set out in Appendix D.

“Performance Guaranty” shall have the meaning set forth in Appendix G.

“Performance LDs” shall have the meaning as set forth in Section 7.6.

“Performance Tests” shall mean those tests required to establish the extent of achievement of the Performance Guaranty.

“Permits” means all valid and effective waivers, franchises, variances, permits, authorizations, licenses or orders of or from any federal, state, provincial, county, municipal, regional, environmental or other governmental body, instrumentality, agency, authority, or court having jurisdiction over construction of the Facility, the Facility Site, performance of the Work, or operation of the Facility, as may be in effect from time to time.

“Person” means any individual, corporation, partnership, limited liability company, association, joint stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, other than Owner or Contractor.

“Phase 1” means the two simple cycle combustion turbines and all supporting equipment, having achieved Substantial Completion for such phase and operating or capable of being operated as stand-alone generating units, as described more fully in the Contract Documents.

“Phase 2” means the conversion of Phase 1 into a 2x1 combined cycle operation generating facility, including the incorporation of one steam turbine generator, the air cooled condensing unit and all supporting equipment, having achieved Substantial Completion for the Project, as described more fully in the Contract Documents.

“Procurement Documents” shall have the meaning set forth in Section 2.2.2.3.

“Project” means, collectively, the design, engineering, permitting, procurement, construction, installation, commissioning, start-up, testing and completion of the Facility.

“Project Design Book” means the index of documents, drawings and information which reflects the Facility design, including the Design Development Documents, the Construction Documents and the other documents required to be produced or delivered by Contractor hereunder, as further described in the Scope of Work.

“Project Taxes” has the meaning set forth in Section 6.7.2.

 

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“Prolonged Delay Date” has the meaning set forth in Section 7.5.

“Prudent Electric Power Industry Practices” means the practices, methods, techniques and standards that, at the particular time of performance of the Work, are prudent and generally accepted in the electric power industry in the United States, or if more stringent, those practices, methods, techniques and standards that are specifically practiced by Contractor, for use in connection with the design, procurement, engineering, construction, testing and operation of power plants of the same or similar size and type as the Facility. Prudent Electric Power Industry Practices are not limited to the optimum practice or method to the exclusion of others, but rather refer to commonly used and reasonable practices and methods.

“Punch-List” means the list prepared in accordance with Section 7.8, which list shall set forth all items of work that remain to be performed in order to ensure that the Work fully complies with all of the standards and requirements set forth herein. The Punch List shall not include any items of work, alone or in the aggregate, the non-completion of which prevents the Facility from (i) reaching Substantial Completion or (ii) being legally and safely placed in commercial operation.

“Real Estate Rights” means all rights in or to real estate (including title to or other rights to use or access the Facility Site, leases, contracts, permits, easements, licenses, private rights of way, and utility and railroad crossing rights) required to be obtained or maintained in connection with construction of the Facility on the Facility Site, performance of the Work, or operation of the Facility (including the transportation of all necessary materials, equipment and other items to the Facility Site, access for the construction, and the startup and testing of the Facility).

“Required Changes” has the meaning set forth in Section 11.3.5.

“Scope of Work” means the scope of work attached hereto as Appendix Q .

“Steam Turbine” means the steam turbine generator and related equipment to be procured by Owner as more fully described in Appendix R.

“Subcontract” means any contract by Contractor with a Subcontractor with respect to performing any part of the Work or providing any services, equipment or materials in connection with the Work.

“Subcontractor” means each and every vendor, supplier, materialmen or contractor under a Subcontract to Contractor, performing any part of the Work or providing any services, equipment or materials in connection with the Work.

“Substantial Completion” has the meaning set forth in Section 7.2.

“Substantial Completion Certificate” means the certificate issued by Owner upon achievement of Substantial Completion pursuant to Section 7.4.

“Switchyard” means the switchyard and related equipment to be procured and erected on a turnkey basis by Owner as more fully described in Appendix R.

“Target Cost” means the sum of all allowable Direct Costs agreed upon by the Parties as of the Commencement Date that will be incurred in Contractor’s performance of the Work, (specifically including amounts paid under the Limited Notice to Proceed and the Interim Construction Agreement), and shall be equal to [ * * * ] * , as such amount may be adjusted pursuant to this Contract.

“Target Price” or “TP” is the sum of the Target Cost and the Contingency.

“Terms and Conditions” means Articles 1 through 20 hereof.

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“Turnover Package” means the documentation (including drawings, start-up procedures, log sheets, settings, and other items) in content, form and substance reasonably acceptable to Owner, submitted by Contractor to Owner which demonstrates that the systems comprising the Facility have been completed in accordance with this Contract and may be operated safely for their intended purposes.

“Unit Aux Transformers” means the two unit auxiliary transformers and related equipment to be procured by Owner as more fully described in Appendix R.

“Warranty” has the meaning set forth in Section 10.1.

“Warranty Period” has the meaning set forth in Section 10.2.

“Work” has the meaning set forth in Section 2.2.

“Work Product” has the meaning set forth in Section 2.7.

1.2 Interpretation . Unless the context requires otherwise, in this Contract (a) words singular or plural in number shall be deemed to include the other and pronouns having a masculine or feminine gender shall be deemed to include the other; (b) any reference contained herein to this Contract or any other agreement or any appendix, schedule, exhibit or attachment hereto or thereto shall mean this Contract or such other agreement and such schedules, exhibits and attachments as amended, supplemented or otherwise restated from time to time; (c) any reference in this Contract to any Person shall include its permitted successors and assigns and, in the case of any governmental instrumentality, any Person succeeding to its functions and capacities; (d) any reference in this Contract to any Article, Section, Appendix, Exhibit or Schedule shall mean and refer to the Article or Section contained in or the Appendix, Exhibit or Schedule attached to this Contract; and (e) the words “include” and “including” shall mean to include, without limitation.

ARTICLE 2

Contractor’s Work and Other Obligations

2.1 Commencement of the Work .

2.1.1 Limited Notice to Proceed . Owner has issued and delivered to Contractor (i) a limited notice to proceed dated August 18, 2003 (such notice and the subsequent extensions thereto are collectively referred to herein as the “Limited Notice to Proceed” ), and (ii) the Interim Construction Agreement, in anticipation of the execution of this Contract, which authorized Contractor to perform certain work on the Project for which Contractor has been or is being separately reimbursed. Upon issuance of the Full Notice to Proceed, any of the work actually performed under the Limited Notice to Proceed or under the Interim Construction Contract shall be deemed to have been performed as Work under and pursuant to the terms of this Contract. The amounts paid under the Limited Notice to Proceed and the Interim Construction Contract identified in Appendix E constitute Direct Costs under this Contract

2.1.2 Full Notice to Proceed . Following the receipt of approvals from the Utah Public Service Commission and the Utah Division of Air Quality and such other governmental or regulatory bodies as Owner in its sole discretion deems appropriate for the construction and operation of the Facility, Owner may issue to Contractor a written notice directing Contractor to commence performance of the Work (the “ Full Notice to Proceed ”), and Contractor shall commence full performance of the Work as of the date of such notice (the “ Commencement Date ”). If Owner issues the Full Notice to Proceed after February 23, 2004, then effects to schedule and costs will be addressed through the Change Order process described in Article 11.

2.2 The Work . Contractor shall (except only to the extent otherwise defined as Owner’s responsibility in the Contract) perform or cause to be performed all of the work, services and obligations (including the satisfaction of those liabilities associated with such work, services and obligations), required in connection with the design, engineering, permitting, procurement, civil works, construction, installation, integration (as more particularly described in Appendix Q) of Owner Furnished Equipment, training for operation, commissioning, start-up, testing and Substantial Completion and Final Completion of the Project and shall provide the materials and equipment, machinery, tools, labor, utilities, chemicals, transportation (including without limitation transportation of Owner Furnished Equipment, as further described in Appendix Q, from the rail siding to the Facility Site), administration

 

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and other services and items required for and related to the foregoing, all as further described in Appendix Q and otherwise to be performed in accordance with the Contract Documents, including any Change Orders (the “Work”). Contractor shall perform the Work in the most efficient and cost effective means available within the requirements of this Contract.

2.2.1 Work in General . In general, the Work shall consist of two phases, including integration of the Owner Furnished Equipment, as follows: (1) Phase 1 to reach Substantial Completion by [ * * * ] * ; and (2) Phase 2 to reach Substantial Completion by [ * * * ] * . Each phase is described in more detail in Appendix Q.

2.2.2 Engineering, Design, Procurement and Construction . Contractor represents and warrants that it has thoroughly familiarized itself with the Facility Site and the Contract Documents and agrees that it will perform the Work in a manner that meets or exceeds the requirements set forth in the Contract Documents.

2.2.2.1 Engineering . Contractor will perform all engineering services necessary to perform the Work and will cooperate with Owner’s reasonable requests to review and, to the extent Owner may require pursuant to Article 5, approve the engineering and design efforts of Contractor, including cooperating with any third parties acting at the request of Owner, (including without limitation any federal, state and local agencies or others as Owner may direct). Contractor shall determine the extent to which engineering work to be performed by Contractor, or any Subcontractor requires certification under Applicable Law by professional engineers licensed and properly qualified to perform such engineering services in the jurisdiction in which such services are to be performed, and to provide or cause to be provided all such required certifications.

2.2.2.2 Design Development Documents . As further described in the Contract Documents, Contractor will prepare, by the date specified in the Approved Project Schedule, those design development documents for the Facility listed in Appendix Q consisting of drawings, models, specifications, plans and other documents necessary to fix and describe the Facility (collectively, the “ Design Development Documents ”).

2.2.2.3 Procurement Documents . As further described in the Contract Documents, Contractor will prepare, by the date specified in the Approved Project Schedule, those procurement policies, standards and documents, including terms and conditions, (the “Procurement Documents” ) necessary for Contractor to perform the procurement services called for herein.

2.2.2.4 Construction Documents . As further described in the Contract Documents, based upon Design Development Documents or any further adjustments in the scope or quality of the Project approved by Owner pursuant to Article 11, Contractor will prepare, prior to undertaking the related Work, those drawings and specifications specified in Appendix Q setting forth in detail the requirements for the construction of the Facility (collectively, the “ Construction Documents ”).

2.3 Hazardous Substances and Off-Site Impacts .

2.3.1 Contractor shall not release or cause the release of any Hazardous Substances brought onto the Facility Site or adjacent areas by Contractor, any Subcontractor or others in the course of performing the Work. Contractor will immediately notify Owner of any known spills, emissions or other releases of Hazardous Substances that occur in connection with the performance of the Work. Contractor will be responsible for removing from the Facility Site and areas adjacent thereto, and for properly disposing of, in a manner acceptable to Owner and in compliance with the Contract Documents, Applicable Laws and Applicable Permits, Hazardous Substances brought onto or released, generated or accumulated at the Facility Site by Contractor or any Subcontractor in the course of performing the Work. As a condition precedent to Final Completion, Contractor will provide to Owner a certification in a form acceptable to Owner stating that (a) no Hazardous Substances were installed or otherwise incorporated in the Facility, other than Hazardous Substances notified to Owner in said certification, and utilized in the performance of the Work, and (b) Hazardous Substances brought onto or generated at the Facility Site by Contractor or any Subcontractor were used released, removed or disposed of in compliance with the Contract Documents, Applicable Laws and Applicable Permits.

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2.3.2 In the event Contractor encounters on the Facility Site material reasonably believed to be a pre-existing Hazardous Substance, then Contractor will, as necessary, immediately cease performance of any Work in the area affected and immediately will report the condition to Owner. Contractor will not thereafter resume performance of the Work in the affected area except with the prior written permission of Owner. If Owner instructs Contractor to resume performance of the Work, and to the extent that the Parties agree in writing on Contractor’s course of subsequent actions (consistent with Applicable Law) in connection with such Hazardous Substance in order to allow continued performance of the Work, then Contractor will proceed with the Work in the affected area subject to Article 11 where applicable.

2.3.3 Contractor shall, in performing the Work, control fugitive dust, storm water runoff and noise and otherwise act in a manner so as to limit all impacts of the Work off of the Facility Site in compliance with Applicable Laws.

2.4 Coordination With Regulators . Contractor shall cooperate with Owner’s reasonable requests in connection with its dealings with federal, state and local governmental agencies in regards to the Work, any Applicable Permits as may be required to complete the Work and any approvals from any state utility regulatory commission (including in connection with proceedings dealing with Owner’s rate or cost recovery applications), the Federal Energy Regulatory Commission or others that Owner determines are necessary.

2.5 Books and Records . Contractor shall maintain fiscal records and books of account pertaining to the Project in accordance with U.S. generally accepted accounting principles consistently applied and Applicable Laws.

2.6 Standards of Performance . Contractor shall be responsible for construction means, methods, techniques, standards, sequences, procedures and safety and security programs in connection with the performance of the Work. Contractor shall perform the Work (a) in accordance with the Contract Documents (b) in a professional, prudent, cost-effective, good and workmanlike manner, and (c) in accordance with Applicable Laws, Applicable Permits, and Prudent Electric Power Industry Practices, including applicable engineering, environmental, construction, safety, and electrical generation codes and standards as required under or listed in the Scope of Work or as otherwise may apply as such codes and standards exist on the Commencement Date In the case of issues that may materially impact the Work, Contractor shall act with reasonable diligence (but except as otherwise provided in the Contract not including any obligation to engage in formal dispute resolution processes) to achieve satisfactory resolution of such issues.

2.7 Title .

2.7.1 Title to all materials, supplies, equipment and machinery used in connection with the Work and which become a permanent part of the Facility shall vest in Owner upon the earlier of (a) the installation of such materials, supplies, equipment or machinery into the Facility Site, or (b) full payment therefore by Owner pursuant to Article 6. Title to water, soil, rock, gravel, sand, minerals, timber and any other resources developed or obtained in the excavation or the performance by Contractor of the Work and the right to use said items or dispose of the same is hereby expressly vested in and reserved by Owner. Notwithstanding the foregoing, title to Owner Furnished Equipment shall at all times remain with Owner.

2.7.2 Contractor shall retain title in its non-Project specific standard drawing details, designs, specifications, databases, computer software and any other proprietary property as identified as such and agreed to by Owner at the time of use by Contractor; provided , however , that Owner shall at all times (including after any termination of this Contract), have the right to retain copies thereof and is hereby granted a perpetual, irrevocable license to use such drawings, designs, specifications, databases, computer software and any other information of Contractor related to the Project and the Facility at no additional cost, fee or royalty to Owner. Owner’s use of any such documents or information for any purpose other than as set forth in this Contract, or modification to such documents by anyone other than Contractor, shall be at the Owner’s sole risk and without liability or legal exposure to Contractor. Title to all drawings, designs, details, models, specifications, reports, plans, databases, computer software and other documents produced by Contractor in connection with the Work shall vest in Owner upon payment pursuant to Article 6. All work product of Contractor, its agents and employees and each Subcontractor performed pursuant to this Contract (collectively, the “ Work Product ”) shall be deemed, to the greatest extent possible, “works made for hire” (as defined in the Copyright Act, as

 

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amended 17 U.S.C.A. § 101 et seq.). Contractor agrees to execute and deliver and cause its employees and agents and all Subcontractors to execute and deliver to Owner any transfers, assignments, documents or other instrument which Owner may deem necessary or appropriate to vest complete title and ownership of any or all Work Product, and all rights therein, in Owner. Notwithstanding the foregoing, Contractor shall have the right to use the Work Product, including business methods and technical methods and processes used and developed in the course of the Work, in its general business practices and operations as long as Contractor maintains such Work Product in strict confidence and does not reveal such Work Product to any third party without the written consent of Owner.

2.8 Facility Site Conditions . Contractor has inspected the Facility Site prior to execution of the Contract and Contractor has based the Target Price on such inspection. In addition, Contractor conducted a geotechnical investigation prior to execution of the Contract based on the proposed layout of major equipment as of the date of this Contract, and the Target Price takes into account the results of such investigation.

2.9 Nature of the Work . In setting the Target Price and performing the Work, Contractor shall be responsible for having taken steps reasonably necessary to understand the nature of the Work, the general local physical, topographic and weather conditions which are anticipated to affect the Work and the costs thereof. With respect to any known pre-existing structures set out in Appendix Q with which the Work may interface or within which the Work or any portion thereof may be integrated, Contractor shall be responsible for having taken reasonable steps to fully understand the structural limitations, soundness and construction makeup of such structures. Failure by Contractor to fully acquaint itself with such conditions which may affect the Work shall not relieve Contractor of its responsibilities under this Contract.

2.10 Subcontractors.

2.10.1 Acceptable Subcontractors . Unless a Subcontractor is already listed on the Approved Bidders List in Appendix N, Owner shall have the right to approve (such approval not to be unreasonably withheld or delayed) each Subcontractor from whom Contractor or any Contractor’s Personnel proposes to solicit bids or otherwise engage in connection with the Work for any aggregate value in excess of [ * * * ]* or which is associated with a critical plant component, as identified by Owner to Contractor from time to time, such identification to be made in advance of Contractor’s solicitation for bids. Once approved by Owner, such Subcontractor shall be considered added to the Approved Bidders List for the specific classes of goods or services for which such Subcontractor is added to the Approved Bidders List. Contractor shall select each Subcontractor from among those pre-approved by Owner. Any successor or replacement of any such Subcontractor shall be subject to Owner’s prior written approval, unless such successor or replacement is already on the Approved Bidders List for the specific classes of goods or services for which such Subcontractor is added to the Approved Bidders List. All other vendors, suppliers, materialmen, consultants or subcontractors may be selected by Contractor following reasonable advance written notification to Owner. Contractor shall provide to Owner such information concerning each Subcontractor as Owner may request. Owner shall have the right to rescind its approval of any Subcontractor for cause by notice to Contractor with respect to contracts with the specific Subcontractor not executed prior to the date on which Owner provides such notice of rescission.

2.10.2 Supervise . Contractor shall be solely responsible for and have exclusive control over each Subcontractor, labor, construction means, material suppliers, methods, techniques, sequences and procedures and for supervising and directing all portions of the Work. Contractor shall be fully responsible for any part of the Work accomplished by any Subcontractor and for the actions or inactions of each Subcontractor, including Persons either directly or indirectly employed by it. Contractor shall be solely responsible for dealing with, coordinating and handling any communications, negotiations and dispute resolutions concerning each Subcontractor and the Work.

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2.10.3 No Privity with Owner . Owner shall not be deemed by virtue of this Contract or otherwise to have any contractual obligation to or relationship with any Subcontractor. Contractor shall include a clause to this effect in each Subcontract with each Subcontractor. Contractor shall be solely responsible for paying each Subcontractor for services, equipment, material or supplies in connection with the Work and the Facility without prejudice to Owner’s payment obligations to Contractor pursuant to Section 6.4.

2.10.4 Purchase Orders and Subcontracts . Consistent with the provisions of Section 2.10.5, Contractor shall use the Procurement Documents in connection with the Work. Owner shall have the right to review and approve the Procurement Documents and Subcontracts valued in excess of $ [ * * * ] * or which are associated with a critical plant component, as identified by Owner to Contractor from time to time, such approval not to be unreasonably withheld or delayed. Contractor and Owner shall meet and attempt to develop a framework of material terms and conditions. If such terms and conditions are included in any Procurement Document or Subcontract substantially in the form attached as Appendix S, such document shall not be subject to further approval by Owner; provided, however, that in each event Owner shall have the right to review and approve risk mitigation measures (including without limitation liquidated damages schedules) in each Subcontract or Procurement Document in excess of $ [ * * * ]* . If Owner has not expressly approved or rejected the terms of a specific Procurement Document or Subcontract within [ * * * ] * Business Days after delivery of such document by Contractor, then that Procurement Document or Subcontract shall be deemed approved as submitted. Contractor will provide Owner with copies of all Subcontracts and the Procurement Documents relating to the Facility.

2.10.5 Subcontractor Warranties . Contractor will procure from each Subcontractor sufficient warranties consistent with Article 10 with respect to any portion of the Work provided by such Subcontractor for a period of no less than twelve (12) months after Substantial Completion of Phase 1 and Phase 2, as applicable, and for a further twelve (12) months after any warranty repair with respect to the subject of the repair; provided that Contractor shall not be required to procure any Subcontractor warranty with a total warranty period longer than 24 months from Substantial Completion for Phase 1 and Phase 2, as applicable. Contractor will obtain and maintain all such warranties in full force and effect until assignment to Owner upon Substantial Completion. Upon Substantial Completion of Phase 1 and Phase 2, as applicable, or upon the earlier termination of this Contract under Article 14, Contractor will assign its rights under all such Subcontractor warranties to Owner; provided, however, that Contractor shall in all cases be responsible to perform all Subcontractor warranties to the extent a Subcontractor is an Affiliate of Contractor to the extent that such Subcontractor fails to do so; and further provided that thereafter, Contractor’s sole obligation shall be to assist Owner in enforcing any such warranties. Contractor shall not waive or otherwise impair the obligation of any Subcontractor to perform the Subcontractor warranties to be delivered pursuant to the Contract, whether in connection with any dispute resolution process or otherwise.

2.10.6 Assignment of Subcontracts . Each Subcontract shall provide that, upon written notification to the Subcontractor by Owner that (a) this Contract has been terminated, (b) Contractor’s right to proceed with the Work has been terminated, or (c) Owner otherwise is assuming Contractor’s rights under such Subcontract, then such Subcontractor shall continue to perform its responsibilities under such Subcontract for the benefit of Owner and shall recognize Owner as being vested with all the rights and responsibilities of Contractor under such Subcontract. Notwithstanding the foregoing, it is specifically understood and agreed (and each Subcontract shall acknowledge) that no Subcontractor shall have any right to look to Owner for the performance of Contractor’s obligations (including as to payment) under any Subcontract prior to the date that Owner provides the aforementioned written notice to such Subcontractor.

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2.10.7 Subcontractor Insurance . In each Subcontract, Contractor shall require each Subcontractor to obtain, maintain and keep in force throughout the time during which it is engaged by Contractor such insurance coverage as is set forth in Appendix F.

2.11 Cooperation . Contractor shall fully cooperate and coordinate with Owner in all aspects of Contractor’s performance of the Work in a manner that will ensure that the Work is performed in accordance with the Contract Documents.

2.12 Contractor Responsibilities with Respect to Owner Furnished Equipment . Contractor shall provide Owner the following services with respect to Owner Furnished Equipment:

2.12.1 Engineering and procurement services as Owner’s engineer;

2.12.2 Construction management services with respect to erection and installation of the ACC and the Switchyard;

2.12.3 Construction, installation and commissioning of the Gas Turbines, the Steam Turbine, the HRSGs, the GSUs, and the Unit Aux Transformers; all as more fully described in Appendix Q, in all cases consistent with the provisions of Section 3.2.

2.13 Permits . Contractor will secure and maintain all Applicable Permits which are designated in Appendix H as Contractor’s responsibility and other Permits which are required by Applicable Laws to be obtained by Contractor or which are typically to be provided by contractors for the design and construction of projects similar to the Project.

2.14 Coordination of Work . Following Substantial Completion of Phase 1 Contractor shall continue to perform the Work necessary to achieve Substantial Completion of Phase 2 and Final Completion of the Project in a manner reasonably designed to minimize disruptions with Owner’s operation of Phase 1. Contractor shall, in addition to its periodic reports delivered to Owner hereunder, notify Owner by reasonable notice, and in no case less than 48 hours, in advance of performing any portion of the Work that will require the shutdown of all or any portion of Phase 1 or involves activities that create a substantial risk of causing an unplanned shutdown of all or any portion of Phase 1.

ARTICLE 3

Owner’s Obligations

3.1 Facility Real Estate Rights and Access to Facility Site . Owner will secure and maintain at its own expense all Real Estate Rights. Owner will furnish to Contractor full and unimpeded access to the Facility Site as necessary in support of the Approved project Schedule for Contractor to perform the Work. Contractor shall perform the Work consistent with such Real Estate Rights to the extent Owner makes the Real Estate Rights known to Contractor and shall cooperate with Owner’s reasonable requests in connection with Owner’s dealings in regards to the Real Estate Rights.

3.2 Owner Furnished Equipment .

3.2.1 Owner will cause the Owner Furnished Equipment to be procured (and in the case of the ACC and the Switchyard, to be furnished and erected, subject and without prejudice to Section 2.12) and delivered into Contractor’s custody and control in accordance with Appendix Q and the delivery schedule to be set forth in the Approved Project Schedule.

3.2.2 Ownership of and responsibility to correct or repair the Owner Furnished Equipment shall remain with Owner except to the extent that the need for any correction or repair is demonstrated to be due to the negligence or breach of contract of Contractor in which case Contractor shall correct or repair such Owner Furnished Equipment as a Direct Cost, but only to the extent that such costs of repair or correction would otherwise qualify as a Direct Cost pursuant to the provisions of the Contract.

3.2.3 Owner will provide or cause to be provided to Contractor, copies of the Owner Furnished Equipment Documents (redacted as appropriate), together with any other related information and documentation all

 

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to the extent only that they are: (i) reasonably necessary for the purpose of Contractor performing the Work or (ii) reasonably required to support the Approved Project Schedule (to the extent Contractor has given appropriate notice to Owner of both the documents and information required and a time schedule within which it is needed).

3.2.4 Owner shall provide at Owner’s cost, the appropriate and adequate technical advisors to support Contractor during the installation, storage, start-up and testing of the Owner Furnished Equipment, as reasonably required. Such advisors shall be responsible to verify to Owner and to the Owner Furnished Equipment suppliers that such activities are properly performed in accordance with the requirements of the Owner Furnished Equipment Suppliers; provided, that such verification does not relieve Contractor of its performance obligations under this Contract.

3.2.5 The Target Cost specifically excludes the purchase price and related procurement expenses of the Owner Furnished Equipment, including expediting and off-site inspection services related thereto, but for the avoidance of doubt specifically includes the costs of those activities and obligations to be performed by Contractor pursuant to Section 2.12.

3.2.6 Notwithstanding anything to the contrary in this Contract (but without limiting Contractor’s obligations under Section 2.12 with respect to the Work), Owner shall be responsible for the performance of Owner Furnished Equipment, without Contractor incurring any liability in connection therewith, except to the extent that any deficiencies in performance arise from Contractor’s negligence or breach of this Contract.

3.2.7 Without prejudice to the obligations of Contractor with respect to the integration of Owner Furnished Equipment, Owner shall, with respect to any issues involving the Owner Furnished Equipment reasonably raised by Contractor that materially impact the Work, act with respect to the providers thereof in a manner consistent with Prudent Electric Power Industry Practice, including using reasonably diligence, not including any obligation to engage in formal dispute resolution processes, to obtain a satisfactory resolution of such issues

3.3 Permits . Owner will secure and maintain at its own expense all Applicable Permits which are designated in Appendix H as Owner’s responsibility and other Permits which are not required by Applicable Laws to be obtained by Contractor or which are typically to be provided by owners or developers, including but not limited to permits necessary for the ownership and operation of the Project.

3.4 Start-up Personnel . Owner, at its cost, will provide a sufficient number of qualified operating and maintenance personnel and technicians, consistent with Contractor’s reasonable requirements as specified in writing by Contractor, to be trained by Contractor and to assist Contractor by performing normal operating and maintenance duties in connection with the start-up of Phase 1 and Phase 2, as applicable, and the performance of the Commissioning Tests and the Completion Tests. Contractor shall be responsible for the direction and supervision of Owner’s operating and maintenance personnel and technicians during the start-up and testing of Phase 1 and Phase 2, as applicable, consistent with any applicable collective bargaining agreements and Facility Site rules and this Contract. Owner shall be responsible for the training on all Owner Furnished Equipment; provided that Contractor shall be responsible for training Owner’s personnel in operation of Phase 1 and Phase 2, as applicable, reflecting the integration of the Owner Furnished Equipment into the Facility. Owner shall provide the qualified individuals to work under the Contractor’s management direction within its start-up organization through Substantial Completion.

3.5 Start-Up and Testing Fuel Supply . Owner shall provide Fuel for the Facility in the quality as specified in Appendix C and quantity required for construction, startup and testing in support of the Approved Project Schedule. Such Fuel will be utilized by Contractor to perform start-up and testing of Phase 1 and Phase 2, as applicable, in accordance with the Contract Documents.

3.6 Other . Owner shall provide or cause to be provided at times consistent with the Approved Project Schedule at no cost to Contractor all raw water to the relevant Interface Points described in Appendix O, telephone connections up to a single delivery point at the boundary of the Facility Site, back-feed power and other power needs for construction (at 480 Volt and 1,000 kW minimum) start-up and testing delivered to the Owner side of the relevant Interface Point in Appendix O (but not including any obligation to provide mobile or temporary generation facilities on the Contractor side of the relevant Interface Point described in Appendix O), and Owner shall be responsible for all gas lines, power lines and other utilities from and beyond the Owner side of the relevant Interface Points described in Appendix O.

 

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In addition, Owner shall be responsible for providing space for a lay-down area, temporary facilities and a parking area within the boundaries of the Facility Site as further identified in Appendix Q, and the preliminary design work necessary for applying for permits for the Facility evaporation pond, as delivered to Contractor on or about December 19, 2003.

ARTICLE 4

Schedule

4.1 Schedule . Contractor and Owner will perform their respective responsibilities related to the Work in accordance with the Approved Project Schedule, as it may be adjusted in accordance with Article 11, and Owner shall cause each Owner Critical Schedule Milestone and Contractor shall cause each Contractor Critical Schedule Milestone, as applicable, to be achieved on or prior to the applicable Critical Schedule Milestone date, as those dates may be adjusted in accordance with Article 11.

4.2 Alterations to Schedule . Contractor shall not, without the prior written consent of Owner pursuant to Article 11, make any alteration to the Contractor Critical Schedule Milestones. However, Contractor shall have the flexibility to re-sequence its construction and other activities as it sees fit provided that it does not adversely impact the Guaranteed Substantial Completion Dates, the Owner Critical Schedule Milestones or the Target Price.

4.3 Revision of Schedule . Contractor shall notify Owner as soon as possible of any circumstances of which it becomes aware that might result in the Contractor Critical Schedule Milestones on the Approved Project Schedule not being met. If, as a result of Contractor’s notice or otherwise, Owner determines that Contractor Critical Schedule Milestones will not be achieved per the Approved Project Schedule, then Owner may, in its sole discretion, and without prejudice to any other rights of Owner hereunder: (i) change the Approved Project Schedule to provide for later completion of such Contractor Critical Schedule Milestones; or (ii) order Contractor to provide a schedule recovery plan to show how the impact on the Guaranteed Substantial Completion Dates can be mitigated. In the latter case, Contractor shall proceed with diligence to implement such recovery plan. For the avoidance of doubt, any entitlement to changes to the Substantial Completion Date and the Target Price shall be exclusively as set out in Article 11.

Without prejudice to the foregoing, if the progress of the Work is not proceeding in accordance with the Contract Documents or the Approved Project Schedule, Owner will be entitled to make recommendations to Contractor for the purpose of remedying such deficiencies, which recommendations shall be incorporated within Contractor’s recovery plan. Contractor shall use commercially reasonable efforts to maintain and, if necessary, restore compliance with the Approved Project Schedule and to meet the Contractor Critical Schedule Milestones, subject to this Section 4.3.

ARTICLE 5

Inspection and Approval

5.1 Owner’s Right to Attend Contractor Inspections . Contractor will notify Owner of any testing to or inspections of the Work or any portion thereof which are specifically identified in Appendix Q , including the Commissioning Tests and the Completion Tests (a) three (3) days in advance of such testing or inspection, for any testing or inspection outside the Facility Site, and (b) forty-eight (48) hours in advance of such testing or inspection for any testing or inspection at the Facility Site. Owner will have the option of being present at the inspections and testing on or off the Facility Site specifically identified in Appendix Q . Owner’s presence or non-presence at any testing or inspection shall not be deemed a waiver of any of Contractor’s obligations under this Contract or be construed as an approval or acceptance of the Work or any portion thereof.

5.2 Inspection and Re-Performance . Owner will have the right to access and inspect the Work wherever located and at any stage of completion. Owner may reject any Work that does not comply with the Contract Documents. If Owner’s inspection or any other information reveals such non-compliance or any other defects in any portion of Work, then Contractor will promptly correct such defective Work. If Contractor fails to initiate correction of the defective Work within fourteen (14) days of its discovery, Owner may, upon seven (7) days’

 

14

 


written notice, correct such defective Work. Owner’s correction of such defective Work will not relieve Contractor of its obligations under this Contract. The incremental costs and expenses related to such actions of Owner will be deducted from any sums due to Contractor under this Contract and shall be deducted from the Target Price.

Without prejudice to the foregoing, if the quality of the Work is not in accordance with the Contract Documents, Owner will be entitled to make recommendations to Contractor for the purpose of remedying such deficiencies.

5.2.1 Cover . Contractor shall not cover any portion of the Work required to be inspected by Owner without providing Owner with notice of covering at least twenty-four (24) hours before such portion of the Work is to be covered. If any portion of the Work should be covered without Contractor first providing such notice, it must, if required in writing by the Owner, at Contractor’s expense and not as a Direct Cost, be uncovered for observation and shall be recovered. If Owner does not perform its inspection within two (2) Business Days after Contractor provided the notice of inspection, Owner shall waive its right of inspection and Contractor may proceed to cover the Work.

5.3 Owner Approval . Owner shall have the right to review and approve those Design Development Documents and Construction Documents identified in Appendix Q, together with such other documents as Owner may reasonably specify from time to time. Before any Work as required or inferred from any Design Development Document or Construction Documents is commenced, Contractor will submit such Design Development Document or Construction Document to Owner for review. Owner shall review and respond within five (5) Business Days of receipt of such Design Development Document or Construction Document. Contractor may proceed with the Work prior to the completion of review by Owner if Contractor is certain that it is necessary to do so to meet the Schedule. If Owner does not respond within the five (5) Business Days, Contractor shall proceed as though the Owner has no comments; provided, however, that review or failure to review any Design Development Document or Construction Document by Owner shall not constitute an admission or agreement by Owner that the Work to be provided or performed in accordance with such Design Development Document or Construction Document is approved or is in conformance with the representations, covenants and warranties of Contractor under this Contract. Whether or not specified in this Contract, review, approval or acceptance by Owner or its designee, of all or any part of the Work, including drawings shall not relieve Contractor from any obligation under the Contract. Such review shall not be deemed a waiver by Owner of any claim arising from a Contractor Event of Default or nonperformance of the Work or any other obligation of Contractor hereunder. It is the sole responsibility of Contractor to properly complete the Work and to provide proper drawings.

ARTICLE 6

Target Price and Payment

6.1 Target Price . Contractor shall use its reasonable best efforts to achieve Final Completion of the Project for an amount at or below the Target Price. The Target Price shall consist of the Target Cost plus the Contingency. Except as otherwise provided herein, Owner shall pay Contractor: (i) the Direct Costs incurred by Contractor in the performance of the Work; (ii) the Fee; and (iii) such other payments as described in the Contract.

6.2 Direct Costs .

6.2.1 Subject to Section 6.2.2, Direct Costs shall mean those costs incurred by Contractor in the performance of the Work (including such mark-ups and/or multipliers as the parties have agreed are applicable thereto, as solely and exclusively set out in Appendix E; but provided always (a) that nothing in this Contract shall require nor permit the charging or payment of a multiplier or markup upon a sum that has already been subject to multiplication or markup, and (b) such multipliers and markups shall be fixed for the period of the Contract and not subject to increase or reduction by virtue of Changes, Change Orders or otherwise) consisting of:

 

15

 


 

(i)

the cost of labor, material and services for the design, engineering, procurement, construction and commissioning of the Project (including engineering, fabrication, services and erection),

 

 

(ii)

Project management, planning/scheduling,

 

 

(iii)

Project controls

 

 

(iv)

supervision,

 

 

(v)

charges for engineering and field non-manual personnel,

 

 

(vi)

construction supervision personnel,

 

 

(vii)

agency personnel,

 

 

(viii)

craft payroll,

 

 

(ix)

labor attraction premiums,

 

 

(x)

Subcontract costs,

 

 

(xi)

material and equipment costs,

 

 

(xii)

equipment rental costs (if equipment is owned by Contractor, then fair market value),

 

 

(xiii)

vendor representatives costs,

 

 

(xiv)

start-up spare parts, first fills, consumables,

 

 

(xv)

start-up and testing material and services,

 

 

(xvi)

training,

 

 

(xvii)

insurance premiums and associated deductibles for those insurances placed pursuant to this Contract as set out in Exhibit F, except, with respect to deductibles, to the extent that the relevant damage or loss was attributable to [ * * * ] * or [ * * * ] * , including without limitation damage and losses referenced in Section 3.2.2; provided, however, that to the extent the relevant deductible is in excess of $ [ * * * ] * , the amount in excess of $ [ * * * ] * shall be allowable as a Direct Cost to the extent that the relevant damage or loss was attributable to [ * * * ] * ,

 

 

(xviii)

legal fees (including fees of claims consultants) reasonably and properly incurred with prior written consent of Owner, such consent not to be unreasonably withheld or delayed for the purpose of enforcing obligations of Subcontractors, insurers or third parties in connection with the Project, but specifically excluding legal fees associated with the negotiations or any dispute resolution between Owner and Contractor; provided, however, that if Contractor incurs any such fees without Owner’s prior written consent, then such fees shall remain Direct Costs to the extent that [ * * * ] * has not been exceeded,

 

 

(xix)

acceleration costs, subject to Section 6.2.2,

 

 

(xx)

repair costs during construction, subject to Section 6.2.2,

 

 

(xxi)

costs of Permits,

 

 

(xxii)

third-party costs or fees for incremental or extended warranties obtained at the request of or with the written consent of Owner to the extent only that such costs or fees were not otherwise reimbursable under another provision of this Contract,

 

 

(xxiii)

freight and transportation costs,

______________

* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC.

 

16

 


 

(xxiv)

import duties and fees,

 

 

(xxv)

bond and other security premiums or issuance costs (including the Performance Security, not to exceed [ * * * ]* % per annum), in no event to include any reimbursement with respect to draws on the principal amounts of such bond or Performance Security,

 

 

(xxvi)

third-party license fees,

 

 

(xxvii)

third-party technology fees,

 

 

(xxviii)

currency fluctuation hedging costs, and

 

 

(xxix)

quality assurance inspection and testing costs,

together with any costs of the same or a broadly similar nature; provided, in each and every case with respect to all of the foregoing that all such costs shall be Direct Costs only to the extent that such costs are reasonably necessarily and properly incurred in furtherance of the Project.

6.2.2 Notwithstanding Section 6.2.1 , Direct Costs shall not include the following costs incurred by Contractor in the performance of the Work, which shall not be allowed for recovery by Contractor:

 

(i)

Late Substantial Completion LDs and Performance LDs;

 

 

(ii)

costs incurred for repeating, repairing, rectifying or remediating any part of the Work, to the extent that the Contractor was entitled to have such repeat, repair, rectification or remediation conducted or performed without charge (or is reimbursed for the cost thereof) by or on behalf of a Subcontractor, except to the extent that, having used commercially reasonable efforts Contractor fails to recover such costs from such Subcontractor, in which case to the extent of such non-recovery only, that amount will, unless disallowed by virtue of another provision of the Contract, be deemed to constitute Direct Costs payable by Owner; provided, however, in each case that such costs are reimbursed to Contractor by Owner as Direct Costs (a) Contractor shall not waive or compromise in any manner any rights that Contractor may have against such Subcontractor with regard to the particular matter, (b) Contractor shall assign to Owner all such rights Contractor may have against such Subcontractor, and (c) if and to the extent that Contractor at any time recovers from such Subcontractor any amounts in regard to such matter, Subcontractor shall hold in trust for the benefit of Owner such sum(s), shall promptly notify Owner of the recovery and amount of such sums, and upon Owner’s request shall transfer to Owner’s account such sum(s);

 

 

(iii)

costs greater than $ [ * * * ] * incurred for repeating, repairing, rectifying or remediating any part of the Work that has been repeated, repaired, rectified or re-performed on a previous occasion;

 

 

(iv)

costs incurred for repeating, repairing, rectifying or remediating any part of the Work to the extent and provided (a) that the cost in question is more than $ [ * * * ] * with respect to each such instance, and (b) that no such costs will be disallowed until the aggregate of such costs exceeds $ [ * * * ] , * in which event such costs up to $ [ * * * ] * shall be Direct Costs and the excess (including costs below $ [ * * * ] , * but in each case subject to clause (c)) shall be disallowed and (c) no such cost shall be disallowed with respect to any such Work if and to the extent that the value cost or liability thereof is less than $ [ * * * ] * . For the avoidance of doubt, when determining whether each or any of the thresholds in this subparagraph (iv) have been exceeded, the cost in question shall be considered in isolation without regard to other costs or expenses that are otherwise reimbursable pursuant to this Contract and without aggregation with any other unconnected cost;

 

 

(v)

any damage to or destruction of the Facility or other real or personal property to the extent covered by insurance (including Subcontractors’ insurance) or recovered by Contractor or any Subcontractor from any third party;

______________

* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC.

 

17

 


 

(vi)

any costs that would be included as Direct Costs, to the extent they are attributable to Contractor’s Personnel’s gross negligence or willful misconduct;

 

 

(vii)

costs of acceleration of the Work, to the extent that the Contractor was entitled to have such costs or recovery measures performe


 
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