Engineering, Procurement And Construction Agreement

AMENDED AND RESTATED ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT Between RED RIVER ENVIRONMENTAL PRODUCTS, LLC Owner and BE&K CONSTRUCTION COMPANY, LLC Contractor

Exhibit 10.51

 

 

 

AMENDED AND RESTATED

ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

between

RED RIVER ENVIRONMENTAL PRODUCTS, LLC

Owner

and

BE&K CONSTRUCTION COMPANY, LLC

Contractor

 

 

 

 

* indicates portions of the exhibit that have been omitted pursuant to a request for confidential information. The non-public information has been filed with the Commission.


TABLE OF CONTENTS

 

         

Page

ARTICLE 1 DEFINITIONS; INTERPRETATION

   13

1.1

   Definitions    13

1.2

   Certain Interpretative Matters    30

1.3

   Order of Precedence    31
  

1.3.1

   Notice    31
  

1.3.2

   Conflict    32

ARTICLE 2 CONTRACTOR’S WORK AND OTHER OBLIGATIONS

   33

2.1

   Commencement of the Work    33
  

2.1.1

   Effective Date    33
  

2.1.2

   Full Notice to Proceed    33
  

2.1.3

   Notice to Proceed Requirements    33
  

2.1.4

   Additional Security    34

2.2

   Work to be Performed    35
  

2.2.1

   Engineering/Design, and Procurement Services    35
  

2.2.2

   Supervision and Superintendence    36
  

2.2.3

   Project Superintendent    37
  

2.2.4

   Certain Project Site Related Work    37
  

2.2.5

   Reference Points    37
  

2.2.6

   Procurement of Materials, Equipment    38
  

2.2.7

   Inspection, Factory Tests and Expediting    39
  

2.2.8

   Labor and Personnel    40
  

2.2.9

   Certain Taxes    41
  

2.2.10

   Permitting    43
  

2.2.11

   Personnel Training    43
  

2.2.12

   Safety Precautions    43
  

2.2.13

   Hazardous Substances    45
  

2.2.14

   Royalties, Import Duties and License Fees    47
  

2.2.15

   Interconnection Agreement    48
  

2.2.16

   [RESERVED]    48
  

2.2.17

   Storage and Related Matters    48
  

2.2.18

   Functional Tests    48
  

2.2.19

   Clean Site and Waste Removal    48
  

2.2.20

   Owner Contracts    49

2.3

   Project Schedule, Progress Reports and Progress Meetings    50
  

2.3.1

   Project Schedule    50
  

2.3.2

   Recovery Plan    51

 

Page i


2.4

   Methods of Performance    51

2.5

   Transfer of Title/Risk of Loss for Certain Items    51
  

2.5.1

   Title to Work    51
  

2.5.2

   Risk of Loss to Contractor Property    52
  

2.5.3

   Title to Drawings, Reports, Documents and Information    52
  

2.5.4

   Title to Natural Resources    53
  

2.5.5

   Title to Fossils and Artifacts    54
  

2.5.6

   Title Warranty    54

2.6

   Subsurface Conditions    54

2.7

   Local Conditions    54

2.8

   Subcontractors and Owner Suppliers    55
  

2.8.1

   Subcontractors    55
  

2.8.2

   No Privity with Owner    55
  

2.8.3

   Certain Subcontracts    55
  

2.8.4

   Purchase Orders and Subcontracts    56
  

2.8.5

   Subcontractor Warranties    56
   2.8.6    Subcontractor Insurance    56

2.9

   Insurance    57

2.10

   Compliance with Applicable Legal Requirements    57

2.11

   Real Estate    57

2.12

   Use of Project Site    57
  

2.12.1

   Use and Restoration    57
  

2.12.2

   Site Authority    57

2.13

   Record Documents    58

2.14

   Submittals    58
  

2.14.1

   Review    58
  

2.14.2

   Variations    58
  

2.14.3

   Due Consideration    58
  

2.14.4

   Applicable Electronic Format    59

2.15

   Separate Contractors and Activities By Owner    59
  

2.15.1

   Separate Work    59
  

2.15.2

   Integration    59
  

2.15.3

   Coordination    59
  

2.15.4

   Owner Contractor Storage and Laydown    60

2.16

   Transportation Costs    60

2.17

   Labor Matters    60

 

Page ii


2.18

   Discipline and Protection    60

2.19

   Security    60

2.20

   Project Site Fire Protection    61

2.21

   Coordination and Transition    61
  

2.21.1

   Phase I Portion of the Project    61
  

2.21.2

   Balance of the Project    61

2.22

   Surplus Equipment and Materials    62

ARTICLE 3 OWNER’S OBLIGATIONS

   63

3.1

   Project Site    63

3.2

   Permits    63

3.3

   Owner Insurance    63

3.4

   Owner Taxes    63
  

3.4.1

   Payment of Taxes    63
  

3.4.2

   Sales Taxes    64

3.5

   Start-up Personnel    64

3.6

   Owner Site Manager and Owner Engineer    64

3.7

   Interconnection    65
  

3.7.1

   Out of Scope Interconnection Facilities and Utility Connections    65
  

3.7.2

   Transmission Facilities    65

3.8

   Startup Period    65
  

3.8.1

   Startup Period; Pre-Commercial Energy    65
  

3.8.2

   Waste    66
  

3.8.3

   Initial Fills    66

3.9

   Hazardous Substances    66

3.10

   Compliance with Contractor’s Rules    67

3.11

   Performance of Owner Obligations    67

3.12

   Compliance with Applicable Legal Requirements    67

3.13

   Owner Suppliers    67
  

3.13.1

   Contract Execution    67

3.14

   Discipline and Protection    67

ARTICLE 4 OWNER’S RIGHT TO INSPECT, STOP AND RE-PERFORM WORK

   69

4.1

   Inspection    69

4.2

   Right to Reject and Re-Performance    69

 

Page iii


4.3

   Defects in Owner Suppliers’ Scope    69

4.4

   Right to Suspend Work for Convenience    69

4.5

   Uncovering Work    70

4.6

   Right to Stop Work for Cause    71

ARTICLE 5 CONSTRUCTION PRICE AND PAYMENT

   72

5.1

   Construction Price    72
  

5.1.1

   Fixed Component    72
  

5.1.2

   Reimbursable Component    72
  

5.1.3

   Payment of Fixed Component    73
  

5.1.4

   Payment of the Reimbursable Component    73
  

5.1.5

   Price and Other Agreement Adjustments due to Change Orders    73
  

5.1.6

   Reconciliation of Actual Craft Labor Hours to Craft Labor Hour Target    75
  

5.1.7

   [RESERVED]    77
  

5.1.8

   Applications for Payment    77
  

5.1.9

   Progress Reports    78
  

5.1.10

   Lien Waivers    78
  

5.1.11

   Other Documentation    78
  

5.1.12

   Failure to Comply    79
  

5.1.13

   Retainage    79
  

5.1.14

   Construction Price Inclusive    80
  

5.1.15

   Contingency Sharing Payment    80

5.2

   Owner Supplier Payments    81

5.3

   Owner Review    81

5.4

   Payment Due Dates    81

5.5

   Final Payment    81

5.6

   Withholding to Protect Owner from Loss    82
  

5.6.1

   Withholding    82
  

5.6.2

   Lien Title Indemnity    82

5.7

   Delinquent Payments    82

5.8

   Contractor Liens    82

5.9

   Forecasts    83

5.10

   Total Work Cost Bonus Amount    83

ARTICLE 6 COMPLETION AND ACCEPTANCE OF THE WORK

   84

6.1

   Phase I Mechanical Completion    84
  

6.1.1

   Criteria for Phase I Mechanical Completion    84

 

Page iv


  

6.1.2

   Notice and Report of Phase I Mechanical Completion    85
  

6.1.3

   Achievement of Phase I Mechanical Completion    86

6.2

   Mechanical Completion    86
  

6.2.1

   Criteria for Mechanical Completion    86
  

6.2.2

   Notice and Report of Mechanical Completion    88
  

6.2.3

   Achievement of Mechanical Completion    88

6.3

   Initial Synchronization    89

6.4

   Phase I Substantial Completion    89
  

6.4.1

   Criteria for Phase I Substantial Completion    89
  

6.4.2

   Notice and Report of Phase I Substantial Completion    90
  

6.4.3

   Achievement of Phase I Substantial Completion    90
  

6.4.4

   Care, Custody and Control During Dispute Resolution Regarding Phase I Substantial Completion    91

6.5

   Creation of Phase I Punch List    92

6.6

   Transfer of Possession and Control of the Phase I Portion of the Project to Owner    92

6.7

   Substantial Completion    93
  

6.7.1

   Preliminary Repairs, Replacements and Refurbishments    93
  

6.7.2

   Substantial Completion    94
  

6.7.3

   Notice and Report of Substantial Completion    95
  

6.7.4

   Achievement of Substantial Completion    95
  

6.7.5

   Care, Custody and Control During Dispute Resolution Regarding Substantial Completion    96
  

6.7.6

   Project Punch List    97
  

6.7.7

   Possession and Control    97
  

6.7.8

   Reliability Test    98

6.8

   Final Completion    99
  

6.8.1

   Criteria for Final Completion of the Project    100
  

6.8.2

   Notice and Report of Final Completion    100
  

6.8.3

   Achievement of Final Completion    100
  

6.8.4

   Target Final Completion Date    101

ARTICLE 7 PERFORMANCE TESTING

   102

7.1

   Performance Tests    102

7.2

   Notice to Owner    102
  

7.2.1

   Phase I Notice    102
  

7.2.2

   Notice    102

7.3

   Completed Performance Tests    102

 

Page v


  

7.3.1

   Phase I Performance Tests    102
  

7.3.2

   Other Performance Tests    103
  

7.3.3

   Individual Test Reports    103

7.4

   Repetition of Tests    104

7.5

   Re-Setting of Project    104

7.6

   Operation of the Project    104

ARTICLE 8 PERFORMANCE AND COMPLETION REQUIREMENTS, LIQUIDATED DAMAGES AND BONUS

   106

8.1

   Phase I Substantial Completion Requirements    106
  

8.1.1

   Phase I Performance Requirements    106
  

8.1.2

   Phase I Substantial Completion Date    106

8.2

   Substantial Completion Performance Test Requirements    106
  

8.2.1

   Performance Requirements    106
  

8.2.2

   Target Substantial Completion Date    108
  

8.2.3

   Target Final Completion Date    108

8.3

   Late Substantial Completion Damages    108
  

8.3.1

   Late Phase I Substantial Completion Liquidated Damages    108
  

8.3.2

   Late Substantial Completion Liquidation Damages    109
  

8.3.3

   Overlap of Delay Liquidated Damage Periods    110
  

8.3.4

   Payment of Delay Liquidated Damages    110

8.4

   Buy Down    110
  

8.4.1

   Cure Period    110
  

8.4.2

   Buy Down Amount    110
  

8.4.3

   Reasonableness    112
  

8.4.4

   Payment of Buy Down Amount    112
  

8.4.5

   Limitation on Right to Minimum Performance Requirements and/or Minimum Reliability Requirement    112

8.5

   Early Phase I Substantial Completion Bonus    112

8.6

   Early Substantial Completion Bonus    113

ARTICLE 9 THE WARRANTY PERIODS

   114

9.1

   General Warranty of Work, Materials and Equipment    114

9.2

   Owner Supplier Work    114

9.3

   Nonconforming Work    114

9.4

   Contractor’s Warranty Work    115

9.5

   Warranty Periods    115

 

Page vi


  

9.5.1

   Duration    115
  

9.5.2

   Transfer    115

9.6

   Subcontractor Warranties    116

9.7

   Root Cause Repairs    116

9.8

   Cure Rights of Owner for Breach of Warranty    116

9.9

   Title to Warranty Work    117

9.10

   Exclusions    117

9.11

   Primary Liability    117

9.12

   General Limitations on Warranties and Remedies    117

ARTICLE 10 CHANGES

   119

10.1

   Changes    119

10.2

   Procedure for Changes    119
  

10.2.1

   Changes Initiated by Contractor    119
  

10.2.2

   Changes Initiated by Owner    120

10.3

   Change Events    120

10.4

   Changes Involving Schedule Extensions    122

10.5

   Changes to the Fixed Component    122

10.6

   Continued Performance Pending Resolution of Disputes    122

10.7

   Options for Implementing Changes    122

10.8

   Documentation    122

ARTICLE 11 FORCE MAJEURE

   124

11.1

   Force Majeure Event    124

11.2

   Burden of Proof    125
  

11.2.1

   Excused Performance    125
  

11.2.2

   Scope of Excused Performance    125
  

11.2.3

   Prior Obligations and Liabilities    125
  

11.2.4

   Continued Performance    125
  

11.2.5

   No Affect on Payment Obligations    125

ARTICLE 12 INDEMNIFICATION

   126

12.1

   Indemnity    126

12.2

   Obligations with Respect to Liens    126

12.3

   Obligations with Respect to Intellectual Property    127

12.4

   Owner Indemnity    127

 

Page vii


12.5

   Notice and Legal Defense    128

12.6

   Failure to Defend Action    129

12.7

   No Limitation to Workers’ Benefits    129

12.8

   Limitation on Indemnification    129

ARTICLE 13 REMEDIES AND TERMINATION

   130

13.1

   Termination for Convenience    130
  

13.1.1

   Termination Payment    130
  

13.1.2

   Termination Obligations    130
  

13.1.3

   Termination Due to Force Majeure    131

13.2

   Termination Upon Contractor Event of Default    131

13.3

   Termination for Agreed Circumstances    132

13.4

   Consequences of Termination; Actions upon Termination    133
  

13.4.1

   Assumption and Succession    133
  

13.4.2

   Completion of the Work    133
  

13.4.3

   Actions Upon Termination    134

13.5

   Owner Monetary and Non-Monetary Defaults; Contractor Draw Conditions on Pre-Financial Closing Letter of Credit    134
  

13.5.1

   Non-Payment    134
  

13.5.2

   Non-Monetary Default    135
  

13.5.3

   Draw Conditions for Pre-Financial Closing Letter of Credit and Letter Agreement    136

13.6

   Duty to Mitigate Damages    136

ARTICLE 14 SECURITY

   137

14.1

   Guarantees    137

ARTICLE 15 REPRESENTATIONS AND WARRANTIES

   138

15.1

   Representations and Warranties of Contractor    138

15.2

   Representation and Warranties of Owner    139

ARTICLE 16 LIMITATIONS OF LIABILITY

   140

16.1

   Limitation of Contractor’s Liability for Liquidated Damages    140
  

16.1.1

   Aggregate Limitation for Liquidated Damages    140
  

16.1.2

   Aggregate Limitation for Delay Liquidated Damages    140
  

16.1.3

   Aggregate Limitation for Performance Liquidated Damages    140
  

16.1.4

   Individual Limitations for Performance Liquidated Damages    140

16.2

   Consequential Damages    140

 

Page viii


16.3

   Overall Limitation of Liability    141

16.4.

   Application    141

ARTICLE 17 DISPUTE RESOLUTION

   143

17.1

   Dispute Resolution Between the Parties    143
  

17.1.1

   Cooperation    143
  

17.1.2

   Management Discussions    143
  

17.1.3

   Voluntary Mediation    143

17.2

   Arbitration    143
  

17.2.1

   Rules and Arbitrators    143
  

17.2.2

   Impartiality, Independence and Qualifications of Arbitrators    144
  

17.2.3

   Costs and Discovery    144
  

17.2.4

   Limitations    144
  

17.2.5

   Additional Relief    145
  

17.2.6

   Venue and Timing    145
  

17.2.7

   Continued Performance    145
  

17.2.8

   Consolidation    145
  

17.2.9

   When Inapplicable    145
  

17.2.10

   Cross Examination    146
  

17.2.11

   Survival    146

ARTICLE 18 CONFIDENTIALITY

   147

18.1

   Confidential Information    147

18.2

   Publicity    148

18.3

   Prior Confidentiality Agreements    149

18.4

   Injunctive Relief    149

ARTICLE 19 COST RECORDS

   150

19.1

   Records    150

19.2

   Inspection of Books, Records and Audit Rights    150

ARTICLE 20 MISCELLANEOUS

   151

20.1

   Authorized Representatives    151

20.2

   Assignment/Delegation    151
  

20.2.1

   Assignment/Delegation by Contractor    151
  

20.2.2

   Assignment/Delegation by Owner    151
  

20.2.3

   Successors and Assigns    152

20.3

   Reviews, Inspections, Approvals by Owner    152

20.4

   Governing Law; Choice of Forum    153

 

Page ix


20.5

   Surviving Obligations    153

20.6

   Severability    153

20.7

   Notices    153

20.8

   Article and Section Headings    154

20.9

   Duties and Remedies    154

20.10

   No Waiver of Rights    155

20.11

   Entire Agreement    155

20.12

   Amendments    155

20.13

   No Third Party Rights    155

20.14

   Obligations Non-recourse    155

20.15

   Relationship of the Parties    155

20.16

   Counterparts    156

20.17

   Cooperation with Financing Efforts    156

20.18

   Financing Engineer    157

20.19

   Owner Engineer    157

20.20

   Review Committee    157

List of Appendices

 

Appendix A:    Scope of Work
Appendix B:    Project Schedule
Appendix C:    Performance Test Requirements and Special Repairs, Replacements and Refurbishments
Appendix D:    Owner Permits
Appendix E:    Owner Contracts
Appendix F:    Key Personnel
Appendix G:    Milestone Payment Schedule
Appendix H:    Cost Breakdown
Appendix I:    Forms
   I -1    Form of Full Notice to Proceed
   I -2A    Form of Application for Payment
   I -2B    [RESERVED]
   I -3    Form of Certificate

 

Page x


   I -4    Form of Notice of Phase I Mechanical Completion, Mechanical Completion, Phase I Substantial Completion, Substantial Completion and Final Completion
   I -5    Form of Change Order
   I -6    Form of Letter of Credit
   I -7    Form of Owner Guaranty
   I -8    Form of Contractor Guaranty
   I -9    Form of Retainage Letter of Credit
   I -10    Form of Opinion
   I -11    Lien Waiver Forms
Appendix J:    Project Site
Appendix K:    Craft Wage Rates and Craft Labor Cost Estimate; Craft Labor Hour Target;
Appendix L:    Sales Tax Materials
Appendix M:    Owner Contract Administration
Appendix N:    Reimbursable Component
Appendix O:    Contractor’s Consumables List
Appendix P:    Target Total Work Cost
Appendix Q:    Insurance Requirements
Appendix R:    Engineering, Procurement, Construction (home office) Engineering Time and Material Cost

 

Page xi


AMENDED AND RESTATED

ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

AMENDED AND RESTATED ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT (this “Agreement”), is entered into as of the 8th day of September, 2008 (the “Effective Date”), by and between Red River Environmental Products, LLC, a Delaware limited liability company (“Owner”), and BE&K Construction Company, LLC, a Delaware limited liability company (“Contractor”). Owner and Contractor are sometimes individually referred to herein as a “Party” and, collectively, as the “Parties.

W I T N E S S E T H:

WHEREAS, Owner is developing, constructing and intends to operate and maintain the Project located at the Project Site in order to produce activated carbon and electricity from the processing of lignite coal;

WHEREAS, Owner and Contractor are parties to an Engineering, Procurement and Construction Agreement dated as of January 29, 2008 (the “Preliminary EPC Agreement”) pursuant to which the Parties agreed upon the terms and conditions for providing certain preliminary engineering, design and long lead procurement activities and certain terms and conditions to be included in this Agreement;

WHEREAS, the Parties intend to enter into an agreement (the “Site Work Agreement”) providing for the performance of certain procurement and site work described in the Preliminary EPC Agreement;

WHEREAS, Owner has entered into certain Owner Contracts providing for, among other things, the delivery and erection of the Multi Hearth Furnaces, the supply of lignite to be used as fuel at the Project, the purchase of activated carbon and electricity produced at the Project and the interconnection of the Project to the utility transmission system; and

WHEREAS, Contractor desires to provide for the engineering, design, procurement, construction, construction management, testing, commissioning and related services for the Project, all of which shall be provided upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing 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; INTERPRETATION

1.1 Definitions. As used in this Agreement and in Notices delivered in accordance with this Agreement, capitalized terms 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:

“Activated Carbon Production Requirement” has the meaning set forth in Section 8.2.1.1.

“Activated Carbon Specification Requirement” has the meaning set forth in Section 8.2.1.2. These specifications relate to sizing and spraying activities to be conducted after carbon product is removed from the Multi Hearth Furnaces and is not intended to make Contractor responsible for any activities or processes occurring inside the Multi Hearth Furnaces.

“Affected Party” has the meaning set forth in Section 11.1.

“Affiliate” means, with respect to any Person, any other Person which (a) such first Person directly or indirectly, in whole or in part, owns, is owned by or is in common ownership with, or (b) such first Person directly or indirectly controls, is controlled by or is under common control with. The term control shall mean, with respect to a Person, the possession, directly or indirectly, of the ability to influence management decisions regarding the business of such a Person, including the ability to block or otherwise limit major decisions of such Person (e.g., increased debt, sale or transfer of share capital (initial or transfer of existing), operation and maintenance decisions, mergers or other restructuring, determination of business plans or budgets, entering into significant contracts or transactions, etc.).

“Agreement” means this Amended and Restated Engineering, Procurement and Construction Agreement, including the body of this Agreement (the “Body of this Agreement”), all Appendices hereto, Change Orders, and all written amendments and supplements hereto.

“Applicable Electronic Format” means the electronic formats set forth in Appendix A.

“Applicable Legal Requirements” means all laws (including common law), statutes, regulations, codes, rules, treaties, ordinances, judgments, directives, Permits, decrees, decisions, approvals, interpretations, injunctions, writs, orders or other similar legal requirements in effect of any Governmental Authority.

“Application for Payment” means an application for payment under this Agreement, in the form attached as Appendix I-2A, which is to be used by Contractor during the course of Work in requesting monthly payments pursuant to


Section 5.1.8, and which is to be accompanied by such supporting documentation as is required by this Agreement.

“Authorized Representative” means, with respect to each Party, the individual appointed by such Party under Section 20.1 to act on such Party’s behalf with respect to that Party’s duties and responsibilities under this Agreement.

“Award” has the meaning set forth in Section 17.2.6.

“Balance of the Project” means all of the Project other than the Phase I Portion of the Project as more particularly described in Appendix A.

“Business Day” means any day, except Saturdays, Sundays, federal holidays, and holidays under the laws of the State of Louisiana.

“Buy Down Amount” has the meaning set forth in Section 8.4.2.

“Certificate of Final Completion” has the meaning set forth in Section 6.8.3.

“Certificate of Mechanical Completion” has the meaning set forth in Section 6.2.3.

“Certificate of Phase I Mechanical Completion” has the meaning set forth in Section 6.1.3.

“Certificate of Phase I Substantial Completion” has the meaning set forth in Section 6.4.3.

“Certificate of Substantial Completion” has the meaning set forth in Section 6.7.4.

“Change” or “Changes” has the meaning set forth in Section 10.1.

“Change Event” has the meaning set forth in Section 10.3.

“Change of Law” means the adoption, imposition, promulgation, re-interpretation, cancellation or modification of any Applicable Legal Requirements by a Governmental Authority effective on or after the Commencement Date.

“Change Order” has the meaning set forth in Section 10.1.

“Change Order Notice” has the meaning set forth in Section 10.2.2.

“Change Order Request” has the meaning set forth in Section 10.2.1.

“Claims” has the meaning set forth in Section 12.1.


“Commencement Date” has the meaning set forth in Section 2.1.2.

“Completed Performance Test” has the meaning set forth in Section 7.3.2.

“Completed Phase I Performance Test” has the meaning set forth in Section 7.3.1.

“Completed Reliability Test” has the meaning set forth in Section 6.7.8.1.

“Confidential Information” has the meaning set forth in Section 18.1.

“Construction Aids” means all tangible equipment (including construction equipment and machinery), apparatus, tools, supplies, utilities, support services, field office equipment and supplies, structures, form lumber, protective fencing, and other goods and items that are required to construct, commission or test the Project, but which are not incorporated into the Project.

“Construction Price” means the amount of compensation applicable to the Work consisting of (a) the Fixed Component, and (b) the Reimbursable Component, as such amount may thereafter be adjusted pursuant to this Agreement.

“Consumables” means the items listed in Contractor’s Consumables List set forth in Appendix O.

“Contractor” means BE&K Construction Company, LLC, a Delaware Limited Liability Company and its successors and assigns permitted under this Agreement.

“Contractor Act of Bankruptcy” means (a) if, by order of a court of competent jurisdiction, a receiver or liquidator or custodian or trustee of Contractor, or of all or substantially all of the property of Contractor, is appointed and is not discharged within 60 days, or if, by decree of such a court, Contractor is adjudicated insolvent, or all or substantially all of the property of Contractor is sequestered, and such decree has continued undischarged and unstayed for 60 days after the entry of such decree, or (b) if a petition to reorganize Contractor pursuant to the Federal Bankruptcy Code or any other similar statute applicable to Contractor, as now or hereinafter in effect, is filed against Contractor and is not dismissed within 60 days after such filing, or (c) if Contractor is adjudicated bankrupt or files a petition in voluntary bankruptcy under any provision of any bankruptcy law or consents to the filing of any bankruptcy or reorganization petition against Contractor under any such law, or (without limitation of the generality of the foregoing) files a petition to reorganize Contractor pursuant to the Federal Bankruptcy Code or any other similar statute applicable to Contractor, as now or hereafter in effect, or (d) if Contractor makes an assignment for the benefit of creditors, or admits in writing an inability to


pay debts generally as they become due, or consents to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of Contractor, or of all or substantially all of the property of Contractor.

“Contractor Event of Default” has the meaning set forth in Section 13.2.

“Contractor Guaranty” means a guaranty in the form set forth in Appendix I-8 executed by the Person obligated thereunder.

“Contractor Hazardous Substance” has the meaning set forth in Section 2.2.13.2.

“Contractor Indemnitees” has the meaning set forth in Section 12.4.

“Contractor Lien” means a Lien upon the Project, the Work, the Project Site, or any Equipment or Materials, or any other property of Owner or any of its Affiliates filed by or through Contractor or its Affiliates or Subcontractors or their respective Personnel in connection with the Work.

“Contractor Lien Bond” means a bond (a) issued by a surety company reasonably acceptable to Owner, (b) in form and substance reasonably acceptable to Owner, (c) in the amount necessary under Applicable Legal Requirements to secure such Lien, and (d) sufficient (i) to permit Owner to obtain title insurance with no exceptions for such Contractor Lien, and (ii) to prevent the Lien holder from causing a sale, foreclosure or other title divestiture with respect to the Project or the Project Site or improvements thereon or any Equipment or Materials or other property of Owner.

“Contractor Permits” has the meaning set forth in Section 2.2.10.

“Contractor Subcontract” means an agreement between Contractor and a Subcontractor.

“Contractor Taxes” has the meaning set forth in Section 2.2.9.2.

“Craft Labor” means all of Contractor’s and its Affiliates’ direct hourly craft labor for site supervision and direct hourly labor of all trades inclusive of general foremen, foremen, journeymen, apprentices, and others who perform construction and associated construction activities in connection with the Work. Craft Labor excludes all of Contractor’s and Contractor’s Affiliates’ non-manual labor and all Subcontractor labor.

“Craft Labor Category” means a specific trade or category of Craft Labor such as ironworkers, pipefitters, journeymen and operators, or especially skilled sub-categories within a craft.


“Craft Labor Cost Component” means a component of the cost of craft labor, such as wage rates, fringes, per diems and incentive payments.

“Craft Labor Cost Estimate” has the meaning set forth in Section 5.1.2 and is the product of the Craft Labor Hour Target (for each classification of each Craft Labor Category) multiplied by the appropriate Craft Wage Rates.

“Craft Labor Hours” means hours of Craft Labor expended to perform the Work.

“Craft Labor Hour Target” has the meaning set forth in Section 5.1.2 and is the estimated total Craft Labor Hours for completion of the Work.

“Craft Wage Rates” means the total compensation for each and every Craft Labor Category by classification, inclusive of wage rates, fringes, per diems, and incentive payments as set forth in Appendix K.

“Defect,” “Defects” or “Defective” has the meaning set forth in Section 4.2.

“Defective Work” has the meaning set forth in Section 4.2.

“Disclosing Party” has the meaning set forth in Section 18.1.

“Disputes” has the meaning set forth in Section 17.1.1.

“Dollars” or “$” or “dollars” means the lawful currency of the United States of America.

“Early Phase I Substantial Completion Bonus Amount” has the meaning set forth in Section 8.5.

“Early Substantial Completion Bonus Amount” has the meaning set forth in Section 8.6.

“Effective Date” has the meaning set forth in the first sentence of this Agreement.

“Engineers” means the Owner Engineer and the Financing Engineer.

“Environmental Compliance Requirement” has the meaning set forth in Section 8.2.1.5.

“Equipment” means any product that (a) is to be incorporated into the Project, (b) is an assembly of operational and/or non-operational parts, whether motorized or manually operated, and (c) requires service connections such as, but not limited to, wiring or piping.


“Excluded Change of Law” means any Change of Law that is primarily applicable to Contractor Taxes of any kind or nature, other than import duties on Contractor-provided Equipment and Materials.

“Final Completion” means that Contractor has satisfied the requirements set forth in Section 6.8 with respect to the Project.

“Final Completion Date” has the meaning set forth in Section 6.8.3.

“Financial Closing” means (a) the execution of binding arrangements for the provision of Financing, and (b) the initial release of proceeds from such Financing for payment to Contractor.

“Financing” means construction, interim and/or long-term financing on terms acceptable to Owner, the proceeds of which, including debt and equity, are intended to be used for all or part of the costs of the Project, including lease financing.

“Financing Engineer” means one or more individuals from an independent engineering firm used by the Financing Parties as independent engineer for the Project and the successors and permitted assigns of such independent engineer.

“Financing Parties” means any and all lenders, underwriters, financing institutions, including hedge funds, private equity groups, credit enhancers and institutional investors, providing or facilitating Financing and their assigns and any trustee(s) or agent(s) acting on any of their behalf.

“Fitch” means Fitch, Inc., Fitch Ratings Ltd., its subsidiaries, and their successors.

“Force Majeure” has the meaning set forth in Section 11.1.

“Full Notice to Proceed” means the Notice described in Section 2.1.2, the form of which is set forth in Appendix I-1.

“Functional Tests” means the functional tests to be conducted by Contractor as described in the Scope of Work.

“Governmental Authority” means any federal, state, county, regional, city, parish or local government body, agency, authority, branch, department, arbitrator, court or any subdivision, instrumentality or agency thereof, having or claiming, a regulatory interest in, or jurisdiction over, the Work (or any portion thereof), the Project, the Project Site, this Agreement or one or more of the Parties as it relates to this Agreement.

“Hazardous Substance” means any element, compound, mixture, solution, particle or substance (a) which is included within the definitions of (i)


“hazardous substances,” “hazardous wastes,” “toxic substances,” “hazardous pollutants or toxic pollutants in any Applicable Legal Requirement of any Governmental Authority of the United States or the State of Louisiana and any applicable judicial, administrative and regulatory decrees, judgments and orders relating to the protection of human health or the environment, including, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901 et seq. (RCRA), the Toxic Substances Control Act, 15 U.S.C. Sections 2601 to 2671, the Clean Air Act, 42 U.S.C. Sections 7401 et seq., and/or the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 to 1387, (ii) any PCBs or PCB items as defined in 40 CFR Section 761.3, and (iii) any asbestos, as defined in 40 CFR Section 763.63, (b) the presence of which requires investigation or Remediation under any Applicable Legal Requirements, or (c) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous, and is or becomes, prior to Substantial Completion, regulated as a Hazardous Waste or Hazardous Material by any Governmental Authority of the United States or the State of Louisiana. Hazardous Substances shall also include underground storage tanks as defined in Section 9001 of RCRA, 42 U.S.C. § 6991.

“Increased Throughput Bonus” has the meaning set forth in Section 6.7.8.3.

“Indemnitee” has the meaning set forth in Section 12.5.

“Initial Synchronization” means synchronization of the Project with the Transmission Facilities and transmission of electric power from the Project to the Transmission Facilities for a minimum of one hour.

“Intellectual Property” has the meaning set forth in Section 2.5.3.2.

“Interconnection Agreement” means that certain Interconnection Agreement entered into between Owner and CLECO Power, LLC relating to the Project.

“Investment Grade” means a rating in one of the four highest rating categories (without regard to subcategories within such rating categories) by a Rating Agency.

“Key Benchmark Project” means a construction project involving use of 125 or more workers at peak or use of 50 or more workers of one single Craft Labor Category at peak, which is located within a radius of 150 miles from the Project Site, excluding any project which primarily involves outage work and lasts for a cumulative duration of less than 60 days and excluding any project to which Contractor is providing engineering, procurement or construction services.


“Key Personnel” has the meaning set forth in Section 2.2.8.1.

“Labor Plan” has the meaning set forth in Section 2.2.8.2.

“Late Payment Rate” means the lesser of (a) the prime rate of interest (sometimes referred to as the base rate) for corporate loans as published in The Wall Street Journal under Money Rates as such rate may be in effect from time to time during the period the delinquent amount remains outstanding, plus two percent (2%) per annum, or (b) the highest per annum interest rate allowed by Applicable Legal Requirements.

“Late Phase I Substantial Completion Damages” has the meaning set forth in Section 8.3.1.

“Late Substantial Completion Damages” has the meaning set forth in Section 8.3.2.

“Letter Agreement” means that letter agreement, dated August 15, 2008, by and between the Parties, as amended by the supplemental letter agreement dated August 25, 2008, as the same may be further amended or supplemented.

“Letter of Credit” means a documentary or standby letter of credit meeting the requirements of Appendix I-6.

“Liens” means any lien, encumbrance or security interest and includes mechanic’s liens, materialmen’s liens and supplier’s liens.

“Lime Consumption Requirement” has the meaning set forth in Section 8.2.1.3.

“Materials” means any products or supplies or materials that are to be incorporated into the Project, whether or not substantially shaped, cut, worked, mixed, finished, refined or otherwise fabricated or processed. The term Materials is intended to include any item that is to be incorporated into the Project that is not Equipment or Consumables.

“Mechanical Completion” means that Contractor has satisfied the requirements set forth in Section 6.2 with respect to the Project.

“Mechanical Completion Date” has the meaning set forth in Section 6.2.3.

“Milestone(s)” means the milestones identified in Appendix G.

“Milestone Payment Schedule” has the meaning set forth in Section 5.1.8 and Appendix G.


“Minimum Carbon Capacity Generation” has the meaning set forth in Section 8.2.1.6.

“Maximum Lime Consumption Requirements” has the meaning set forth in Section 8.2.1.7.

“Minimum Net Electrical Output Requirement” has the meaning set forth in Section 8.2.1.8.

“Minimum Performance Requirements” has the meaning set forth in Section 8.2.1.

“Minimum Reliability Requirement” has the meaning set forth in Section 6.7.8.2.

“Moody’s” means Moody’s Investor Service, Inc. and its successors.

“MSDSs” has the meaning set forth in Section 2.2.13.4.

“Multi Hearth Furnace” or “MHF” means the multi hearth furnace(s) that will generate activated carbon from coal at the Project.

“Multi Hearth Furnace Agreements” means the agreements between the Multi Hearth Furnace Supplier and Owner for the supply and erection of the Multi Hearth Furnaces for the Project, as the same may be amended or supplemented in accordance with their respective terms.

“Multi Hearth Furnace Supplier” means the Person or Persons supplying the Multi Hearth Furnaces pursuant to the Multi Hearth Furnace Agreements.

“Net Electrical Output” has the meaning set forth in Appendix C.

“Net Electrical Output Requirement” has the meaning set forth in Section 8.2.1.4.

“Notice” means a written notice, order or other communication given under this Agreement to a Party in accordance with Section 20.7.

“Notice of Final Completion” has the meaning set forth in Section 6.8.2.

“Notice of Mechanical Completion” has the meaning set forth in Section 6.2.2.

“Notice of Phase I Mechanical Completion” has the meaning set forth in Section 6.1.2.


“Notice of Phase I Substantial Completion” has the meaning set forth in Section 6.4.2.

“Notice of Substantial Completion” has the meaning set forth in Section 6.7.3.

“O&M Manual” means the Project operations and maintenance manual to be provided by Contractor to Owner in accordance with this Agreement.

“OEM” means, with respect to any item of Equipment, the original manufacturer thereof.

“Other Benchmark Project” means a construction project involving use of 125 or more workers at peak or use of 50 or more workers of one single Craft Labor Category at peak, which is located within a radius of 300 miles from the Project Site, excluding any project which primarily involves outage work and lasts for a cumulative duration of less than 60 days.

“Owner” means Red River Environmental Products, LLC, and includes its successors and assigns permitted under this Agreement.

“Owner Act of Bankruptcy” means (a) if, by order of a court of competent jurisdiction, a receiver or liquidator or custodian or trustee of Owner, or of all or substantially all of the property of Owner is appointed and is not discharged within sixty (60) days, or if, by decree of such a court, Owner is adjudicated insolvent, or all or substantially all of the property of Owner is sequestered, and such decree has continued undischarged and unstayed for sixty (60) days after the entry of such decree, or (b) if a petition to reorganize Owner, pursuant to the Federal Bankruptcy Code or any other similar statute applicable to Owner, as now or hereinafter in effect, is filed against Owner, and is not dismissed within sixty (60) days after such filing, or (c) if Owner is adjudicated bankrupt or files a petition in voluntary bankruptcy under any provision of any bankruptcy law or consents to the filing of any bankruptcy or reorganization petition against Owner, under any such law, or (without limitation of the generality of the foregoing) files a petition to reorganize Owner, pursuant to the Federal Bankruptcy Code or any other similar statute applicable to Owner, as now or hereafter in effect, or (d) if Owner makes an assignment for the benefit of creditors, or admits in writing an inability to pay debts generally as they become due, or consents to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of Owner, or of all or substantially all of the property of Owner.

“Owner Agents” means those third party contractors designated by Owner as having the same authority as Owner to review Contractor Project documents, whether confidential or otherwise, and to have access to the Project Site.

“Owner Authorized Parties” has the meaning set forth in Section 9.3.


“Owner Contract” means those contracts or purchase orders executed or to be executed by Owner for any Owner Suppliers’ Scope, if any, as set forth in Appendix E.

“Owner Engineer” means the engineering firm designated by Owner, for the benefit of Owner, from time to time in a Notice to Contractor as Owner’s engineer for the Project.

“Owner Events of Default” has the meaning set forth in Section 13.5.2.

“Owner Guaranty” means a guaranty in the form set forth in Appendix I-7 executed by the Person obligated thereunder.

“Owner Hazardous Substances” has the meaning set forth in Section 3.9.

“Owner Indemnitees” has the meaning set forth in Section 12.1.

“Owner Insurance” has the meaning set forth in Section 3.3.

“Owner Permits” has the meaning set forth in Section 3.2.

“Owner Site Manager” has the meaning set forth in Section 3.6.

“Owner Supplier” means a Supplier providing Equipment, Materials, construction work or other items or services for the Project pursuant to an Owner Contract.

“Owner Suppliers’ Scope” means those items of Equipment and Materials, construction work, or other items or services to be supplied by Owner pursuant to an Owner Contract.

“Owner Taxes” has the meaning set forth in Section 3.4.1.

“Owner Test Interruption” has the meaning set forth in Appendix C.

“Party” and “Parties” have the meanings set forth in the second sentence of this Agreement.

“Performance Requirements” has the meaning set forth in Section 8.2.1.

“Performance Tests” means the tests designed to demonstrate satisfaction of the Performance Requirements to be conducted in accordance with the test procedures and requirements set forth in Part 2 of Appendix C.


“Permits” means all waivers, franchises, variances, permits, approvals, authorizations, licenses or orders of or from any federal, state, provincial, county, municipal, regional, environmental or other governmental body, instrumentality, agency, authority, court or other body having jurisdiction over Owner or Contractor and their respective obligations under this Agreement or the Project, the Project Site, the performance of the Work, or the operation of the Project, 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 or other entity with legal constitution under Applicable Legal Requirements, or any government or political subdivision or instrumentality or agency thereof.

“Personnel” means, with respect to a Person, such Person’s employees, agents, independent contractors, representatives, invitees, subcontractors, vendors and its agents’, independent contractors’, representatives’, invitees’, subcontractors’, vendors’ respective employees, agents, personnel, representatives, invitees, subcontractors, vendors or independent contractors.

“Phase I Activated Carbon Production Requirement” has the meaning set forth in Section 8.1.1.1.

“Phase I Activated Carbon Specification Requirement” has the meaning set forth in Section 8.1.1.2.

“Phase I Environmental Compliance Requirement” has the meaning set forth in Section 8.1.1.3.

“Phase I Mechanical Completion” means that Contractor has satisfied the requirements set forth in Section 6.1 with respect to the Project.

“Phase I Mechanical Completion Date” has the meaning set forth in Section 6.1.3.

“Phase I Operating Requirements” has the meaning set forth in Section 6.7.1.

“Phase I Performance Requirements” has the meaning set forth in Section 8.1.1.

“Phase I Performance Tests” means the tests designed to demonstrate satisfaction of the Phase I Performance Requirements to be conducted in accordance with the test procedures and requirements set forth in Part 1 of Appendix C.


“Phase I Portion of the Project” means the components of the Project to be completed in connection with achievement of the Phase I Substantial Completion Date as more particularly described in Appendix C.

“Phase I Punch List” has the meaning set forth in Section 6.5.

“Phase I Substantial Completion” means that Contractor has satisfied the requirements set forth in Section 6.4 with respect to the Phase I Portion of the Project.

“Phase I Substantial Completion Date” has the meaning set forth in Section 6.4.3.

“Pre-Financial Closing Letter of Credit” has the meaning set forth in Section 2.1.4.

“Preliminary EPC Agreement” has the meaning set forth in the Recitals.

“Preliminary Mitigation Plan” has the meaning set forth in Section 11.2.1.

“Professional Standards” means those standards and practices used by, and the degree of skill and judgment exercised by, recognized United States engineering and/or construction firms, when performing high quality services on coal process plants and power plants similar to the Project, taking into account, as appropriate, the recommendations and requirements of vendors of Equipment and Materials. It is not intended that Professional Standards as a standard of care may be used by Owner to require changes to Equipment or Materials that are described with specificity in Appendix A.

“Project” means the lignite coal processing, activated carbon-producing, and steam-electric generating facility located at the Project Site, together with all Equipment, Materials, appurtenances and auxiliaries necessary for its operation, as described in Appendix A.

“Project Interconnection Facilities” has the meaning set forth in Section 2.2.15.1.

“Project Safety Manual” has the meaning set forth in Section 2.2.12.

“Project Schedule” is the Level 3 schedule as of the Commencement Date that will be in effect for the Work, as such Level 3 schedule may be updated (in accordance with the terms of this Agreement) from time to time. The Level 3 Project Schedule is attached to this Agreement as Appendix B.


“Project Site” means the land on which the Project will be located as described in Appendix J.

“Project Superintendent” has the meaning set forth in Section 2.2.3.

“Prudent Industry Practices” means, at a particular time, the practices, methods, materials, supplies, equipment and standards of safety, performance and service that are commonly applied in the electric utility industry in the United States to operate and maintain power plants similar to the Project, including the use of, and adherence to, equipment, practices and methods, applicable industry codes, standards, and regulations that, in the exercise of reasonable judgment and in light of the facts and circumstances known at the time the decision was made, would be reasonably expected to accomplish the desired result while protecting the Project and any individual from damage, loss or injury. Prudent Industry Practices are not intended to be limited to the optimum practice or method to the exclusion of all others, but rather to be a spectrum of possible, but reasonable practices and methods, having due regard for, among other things, manufacturers’ and vendors’ requirements and warranties, Applicable Legal Requirements and the requirements of this Agreement.

“Punch List” has the meaning set forth in Section 6.7.6.

“Qualified Security Provider” means an internationally-recognized United States financial institution with a Rating Agency rating of at least A-, as determined by Standard and Poor’s, A3, as determined by Moody’s, or a similar rating as determined by Fitch.

“Rating Agency” means any of Standard & Poor’s, Moody’s or Fitch.

“Receiving Party” has the meaning set forth in Section 18.1.

“Record Drawings” means the amended drawings and documents specified in Section 2.2.4 of Appendix A. “Record Drawings” shall be updated to reflect changes made through Change Orders, plan clarifications, addenda, notices to bidders, field changes, responses to requests for information, jobsite memos, and any additional details needed for the construction of the Project but not shown on the released-for-construction documents. Such drawings must be signed and sealed by a state-registered professional engineer and submitted in accordance with Appendix A.

“Record Documents” has the meaning set forth in Section 2.13.

“Recovery Plan” has the meaning set forth in Section 2.3.2.1.

“Reimbursable Component” has the meaning set forth in Section 5.1.2.


“Reimbursable Component Estimate” has the meaning set forth in Section 5.1.2.

“Release” means spilling, leaking, pumping, pouring, emitting, discharging, injecting, escaping, leaching, dumping, or disposing into or migration within the environment.

“Reliability Requirement” has the meaning set forth in Section 6.7.8.2.

“Reliability Test” has the meaning set forth in Section 6.7.8.1.

“Remediation” means the investigation, handling, treatment, transportation, removal, disposal, remediation and cleanup of, and other corrective action for, Hazardous Substances and/or damage to the environment caused by Hazardous Substances.

“Replacement Contractor” has the meaning set forth in Section 13.4.1.

“Required Contract Dates” means the Required Phase I Substantial Completion Date and the Required Substantial Completion Date as such dates may be adjusted pursuant to this Agreement.

“Required Phase I Substantial Completion Date” means the date that is * calendar days from the date of the Full Notice to Proceed, as such date may be adjusted by mutual agreement of the Parties in accordance with this Agreement.

“Required Substantial Completion Date” means the date that is * calendar days from the date of the Full Notice to Proceed, as such date may be adjusted by mutual agreement of the Parties in accordance with this Agreement.

“Retainage” has the meaning set forth in Section 5.1.13.

“Retainage Letter of Credit” has the meaning set forth in Section 5.1.13.

“Review Committee” has the meaning set forth in Section 20.20.

“Rules” has the meaning set forth in Section 17.2.1.

“Sales Taxes” has the meaning set forth in Section 2.2.9.1.

“Scope of Work” means the description of Work set forth in Appendix A.


“Separate Contractors” means the Multi Hearth Furnace Supplier, the Transmission Owner and any other subcontractors or vendors that will perform work for or on behalf of Owner in order to satisfy Owner’s obligations under this Agreement.

“Site Work Agreement” has the meaning set forth in the Recitals.

“Specially Manufactured Equipment” means any Equipment (a) that is manufactured by a Supplier expressly for Contractor or a Subcontractor for use specifically in the Project, (b) that is not immediately transferable, adaptable or usable in any other project or capacity, to include other projects or uses similar in scope and/or purpose to the Project, (c) for which exact or reasonably similar replacements are either not immediately available or would require special manufacture themselves, and (d) that is not one of the Owner-provided supplies.

“Standard & Poor’s” means Standard & Poor’s Ratings Group, Inc. and its successors.

“Startup Period” has the meaning set forth in Section 3.8.1.

“Subcontractor” means each and every Supplier, subcontractor or contractor of any tier performing any part of the Work, including providing any Equipment and Materials, directly or indirectly for or to Contractor.

“Submittals” means all documents required to be submitted to Owner by Contractor pursuant to Appendix A or other provisions of this Agreement.

“Substantial Completion” means that Contractor has satisfied the requirements set forth in Section 6.7.2 with respect to the Project.

“Substantial Completion Date” has the meaning set forth in Section 6.7.4.

“Supplier” means a manufacturer, fabricator, supplier, distributor, materialman or vendor of Contractor or a Subcontractor.

“Target Contract Dates” means the Target Phase I Substantial Completion Date and the Target Substantial Completion Date, as such dates may be adjusted pursuant to this Agreement.

“Target Final Completion Date” means the date that is 14 calendar days from the Substantial Completion Date, as such date may be adjusted by mutual agreement of the Parties.

“Target Mechanical Completion Date” means the date that is 640 calendar days from the Full Notice to Proceed, as such date may be adjusted by mutual agreement of the Parties.


“Target Phase I Mechanical Completion Date” means the date that is * calendar days from the date of Full Notice to Proceed, as such date may be adjusted by mutual agreement of the Parties.

“Target Phase I Substantial Completion Date” means the date that is * calendar days from the date of Full Notice to Proceed, as such date may be adjusted by mutual agreement of the Parties.

“Target Substantial Completion Date” means the date that is * calendar days from the date of Full Notice to Proceed, as such date may be adjusted by mutual agreement of the Parties.

“Target Total Work Cost” means the Total Work Cost target set forth in Appendix P.

“Taxes” means all taxes, assessments, levies, duties, fees, charges and withholdings of any kind whatsoever and all penalties, fines, additions to tax, and interest thereon.

“Term” means the period of time commencing upon the Effective Date and ending upon the earlier of the last day of the Warranty Period or the termination of this Agreement.

“Termination Payment” has the meaning set forth in Section 13.1.1.

“Total Contractor Compensation” means the actual total cost incurred by Owner to complete the Work under this Agreement, plus the actual total costs incurred by Owner pursuant to the Site Work Agreement, the Preliminary EPC Agreement and the Letter Agreement, as amended (including, without limitation, all purchase orders and limited notices to proceed under such agreements).

“Total Work Cost” means the actual total cost incurred by Owner to complete the Work under this Agreement, plus the actual total costs incurred by Owner pursuant to the Site Work Agreement, the Preliminary EPC Agreement, the Letter Agreement, as amended, and all Owner Contracts (including, without limitation, all purchase orders and limited notices to proceed under such agreements).

“Total Work Cost Bonus Amount” has the meaning set forth in Section 5.10.

“Transmission Facilities” means the transmission facilities to be provided by the Transmission Owner.

“Transmission Owner” means Owner’s counterparty under the Interconnection Agreement.


“Utility Facilities” means the third party permanent facilities for potable water, sewer, phone, cable and other utility services to which Contractor will connect the Project.

“Utility Interconnection Points” means the respective points where the Project will be connected to each of the Utility Facilities as more particularly described in Appendix A.

“Warranties” means the warranties made by Contractor in Article 9.

“Warranty Defect” has the meaning set forth in Section 9.3.

“Warranty Period” has the meaning set forth in Section 9.5.1.

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

1.2 Certain Interpretative Matters. In this Agreement, unless the context otherwise requires:

 

  (a) the singular number includes the plural number and vice versa;

 

  (b) reference to any Person includes such Person’s successors and assigns that are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity;

 

  (c) any accounting term used and not otherwise defined in this Agreement has the meaning assigned to such term in accordance with generally accepted accounting principles in the United States consistently applied;

 

  (d) “including” (and with correlative meaning “include”) means (i) including without limiting the generality of any description preceding such term, and (ii), with respect to any description following such term, means “including, without limitation” and “including, but not limited to;”

 

  (e) reference to any Applicable Legal Requirement means such Applicable Legal Requirement as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time;

 

  (f) a reference in a document to an Article, Section, Exhibit, Schedule, Annex, or Appendix is to the Article, Section, Exhibit, Schedule, Annex or Appendix of such document unless otherwise indicated and Exhibits, Schedules, Annexes or Appendices to any document shall be deemed incorporated by reference in such document;

 

  (g)

without limiting the rights or obligations of the Parties pursuant to Article 10, any agreement, document, instrument, or insurance policy, defined or referred to herein or in any agreement or instrument that is


 

referred to herein (including this Agreement) means such agreement, document, instrument, or insurance policy, as from time to time amended, modified, supplemented, superseded, or replaced in accordance with the terms thereof and, if applicable, the terms hereof, including (in the case of agreements or instruments) by waiver or consent, and references to all attachments thereto and instruments incorporated therein; and

 

  (h) “as indicated” refers to drawings;

 

  (i) unless the context specifically requires otherwise, the terms “approval,” “consent,” “accept,” “acceptance,” “authorization” and terms of similar import shall be deemed to be followed by the phrase “which shall not be unreasonably withheld, unreasonably conditioned or unreasonably delayed;”

 

  (j) “hereof,” “herein,” “hereby,” “hereto,” and similar words refer to this entire Agreement and not any particular article, section, subsection or other subdivision of, or Appendix, or schedule to this Agreement;

 

  (k) an amount is “due” or “owing” (or using words of similar meaning) when the payment period associated with such payment obligation has expired (excluding cure periods); provided that all required documentation for such amount due has been properly provided to the owing Party;

 

  (l) any discretionary activity to be exercised by a Person hereunder (including any approval to be granted by such Person) shall be deemed to include the requirement that such Person exercise its discretion reasonably, unless otherwise specifically provided herein; and

 

  (m) a “month” refers to a calendar month and a “day” refers to a calendar day.

1.3 Order of Precedence.

1.3.1 Notice. Each Party shall provide Notice to the other Party of any discovered conflict or inconsistency among any of the Appendices or between any of the Appendices and the Body of this Agreement promptly upon such Party acquiring actual knowledge of such conflict or inconsistency. In the event of any conflict between provisions within the Body of this Agreement and the Appendices, the following order of precedence for construction and interpretation shall apply unless the Parties otherwise agree:

 

  (a) Amendments and Change Orders to the Body of this Agreement duly signed and issued after the Effective Date, with those of a later date having precedence over those of an earlier date;


  (b) The Body of this Agreement;

 

  (c) Change Orders to Appendices duly signed and issued after the date of this Agreement, with those of a later date having precedence over those of an earlier date;

 

  (d) All Appendices to this Agreement.

1.3.2 Conflict. In the event of a conflict within any of the levels set forth in the order of precedence in Section 1.3.1, the Party identifying such conflict shall give Notice to the other Party and the Parties shall evaluate the conflict and use their respective reasonable efforts to resolve the conflict and, as necessary, set forth the solutions in writing by executing a Change Order, as appropriate. In the event the Parties are unable to resolve the conflict, the decision shall be made by Owner and must be consistent with Professional Standards, subject to Contractor’s rights under Article 17. Such resolution shall be provided by written Notice to Contractor. In the event that a lower level of precedence set forth in Section 1.3.1 contains additional or more detailed requirements than are contained in a higher level precedence, the existence of such additional or detailed requirement does not constitute a conflict. Notwithstanding anything in this Section 1.3, the provisions of this Agreement, including all Appendices, shall wherever possible be construed as complementary rather than conflicting.


ARTICLE 2

CONTRACTOR’S WORK AND OTHER OBLIGATIONS

2.1 Commencement of the Work.

2.1.1 Effective Date.

This Agreement shall be effective on the Effective Date.

2.1.2 Full Notice to Proceed. After the Effective Date and upon satisfaction of the requirements set forth in Section 2.1.3, Owner is entitled to deliver to Contractor a Notice in the form of Appendix I-1 (the “Full Notice to Proceed”), which will authorize Contractor to commence full performance of the Work on the Business Day following delivery of such Notice (the “Commencement Date”). If the Full Notice to Proceed has not been delivered to Contractor on or before September 8, 2008 then the Fixed Component, the Target Total Work Cost and Project Schedule will be equitably adjusted to account for the delay in the issuance of the Full Notice to Proceed. If the Commencement Date has not occurred on or before December 31, 2008 then the Parties shall negotiate, in good faith, a new Fixed Component, Target Total Work Cost and Project Schedule to effect Contractor’s performance of the Work; provided, however, that at any time after December 31, 2008, if the Full Notice to Proceed has not been delivered, either Owner or Contractor may nevertheless terminate this Agreement upon 30 days’ prior Notice to the other Party, and the termination will be effected as described in Section 13.1, without any other liability to either Party as a result of such termination unless the Full Notice to Proceed is delivered within such 30 day period.

2.1.3 Notice to Proceed Requirements. In order for the Commencement Date to occur the following must occur:

 

  (a) The Owner Contracts are described in Appendix E;

 

  (b) Contractor has provided Owner with evidence of insurance required to be obtained by Contractor in accordance with Appendix Q (if not previously delivered);

 

  (c) Contractor has provided Owner with an executed Contractor Guaranty in the form of Appendix I-8, accompanied by an opinion of counsel substantially in the form of Appendix I-10;

 

  (d) Contractor has obtained those Contractor Permits required to be obtained by Contractor for the commencement of construction and Owner has received copies of such Contractor Permits;


  (e) Owner has furnished to Contractor evidence of insurance required to be obtained by Owner in accordance with Appendix Q (if not previously delivered);

 

  (f) Owner has obtained those Owner Permits required to be obtained by Owner for the commencement of construction and Contractor has received copies of such Owner Permits;

 

  (g) If Financial Closing has not occurred, Owner has provided an executed Owner Guaranty to Contractor in the form of Appendix I-7, accompanied by an opinion of counsel substantially in the form of Appendix I-10; provided, however, that the Owner Guaranty shall terminate upon Financial Closing;

 

  (h) Owner has provided access to the Project Site in accordance with Section 3.1;

 

  (i) Owner has paid all amounts then due and owing to Contractor under the Preliminary EPC Agreement, the Site Work Agreement and the Letter Agreement; and

2.1.4 Additional Security. If Financial Closing has not occurred, then on or before September 30, 2008, Owner shall furnish, or cause to be furnished, to Contractor a Letter of Credit from a Qualified Security Provider in the maximum stated amount of not less than twenty-one million three hundred fifty thousand Dollars ($21,350,000) and otherwise in form and substance reasonably satisfactory to Contractor (the “Pre-Financial Closing Letter of Credit”); provided, however, that such Pre-Financial Closing Letter of Credit shall terminate upon Financial Closing. If the Financial Closing has not occurred by February 28, 2009, then as of February 28, 2009 and quarterly thereafter until Financial Closing occurs, Owner will cause the Pre-Financial Closing Letter of Credit to increase upon Contractor’s showing that the then-current balance of the stated amount is insufficient to pay all amounts foreseeably due Contractor in the event of an Owner payment default (including, without limitation, cancellation charges under Contractor Subcontracts) prior to Financial Closing. If Financial Closing has not occurred by July 15, 2009 and replacement of or extension to the letter of credit placed by Owner pursuant to the Letter Agreement has not been delivered to Contractor more than 10 days before July 31, 2009, then Contractor shall be entitled to draw the full amount of such letter of credit, which amount shall be held in escrow by Contractor and applied only to, and to the extent permitted in connection with, termination of the Agreement pursuant to Sections 13.5 and 13.1.1. Within ten (10) Business Days following Financial Closing, Contractor shall return the letter of credit placed by Owner pursuant to the Letter Agreement or the Pre-Financial Closing Letter of Credit, as applicable, to Owner.


2.2 Work to be Performed. Except as otherwise expressly set forth in this Agreement as being the responsibility of Owner, Contractor shall, in accordance with and subject to limitations contained in this Agreement, perform or cause to be performed all acts or actions required of Contractor under this Agreement, including designing, engineering, inspecting (including special inspections), securing, permitting (with respect to Contractor Permits), procuring Equipment, Materials and Consumables, transporting, expediting, equipping, supplying, constructing, installing, connecting, training operators, commissioning, starting-up, testing, construction management and administration of Owner Contracts in accordance with Appendix M and completing the Project (whether at the Project Site or elsewhere as applicable) and satisfying Contractor’s warranty obligations during the Warranty Period (collectively, the “Work”). Contractor represents and warrants that it has thoroughly familiarized itself with all requirements of this Agreement regarding the Work and has the requisite qualifications to perform, or cause to be performed, all aspects of the Work in accordance with this Agreement. Once performed and paid for in accordance with the terms of the Preliminary EPC Agreement, the Site Work Agreement and the Letter Agreement, all work performed and equipment and materials supplied thereunder shall be part of the “Work” under this Agreement and part of the Equipment and Materials provided by Contractor under this Agreement. Without otherwise limiting Contractor’s responsibility under this Agreement, furnishing Owner Suppliers’ Scope is not part of the Work. The Work shall be performed by Contractor in accordance with Professional Standards. Contractor shall perform all managerial, supervisory, administrative services, and construction management that may be necessary to ensure the proper and timely completion of the Work in accordance with this Agreement. Contractor agrees that Contractor will be ultimately responsible for the proper and timely completion of the entirety of the Work in accordance with this Agreement, whether performed by Contractor or by any Subcontractor. The intent of this Agreement is to relieve Owner of the necessity of performing the Work, or any part thereof, to complete the Project in accordance with the requirements of this Agreement, except as expressly and specifically itemized herein as being performed by Owner in accordance with this Agreement. Contractor hereby undertakes the following covenants and agrees to perform the Work and its obligations hereunder as follows:

2.2.1 Engineering/Design, and Procurement Services. Effective as of the Commencement Date, Contractor represents and warrants that it has thoroughly familiarized itself with all aspects of the Work and has made such independent investigations as it deems necessary such that any and all design, engineering or other information regarding the Work that Contractor has been provided by Owner shall either have been rejected by Contractor or accepted by Contractor without recourse to Owner. Contractor shall not be entitled to relief under this Agreement and excuse of performance hereunder in the event of any inaccuracy or incompleteness with respect to any information provided by Owner with respect to the Work except Owner Suppliers’ Scope. Effective as of the Commencement Date, Contractor represents and warrants that it has thoroughly familiarized itself with this


Agreement, that it shall provide all engineering, and design, and procurement services necessary for the performance of all of its obligations under this Agreement, including without limitation, achievement of Contractor’s responsibility for the Performance Requirements. Contractor shall perform, or cause to be performed, all engineering and design services that constitute a part of the Work in accordance with Professional Standards and Applicable Legal Requirements, and the Project will be engineered and designed to operate in conformity with the requirements of this Agreement, Professional Standards, the operational requirements of the Interconnection Agreement and Applicable Legal Requirements. Engineering, design, and procurement services shall include, without limitation, those services described in Appendix A. The Project shall be designed so as to be capable (subject to the performance of the Owner Suppliers’ Scope) of producing activated carbon material; and of generating, transmitting and delivering electricity; while satisfying, subject to the terms hereof, each of the relevant Performance Requirements as demonstrated during the Performance Tests. The Project shall also be designed so as to be capable of satisfying the Performance Tests and the Reliability Requirement. Contractor shall cooperate with Owner and Owner Engineer with respect to the performance by Owner of its obligations under Article 3. All engineering or other components of the Work requiring certification under Applicable Legal Requirements shall be certified by professional engineers licensed and properly qualified in the State of Louisiana to perform such engineering services. All such professional services shall be performed with the degree of care, skill and responsibility customary among such licensed personnel.

2.2.2 Supervision and Superintendence.

2.2.2.1 Supervision of Work; Responsibility. Contractor shall supervise and direct the Work competently and efficiently, devoting such attention thereto and applying such skill and expertise as may be necessary to perform the Work in accordance with this Agreement. Contractor shall be responsible for the conduct of Persons under its supervision, including (without limitation, its Subcontractors, vendors, suppliers and contract counterparties). Contractor shall be responsible for check-out, start-up, testing and turn-over of the Project and shall carry out those activities in accordance with all Applicable Legal Requirements, the start-up and check-out requirements and procedures as set forth in Appendix A, the requirements for the Performance Tests and the other requirements of this Agreement. During start-up of the Project, Contractor shall coordinate with the operating Personnel to be provided by Owner pursuant to Section 3.5 and shall schedule and phase-in the activities of such Personnel in accordance with an operator phase-in plan to be prepared and submitted by Contractor for Owner’s review and approval no later than 12 months after the Commencement Date.

2.2.2.2 Manufacturers’ Field Representatives. Contractor shall keep at the Project Site, competent manufacturers’ field


representatives and any necessary assistants in connection with the erection, installation, start-up, or testing of Equipment and other components of the Work furnished, or for instruction and training of Owner’s Personnel thereon, as needed and/or as required by Appendix A or the other provisions of this Agreement.

2.2.3 Project Superintendent. At all times (when performing Work at the Project Site) and in any event and from and after the Commencement Date, Contractor shall keep at the Project Site during the progress of the construction aspects of the Work a competent project superintendent (the “Project Superintendent”), who shall not be replaced without the prior written concurrence by Owner. The Project Superintendent shall be solely dedicated to the performance of the Work. The Project Superintendent shall be Contractor’s representative at the Project Site and shall have authority to act on behalf of and bind Contractor with respect to day-to-day decisions in the ordinary course of business; provided, however, that the Project Superintendent has no authority to execute a Change Order or amend this Agreement. Further, the Project Superintendent shall be responsible for furnishing information on a timely basis as reasonably requested by Owner, shall have the authority to agree upon procedures for coordinating Contractor’s efforts with those of Owner, and shall be present or duly represented at the Project Site at all times when the Work is being performed. Owner may rely upon the actions of the Project Superintendent taken within the authority set forth in this Section 2.2.3. Any communication (including a Notice) given to the Project Superintendent will be deemed to be given to Contractor.

2.2.4 Certain Project Site Related Work. Contractor shall be responsible for clearing, preparation, excavation, and fill of the Project Site as is necessary to perform the Work in accordance with this Agreement. Contractor shall also be responsible to clear, prepare and rough grade that portion of the Project Site on which the Transmission Facilities will be located. Such Work shall be performed in accordance with the Project Schedule to enable Owner to arrange for the timely installation of the Transmission Facilities in accordance with a schedule for the Transmission Facilities provided to Contractor by Owner. Contractor shall provide for the procurement of all soil, gravel and similar materials required for the performance of or otherwise in connection with the Work and the proper disposal of such materials in accordance with this Agreement and Applicable Legal Requirements. Contractor shall provide adequate treatment of and protection against soil erosion and water runoff resulting from the Work that is in compliance with all Applicable Legal Requirements. Contractor shall provide for the proper collection and disposal of groundwater resulting from the Work. For the avoidance of doubt, Contractor shall have no responsibility for Hazardous Substances located at the Project Site prior to the date Contractor first began performing Work at the Project Site.

2.2.5 Reference Points. Contractor shall confirm engineering surveys establishing reference points for construction, which in Contractor’s judgment


are necessary to enable Contractor to perform the Work. Contractor shall be responsible for laying out the Work and shall protect and preserve such established reference points. Any changes to the established reference points shall require Contractor to update all Submittals (including those previously submitted) reflecting the new reference points. Such updating shall be undertaken promptly, consistent with Professional Standards, and without delaying Work that will be based on such updating. Contractor shall provide Notice to Owner whenever any reference point is lost or destroyed or requires relocation and shall be responsible for the accurate replacement or relocation of such reference points by professionally qualified Personnel.

2.2.6 Procurement of Materials, Equipment.

2.2.6.1 Procurement of and Responsibility for Materials and Equipment. Except as otherwise provided in this Agreement, as part of the Work, Contractor shall furnish and assume full responsibility for all Equipment and Materials, Construction Aids, labor, transportation, construction equipment and machinery, tools, appliances, fuel and power, light, heat, telephone, water (including potable water for Personnel performing Work on the Project Site), sanitary facilities, temporary facilities, internet and other communications access and all other facilities, products, items, supplies and incidentals necessary for the performance of its obligations under this Agreement.

2.2.6.2 New Materials and Equipment; No Liens. Each item of Equipment and Materials supplied as part of the Work and all other components of the Work that will become part of the Project turned over to Owner upon Substantial Completion shall be (a) new and unused and (b) free from any Liens or Claims by any third Persons; provided that in the case of clause (b) above, Contractor shall not be responsible for any Liens or Claims resulting directly from the failure by Owner to make any payment properly due to Contractor in respect of such item. All Equipment and Materials delivered to the Project Site shall be applied, installed, connected, erected, used, cleaned, and conditioned by Contractor in accordance with the instructions of the applicable Supplier.

2.2.6.3 Safety Standards. All Work shall be designed to meet the safety standards established by applicable codes, Applicable Legal Requirements and this Agreement.

2.2.6.4 Total Cost Breakdowns. Contractor shall provide to Owner a cost breakdown of the aggregate amount paid by Owner to Contractor for the Work in accordance with Appendix H. Such information shall be provided on or before the Required Substantial Completion Date. Such information shall be updated on or before the Final Completion Date.


2.2.7 Inspection, Factory Tests and Expediting. Contractor shall perform all inspection, component testing, expediting, quality surveillance and traffic services as necessary for the performance of the Work, including the provision of such services in connection with the Owner Contracts. Contractor’s responsibilities under this Section 2.2.7 shall include inspecting and testing such Work and Equipment and Materials, as is customarily inspected and/or tested in accordance with Professional Standards, including inspecting Work in progress at intervals appropriate to the stage of construction, fabrication or shipment on or off the Project Site as necessary to ensure that such Work is proceeding in accordance with this Agreement and the Project Schedule. All third party inspections, tests or approvals shall be performed by qualified organizations acceptable to Contractor and Owner. Contractor shall perform all inspections and tests required by, and otherwise comply with, the Quality Assurance Program described in Appendix A. If Applicable Legal Requirements require any Work to specifically be inspected, tested or approved, Contractor shall assume full responsibility therefor and furnish to Owner the required certificates of inspection, testing or approval. Not later than 30 days after the Full Notice to Proceed is delivered to Contractor, Contractor will supply to Owner a quality surveillance plan for Specially Manufactured Equipment. Each monthly progress report delivered by Contractor shall specify the date, time and location of factory tests, inspections and witness points of which Contractor is then aware of and intends to witness with respect to Equipment and Materials or other work to be provided or performed by its Subcontractors and/or Owner Suppliers in the month following the month in which each such progress report is delivered to Owner. If and when Contractor obtains new information about such factory tests, inspections or witness points or other factory tests, inspections or witness points that was not available to it when the monthly progress report was delivered, it will promptly advise Owner and update such information as necessary to allow Owner and the Owner Engineer a reasonable opportunity to attend such event. Contractor shall give reasonable notice of changes to such dates, times and locations to allow Owner and the Owner Engineer to make arrangements to attend, it being understood that tests, inspections or witness points to be performed outside the United States will require additional notice. Owner and its invitees (including representatives of Owner and the Engineers) shall have the right, but not the obligation, to attend any inspections, tests or approvals of such Equipment or Materials. In no event shall Contractor’s obligation to provide notice regarding certain tests, inspections or approvals or Owner’s and its designees’ right to attend tests, inspections or approvals, limit, delay, or modify Contractor’s obligation to perform all tests, inspections or obtain approvals required by this Agreement. Successful completion of factory or other off-Project Site tests is a precondition to shipment of such Equipment or Materials to the Project Site or other Contractor storage facility; provided, however, that Contractor may authorize such shipment if, prior to shipment, Contractor presents a plan consistent with Professional Standards to Owner to rectify the reasons for such failure. Contractor shall thereafter implement such plan and re-perform and demonstrate that such test has been passed. Should Contractor fail to give proper notice under this Section 2.2.7, at Owner’s option,


Contractor shall re-perform or re-inspect any such test or inspection as to which Contractor failed to give proper notice if Owner has reviewed the test results (which are to be provided to Owner within 7 days of such failure or as soon thereafter as test results are available to Contractor) and gives notice to Contractor questioning the validity thereof. Attendance by Owner at any such test or inspection despite the lack of proper notice will waive Owner’s right to cause Contractor to so re-test or re-inspect. Owner shall require that its Personnel conform to all safety and security requirements that may apply to the location where the inspection shall be performed.

2.2.8 Labor and Personnel.

2.2.8.1 Qualified Personnel. Except as set forth in Section 3.5 with respect to operations and maintenance Personnel, Contractor shall provide competent and suitable qualified Personnel to perform the Work, and Contractor shall be solely responsible for all labor and Personnel required in connection with the Work, including: (a) professional engineers licensed to perform engineering services in accordance with Applicable Legal Requirements and qualified to perform the type of engineering services required by Contractor hereunder, and (b) the Project Superintendent who has the experience and authority to supervise and manage the Work on behalf of Contractor. Contractor’s staff shall include the key personnel set forth in Appendix F, who shall be dedicated to the performance of the Work (the “Key Personnel”). Contractor shall in good faith consult with Owner regarding the removal or replacement of any Key Personnel prior to such action. Without Owner’s prior approval, Contractor shall neither reassign Key Personnel to any other project nor give Key Personnel tasks related to any matter other than the Work, except to the extent that such reassignment or other tasks (a) could not reasonably prevent, delay or hinder the performance of the Work by Contractor in accordance with this Agreement or (b) is necessitated by serious personal reasons (e.g., death, retirement, or personal or family illness). If at any time during the performance of the Work, any of Contractor’s or its Subcontractors’ Personnel becomes reasonably unacceptable to Owner, then, upon notice from Owner setting forth its objections to the performance of such individual, Contractor and Owner shall discuss such personnel issues and attempt to resolve any problem involving such individual. If the attempt to resolve such problem is not successful and the employee is unfit or unqualified in the reasonable judgment of Owner, Contractor shall replace as soon as possible any such individual (other than the Project Superintendent and senior field superintendents, who shall be replaced only if grossly negligent in the supervision of the Work), in each case, consistent with a diligent effort to find a suitable replacement and shall in good faith consult with Owner regarding such replacement. If at any time during the performance of the Work any of the Key Personnel should no longer be available to perform services in connection with the Work, then Contractor shall replace such individual with a replacement


reasonably satisfactory to Owner. The replacement or renewal of any such personnel will not entitle Contractor to a Change Order.

2.2.8.2 Labor Plan. In order to optimize the availability, recruitment, safety, productivity, utilization and retention of Craft Labor needed to perform the Work at the Project Site, Contractor has developed and shall implement, the Craft Labor plan for execution of the Work (the “Labor Plan”). During the performance of the Work, either Party will be entitled to recommend amendments to the Labor Plan. This Section 2.2.8.2 is not intended to limit the right of Contractor to a Change Order with respect to labor-related matters to the extent Contractor is otherwise entitled to relief therefor under this Agreement.

2.2.9 Certain Taxes.

2.2.9.1 Sales Taxes. Contractor shall be responsible for the administration and timely payment, with reimbursement therefor as provided in this Agreement, of all (a) sales and use taxes imposed by Applicable Legal Requirements upon Contractor that are properly payable (“Sales Taxes”) in connection with or arising from the Work, (b) Sales Taxes on items incorporated into the Work or imposed by Applicable Legal Requirements upon Owner and for which Contractor has the responsibility to collect such Tax from Owner and (c) value added, excise taxes and import duties that are properly payable by Contractor or any Subcontractor in performance of the Work. All other Taxes (except to the extent similar to those set forth in Section 2.2.9.2) imposed by non-U.S. Governmental Authorities, duties and fees of any kind, in each case that are properly payable in connection with or arising from the performance of the Work will be reimbursed by Owner to Contractor. Owner shall reimburse Contractor for Sales Taxes in connection with or related to the Work that are incorporated into the Work or that are imposed by Applicable Legal Requirements upon Owner and are paid by Contractor. Such reimbursement shall be made only upon the furnishing of reasonable documentation establishing that such Taxes have in fact been paid to the appropriate taxing jurisdiction. Reimbursement for the Sales Taxes as provided in Section 3.4.2 shall be part of the Reimbursable Component, and Owner does not assume any further liability in connection with such Taxes. Reimbursement for Sales Taxes on items incorporated into the Work shall be a contractual commitment to Contractor and Owner shall not have any direct liability to any taxing jurisdiction for Contractor’s failure to properly pay such Taxes. Contractor agrees to indemnify and hold Owner harmless for any Taxes, interest, penalties or other costs that arise from the failure of Contractor to remit or timely remit Sales Taxes as required by Applicable Legal Requirements and this Agreement or arising from the failure of Contractor to allow Sales Tax audits or to comply with any other requirements of the state and local taxing authorities in connection with the Work. In circumstances


where a Sales Tax is imposed for purchases that are not exempt from Sales Tax pursuant to exemption programs identified by Owner to Contractor or for which an exemption is not applicable, Contractor shall be reimbursed in accordance with Section 3.4 for its payment of all such Sales Taxes; provided, however, that if Sales Taxes (for which an exemption would have otherwise applied) are paid on a purchase identified by Owner as tax benefit-qualified because of Contractor’s failure to furnish or cause to be furnished properly completed Sales Tax certificates as provided in Appendix L or any other failure by Contractor to perform its obligations hereunder, then Contractor shall reimburse Owner, at Contractor’s expense, for the reasonable costs incurred by Owner in seeking a refund of such Sales Taxes from appropriate authorities. With respect to all purchases identified by Owner as tax benefit-qualified, Contractor shall furnish to the appropriate taxing authorities all required information and reports in connection with all Contractor Taxes and Sales Taxes. Contractor shall furnish to Owner all required information and reports in connection with all Sales Taxes as are as described in Appendix L or otherwise reasonably requested in a Notice from Owner to Contractor. Contractor shall provide assistance as reasonably requested by Owner or its tax consultant(s), in confirming eligibility and qualification for exemptions from Sales Taxes (and any other tax exemptions) to the relevant Governmental Authorities. From time to time and within 30 days of a request therefor, Contractor shall provide Owner with information regarding quantities, descriptions, and costs of property installed at the Project reasonably requested by Owner in connection with the preparation of Owner’s tax returns, satisfying regulatory requirements or as otherwise required in connection with Financing or with obtaining exemption from, or rebate of, Sales Tax. Contractor agrees to participate in any Sales Tax exemptions or rebate programs identified by Owner, to complete and deliver the applicable documentation to obtain tax-exemption for purchases of Equipment and Materials, and to pass any Sales Tax savings or rebates through to Owner. Owner hereby notifies Contractor that all Equipment and certain Materials and Consumables will be installed or used within an “enterprise zone” and therefore may be subject to Sales Tax rebates under the Louisiana Quality Jobs Act Program or the Louisiana Enterprise Zone Program upon Contractor’s proper completion and presentation of the Sales Tax certificates set forth in Appendix L for purchases identified by Owner, subject to certain other terms and conditions of Sales Tax exemption and rebate programs.

2.2.9.2 Contractor Taxes. Contractor shall be liable, without reimbursement by Owner hereunder, for (a) all foreign and U.S. federal, state, local, and other taxes, which may be assessed on Contractor’s net income or gross receipts (except Taxes on gross receipts that are deemed to be Sales Taxes), and (b) all corporate engineering, contractor, or business license costs and franchise fees required for Contractor to conduct business in the State of Louisiana, (collectively, the “Contractor Taxes”). Neither the Fixed


Component nor the Total Work Cost will include Sales Taxes or Contractor Taxes.

2.2.9.3 Applications for various federal, State of Louisiana, county and other local incentive programs and inducements related to the construction of the Project have been (or will be) submitted by, or on behalf of, Owner. At the request of Owner, Contractor will support Owner and its consultants in order to fully utilize the incentives offered. Participation in this effort, when requested by Owner, will include assistance with information requests to third Persons for filings related to the programs, assistance with tracking specific costs related to the incentive programs, providing Contractor and Subcontractor employee headcounts and (to the extent reasonably available) payroll information, and other reasonable assistance as may be requested in a timely manner; provided, however, that such assistance shall not require Contractor to (a) engage in lobbying or other efforts to obtain favorable legislation, (b) require the release of confidential personnel data or (c) engage in litigation, administrative proceedings, or other efforts to obtain favorable judicial outcomes. Contractor shall cooperate and provide testimony, documentation and other relevant information in connection with Disputes with respect to Taxes assessed against, payable by or for which Owner is responsible, to the extent relating to the Work performed under this Agreement.

2.2.10 Permitting. Contractor shall obtain, pay for, and maintain in effect, all permits and governmental approvals that are necessary for Contractor to perform the Work, excepting only Owner Permits (“Contractor Permits”). Owner shall obtain the Owner Permits, and Contractor shall perform the Work so as to comply with and, as applicable, to maintain Owner Permits. Each Party shall provide the Party responsible for a Permit with information in its possession or reasonably available to it, as is reasonably required by the responsible Party in order to obtain and keep such Permit in full force and effect. Costs incurred by Contractor to obtain and/or maintain licenses, certifications and other permissions of Governmental Authorities to conduct its business in the State of Louisiana will not be part of the Construction Price.

2.2.11 Personnel Training. In accordance with the Project Schedule, Contractor shall provide the facilities, material, supplies, personnel and other items required to train the operations and maintenance personnel to be provided by Owner in the proper and safe operation and maintenance of the Project, as further described in Appendix A.

2.2.12 Safety Precautions. Until the Substantial Completion Date, Contractor shall be solely responsible for developing, implementing, and administering job site safety requirements. Owner shall have no responsibility therefor, except as otherwise expressly provided in this Agreement. Beginning on the Substantial Completion Date, Owner shall assume responsibility for developing, implementing,


and administering site safety. Each Party, to include Financing Parties and the invitees of any Party, shall abide by the safety requirements of the Party that has responsibility for administering such requirements. Contractor shall assign a full-time safety and health manager who will be responsible (until the Substantial Completion Date) for introducing, administering and monitoring procedures to promote safe working conditions at the Project Site, in compliance with Applicable Legal Requirements. In addition to reporting to the Project Superintendent, such safety and health manager shall have direct reporting responsibility to Contractor’s home office management. Contractor shall notify Owner orally of all potential lost-time accidents at the Project Site suffered by individuals at the Project Site as soon as possible but no later than any deadline to report such matter to a Governmental Authority. Contractor shall furnish Owner a written report describing each such accident, and the injuries incurred, within 2 Business Days after occurrence of the accident, which shall include any written reports thereof required to be submitted to any Governmental Authority. Such report must also contain the cause of the occurrence (if known) and the actions taken or to be taken to avoid repetition. Contractor shall promptly give Notice to Owner of any hazardous conditions at the Project Site immediately after it becomes aware of such conditions. Contractor shall also comply with Applicable Legal Requirements and the requirements of Appendix A with respect to the Work bearing on the safety of individuals or property (on and off the Project Site) or their protection from damage, injury or loss. Contractor has developed a project safety manual, which manual includes (a) express prohibitions on the presence of alcohol, controlled substances, firearms (except, with the prior consent of Owner, for trained security personnel), explosives (except as necessitated for performance of the Work), or other weapons at the Project Site or fighting or other disorderly conduct at the Project Site, (b) proper training and workplace examinations, (c) compliance with Applicable Legal Requirements, (d) Contractor’s standard drug and alcohol testing protocol, and (e) a requirement for appropriately staffed on-site first aid trailers (the “Project Safety Manual”). Contractor shall initiate, maintain and supervise reasonable safety precautions and programs in connection with the performance of the Work in accordance with the Project Safety Manual and shall take reasonable precautions for the safety of, and shall provide reasonable protection to prevent damage, injury or loss to: (i) any individual at the Project Site or who may be affected thereby, (ii) all Materials and Equipment in storage at the Project Site, or under the care, custody or control of Contractor or any Subcontractor, and (iii) other property at or immediately surrounding the Project Site. In emergencies affecting the safety or protection of Persons or the Work or property at the Project Site, Contractor, without special instruction or authorization from Owner, shall reasonably act to prevent damage, injury, or loss. Whenever Contractor has failed to take sufficient precautions for the safety of the public or the protection of the Project or of structures or property at the Project Site, creating, in the opinion of Owner, an emergency requiring immediate action, then Owner may cause such sufficient precautions to be taken or provide such protection. Owner shall give Contractor Notice as soon as practicable under the circumstances regarding the action it intends to take, or if


circumstances do not reasonably permit prior Notice, the action it has taken; provided, however, that the failure by Owner to include all actions it takes in such Notice shall not preclude Owner from taking all necessary action, nor relieve Contractor of any of its obligations hereunder. The taking or providing of any such precautions or protection by Owner or its agents or representative will not relieve Contractor of its obligations under this Agreement and Applicable Legal Requirements. The cost incurred by or on behalf of Owner to take such precautions or protection by or on behalf of Owner shall be added to the Construction Price.

2.2.13 Hazardous Substances.

2.2.13.1 Prevention of Releases; Notice. Contractor shall take reasonable measures necessary to prevent the Release or threatened Release of any Hazardous Substances at the Project Site. Contractor shall immediately notify Owner of: (a) any Release or threatened Release of Hazardous Substances that occur (or may occur) in connection with the performance of the Work promptly upon Contractor becoming aware of such Release or threatened Release, (b) any violations and any and all investigations, actions, claims, suits, notices of violation, fines, penalties, orders, and other proceedings related to violations or alleged violations of Applicable Legal Requirements, including Permits issued thereunder, which are asserted against Contractor or any of Contractor’s Personnel or any Subcontractors in connection with the Work or their activities on, along, adjacent to or near the Project Site, (c) Contractor’s discovery of any Releases of Hazardous Substances at the Project Site or nearby areas, and (d) all material developments with respect to Section 2.2.13.1 (a)-(c). The provisions of this Section 2.2.13.1 shall not limit the obligations of Contractor under Section 2.2.13.2.

2.2.13.2 Contractor-Related Releases.

(a) Contractor shall be responsible for collection, handling, storage and removal from the Project Site and immediately surrounding areas, proper disposal of, and the Remediation of, in compliance with this Agreement, all Applicable Legal Requirements and all Permits, Hazardous Substances that were brought to the Project Site by Contractor, its Personnel or Subcontractors (“Contractor Hazardous Substance”). For purposes of clarification, if Hazardous Substances are brought to the Project Site in containers or are deposited into containers at the Project Site by Contractor, its Personnel or Subcontractors (or any other Person acting on behalf of Contractor, its Personnel or Subcontractors) and Contractor or any such Person thereafter ruptures or otherwise causes a Release of such Hazardous Substances, such Hazardous Substances as so released and contaminated media caused thereby shall be a Contractor Hazardous Substance. As part of the Work,


Contractor shall dispose of all Contractor Hazardous Substances in its own name, or the name of the applicable Subcontractor, including listing its name, or the name of the applicable Subcontractor, as “generator” on any waste management and shipping papers.

(b) Contractor shall be responsible for the incremental damage, incremental liability and incremental Remediation associated with a Release or threatened Release of any non-Contractor Hazardous Substance after it has been discovered by or specifically identified to Contractor or its Subcontractors or their Personnel, to the extent that such Release or threatened Release was caused by Contractor, its Subcontractors or their respective Personnel; provided, however, that Contractor liability under this subsection (b) shall not exceed one hundred thousand Dollars ($100,000). Contractor shall not be responsible for paying any portion of a fine that is imposed upon Owner as a result of a prior violation for which Contractor or its Subcontractors or their respective Personnel were not responsible.

(c) If Contractor should fail or refuse to commence and diligently pursue Remediation required of it in accordance with this Section 2.2.13.2, then Owner may, at its discretion and after 48 hours’ Notice to Contractor, perform such Remediation as it deems necessary or adequate. All reasonable costs and expenses of such Remediation shall be billed to the account of Contractor, who shall promptly reimburse such amounts to Owner, which amount shall not be included as part of the Total Work Cost.

(d) To the fullest extent permitted by Applicable Legal Requirements, Contractor agrees to and shall release, defend, indemnify and hold harmless the Owner Indemnitees from and against all Claims (except to the extent Claims arise from the negligence or intentional misconduct of such indemnified Persons) to the extent arising out of (i) failure by Contractor to perform its obligations under this Section 2.2.13 with respect to Contractor Hazardous Substances and/or (ii) the incremental damage, liability or Remediation for which Contractor is responsible under this Section 2.2.13.2 with respect to non-Contractor Hazardous Substances, whether through suits or causes of action in a court of law or claim, complaints or penalties arising out of a violation or alleged violation of Applicable Legal Requirements.

2.2.13.3 Other Releases. If Contractor encounters on the Project Site material reasonably believed to be a Hazardous Substance (other than a Contractor Hazardous Substance), which under Applicable Legal Requirements or Professional Standards requires Contractor to suspend Work to avoid injury to Persons or property, then Contractor shall immediately cease


performance of any Work in the area affected and report the condition to Owner in writing. As and to the extent such material is not a Contractor Hazardous Substance, Owner shall be responsible for such material as provided in Section 3.9. Contractor shall not thereafter resume performance of the Work in the affected area, except with the prior written permission of Owner.

2.2.13.4 MSDSs. Contractor shall provide Owner with Material Safety Data Sheets (written in English, with English units of measure for all values) (“MSDSs”) properly completed covering any Contractor Hazardous Substances 3 Business Days prior to arrival of such Contractor Hazardous Substances to the Project Site. Contractor shall maintain at the Project Site complete records and inventories, including MSDSs, of Contractor Hazardous Substances delivered to or located at the Project Site as part of the Work. In addition, Contractor shall receive, maintain and incorporate into its records, the records and inventories, including MSDSs, of Hazardous Substances delivered to or located at the Project Site by the Separate Contractors; provided that Owner shall be responsible for insuring that each of the Separate Contractors are contractually required to provide such information to Contractor. Contractor and its Subcontractors shall properly label all containers holding Contractor Hazardous Substances and train their respective employees in the safe storage, usage and handling of such substances, including any training that is required by Applicable Legal Requirements.

2.2.13.5 Prohibited Materials. PCBs, lead paint, lead paint containing materials, asbestos or asbestos containing materials shall not be delivered to the Project Site by Contractor, its Personnel or its Subcontractors in any form or for any reason.

2.2.13.6 Hazardous Substance Handling Protocol. Contractor shall develop a Hazardous Substance management, handling and remediation protocol and shall adhere to such protocol in connection with the performance of all of its obligations with respect to Hazardous Substances at the Project Site.

2.2.14 Royalties, Import Duties and License Fees. Contractor shall be responsible for the administration and payment of all royalties, import duties, port fees and related charges, and license fees (except for fees and related charges for Owner Permits), if any, for or associated with the Work. In performing the Work, Contractor shall not incorporate into the Project any materials, methods, processes or systems which involve the use of any confidential information, Intellectual Property or proprietary rights, which Owner and Contractor do not have the right to use or which may result in claims or suits against Owner or Contractor for infringement or misappropriation of any Intellectual Property, or pending applications for any such rights, it being understood that Contractor will not be responsible for infringement or misappropriation of Intellectual Property by an Owner Supplier.


2.2.15 Interconnection Agreement.

2.2.15.1 Transmission. Owner shall enter into the Interconnection Agreement, which will provide, among other things, for the construction by the Transmission Owner of the Transmission Facilities. The Interconnection Agreement will specify the switchyard located at the Project Site and other facilities required to interconnect the Project with the Transmission Facilities (the “Project Interconnection Facilities”) and the date on which interconnection is to occur. Contractor shall cooperate with Owner and the Transmission Owner to perform interconnection of the Project Interconnection Facilities with the Transmission Facilities.

2.2.15.2 Utilities. Contractor shall connect the Project at the Utility Interconnection Points in accordance with the Project Schedule and Appendix A.

2.2.16 [RESERVED]

2.2.17 Storage and Related Matters. Contractor shall unload, handle, load, transport, inspect, maintain warehouse/inventory control, and otherwise provide appropriate storage, in accordance with manufacturers’ recommendations, for all Equipment and Materials to be incorporated into the Project and as required for permanent and temporary construction.

2.2.18 Functional Tests. Contractor shall include Functional Tests on the Project Schedule; shall prepare test plans and procedures for same; shall obtain Owner approval of same; and shall perform and successfully complete each of the Functional Tests as described in the Scope of Work.

2.2.19 Clean Site and Waste Removal. Beginning on the date Contractor commences Work at the Project Site and continuing thereafter throughout the Term, Contractor shall keep the Project Site and immediately surrounding area (whether public or private), properties, waterways, sidewalks and other areas free from accumulations of waste, rubbish, dirt, debris and other garbage, liquid and non-liquid materials whether spilled, dropped, discharged, blown out or leaked because of performance of the Work and shall properly dispose of same. Contractor shall maintain its working, storage, laydown and parking areas in a clean and non-hazardous condition, and shall employ adequate dust control measures. Contractor is responsible for disposal of all wastes generated by it or its Subcontractors and Owner Suppliers during the performance of the Work on the Project Site, including waste water (as directed), sanitary wastes, demolition debris, construction debris, spoil, surplus excavation material, office wastes, and wastes related to preparation, commissioning, testing, and start-up of Equipment, but excluding (a) wastes for which Owner is responsible pursuant to Section 3.8.3, (b) Owner Hazardous Substances pursuant to Section 3.9 and (c) wastes that result from the operation or maintenance


of the Phase I Portion of the Project by or on behalf of Owner after the Phase I Substantial Completion Date, which shall be responsibility of Owner. Contractor shall handle, store or dispose of all wastes for which it is responsible in accordance with Applicable Legal Requirements. Except as expressly permitted under this Agreement, wastes shall be disposed of in a suitable off-site location. On the Phase I Substantial Completion Date, Contractor shall leave the Phase I Portion of the Project Site in a neat, clean and orderly condition, ready for use and occupancy by Owner, removing all waste materials, rubbish and debris. On the Substantial Completion Date or the date of termination of this Agreement if before the Substantial Completion Date, Contractor shall leave the Project Site in a neat, clean and orderly condition, ready for use and occupancy by Owner, removing all waste materials, rubbish, and debris.

2.2.20 Owner Contracts.

2.2.20.1 Owner Contract Administration. Appendix E includes a list of Owner Contracts that have been provided to Contractor. Commencing on the Commencement Date, Contractor shall exercise the authority granted to Contractor pursuant to Appendix M to administer each Owner Contract entered into by Owner for the benefit of Owner. Administration shall commence on the Commencement Date; provided that a complete copy of the Owner Contract has been provided to Contractor. Contractor shall maintain in an orderly fashion all books, records and written communications with respect to the performance of its responsibilities under this Agreement with respect to Owner Suppliers and the administration of Owner Contracts. Such books, records and communications (either paper copy or electronic) may, at Contractor’s option, be maintained for a three-year period commencing on the Substantial Completion Date, or be delivered to Owner at any time upon the earlier of Final Completion or the earlier termination of this Agreement. Owner shall be entitled to access to such materials while in the possession of Contractor on reasonable notice at reasonable times.

2.2.20.2 Representative Capacity. Nothing contained herein shall create any contractual relationship between Contractor and any Owner Supplier, except that Contractor shall be designated as Owner’s representative in each Owner Contract for the purpose of administering such Owner Contract and enforcing Owner’s rights expressed therein as set forth in Appendix M, but nothing herein shall make Contractor responsible to any extent for the schedule or warranty performance of Owner Suppliers other than in connection with the manner in which any bonus hereunder is earned.

2.2.20.3 Responsibility. Without limiting the other express obligations of Contractor under this Agreement, as between Owner and Contractor, Owner shall be responsible for the items of equipment, materials and work to be provided pursuant to the Owner Contracts but, in its agency capacity, Contractor shall administer and enforce such Owner Contracts on


behalf of Owner in accordance with the authority granted to Contractor pursuant to Appendix M and Contractor shall be responsible for coordinating performance by the Owner counter-party under each such Owner Contract.

2.2.20.4 Liquidated Damages. Except as set forth below in this Section 2.2.20.4, liquidated damages, backcharges, refunds or other amounts of any kind recovered under the Owner Contracts or Contractor Subcontracts are the property of Owner and will either be payable directly to Owner or, if received by Contractor, shall be credited against amounts to be paid by Owner in any of the next succeeding Applications for Payment. Amounts recovered by a Party in respect of an indemnification obligation are to be retained by the indemnified Party and will not affect the Total Work Cost. Owner shall act reasonably in determining whether to initiate, continue, settle or abandon claims or proceedings against an Owner Supplier.

2.3 Project Schedule, Progress Reports and Progress Meetings.

2.3.1 Project Schedule

2.3.1.1 Project Schedule and Progress Reports. Without limiting Contractor’s responsibilities under Article 8, Contractor shall perform the Work in accordance with the Project Schedule with the objective of achieving the Target Contract Dates and the Required Contract Dates. The Project Schedule, the Target Contract Dates and the Required Contract Dates (including those dates on which Owner is to perform any obligation hereunder as contained in the Project Schedule) may only be modified by agreement of both Parties. Contractor shall report progress on the Work and hold progress meetings as specified in Appendix A, which reports and meetings will include matters and activities relating to any on-going or anticipated Recovery Plans.

2.3.1.2 Reporting to Owner. Changes to the Project Schedule shall be reflected in the monthly reporting process as more particularly set forth in Appendix A. Such Project Schedule and all updates, each in native format, thereto shall be treated as Confidential Information by Owner, subject to the following provisions of this Section 2.3.1.2. Owner, Owner Agents, and the Engineers will be permitted to view the Project Schedule in native format (Primavera Project Planner (Level 3)) during schedule reviews conducted by Contractor. Owner shall be entitled to retain its copies of the Project Schedule (Primavera Project Planner (Level 3)) in native format for use in connection with the Project and may make such information available to its employees and Owner Agents for its purposes in connection with the Project. Upon expiration of the Term, Owner shall return or destroy all copies of the Level 3 Project Schedule; provided that Owner may retain one paper and one native format copy of each monthly schedule provided to Owner.


2.3.2 Recovery Plan.

2.3.2.1 Preparation. If, at any time during the performance of the Work, Owner or Contractor reasonably believe it either is (or will be) delayed in its adherence to the then current critical path progress described in the Project Schedule for any reason, the Party making such determination shall give Notice to the other Party and Owner may require Contractor to prepare a proposed plan of recovery (the “Recovery Plan”) and implement it. A Recovery Plan will explain and demonstrate how Contractor intends to re-sequence or progress the remaining Work such that the Project Schedule should be achieved, if practicable, or as soon thereafter as possible if not practicable.

2.3.2.2 Review; Implementation. Contractor shall submit its initial proposed Recovery Plan to Owner within a reasonable period of time under the circumstances and which in no event will exceed 14 days of receiving Notice from Owner of the requirement for submission of a Recovery Plan. Upon receipt of such proposed Recovery Plan, Owner shall review and comment upon the same. Contractor shall coordinate with and incorporate any reasonable comments proposed by Owner to its proposed Recovery Plan and shall update and supplement such Recovery Plan as quickly as possible under the circumstances. Contractor shall implement such Recovery Plan in order that, to the maximum extent possible, the Target Contract Dates and the Required Contract Dates will be achieved. If Contractor determines it necessary to update or modify its Recovery Plan to reflect the progress of its recovery Work, it shall as soon as reasonably possible submit such modified or updated Recovery Plan in writing, to Owner. Neither Owner’s review nor comment upon a Recovery Plan under this Section 2.3.2.2 will relieve Contractor of any of its obligations under this Agreement. Contractor’s compliance with Owner requests under this Section 2.3.2 does not waive or limit Contractor’s rights, if any, under Article 10.

2.4 Methods of Performance. Contractor shall be solely responsible for all construction means, methods, techniques, sequences, procedures and safety and security programs in connection with the performance of the Work.

2.5 Transfer of Title/Risk of Loss for Certain Items.

2.5.1 Title to Work. Title to all or any portion of the Work covered by any Application for Payment shall pass to Owner upon the first to occur of payment therefor to Contractor pursuant to this Agreement or delivery of such items to the Project Site. Title to all such Work (including Contractor-supplied Equipment and Materials) shall pass free and clear of all Liens; provided, however that Owner has paid all amounts then due and owing to Contractor in respect of such Work. Notwithstanding the transfer of title to Owner, Contractor shall be responsible for the


care, custody, control, protection and safe keeping of all Work (and will maintain the risk of loss with respect to all Work) and once delivered to the Project Site, all Equipment and Materials provided under any Owner Contract and/or by Owner Suppliers, in each case, until the transfer of care, custody and control of the Project Site to Owner on the Substantial Completion Date; provided that (a) care, custody and control of the Phase I Portion of the Project shall transfer to Owner on the Phase I Substantial Completion Date, and (b) in the case of the Owner Contract for the MHF, Contractor will be responsible for protection and safe keeping of MHF Equipment and Materials but not the care, maintenance, and weather protection of the Multi Hearth Furnaces. The foregoing notwithstanding, Contractor’s liability for loss or damage to the Work located at the Site is limited to the proceeds of the builder’s risk insurance to be maintained for the Work; provided, however, that (i) Contractor is responsible for the deductible per occurrence, not exceeding $250,000 in each instance, under such insurance for a loss that arises from the Contractor’s or its Subcontractor’s negligence or failure to perform in accordance with this Agreement (or the Site Work Agreement, the Preliminary EPC Agreement or the Letter Agreement, as the case may be) and (ii) Contractor is responsible for uninsured loss to the Work at the Site that arises from the Contractor’s or its Subcontractor’s failure to perform in accordance with this Agreement (or the Site Work Agreement, the Preliminary EPC Agreement or the Letter Agreement, as the case may be) up to an aggregate liability limit under this clause (ii) of Three Million Dollars ($3,000,000) and any such claims above this aggregate liability limit are waived by Owner.

2.5.2 Risk of Loss to Contractor Property. The risk of loss and responsibility for construction equipment utilized by Contractor or its Subcontractors, whether owned by Contractor, a Subcontractor or their Affiliates or rented or leased from a third party, is retained by Contractor.

2.5.3 Title to Drawings, Reports, Documents and Information.

2.5.3.1 Submittals. Contractor hereby assigns title to all Submittals (hard and soft) provided by Contractor to Owner pursuant to this Agreement; provided, however, that, the respective rights of the Parties to the Intellectual Property therein contained are set forth in this Section 2.5.3.

2.5.3.2 License. Contractor grants to Owner the irrevocable and absolute right to practice, perform, make, copy, create derivative works of, import and otherwise use by irrevocable, non-exclusive, perpetual, transferable or assignable, royalty-free license, any and all patents, patent applications, copyrights, trade secrets and other intellectual property rights of Contractor (“Intellectual Property”) and any Submittals, Record Documents and Intellectual Property contained therein relative to the Project that is included in the Work, whether now existing or hereinafter developed or otherwise acquired, but only to the extent reasonably necessary in connection with the ownership, construction, operation, maintenance, improvement,


replacement, expansion or repair of the Project. Contractor further agrees that it shall, upon request, provide the aforementioned Persons with such information during the performance of this Agreement in a timely fashion and subject only to the confidentiality restrictions provided in Article 18. Nothing herein implies conveyance of any Intellectual Property of third parties other than Contractor vendors to the extent set forth in purchase agreements.

2.5.3.3 Inventions. All inventions directly related to Owner processes or operations arising from the Work shall be the property of Owner. In the event Contractor obtains legal entitlements to such inventions, the provisions of this paragraph shall require Contractor to transfer such entitlement to Owner prior to the Final Completion Date, without cost to Owner. Contractor grants to Owner an irrevocable, royalty-free, non-exclusive, transferable or assignable and perpetual license and right to practice, perform, make, copy, create derivative works of, import and otherwise use any and all inventions reasonably arising from the Work that are necessary for the construction, operation, maintenance, improvement, replacement, expansion or repair of the Project, all without additional cost to Owner in connection with the Project.

2.5.3.4 Use. Contractor grants to Owner an irrevocable, perpetual, non-exclusive, royalty-free, and transferable or assignable license and right to practice, perform, make, copy, create derivative works of, import and otherwise use any and all Submittals, Record Documents and the information contained therein. Contractor shall have the right to retain and use all Submittals, Record Documents and the information contained therein. Owner shall not acquire any rights to any of Contractor’s or any Subcontractors’ reference documents (documents that are prepared prior to the performance of the Work or are prepared independent of the Work and, in each case, are not a Submittal) or proprietary computer software that may be used in connection with the Work. Submittals and Record Documents are not intended or represented to be suitable for reuse by Owner or others for any facility other than the Project. Any reuse of Submittals or other Record Documents for any purpose other than in connection with the Project, without prior written verification or adaptation by Contractor for the specific purpose intended, will be at such user’s sole risk.

2.5.3.5 Survival. The provisions of this Section 2.5.3 shall survive termination of this Agreement and continue in full force and effect for perpetuity.

2.5.4 Title to Natural Resources. 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.


Contractor agrees to execute and deliver and cause its employees and agents and all Subcontractors to execute and deliver to Owner transfers, assignments, documents or other instrument which are necessary to vest complete right, title, interest and ownership of and to any or all items described herein, exclusively in Owner. Notwithstanding the foregoing to the contrary, Contractor shall be entitled to use any natural resources developed or obtained in the excavation or clearing of the Project Site as necessary for the performance of the Work.

2.5.5 Title to Fossils and Artifacts. Title to all fossils, coins, articles of value or antiquity, and structures and other remains or things of geological or archaeological interest discovered at the Project Site shall (as between the Parties) remain with and be the property of Owner. Contractor shall use reasonable efforts not to damage any such articles or items and shall not knowingly remove any such articles or items. Contractor shall, immediately upon the discovery of any such article or item, provide Notice to Owner and safeguard such articles or items.

2.5.6 Title Warranty. Contractor warrants that upon passage of title to the Work in accordance with Section 2.5.1, Owner will have good and indefeasible title to such Work not subject to any Lien, privilege, security interest or other defect in title. Without limiting Contractor’s obligation under Section 12.2, in the event of any non-conformity with this warranty, Contractor, at its own expense upon written Notice of such failure, shall cure such defect. The provisions of this Section 2.5.6 will survive the execution or earlier termination of this Agreement.

2.6 Subsurface Conditions. Contractor represents that it has inspected the Project Site, conducted such tests and made such investigations that are consistent with Professional Standards, reviewed the information provided to it by Owner relating to surface and subsurface conditions, properly interpreted such Owner-provided information and the results of such inspections and tests, and performed any additional tests and surveys it deemed advisable, and Contractor’s design assumes the accuracy of all such information. Contractor is not liable for actual subsurface conditions which materially deviate from the conditions which were expected or should have been expected consistent with Professional Standards from the information provided by Owner as well as Contractor’s tests and investigations described herein. Contractor will be entitled to a Change Order for the associated adverse impact only if actual subsurface conditions are encountered by Contractor that materially deviate from such information and/or the results of such inspections or tests, and/or the reasonable interpretation thereof.

2.7 Local Conditions. Contractor represents that it has taken steps necessary to examine and ascertain the nature and location of any and all general and local conditions relevant to the Work and its surroundings and the cost thereof, and that it has investigated and satisfied itself as to the general and local conditions that can affect the Project, the Project Site, and/or the performance of the Work, including transportation, inland transit, access and egress (subject to Section 3.1), laydown,


parking, storage of materials, availability of utilities and utility services, location of local residences and businesses, water, waste disposal, electricity, roads, or other public goods or services, reasonably foreseeable climatic conditions at the Project Site (subject to Section 11.1), Applicable Legal Requirements, and the character and availability of equipment and facilities needed preliminary to and during the prosecution of the Work.

2.8 Subcontractors and Owner Suppliers.

2.8.1 Subcontractors. Contractor may have portions of the Work performed by Subcontractors. Contractor agrees that (a) with respect to services performed by non-manual personnel, Contractor will only subcontract Work to Affiliates at or below prevailing market rates for such Work or at rates otherwise approved by Owner, and (b) pursuant to a subcontract entered into in good faith and at market-based rates after notice to Owner and receipt of Owner’s prior consent.

2.8.2 No Privity with Owner. Owner shall not be deemed by virtue of this Agreement or otherwise to have any contractual obligation to, or relationship with, any Subcontractor. Contractor shall include a clause to this effect in each Contractor Subcontract with its Subcontractors.

2.8.3 Certain Subcontracts.

2.8.3.1 Contractor Subcontracts. Contractor shall ensure that the terms of each Contractor Subcontract with an aggregate value equal to or exceeding fifty thousand Dollars ($50,000.00) provide that it may be, without requiring the prior consent of the relevant Subcontractor, in whole or in part, assigned and delegated by Contractor to Owner, upon assumption of the obligations in respect of such Contractor Subcontract by Owner, in the event of a termination of this Agreement for any reason.

2.8.3.2 Confirmation of Performance. Contractor shall use commercially reasonable efforts to obtain provisions in each Contractor Subcontract with an aggregate value less than fifty thousand Dollars ($50,000.00) and shall cause each Contractor Subcontract with an aggregate value equal to or exceeding fifty thousand Dollars ($50,000.00) to provide, upon notification to the Subcontractor, that if: (a) this Agreement has been terminated for any reason, and (b) Owner or its designee shall thereafter be assuming Contractor’s obligations in full under such Contractor Subcontract, then such Subcontractor shall continue to perform its responsibilities under such Contractor Subcontract for the benefit of Owner or its designee and such Subcontractor shall recognize Owner or its designee as being vested with all the rights and responsibilities of Contractor from and after such assignment and assumption of such Contractor Subcontract.


2.8.3.3 Notice. Within 30 days of the execution of a Contractor Subcontract with an aggregate value less than fifty thousand Dollars ($50,000.00), Contractor will give Owner notice of the identity of the Subcontractor if it will be providing Work that will be physically incorporated into the Project, will be valued in excess of ten thousand Dollars ($10,000.00) and will not permit assignment of its Contractor Subcontract in accordance with Section 2.8.3.2 (a) and (b).

2.8.4 Purchase Orders and Subcontracts. Contractor shall furnish to Owner a copy of each Contractor Subcontract with an aggregate value equal to or exceeding fifty thousand Dollars ($50,000.00) entered into by Contractor within 14 days following Contractor entering into such Contractor Subcontract. Such copy is for informational purposes only and Owner shall not have any liability with respect thereto, including the terms and condition (or lack thereof) of such Contractor Subcontract. Thereafter, Contractor shall furnish to Owner a copy of any amendment or supplement to any such Contractor Subcontract within 14 days after entering into such amendment or supplement. Contractor shall also provide to Owner a list of all Contractor Subcontracts that it is a party to for Contractor Equipment and Materials that are incorporated into the Project. Such list will identify the Subcontractor and describe that portion of the Work provided by such Subcontractor. Such list will be delivered within 30 days of the Full Notice to Proceed and shall be periodically updated by Contractor through Final Completion.

2.8.5 Subcontractor Warranties. Contractor shall use reasonable commercial efforts to procure from all Subcontractors entering into a Contractor Subcontract with an aggregate value equal to or exceeding fifty thousand Dollars ($50,000.00) warranties substantially similar (in length and in scope) to those required of Contractor under Article 9. All such warranties shall be enforceable by Contractor or, as noted in the proviso in the next sentence and in the sentence thereafter, by Owner. Contractor shall enforce all Subcontractor warranties itself and/or on behalf of Owner prior to Substantial Completion of the Work to which such warranty relates. Owner shall have the right to enforce such warranties after Substantial Completion of the Work to which such warranty relates and prior to such time if Contractor fails to do so following Notice from Owner and an opportunity for Contractor to cure. At the earlier of (a) Substantial Completion of the Work to which such warranty relates, or (b) the date of termination of this Agreement, Contractor shall assign to Owner its rights under any and all Subcontractor warranties that continue after such date. Contractor shall secure such assignment from each Subcontractor, and at the earlier of (i) Substantial Completion of the Work to which such warranty relates or (ii) the date of termination of this Agreement, Contractor shall deliver to Owner copies of all Contractor Subcontracts providing for warranties that continue in effect after such date.

2.8.6 Subcontractor Insurance. Contractor shall require all Subcontractors who perform activities on the Project Site to obtain, maintain and keep


in force throughout the time during which they are engaged by Contractor such insurance coverages as are set forth in Appendix Q in addition to those that are normal and customary under Professional Standards for the portion of the Work to be performed on the Project Site by such Subcontractor.

2.9 Insurance. Contractor shall obtain and maintain in full force and effect during the Term of this Agreement (or for such other term as may be required under Appendix Q) insurance in accordance with, and meeting the requirements set forth in, Appendix Q. Contractor’s further obligations with respect to insurance are also set forth in Appendix Q. In addition, the foregoing provisions requiring Contractor to obtain or maintain insurance shall not be construed in any manner as waiving, restricting or limiting the liability of Contractor as to any obligations imposed under this Agreement, whether or not the same are, or may be, covered by insurance.

2.10 Compliance with Applicable Legal Requirements. Contractor shall comply with all Applicable Legal Requirements in connection with its performance of the Work and the Work as supplied and constructed by or on behalf of Contractor shall function when operated in accordance with the Project O&M Manual and shall comply with all Applicable Legal Requirements.

2.11 Real Estate. Contractor acknowledges that it does not require rights to use any real estate, including any easements or access rights for other property, which is not included in the Project Site in order to perform the Work, including areas for storage, parking and construction laydown.

2.12 Use of Project Site.

2.12.1 Use and Restoration. Contractor shall perform the on-site Work at the Project Site, subject to any restriction thereon specified in Appendix J, and shall not conduct activities or store equipment or materials unrelated to the Work at the Project Site. Contractor shall restore the Project Site to the final landscape plan and Project Site plan as developed by Contractor and approved by Owner. As soon as practicable after the Substantial Completion Date, Contractor shall clear the Project Site of Construction Aids and surplus materials except as needed for Final Completion. Within 30 days after the Final Completion Date, Contractor shall remove all of its Construction Aids and surplus Materials from the Project Site, except as necessary for Contractor to attend to a warranty claim.

2.12.2 Site Authority. Consistent with the provisions of this Agreement and Section 3.1, it is understood between the Parties that Contractor shall have primary authority over the Project Site from the Commencement Date until Substantial Completion has occurred. Contractor is responsible for the safety, security and discipline of Persons and property on the Project Site from the Commencement Date until Substantial Completion as provided in Section 2.2.12. After the Commencement Date, Contractor will provide access to work areas to Owner or


Separate Contractors as reasonably required for performance of activities to be performed by such Persons, consistent with the proviso set forth in Section 3.1 and after the turnover of care, custody and control of the Phase I Portion of the Project Contractor shall provide access to Owner and its designees in order for Owner to operate and exercise care, custody and control of the Phase I Portion of the Project.

2.13 Record Documents. Contractor shall properly and currently maintain accessibility to all Submittals, field change notices, requests to engineering (and associated approvals or disapprovals), Change Orders, field test records, and written interpretations and clarifications (collectively, “Record Documents”) indexed and currently annotated to show all material changes made during performance of the Work. Once Contractor commences construction Work at the Project Site, Record Documents shall be maintained at the Project Site. Record Documents will be maintained in Applicable Electronic Format. Owner, Owner Agents, and Engineers shall have access to such Record Documents at all times during the Term and may reasonably request paper (or portable document format (PDF)) copies of these Record Documents. Prior to Final Completion, Contractor shall provide Owner with surveyed Record Drawings that have been conformed to construction records, as specified in Appendix A. A copy of all Record Documents (excepting only Submittals) in Applicable Electronic Format shall be provided to Owner by Contractor at the earlier to occur of (a) Substantial Completion with respect to the Phase I Portion of the Project and (b) Final Completion with respect to the Balance of the Project, or (c) termination of this Agreement. For purposes of clarity, Submittals shall be provided to Owner by Contractor pursuant to Section 6.8.1(e).

2.14 Submittals.

2.14.1 Review. Contractor shall submit to Owner for review in accordance with the accepted schedule of submissions, copies of Submittals as specified in Appendix A with respect to the Work, which shall bear the required information that Contractor has satisfied Contractor’s responsibilities under this Agreement with respect to the review of the submission. Title block information on all Submittals shall be as agreed between Owner and Contractor. The data shown on Submittals shall be materially complete with respect to quantities, dimensions, specified performance and design criteria, materials, and similar data to enable Owner to review the information as contemplated by Section 2.14.3.

2.14.2 Variations. At the time of each submission, Contractor shall specify in writing each variation that the Submittal has from the requirements of Appendix A, and in addition, shall cause a specific notation to be made on each submittal submitted to Owner for review of each such variation.

2.14.3 Due Consideration. Owner shall review Submittals within the time period specified in Appendix A, but review by or on behalf of Owner shall be only for conformance with the design concept of the Project and for compliance with


this Agreement and shall not extend to means, methods, techniques, sequences, or procedures of construction (except where a specific means, method, technique, sequence, or procedure of construction is indicated in or required by this Agreement). The review of a separate item as such shall not indicate approval of the item or the component in which the item functions. Contractor shall give due consideration to Owner’s comments and make reasonable changes or corrections required by Owner, and resubmit as required to reflect such Owner changes or corrections. Upon re-submission, Contractor shall direct specific attention in writing to revisions to Submittals. Owner will not have any responsibility or liability for the accuracy or completeness of any Submittal, or for any defect, deficiency thereof or for any failure of such Submittal to comply with the requirements of this Agreement, notwithstanding any review or comment on its part.

2.14.4 Applicable Electronic Format. Submittals by Contractor to Owner shall be made in accordance with Appendix A, the provisions of this Agreement, and, as applicable, in the Applicable Electronic Format.

2.15 Separate Contractors and Activities By Owner

2.15.1 Separate Work. Owner will perform, either with its own forces or through other contractors and subcontractors, the activities described as Work or services to be provided by or on behalf of Owner or the Separate Contractors and as work or services to be provided by Owner in Appendix A.

2.15.2 Integration. Contractor shall use reasonable efforts to arrange the performance of the Work so that the Work and the work of Owner’s forces or any of its Separate Contractors are properly coordinated, joined in an acceptable manner and performed in the proper sequence without any disruption or damage to the Work, or any work of Owner’s forces or its Separate Contractors.

2.15.3 Coordination. Contractor shall coordinate the activities of Contractor’s and its Subcontractors’ forces on the Project Site with the activities of Owner’s forces and each of its Separate Contractors for the Owner activities defined in Appendix A such that the Work of Contractor and the work of such Owner’s forces or Separate Contractors are performed in accordance with the Project Schedule; provided that Owner timely provides Contractor with the information reasonably requested in respect of activities of Owner and its Separate Contractors, and that Owner gives Contractor timely and reasonable notice of activities that would require such coordination. For the avoidance of doubt, Contractor shall have final authority over the coordination of activities on the Project Site; provided, however, that if Contractor’s exercise of such authority delays Owner in performing its obligation such that Owner cannot reasonably perform an obligation hereunder in accordance with the Project Schedule, Contractor will not be entitled to a Change Order on account thereof nor relief from its performance obligations hereunder.


2.15.4 Owner Contractor Storage and Laydown. Contractor shall afford all of Owner Suppliers and Owner’s Separate Contractors reasonable opportunity for storage of their materials and equipment and for performance of their work on the Project Site. Owner shall direct all Owner Suppliers and Separate Contractors to cooperate with Contractor and to avoid actions that could unreasonably interfere with the activities of Contractor. Owner will provide Contractor with the storage and laydown requirements of Owner’s Separate Contractors.

2.16 Transportation Costs. Contractor shall arrange and pay for all transportation, inland transit, storage and handling costs of every kind and nature in connection with the Work (other than as provided for in an Owner Contract)

2.17 Labor Matters. Contractor shall manage its labor workforce and its Subcontractor’s labor workforce at the Project Site in accordance with the Labor Plan. Subject to Article 11, Contractor shall be responsible for managing all labor relations matters relating to the Work on or about the Project Site (including labor relations matters involving Owner’s Appendix A activities and Owner’s operating personnel who are subject to Contractor’s supervision control and technical direction during start-up and testing). Contractor shall advise Owner promptly (and vice versa), in writing, of any actual, anticipated, or threatened labor dispute that might affect the completion of the Work in accordance with the Project Schedule. Costs incurred by Contractor under this Section 2.17 for legal defense in matters not involving its own Personnel or its Subcontractor’s Personnel will be reimbursable by Owner if Owner directs Contractor to undertake such legal action.

2.18 Discipline and Protection. Contractor shall enforce strict discipline and good order among its employees, its Subcontractors’ employees, Owner Supplier employees and any other Persons carrying out portions of the Work on the Project Site and provide for the protection and maintenance of the Work and Owner Equipment and Materials on the Project Site and of all Persons and property related thereto. Contractor shall at all times take reasonable and appropriate actions to prevent any unlawful or disorderly conduct by or amongst its employees and those employees of Subcontractors and Owner Suppliers on the Project Site. Contractor shall not permit the employment, by it or its Subcontractors, of unfit Persons or Persons not skilled in tasks assigned to them. Owner shall do the same in respect of its Separate Contractors who are performing work on the Project Site.

2.19 Security. Beginning on the date prior to the date of the Full Notice to Proceed that Contractor begins Project Site mobilization, Contractor shall be responsible for and shall take precautions and measures as may be necessary to secure the Project Site at all hours, including evenings, holidays and non-working hours; provided, however, that upon Substantial Completion, access to and security the Project will be the responsibility of Owner, and Contractor shall observe the requirements imposed by Owner, which shall be consistent with Prudent Industry Practices. Contractor is not entitled to rely on security provided by Owner prior to the


Substantial Completion Date. Contractor shall erect, maintain or undertake, as required by existing conditions and the performance of this Agreement, all reasonable safeguards for safety and protection, including banners, lighting, CCTV monitoring, security patrols, controlled access, posting danger signs and other warnings against hazards, promulgating safety regulations, and notifying Owner and users of nearby sites and utilities.

2.20 Project Site Fire Protection. Without limiting Contractor’s obligations pursuant to Appendix A, beginning on the date that Contractor begins Project Site mobilization, Contractor shall be responsible for providing all fire protection services, including liaison with the local fire and emergency authorities, necessary to safeguard and protect the Project Site until the earlier of (a) Phase I Substantial Completion with respect to the Phase I Portion of the Project, (b) Substantial Completion with respect to the Balance of the Project, or (c) termination of this Agreement. Contractor shall provide a Project Site fire protection plan for Owner’s review and comment no later than 14 days following the Commencement Date. Contractor shall give due consideration to Owner’s comments and modify the plan appropriately.

2.21 Coordination and Transition.

2.21.1 Phase I Portion of the Project. At least 6 months prior to the Target Phase I Substantial Completion Date, Contractor shall deliver to Owner a proposed plan that provides for the coordination of (a) Contractor’s access to and use of the Phase I Portion of the Project for performance of the balance of the Work necessary on the Phase I Portion of the Project consistent with Section 6.4.1 and consistent with the right of Owner to operate the Phase I Portion of the Project in the ordinary course of business, and (b) the security forces, facilities and safety procedures of the Parties that will be in effect until Substantial Completion. Contractor and Owner shall thereafter agree on the final plan no later than 3 months prior to the Target Phase I Substantial Completion Date. Such plan shall maintain the existing access gates to the Project but separate parking for Owner’s administrative, operations and/or maintenance personnel, and other Personnel in connection with the business operations of Owner and/or the operations and maintenance of the Phase I Portion of the Project, as well as plans for fencing or other methods of separating Phase I Portion of the Project operations and Balance of the Project construction areas, and after Substantial Completion, for separate access gates.

2.21.2 Balance of the Project. At least 6 months prior to the Target Substantial Completion Date, Contractor shall deliver to Owner a proposed plan that provides for coordination of (a) Contractor’s access and use of the Project Site for performance of the Work necessary after Substantial Completion consistent with Section 6.7.7 and consistent with the right of Owner to operate the Project in the ordinary course of business, and (b) the security forces, facilities and safety


procedures of the Parties that will be in effect for the remainder of the Term. Contractor and Owner shall thereafter agree on the plan no later than one month prior to Substantial Completion. Such plan shall provide for separate access gates to the Project and separate parking for Owner’s administrative, operations and/or maintenance personnel, and other Personnel entering the Project Site in connection with the business operations Owner and/or operations and maintenance of the Project.

2.22 Surplus Equipment and Materials. Any surplus Equipment or Materials at Final Completion that were not paid for as part of the Reimbursable Component shall be the property of Contractor and may be sold or otherwise disposed of by Contractor in its sole discretion and for its own account. Any surplus Equipment or Materials at Final Completion that were paid for as part of the Reimbursable Component that Owner does not advise Contractor it wants to retain shall be sold by Contractor, and the proceeds thereof (net of reasonable sales costs) shall, at Contractor’s option as reflected in a Notice to Owner, be either (a) promptly remitted to Owner and deducted from the Total Work Cost or (b) retained by Contractor with such proceeds having no effect on the Total Work Cost.


ARTICLE 3

OWNER’S OBLIGATIONS

3.1 Project Site. In accordance with the Project Schedule, beginning on the Commencement Date Owner shall make available, and provide and maintain access to, the Project Site as required by Contractor for the performance of the Work, including access to the portions of the Project Site required to effect those interconnections of the Project to the Utility Facilities; provided, however, that Contractor’s access is subject to Owner’s (Owner Agent’s, and the Engineers’, as appropriate) reasonable exercise of their respective rights and the performance of their respective obligations under and in accordance with this Agreement, including (a) to inspect the Work; (b) to operate and maintain the Project on and after the Phase I Substantial Completion Date or the Substantial Completion Date applicable to such Work, whether performed directly or pursuant to third party agreements; (c) to perform or cause to be performed the activities identified in Appendix A, subject to Section 2.15; (d) to prepare for, in accordance with Prudent Industry Practices, the operation of the Project and related operations, subject to Section 2.21; and (e) to conduct such other activities and obligations typically associated with an owner of real property, including compliance and communication with Governmental Authorities. Owner has disclosed the Project Site information set forth in Appendix J to Contractor.

3.2 Permits. Owner shall obtain and pay for the Owner Permits designated in Appendix D as Owner’s responsibility (“Owner Permits”). Contractor shall reasonably cooperate with Owner by providing information needed by Owner in connection with Owner’s efforts to obtain the Owner Permits and once obtained Contractor shall maintain the Owner Permits. Nothing herein shall be deemed to limit Contractor’s obligations with respect to the Environmental Compliance Requirement or any other any Performance Requirement.

3.3 Owner Insurance. Owner shall obtain and maintain the insurance coverages as described in the applicable portion of Appendix Q (“Owner Insurance”).

3.4 Owner Taxes.

3.4.1 Payment of Taxes. Owner shall administer and pay Taxes properly imposed by any taxing authority on Owner or required to be collected or paid by Owner, including Taxes: (a) that constitute property taxes, real or personal, assessed on the Equipment, Materials, the Project, and the Project Site, (b) that are measured by the sale of products or electricity from the Project, (c) upon services or labor provided by Owner (other than by Contractor or any Subcontractor) in connection with the Project, and (d) upon the gross receipts (except taxes on gross receipts that are deemed to be Sales Taxes) or net income of Owner (collectively “Owner Taxes”).


3.4.2 Sales Taxes. With respect to Sales Taxes, Owner shall, in a timely manner as reasonably required by Contractor in order to purchase items as necessary to comply with the Project Schedule: (a) furnish to Contractor all exemption certificates, information and reports required to be submitted to appropriate taxing authorities in connection with Sales Tax exemptions or rebates necessary for Contractor to perform its obligations with respect to Sales Tax rebates and exemptions, and (b) reimburse Contractor in connection with an Application for Payment for the full amount of Sales Taxes properly paid by Contractor in accordance with this Agreement (recognizing Contractor’s obligation to seek and obtain Sales Tax exemptions as described in Section 2.2.9); provided, however, that it is expressly understood that the Fixed Component includes all Sales Tax for items that are not directly incorporated in the Work, such as Sales Tax on rental equipment and Sales Tax for subcontracted services included in the Fixed Component. Contractor shall use commercially reasonable efforts to minimize Sales Taxes and cooperate with Owner in its efforts to minimize Sales Taxes.

3.5 Start-up Personnel. Owner shall provide operations and maintenance Personnel in accordance with Appendix A and the phase-in plan to be developed in accordance with Section 2.2.2.1 to operate and maintain the Project with Contractor’s assistance during the Startup Period. Such Personnel will have the qualifications and experience required pursuant to Appendix A. Such phase-in plan may be subsequently adjusted by agreement of the Parties; provided, however, that Contractor must give Notice thereof to Owner as soon as reasonably practicable but not less than 3 months in advance of any proposed adjustment. Scheduling of such Personnel shall be undertaken by Owner and with due regard for minimizing overtime. Such Personnel shall be trained by Contractor and shall assist Contractor by performing normal operating, testing, check-out and maintenance duties during the Startup Period. If any of the Personnel provided by Owner do not satisfy the criteria set forth in Appendix A, Contractor shall provide a detailed Notice describing any such deficiency to Owner as soon as practicable, and, for adequate cause stated, Owner shall replace such Personnel for training by Contractor promptly under the circumstances. Until the Phase I Substantial Completion Date with respect to the Phase I Portion of the Project and the Substantial Completion Date with respect to the Balance of the Project, Contractor shall be responsible for technical direction of Owner’s operations Personnel. The provision by Owner of such Personnel shall not relieve Contractor of its obligations under the Agreement.

3.6 Owner Site Manager and Owner Engineer. Owner shall designate by Notice to Contractor (a) a full-time Owner employee or consultant to serve as Owner’s site manager (“Owner Site Manager”), and (b) the Owner Engineer. Owner may by Notice to Contractor change the Owner Site Manager or the Owner Engineer. The Owner Site Manager shall be Owner’s representative who after the commencement of construction hereunder at the Project Site shall be located at the Project Site. The Owner Site Manager shall have authority to act on behalf of Owner with respect to day-to-day decisions in the ordinary course of business; provided,


however, that the Owner Site Manager has no authority to execute Change Orders or amend this Agreement. Further, the Owner Site Manager will be responsible for furnishing information on a timely basis as reasonably requested by Contractor that is required by this Agreement to be provided by Owner to Contractor, and will have the authority to agree upon procedures for coordinating Owner’s efforts with those of Contractor. Neither the Owner Site Manager nor the Owner Engineer shall be Owner’s Authorized Representative unless specifically appointed to such position by Owner. Contractor may rely upon the actions of the Owner Site Manager taken within the authority set forth in this Section 3.6. Any communication (including a Notice) given to the Owner Site Manager shall be deemed to be given to Owner.

3.7 Interconnection.

3.7.1 Out of Scope Interconnection Facilities and Utility Connections. Upon completion of the site preparation and grading activities by Contractor with respect to that portion of the Project Site to be utilized for the Transmission Facilities, which activities shall be performed as part of the Work and in accordance with the Project Schedule and other applicable provisions of this Agreement, Owner shall be responsible for the installation, operation and maintenance of the Transmission Facilities and for payment of all fees to be paid to Utility Facilities providers for interconnection of the Project. Owner is responsible for ensuring the Transmission Facilities and the Utility Facilities, as set forth in Appendix A, are available in accordance with the Project Schedule. Prior to the date specified therefor in the Project Schedule, Owner shall cause the Transmission Owner or other transmission service provider to take from the Project the net electricity generated during the Startup Period. The Project Schedule shall include the date when back-feed power will commence.

3.7.2 Transmission Facilities. Contractor shall coordinate with the Transmission Owner with respect to the implementation and timely completion of activities to be conducted under the Interconnection Agreement, including inspection and start-up of the Contractor Transmission Facilities. Contractor shall give Owner no less than 30 days prior initial Notice that Contractor is ready for energization and backfeed power. Contractor shall coordinate the supply thereof. Contractor shall coordinate and arrange for any requirements for access to the Project by the Transmission Owner or its designees as required by the Interconnection Agreement. Contractor shall cooperate with Owner, and cooperate and coordinate with the Transmission Owner and their respective designees in order to provide for the timely completion of the Contractor Transmission Facilities connection with these interconnection activities.

3.8 Startup Period.

3.8.1 Startup Period; Pre-Commercial Energy. The “Startup Period” for the Project means (a) with respect to the Phase I Portion of the Project,


the period from the Phase I Mechanical Completion Date until the Phase I Substantial Completion Date and (b) with respect to the Balance of the Project, the period from the Mechanical Completion Date until the Substantial Completion Date. Owner has all right, title and interest to all revenue resulting from the activated carbon product and electricity generated (net of auxiliary loads) by the Project, and Contractor shall have no right to any such product or electricity or to the proceeds of the sale of such. Contractor shall make reasonable efforts to maximize the production of activated carbon product and the production of electricity by the Project during the Startup Period consistent with Contractor’s obligations to perform the Work on schedule and on budget.

3.8.2 Waste. Owner shall be responsible for the handling, transportation and placement of, in accordance with all Applicable Legal Requirements, all coal waste and other wastes including ash and lime solids generated by the operation of the Project during the Startup Period, and made available by Contractor to Owner at the applicable delivery point.

3.8.3 Initial Fills. Contractor shall be responsible for providing initial fills of lubricants, chemical, fuels, etc. of plant equipment to support start-up and initial operations. Contractor will invoice Owner on a cost reimbursable basis for initial fills.

3.9 Hazardous Substances. In addition to Project Site information referenced in Appendix J, Owner also shall disclose to Contractor, as information becomes available to Owner, the existence of Hazardous Substances at the Project Site as to which Owner has actual knowledge. Subject to Section 2.2.13, Owner shall be and remain responsible for any Hazardous Substances that are brought onto the Project Site by Owner or any other Person performing activities on behalf of Owner (other than Contractor, its Subcontractors or Owner Suppliers) or that exist on the Project Site prior to the Commencement Date or releases caused by Owner or any other Person acting on its behalf (other than Contractor, its Subcontractors and Owner Suppliers) and not in accordance with Contractor’s direction (“Owner Hazardous Substances”), including any required Remediation and/or site restoration in connection therewith. To the fullest extent permitted by Applicable Legal Requirements, Owner agrees to release, defend, indemnify and hold the Contractor Indemnitees harmless from and against all liability (except for any liability arising from the negligence or intentional Release by such indemnified Persons (as set forth in Section 2.2.13.2)) arising out of Owner Hazardous Substances, or otherwise arising out of fulfilling Owner’s obligations under this Section 3.9, whether through suits or causes of action in a court of law or claim, complaints or penalties arising out of a violation or alleged violation of Applicable Legal Requirements. If Contractor discovers or encounters any Owner Hazardous Substances, which under Applicable Legal Requirements or Professional Standards would require Contractor to suspend Work to avoid injury to individuals or damage to property, then Contractor shall promptly give Notice to Owner and cease performance of the Work in and around the


affected area. Except as provided in Section 2.2.13.2, Contractor shall have no responsibility for the removal, treatment, transportation, disposal or Remediation of Owner Hazardous Substances. Contractor shall not have or exert any control over Owner or interfere with Owner or any Person acting on behalf of Owner in Owner’s performance of its obligations or responsibilities in connection with the storage, transportation or disposal of any Owner Hazardous Substances. Contractor shall reasonably cooperate with Owner in connection with the Remediation by Owner of any Owner Hazardous Substances identified at the Project Site; provided, however, that Contractor shall not be required to provide disposal services for Owner Hazardous Substances.

3.10 Compliance with Contractor’s Rules. On or before the Commencement Date, Contractor will provide to Owner a copy of its proposed written rules regarding activities at the Project Site that are applicable to all Persons on the Project Site prior to Substantial Completion. Within 15 Business Days from receipt thereof, Owner will be entitled to provide its comments thereto. Contractor shall give due consideration to and incorporate any reasonable comments of Owner and thereafter promptly provide Owner with a final copy of such rules. Owner and all Owner Personnel shall comply with such final written rules.

3.11 Performance of Owner Obligations. Owner shall perform its obligations under Article 3 and the applicable provisions of Appendix A that appear on the Project Schedule on or before the date specified therefor as such dates may be adjusted in accordance with this Agreement.

3.12 Compliance with Applicable Legal Requirements. Owner shall comply with Applicable Legal Requirements in connection with the performance of its obligations hereunder and in connection with contracting for work or services to be performed by its Separate Contractors related to the Project.

3.13 Owner Suppliers.

3.13.1 Contract Execution. Owner is responsible for entering into the Owner Contracts; provided, however, that for future Owner Contracts, Contractor shall provide the support contemplated by Appendix M. The Parties agree that the negotiation of certain future Owner Contracts may require cooperation of the Parties.

3.13.2 [RESERVED]

3.14 Discipline and Protection. Owner shall at all times take reasonable and appropriate actions to prevent any unlawful or disorderly conduct by or amongst its employees and those employees of its Separate Contractors at the Project Site. Owner shall require that its Separate Contractors not employ unfit individuals or assign individuals to tasks as to which they are inappropriately suited in connection with the performance of the activities of such Separate Contractors.


ARTICLE 4

OWNER’S RIGHT TO INSPECT, STOP AND RE-PERFORM WORK

4.1 Inspection. Owner and its designees will have the right to have access to and inspect the Work, including Equipment and Materials, and to be present at all tests and inspections at any stage of completion on the Project Site. The participation in, or observation of, any such inspections or testing by Owner and its designees (or any failure by Owner or its designees to participate in or observe such inspections and testing) will not be deemed to constitute a waiver of any of Contractor’s obligations under this Agreement or be construed as an approval or acceptance of the Work. So long as Contractor provides reasonable advance Notice to Owner of a test or inspection (such Notice may be in the form of the identification of such test or inspection in the Project Schedule, monthly progress report or other written Submittal to Owner but must be at least 5 Business Days prior to such test or inspection), then the failure of Owner or its designees to be present at such test or inspection will not invalidate or otherwise adversely affect the conduct or results of such test or inspection. Owner or its designees exercising rights pursuant to this Section 4.1 shall not unreasonably interfere with Contractor’s performance of its obligations hereunder.

4.2 Right to Reject and Re-Performance. Prior to the Warranty Period, if the Work is not in conformance with the requirements of this Agreement (“Defective Work”), then Owner may give Contractor Notice of the Defective Work. If Owner provides Notice to Contractor that Owner requires a plan of correction for Defective Work, then Contractor shall, within 7 Business Days after Owner’s Notice thereof, submit a plan of correction of the Defective Work to Owner for review and Contractor shall include in the plan of correction any reasonable comments to such plan proposed by Owner. Contractor shall provide Notice to Owner of any modifications or supplements to the plan of correction reasonably implemented by Contractor. For purposes of this Agreement, “Defect,” “Defects” or “Defective” describes Work that is not in conformance with the requirements of this Agreement.

4.3 Defects in Owner Suppliers’ Scope. Prior to the Warranty Period, if either Party obtains knowledge of any defect or deficiency in any Owner Suppliers’ Scope, such Party shall give Notice thereof to the other Party, and Owner shall thereafter enforce the provisions of the applicable Owner Contract and secure from the applicable Owner Supplier a plan of correction for such defect or deficiency. Upon Owner’s request, Contractor shall cooperate with Owner in such enforcement. Any legal expenses so incurred by Contractor to cooperate with enforcement of the Owner Contract shall be a reimbursable expense. For the purposes of clarity, Contractor shall not be required nor entitled to initiate litigation to comply with its obligations under this Section 4.3.

4.4 Right to Suspend Work for Convenience. Owner may, at any time and from time to time, by a Notice, suspend (and later reinstate) all or any portion of the Work. Upon receipt of such Notice, Contractor shall immediately suspend its


performance of such Work consistent with a safe and orderly shut-down of such Work. Either Party may terminate this Agreement, with such termination being handled under Section 13.1 hereof, if (a) in the case of a suspension of all or substantially all of the Work by Owner for convenience after the Commencement Date, the suspension of Work exceeds 180 days in the aggregate, or (b) in the case of a suspension resulting from the occurrence of a Change of Law occurring on or after the Commencement Date or an event of Force Majeure occurring on or after September 1, 2008, a single suspension of all or substantially all of the Work exceeds 270 days. In the case of either (a) or (b) above, Contractor may reassign Key Personnel engaged in Work at the Project Site if any such suspension of the Work exceeds 30 consecutive days. If Contractor reassigns Key Personnel in accordance with this Section 4.4, it shall use reasonable efforts to reassemble the original Key Personnel at such time as the suspension of the Work is lifted. If the Project is suspended by Owner, Contractor shall be paid for all completed Work prior to such suspension as follows:

 

  (a) Contractor shall be compensated for all Reimbursable Component Work performed up to date of suspension. For the Fixed Component, all Milestones achieved prior to suspension shall be paid and, in the event that a suspension lasts for more than 30 consecutive days, Contractor shall be entitled to invoice Owner for an equitable proportion of the applicable Milestone Payment Schedule amounts due for partially-completed Milestones pursuant to Appendix G.

 

  (b) All cost resulting from the suspension of Work including on-going costs and reasonable cost of work required to secure and protect partially-completed Work but excluding time value of money, lost opportunity costs and the like, shall be paid via Change Order process (provided that Contractor shall not be required to provide Notice to Owner of the event giving rise to such Change Order) on a time and material basis or lump sum if mutually agreed; provided, however, that to the extent reasonably possible, Contractor shall provide advanced written notice of such anticipated cost so Owner has the opportunity to avoid or mitigate said costs. Contractor shall use reasonable efforts to minimize such extra costs arising from suspension, including consultation with Owner as to potential reassignment of Contractor’s personnel and/or suspension of the work of Subcontractors.

4.5 Uncovering Work. Without limiting Owner’s right to inspect the Work at any time on the Project Site, at each weekly construction meeting at the Project Site, Contractor shall provide to Owner a copy of Contractor’s 3 week look-ahead schedule for Work to be performed on the Project Site. Owner shall promptly advise Contractor in writing of those items of Work on such look-ahead schedule that it specifically wants to witness or inspect. For those items of Work that Owner advises Contractor that it wants to witness or inspect, Contractor shall keep Owner reasonably apprised of changes to the time and location of the performance of such


events. If Contractor performs any such item of Work at a time as to which Owner did not have Notice in accordance herewith, then, upon Owner’s written request, given within 7 days of the date on which Owner was advised that such Work would be performed, Contractor shall expose, uncover or otherwise test such Work as Owner may reasonably require. If Owner fails to witness or inspect Work which it had requested the opportunity to witness or inspect, Contractor shall be entitled to proceed with such Work and Owner shall not be entitled to enforce its rights under this Section 4.5, except upon issuance of a Change Order to Contractor in accordance with Article 10. With respect to any other Work that is covered by Contractor, Contractor, at Owner’s written request, shall uncover, expose, or otherwise make available for observation, inspection, or testing as Owner may require. If Work is Defective, Contractor shall (a) not be entitled to a Change Order on account thereof, including any cost or delay associated therewith, and (b) prepare a Recovery Plan if there is a delay in the Project Schedule. If, however, such Work is not Defective, Owner shall issue Contractor a Change Order in accordance with Article 10 for the associated impact, as demonstrated by Contractor in a Change Order Request.

4.6 Right to Stop Work for Cause. Owner, by a Notice, may order Contractor to stop performance of that portion of the Work that reasonably appears to Owner to cause or threaten to cause an imminent danger to life or damage to property. If it is reasonably determined by Owner that such activities of Contractor or Contractor’s Personnel caused or threatened to cause imminent danger to life or damage to property, Contractor shall not be entitled to a Change Order for the associated impact. Owner’s right to stop Work under this Section 4.6 shall be without prejudice to any other right or remedy Owner may have under this Agreement. Once the cause of the stop work order has been resolved by Contractor, Owner shall promptly direct Contractor to resume performance of the Work that had been stopped. In the event that any stop work order Notice provided hereunder is subsequently determined to not have been properly issued in accordance with the provisions of this Section 4.6, Owner shall issue a Change Order to Contractor in accordance with Article 10, to reflect any cost or schedule impact, as demonstrated by Contractor in a Change Order request.


ARTICLE 5

CONSTRUCTION PRICE AND PAYMENT

5.1 Construction Price. The Construction Price shall consist of 2 components: the Fixed Component and the Reimbursable Component. These two components of the Construction Price are as follows:

5.1.1 Fixed Component. The Fixed Component is one hundred eighty-four million nine hundred seventy-seven thousand two hundred seventy-five Dollars ($184,977,275). The Fixed Component addresses all components of the Work aside from the Work that is part of the Reimbursable Component pursuant to Section 5.1.2. The items to be included in the Fixed Component include, without limitation, the following.

 

   

Home office services, including engineering

 

   

Field supervision

 

   

Temporary facilities

 

   

Field office expenses

 

   

Construction equipment, including heavy lift cranes

 

   

Tools and Consumables

 

   

Insurance required of Contractor

 

   

Miscellaneous expenses

 

   

Contingency (on fixed components, quantities, and contract risk)

 

   

Equipment (excepting Owner-provided Equipment)

 

   

Bulk Materials

 

   

Special tools for maintenance

 

   

Contractor fee, administration and overhead

 

   

Warranties

5.1.2 Reimbursable Component. The estimated Reimbursable Component is *, as more specifically set forth in Appendix S, attached hereto. The “Reimbursable Component” consists of the costs described in Appendix N. Prior to the date of the Full Notice to Proceed, Contractor shall develop and provide to Owner a detailed “bottom up” labor estimate, itemized by installed item of Equipment that includes for each item: (a) the expected man-hours, by classification within each Craft Labor Category to install such Equipment, and (b) the average apprentice and journeyman rate for each Craft Labor Category (the “Craft Labor Cost Estimate”)


which is attached as Appendix K. As used above “item” includes each and every individual engineered product, all non-engineered procured items and each individual bulk material item used to install and interconnect each engineered and non-engineered item of Equipment, inclusive of all support utility materials. Prior to the date of the Full Notice to Proceed, Contractor shall provide to Owner a detailed estimate of the Reimbursable Component (the “Reimbursable Component Estimate”). All labor other than on-site Craft Labor is part of the Fixed Component. The Craft Labor Cost Estimate which is the basis for determining the estimated total Craft Labor Hours and the Craft Labor Hours target amount for the Work (the “Craft Labor Hour Target”) is set forth in Appendix K. The wage rates for the Craft Labor Cost Estimate were developed by Contractor through a labor survey in the relevant region, and such survey shall be provided to Owner on or before the Commencement Date so that Owner and Contractor can collectively agree on a wage rate strategy for attracting the necessary Craft Labor. Base Craft Labor rates and per diem as agreed upon by the Parties are set forth in Appendix K. As Work on the Project progresses, if Contractor demonstrates to Owner that the stipulated Craft Wage Rates or per diem need to be increased to attract and retain qualified Craft Labor based upon market conditions or can be decreased without reducing productivity or availability of labor, the new rates will be implemented and associated cost will be reimbursable, subject to the Craft Labor productivity reconciliation pursuant to Section 5.1.4.

5.1.3 Payment of Fixed Component. The Fixed Component shall be paid to Contractor in monthly installments in accordance with the Milestone Payment Schedule set forth in Appendix G for completed Milestones and upon delivery to Owner of Applications for Payment in accordance with the payment procedures set forth in this Agreement.

5.1.4 Payment of the Reimbursable Component. Contractor shall invoice biweekly the Reimbursable Component costs, including costs for field Craft Labor based upon reasonable estimates of Work projected to be performed in the next biweekly period, and Owner shall pay such invoices within 15 days of receipt. Such invoices shall include, at a minimum, certified payroll records (subject to audit) verifying pay rates for the labor estimated to be required during the subsequent biweekly period. In addition, each invoice shall account for any overpayment or underpayment with respect to the previous biweekly period and the appropriate adjustment shall be added to or deducted from the estimate (as the case may be). All adjustment reports regarding actual hours worked and applicable rates shall be supported with certified payroll records included with each invoice.

5.1.5 Price and Other Agreement Adjustments due to Change Orders. All adjustments to the Fixed Component due to Change Orders shall be calculated as follows:

 

  a) Schedule Changes.


  i. The Fixed Component will be equitably adjusted for schedule delays to the extent caused by Owner. Contractor shall provide documentation of costs incurred for schedule extension or schedule acceleration.

 

  b) Scope Changes.

Changes initiated by Owner in the Work after the Full Notice to Proceed shall generally be estimated and priced in the same manner as the original Fixed Component was developed consistent with lump sum contracting practices, and shall be handled as follows for the specified situation:.

 

  i. Unit Priced Work: Where the Fixed Component was based upon unit pricing such pricing shall be used for scope adjustments, subject to equitable market adjustments applicable to such pricing for the quantity of unit purchased.

 

  ii. Engineering Scope: For Changes in the Work after the Full Notice to Proceed (other than as provided in (i) above) that increase the engineering scope, Contractor shall provide Owner with a proposed fixed price developed in the same manner as the original Fixed Component was developed consistent with lump sum contracting practices but if the Parties cannot agree on the proposed lump sum, the cost of the Change shall be equitably adjusted based upon stipulated hourly billable rates appended hereto as part of Appendix R and Contractor’s documented hours worked.

 

  iii. Equipment Materials and Subcontracts: For Changes in the Work after the Full Notice to Proceed (other than as provided in (i) above) that increase the amount of Equipment, Materials or Contractor Subcontract work to be procured by Contractor for the Project, the Fixed Component shall be adjusted based upon the actual increased cost of such Equipment and/or Material or Contractor Subcontract plus * percent (*%) in respect of Contractor’s overhead and administrative costs to procure such Equipment, Materials or Contractor Subcontract work.

 

  c) Craft Labor Increases. For Changes that increase the aggregate actual field Craft Labor Hours expended above the Craft Labor Hour Target (aggregate number for all Craft Labor categories) such direct field Craft Labor Hours shall be reimbursed in accordance with the Reimbursable Component hereof. For such Changes that increase the amount of Craft Labor Hours above the Craft Labor Hour Target and for which the Fixed Component has not otherwise been modified, adjustments to the Fixed Component to cover the additional management and overhead associated with the additional Craft Labor Hours shall be determined as follows:


  i. For up to the first *% of such increase above the total Craft Labor Hour Target, there shall be no additional charges under the Fixed Component in respect of profit or administrative expense for management or other overhead associated with such additional Craft Labor Hours.

 

  ii. For the portion of the actual Craft Labor Hours that exceeds the Craft Labor Hour Target, by greater than *% but less than or equal to *% of the total Craft Labor Hour Target, there shall be an increase in the Fixed Component in an amount equal to *% of the amount of the Reimbursable Component for this incremental (above *%) increase in Craft Labor Hours.

 

  iii. For the portion of the actual Craft Labor Hours that exceeds the Craft Labor Hour Target, by greater than *% of the total Craft Labor Hour Target, there shall be an increase in the Fixed Component in an amount equal to *% of the amount of the Reimbursable Component for this incremental (above *%) increase in Craft Labor Hours.

 

  iv. For the portion of the actual Craft Labor Hours that exceeds the Craft Labor Hour Target by greater than *% of the total Craft Labor Hour Target, there shall be an increase in the Fixed Component in an amount equal to the amount of overhead and administrative markup generally applied in arriving at the Fixed Component (expressed as a percentage) of the amount of the Reimbursable Component for this incremental (above *%) increase in Craft Labor Hours.

The foregoing notwithstanding, it is understood that any Craft Labor Hours resulting from Contractor’s error, negligence, defects or deficiencies in engineering or in the performance of the Work (beyond that which is normal re-work activity customary in the industry in accordance with Prudent Industry Practices) shall not be included in the calculation of actual Craft Labor Hours expended for determining if and to what extent the Craft Labor Hour Target has been exceeded but shall be separately identified in each Application for Payment for the Reimbursable Component. Similarly, to the extent that the aggregate actual Craft Labor Hours for the Work included in the original Craft Labor Cost Estimate are below the Craft Labor Hours Target, such underrun shall be to Owner’s benefit and no adjustments shall be made unless and until the entire underrun in Craft Labor Hours has first been exhausted and then Craft Labor Hours exceed *% of the Craft Labor Hour Target.

5.1.6 Reconciliation of Actual Craft Labor Hours to Craft Labor Hour Target. In the event that field Craft Labor productivity for performing the Work is different than the Craft Labor Hour Target, such variances shall be reconciled as follows:


  a) If actual Craft Labor Hours are within *% (over or under) of the Craft Labor Hour Target, Owner pays actual cost. Contractor shares no part of any overrun or underrun in labor hours within this range.

 

  b) If actual Craft Labor Hours overrun the Craft Labor Hour Target by more than *%, but not more than or equal to *% of the Craft Labor Hour Target, Owner and Contractor share the cost of such excess labor hours above *% of the Craft Labor Hour Target equally.

 

  c) If actual Craft Labor Hours overrun the Craft Labor Hour Target by greater than *% of the Craft Labor Hour Target, Contractor pays all of the cost for labor hours in excess of *% above the Craft Labor Hour Target.

 

  d) If actual Craft Labor Hours underrun the Craft Labor Hour Target by greater than five percent but less than or equal to *%, then Owner and Contractor equally share the underrun in the cost of the saved labor hours to the extent greater than five percent below the Craft Labor Hour Target.

 

  e) If actual Craft Labor Hours underrun the Craft Labor Hour Target by greater than *% of the Craft Labor Hour Target, Contractor earns a bonus equal to the cost of the labor hours saved by the underrun in excess of *% below the Craft Labor Hour Target.

 

  f) All adjustments for Craft Labor Hours overrun or underrun will be calculated based upon the average billable wage rate (wages, mark up, per diem) paid by Contractor during the course of the Project; provided, however, that to the extent that the average billable wage hour paid by Contractor exceeds the average billable wage hour used in arriving at the Craft Labor Cost Estimate, such increased hourly costs shall offset any bonus or cost savings share to be paid Contractor for underruns so that Owner shall only make payments to Contractor for labor hour underruns to the extent Owner has recognized real cost savings in the Craft Labor Cost Component.

The foregoing notwithstanding, it is understood that any expenditure of Craft Labor Hours resulting from Contractor’s error, negligence, defects or deficiencies in engineering or in the performance of the Work (beyond that which is normal re-work activity customary in the industry in accordance with Prudent Industry Practices) shall not be included in the calculation of actual field hours expended for determining if and to what extent the Craft Labor Hour Target has been exceeded and shall not be included in (or paid by Owner as part of) the Reimbursable Component, but shall be separately identified and reflected in each Application for Payment for the Reimbursable Component.


5.1.7 [RESERVED].

5.1.8 Applications for Payment.

5.1.8.1 Fixed Component. Between the 1st and 5th day of each month after the month in which the Full Notice to Proceed occurs, Contractor shall submit to Owner an Application for Payment filled out and signed by Contractor. Each Application for Payment for the Fixed Component shall describe (a) all Milestones completed, the sum of all prior payments in respect of the Fixed Component made by Owner to Contractor through the last day of the prior month, (b) the amount of the Fixed Component owed to Contractor based upon the completed Milestones and the Milestone Payment Schedule attached hereto as Appendix G (the “Milestone Payment Schedule”) and an updated Milestone Payment Schedule, reflecting payments made, (c) the Fixed Component amount for any agreed Change Order Work performed stating specifically the Work performed and the Change Order supporting the payment and (d) any amount due in respect of the Fixed Component for which payment was withheld from an earlier payment and where the cause for such withholding no longer applies.

5.1.8.2 Reimbursable Component. Together with each Application for Payment for the Fixed Component submitted pursuant to Section 5.1.8.1 above and between the 15th and 20th day of each month after the month in which the Full Notice to Proceed occurs, Contractor shall submit to Owner an Application for Payment for the Reimbursable Component filled out and signed by Contractor. Each Application for Payment for the Reimbursable Component shall describe (a) the amount of Craft Labor performed in the previous biweekly period including backup for the hours worked and wage rates to include Craft Labor Hours expended to date, Craft Labor Hours expected to be expended during the estimate period included in such Application for Payment pursuant to Section 5.1.4, reconciliation of the actual field Craft Labor performed versus the estimate therefor reflected in the prior biweekly or other applicable invoices and such other matters as required to verify and justify payments of the Reimbursable Component as described in Section 5.1.4, (b) the Reimbursable Component amount of any agreed Change Order Work performed stating specifically the Work performed and the Change Order supporting the payment, (c) any other amount payable with respect to the Reimbursable Component pursuant to this Agreement together with supporting documentation which reasonably demonstrates the cost of such Work and identifies the provisions of this Agreement which designate such costs as a Reimbursable Component, and (d) all Craft Labor Hours resulting from error, negligence, defects or deficiencies in engineering or in the performance of the Work (beyond that which is normal re-work activity customary in the industry in accordance with Prudent Industry Practices) which shall be separately identified but shall not be part of the Reimbursable Component or otherwise payable by Owner to Contractor.


5.1.9 Progress Reports. Each Application for Payment for the Fixed Component submitted by Contractor must be supported by a monthly progress report in accordance with Appendix A for the month preceding the Application for Payment. Such progress report shall also include a good faith forecast of the estimated Fixed Component, and Reimbursable Component costs (to included expected Craft Labor Hours to be devoted to rework or correcting Defective Work, if any) for the Work that Owner will be liable to pay to Contractor for the 90 day period commencing with the month following the month in which the Application for Payment is submitted. It is recognized that forecasts are forward-looking projections and variances from such forecasts shall not affect Owner’s payment obligations hereunder.

5.1.10 Lien Waivers. With each Application for Payment, Contractor shall deliver to Owner and any title company specified by Owner a waiver and release of Liens in the form of Appendix I-11, duly executed and acknowledged by Contractor and those Subcontractors with an aggregate Contractor Subcontract value equal to or exceeding fifty thousand Dollars ($50,000.00) in order to assure an effective release of mechanic’s or materialmen’s Liens in respect of the Work performed in the preceding month in accordance with the laws of the State of Louisiana. In addition, Contractor shall deliver to such title company a duly executed and acknowledged Contractor’s statement satisfying all Applicable Legal Requirements identifying each of the Subcontractors, the value of such Contractor Subcontract, the amounts paid to date, and the balance of the amount due or to become due to each, and a statement that all undisputed payments then due and owing have been made to such Subcontractors in accordance with the terms of the applicable Contractor Subcontract as of the date of such statement; provided, however, that Owner has made all undisputed Construction Price payments for Work when due. Contractor shall also exercise the authority granted to it pursuant to Appendix M to obtain for Owner with each request for payment a waiver and release of Liens to the extent of such payment, as applicable, in the form of Appendix I-11, duly executed and acknowledged by each Owner Supplier in order to assure an effective release of mechanic’s or materialmen’s Liens in respect of each item of Owner Suppliers’ Scope in accordance with the laws of the State of Louisiana. If Contractor is not able to obtain such a waiver and release of Liens from any Owner Supplier, Contractor will not recommend approval of the request for payment by such Owner Supplier and Owner will be under no obligation to pay the Owner Supplier in respect of such request for payment.

5.1.11 Other Documentation. Each Application for Payment must be fully completed and also include the following in form and substance reasonably satisfactory to Owner:

 

  (a) a duly executed Contractor’s certification stating that it has reviewed all financial information contained in the Application for Payment as true, correct and complete;


  (b) a copy of all invoices pursuant to which Contractor has paid Sales Taxes for which it seeks reimbursement;

 

  (c) information in such detail and with such backup so as to allow Owner to sign off on the reconciliation and verification of reimbursable costs and Change orders;

 

  (d) such other information as may be reasonably required by Owner.

5.1.12 Failure to Comply. To the extent Contractor fails to comply with the foregoing requirements with respect to submission of documentation with the Application for Payment, Owner shall, after issuing a Notice to Contractor, be entitled to withhold an equitable portion of the payment due to Contractor up to the full Application for Payment amount.

5.1.13 Retainage.

5.1.13.1 Retainage; Retainage Letter of Credit. Contractor agrees that *% of the Fixed Component shall be retained (the “Retainage”) by Owner out of each monthly payment for Work reflected in an Application for Payment of the Fixed Component. In lieu of the Retainage, Contractor may elect from time to time to deliver to Owner an irrevocable bank letter of credit (the “Retainage Letter of Credit”) in the form of Appendix I-9, issued by a Qualified Security Provider and in a stated amount at least equal to the amount of the Retainage for which such security is being provided as substitute security, as such amount increases based on the Milestones achieved by Contractor in the Milestone Payment Schedule (up to a maximum of *% of the Fixed Component). Increases in the maximum stated amount may be made from time to time by the issuing Qualified Security Provider, at the request of Contractor; provided that advance Notice thereof is provided to Owner and the revised Retainage Letter of Credit is delivered to Owner promptly after such modification. In no event shall the sum of the Retainage and any outstanding Retainage Letter of Credit exceed *% of that portion of the Fixed Component then paid to Contractor (with such retained amounts deemed paid to Contractor for purposes of the foregoing *% calculation).

5.1.13.1 Application of Retainage; Draws upon Retainage Letter of Credit. Owner shall have the right to apply the Retainage so withheld to satisfy any payment obligation of Contractor under this Agreement that is not paid when due hereunder. The Retainage Letter of Credit shall provide for payment to Owner thereunder, without right of objection of Contractor to satisfy any payment obligation of Contractor, under this Agreement that is not paid when due hereunder, but only as and to the extent that all Retainage other than the Retainage Letter of Credit has been applied to pay such amount and a deficiency remains. Owner agrees to use reasonable efforts to deliver a copy of any demand made under the Retainage Letter of Credit to Contractor contemporaneously with the demand presented to the Retainage Letter of Credit issuer; provided, however, that failure to


so deliver such demand shall not delay, or create a right of objection to, any payment to be made under the Retainage Letter of Credit. Any amounts drawn under the Retainage Letter of Credit shall be deposited into the fund or account in which other Retainage and/or amounts previously drawn under a Retainage Letter of Credit are maintained and used only as provided in this Agreement.

5.1.13.2 Release of Retainage, Retainage Letter of Credit. Upon the occurrence of Substantial Completion and upon agreement by the Parties on the components, and monetary value corresponding to each component, of the final Punch List, and satisfactory completion of the Completed Reliability Test which demonstrates satisfaction of the Reliability Requirement, the Retainage shall be reduced or, if applicable, Owner shall authorize the Retainage Letter of Credit issuer to reduce the stated amount of the Retainage Letter of Credit, in each case, to an amount equal to the sum of (a) 200% of the value of the Punch List as determined by Owner in consultation with Contractor and (b) if Contractor is liable for any Buy Down Amount in respect of the Reliability Requirement pursuant to Section 8.4.2.4, the full amount of Contractor’s liability pursuant to Section 8.4.2.4. This amount, and/or credit, as applicable, will be held by Owner until the Final Completion of the Work and shall be paid, or released, as applicable to Contractor with the final payment pursuant to Section 5.5, and Owner shall return the Retainage Letter of Credit to Contractor within ten (10) Business Days of the Final Completion Date.

5.1.13.3 Performance Requirements. If the Performance Test results upon which Substantial Completion is achieved demonstrate satisfaction of the Minimum Performance Requirements, then no Retainage shall be released hereunder until all Buy Down Amounts payable pursuant to Section 8.4 have been paid to Owner.

5.1.14 Construction Price Inclusive. The Parties agree that the Construction Price provided for in this Article 5 includes all amounts payable to Contractor for full and satisfactory completion of the Work.

5.1.15 Contingency Sharing Payment. On the Final Completion Date, Contractor shall pay to Owner an amount equal to the Contingency Sharing Payment and deliver to Owner a statement calculating such Contingency Sharing Payment in reasonable detail. Owner may arrange for the audit, at Owner’s expense by a third-party auditing firm reasonably acceptable to Contractor, of the Actual Fixed Costs and other items that are included in the calculation of the Contingency Sharing Payment to determine the accuracy of the Contingency Sharing Payment. The Contractor shall provide the Owner with a monthly non-binding estimate of the contingency balance based on fixed costs of the Facility incurred at the time. “Contingency Sharing Payment” is that amount which is equal to the lesser of (i) *% of $* or (ii) *% of the amount, if any, by which (A) the Fixed Component ($*), adjusted for Changes, minus profit ($*), adjusted for Changes, exceeds (B) the Actual Fixed Costs. “Actual Fixed Costs” is an amount equal to the sum (without duplication of amounts) of (1) all


amounts paid by Contractor in order to achieve Final Completion plus (2) all amounts incurred in respect of the Work by Contractor for administrative costs and home office overhead of its Affiliates, plus (3) all liquidated damages and other amounts paid by Contractor to Owner hereunder, warranty payments, amounts paid by Contractor under indemnities hereunder; provided, however, that there shall be excluded from Actual Fixed Costs all Reimbursable Costs and costs that are otherwise reimbursed under this Agreement (such as Force Majeure costs, but not including costs incurred under Change Orders), costs that are recovered from the proceeds of insurance or payments from third parties including Subcontractors, Contractor’s income Taxes or corporate franchise Taxes, or profit of Contractor or its Affiliates. For purposes of determining Actual Fixed Costs, administrative costs and overhead and other similar amounts in respect of costs of Affiliates shall be limited to amounts allocated to construction work by Contractor and its Affiliates uniformly across all of its construction work.

5.2 Owner Supplier Payments. Invoicing for and payments to Owner Suppliers under Owner Contracts shall be handled by the Parties in accordance with Appendix M.

5.3 Owner Review. Without prejudicing Owner’s other rights under this Agreement, for purposes of determining the amount of payment to which Contractor is entitled in respect of an Application for Payment, Owner shall promptly notify Contractor concerning any invoiced amount or portion thereof that is in dispute (including where Owner contends that there is a deficiency with respect to such Application for Payment and/or the accompanying documentation) and of the basis for such Dispute as soon as reasonably practicable with the objective of allowing time for the Parties to resolve such Dispute prior to the date on which payment on the disputed matter would otherwise be due. It is understood by Contractor that Owner’s determination under this Section 5.3 may be made in conjunction with the Financing Parties, and the approval by the Financing Engineer may be required prior to payment.

5.4 Payment Due Dates. Except with respect to those amounts which may have been disputed in good faith by Owner in accordance with Section 5.3, Owner shall make full payment of the monthly amounts invoiced by Contractor pursuant to Section 5.1 such that payment is received by Contractor in immediately available funds by the last Business Day of the month in which the Application for Payment was submitted, except as provided in Section 5.1.4.

5.5 Final Payment. Upon Final Completion, Contractor shall submit a final Application for Payment and supporting documentation, which shall set forth all amounts due and remaining unpaid to it and otherwise complying with the requirements of this Agreement, accompanied by (i) a full Lien waiver and release from Contractor that is applicable to all of the Work, conditioned solely on receipt of such final payment, and (ii) a full Lien release and waiver from each Subcontractor for


all Work performed under a Contractor Subcontract or Owner Contract with an aggregate value equal to or exceeding fifty thousand Dollars ($50,000.00), in each case, in the forms attached hereto as Appendix I-11. The final Application for Payment shall also include release of all remaining Retainage that Owner is not entitled to retain pursuant to the terms of this Agreement.

5.6 Withholding to Protect Owner from Loss.

5.6.1 Withholding. Owner may, without prejudice to any other rights Owner may have hereunder, after issuing a Notice to Contractor, also withhold all or any portion of any payment to such extent as may be necessary in Owner’s reasonable judgment to protect Owner from losses, costs, expenses or damages for which Contractor is liable due to:

 

  (a) unpaid overdue amounts due to Owner by Contractor under this Agreement; and

 

  (b) Contractor Liens (with respect to Liens filed by Subcontractors) for which, 20 days after having received knowledge thereof, Contractor has failed to remove the Contractor Lien or provide a Contractor Lien Bond.

5.6.2 Lien Title Indemnity. Notwithstanding Section 5.6.1, Owner shall release any payments withheld because of any Lien if Contractor obtains a Contractor Lien Bond; provided, however, that other than compliance with its obligation to deliver a Contractor Lien Bond, the posting of such Contractor Lien Bond does not relieve Contractor of any other obligations (including its indemnity obligations) under this Agreement.

5.7 Delinquent Payments. Payments not made when due will bear interest from the due date thereof until the date paid at the Late Payment Rate. For the avoidance of doubt, any portion of any payment that is disputed and not paid in accordance with the provisions of this Agreement and subsequently determined to be payable on the original due date thereof will bear interest in accordance with the foregoing from the date such portion of the disputed amount was due (assuming there had been no Dispute) until the date of actual payment.

5.8 Contractor Liens. Contractor shall cause each Contractor Lien to be canceled or discharged of record or furnish Owner with a Contractor Lien Bond. If Contractor does not promptly satisfy such Contractor Lien or fails to provide Owner with a Contractor Lien Bond in lieu thereof, in any event within the period specified in Section 5.6.1(b), then Owner may, after Notice to Contractor and expiration of 10 days after Contractor’s receipt of such notice, cure or release such Contractor Lien by payment of money or otherwise, and, if Owner arranges a Contractor Lien Bond with respect to such Contractor Lien, Contractor shall reimburse Owner for the reasonable cost of arranging such Contractor Lien Bond within 30 days after a request therefor by


Owner, if and to the extent that Contractor was not justified in withholding the payment underlying such Lien.

5.9 Forecasts. On or before the Commencement Date, Contractor shall deliver to Owner a cash flow forecast covering the period from the date of the forecast through Final Completion in the format reasonably required by Owner. During the Term, Contractor shall thereafter update such forecast quarterly or at such earlier time when circumstances materially differ from the immediately preceding cash flow forecast. It is recognized that forecasts are forward-looking projections and variances from such forecasts shall not affect Owner’s payment obligations hereunder.

5.10 Total Work Cost Bonus Amount. Upon Final Completion, if the Total Work Cost is less than the Target Total Work Cost, then Contractor shall be entitled to a bonus in the amount of * percent (*%) of the difference between the Total Work Cost and the Target Total Work Cost (the “Total Work Cost Bonus Amount”).


ARTICLE 6

COMPLETION AND ACCEPTANCE OF THE WORK

6.1 Phase I Mechanical Completion.

6.1.1 Criteria for Phase I Mechanical Completion. Each of the following conditions must be met for “Phase I Mechanical Completion” to occur:

6.1.1.1 Contractor has performed or provided: (a) the design, engineering, procurement, permitting (in respect of Contractor Permits only), construction and installation in accordance with this Agreement and manufacturer’s requirements of the Phase I Portion of the Project; and (b) all of the connections of all such Equipment and Materials between and to other applicable Equipment and Materials as required by way of piping, wiring, controls, and safety systems, in each case, in connection with the Phase I Portion of the Project. In addition, Contractor shall have assured that:

 

  (i) all such Equipment and related operating systems that comprise the Phase I Portion of the Project are individually cleaned, leak checked, lubricated and aligned in accordance with Professional Standards;

 

  (ii) all initial fills associated with the Phase I Portion of the Project have been completed;

 

  a. all instruments associated with the Phase I Portion of the Project are calibrated and loop checked, and to the extent possible without operating the equipment or Project, the plant control system associated with the Phase I Portion of the Project has been verified as fully operational and ready for startup;

 

  b. all electrical wiring associated with the Phase I Portion of the Project has been checked for continuity and proper termination, and meggered where applicable,

 

  (iii) all relays associated with the Phase I Portion of the Project are set in their final configuration, pending operational confirmation and adjustment;

 

  (iv) all Equipment associated with the Phase I Portion of the Project is checked out in accordance with Professional Standards and OEM requirements;

 

  (v) all ground checks associated with the Phase I Portion of the Project are complete;


  (vi) piping and pressure vessels associated with the Phase I Portion of the Project are hydro tested and flushed in accordance with Professional Standards or where not possible, pressure tested using procedures prepared by Contractor and approved by Owner;

 

  (vii) all motor rotation checks associated with the Phase I Portion of the Project are complete;

 

  (viii) all electrical devices (including the generator panels) associated with the Phase I Portion of the Project have been energized;

 

  (ix) all checks required by the Transmission Owner associated with the Phase I Portion of the Project, if any, have been completed;

 

  (x) all electrical circuits associated with the Phase I Portion of the Project have been checked to verify that such equipment and operating systems have been correctly installed;

 

  (xi) all Equipment associated with the Phase I Portion of the Project is ready for initial operation of the Phase I Portion of the Project, and may be so operated, without damage thereto or to any other property and without injury to any person;

 

  (xii) an initial Phase I Punch List has been provided to Owner by Contractor, and approved by Owner.

6.1.1.2 Contractor has completed the Work necessary to cause the Phase I Portion of the Project to be capable of starting up safely and in accordance with Applicable Legal Requirements, OEM requirements, and Prudent Industry Practices.

6.1.1.3 Contractor has completed the training of Owner provided Personnel designated for operation and maintenance of the Phase I Portion of the Project, as required by Appendix A.

6.1.1.4 A draft Phase I Portion of the Project O&M Manual, including vendor O&M Manuals related to the applicable MHF(s), has been provided as required by Appendix A.

6.1.2 Notice and Report of Phase I Mechanical Completion. When Contractor determines that it has satisfied the conditions for Phase I Mechanical Completion, Contractor shall deliver written Notice of such determination (“Notice of Phase I Mechanical Completion”) to Owner in the form set forth in Appendix I-4. The Notice of Phase I Mechanical Completion will contain a certification by Contractor that it has satisfied all of the conditions for Phase I Mechanical Completion pursuant to this Section 6.1 and Appendix A.


6.1.3 Achievement of Phase I Mechanical Completion. Within 10 Business Days of receipt of the Notice of Phase I Mechanical Completion by Owner, Owner shall inspect the Phase I Portion of the Project, and/or cause the Phase I Portion of the Project to be inspected by the Owner Engineer and/or Owner Agents, and by its other designees, and Owner shall either: (a) deliver to Contractor a written acceptance of Contractor’s Notice of Phase I Mechanical Completion in the form set forth in Appendix I-3 (the “Certificate of Phase I Mechanical Completion”), or (b) notify Contractor in writing that it disputes (or cannot confirm) Contractor’s certification that the conditions for Phase I Mechanical Completion have been met, stating with specificity the reasons therefor. If Owner issues the Certificate of Phase I Mechanical Completion, the date of Owner’s receipt of the Contractor’s Notice of Phase I Mechanical Completion shall be deemed the “Phase I Mechanical Completion Date”. If Owner notifies Contractor that it disputes satisfaction of the conditions for Phase I Mechanical Completion or cannot confirm Contractor satisfaction of the conditions, then Contractor shall either promptly undertake such action or Work as is necessary to meet or verify such conditions and issue another Notice of Phase I Mechanical Completion to Owner or refer the matter to Dispute resolution in accordance with this Agreement. In the event Contractor prevails in the Dispute, the date of Owner’s receipt of the then-applicable Notice of Phase I Mechanical Completion will be deemed the “Phase I Mechanical Completion Date”.

6.2 Mechanical Completion.

6.2.1 Criteria for Mechanical Completion. Each of the following conditions must be met for “Mechanical Completion” to occur:

6.2.1.1 Phase I Mechanical Completion must have occurred and with respect to the Balance of the Project, Contractor has performed or provided: (a) the design, engineering, procurement, permitting (in respect of Contractor Permits only), construction and installation in accordance with this Agreement and manufacturer’s requirements for the Balance of the Project; and (b) all of the connections of all such Equipment and Materials between and to other applicable Equipment and Materials as required by way of piping, wiring, controls, and safety systems, in each case, in connection with the Balance of the Project. In addition, Contractor shall have assured that:

 

  (i) all such Equipment and related operating systems that comprise the Balance of the Project are individually cleaned, leak checked, lubricated and aligned in accordance with Professional Standards;

 

  (ii) all initial fills associated with the Balance of the Project have been completed;

 

  a.

all instruments associated with the Balance of the Project are calibrated and loop checked, and to the extent possible


 

without operating the Equipment or Project, the plant control system associated with the Balance of the Project has been verified as fully operational and ready for startup;

 

  b. all electrical wiring associated with the Balance of the Project has been checked for continuity and proper termination, and meggered where applicable,

 

  (iii) all relays associated with the Balance of the Project are set in their final configuration, pending operational confirmation and adjustment;

 

  (iv) all Equipment associated with the Balance of the Project is checked out in accordance with Professional Standards and OEM requirements;

 

  (v) all ground checks associated with the Balance of the Project are complete;

 

  (vi) piping and pressure vessels associated with the Balance of the Project are hydro tested and flushed in accordance with Professional Standards or where not possible, pressure tested using procedures prepared by Contractor and approved by Owner;

 

  (vii) all motor rotation checks associated with the Balance of the Project are complete;

 

  (viii) all electrical devices (including the generator panels) associated with the Balance of the Project have been energized;

 

  (ix) the medium and high voltage connections to and from the step-up transformer to the Transmission Facilities’ dead-end structure located as provided in Appendix A have been completed, and all checks required by the utility associated with the Balance of the Project have been completed such that back-feed can be provided;

 

  (x) all electrical circuits associated with the Balance of the Project have been checked to verify that such equipment and operating systems have been correctly installed;

 

  (xi) all Equipment associated with the Balance of the Project is ready for initial operation of the Balance of the Project, and may be so operated, without damage thereto or to any other property and without injury to any person;


  (xii) the steam turbine is on turning gear and ready for commissioning and start-up;

 

  (xiii) an initial Punch List relating to the Balance of the Project has been provided to Owner by Contractor, and approved by Owner.

6.2.1.2 Contractor has completed the Work necessary to cause the Balance of the Project to be capable of starting up safely and in accordance with Applicable Legal Requirements, OEM requirements, and Prudent Industry Practices.

6.2.1.3 Contractor has completed the training of Owner provided Personnel designated for operation and maintenance of the Project, as required by Appendix A.

6.2.1.4 A draft total O&M Manual, including vendor O&M Manuals, has been provided as required by Appendix A.

6.2.2 Notice and Report of Mechanical Completion. When Contractor determines that it has satisfied the conditions for Mechanical Completion, Contractor shall deliver written Notice of such determination (“Notice of Mechanical Completion”) to Owner in the form set forth in Appendix I-4. The Notice of Mechanical Completion will contain a certification by Contractor that it has satisfied all of the conditions for Mechanical Completion pursuant to this Section 6.2.

6.2.3 Achievement of Mechanical Completion. Within 10 Business Days of receipt of the Notice of Mechanical Completion by Owner, Owner shall inspect the Project, and/or cause the Project to be inspected by the Owner Engineer and/or Owner Agents, and by its other designees, and Owner shall either: (a) deliver to Contractor a written acceptance of Contractor’s Notice of Mechanical Completion in the form set forth in Appendix I-3 (the “Certificate of Mechanical Completion”), or (b) notify Contractor in writing that it disputes (or cannot confirm) Contractor’s certification that the conditions for Mechanical Completion have been met, stating with specificity the reasons therefor. If Owner issues the Certificate of Mechanical Completion, the date of Owner’s receipt of Contractor’s Notice of Mechanical Completion shall be deemed the “Mechanical Completion Date”. If Owner notifies Contractor that it disputes satisfaction of the conditions for Mechanical Completion or cannot confirm Contractor satisfaction of the conditions, then Contractor shall either promptly undertake such action or Work as is necessary to meet or verify such conditions and issue another Notice of Mechanical Completion to Owner or refer the matter to Dispute resolution in accordance with this Agreement. In the event Contractor prevails in the Dispute, the date of Owner’s receipt of the then applicable Notice of Mechanical Completion will be deemed the “Mechanical Completion Date”.


6.3 Initial Synchronization. Contractor shall provide Owner with at least 30 days prior Notice of the projected time or times it will attempt Initial Synchronization of the steam turbine-generator, and 48 hours prior verbal notice of the actual time or times it will attempt Initial Synchronization.

6.4 Phase I Substantial Completion.

6.4.1 Criteria for Phase I Substantial Completion. Each of the following conditions must be met for “Phase I Substantial Completion” to occur:

 

  (a) Phase I Mechanical Completion has been achieved;

 

  (b) the most recent Completed Phase I Performance Test demonstrates concurrent achievement of (i) the Phase I Activated Carbon Production Requirement, (ii) the Phase I Activated Carbon Specification Requirement, (iii) the Phase I Environmental Compliance Requirement, and (iv) compliance with all Applicable Legal Requirements applicable to Contractor under this Agreement and necessary for the Phase I Portion of the Project to be capable of operations in compliance therewith as applicable and in accordance with Appendix C;

 

  (c) during the Completed Phase I Performance Test, (i) the Phase I Portion of the Project, its individual components, systems, subsystems and Equipment were not operated outside their designed continuous rated limits, (ii) only the normal contingent or operating Personnel performing their anticipated normal operations and maintenance activities with respect to the Phase I Portion of the Project were required to operate and maintain the Phase I Portion of the Project during the conduct of such Completed Phase I Performance Test and (iii) no temporary or special equipment that is not part of the Work was required to conduct or complete such Completed Phase I Performance Test;

 

  (d) there are no Liens (except those for which a Contractor Lien Bond has been provided in accordance with the terms of this Agreement) resulting from the actions or failure to act of Contractor, its Personnel or any of the Owner Suppliers, other than Liens resulting from the failure of Owner to pay all amounts due to Contractor and/or Owner Suppliers in accordance with the terms of this Agreement;

 

  (e) Contractor has provided to Owner special tools and spare parts identified by Owner after review of the special tools and supplier recommended spare parts list provided by Contractor pursuant to Appendix A which are required in connection with the Phase I Portion of the Project. Special tools may be reconditioned subject to Owner approval;


  (f) the draft Project O&M Manual with respect to the Phase I Portion of the Project and all other Submittals required to be submitted prior to or as a condition of Phase I Substantial Completion have been provided (such draft must include all information and manuals necessary for Owner to operate and maintain the Phase I Portion of the Work in accordance with Prudent Industry Practices and the other requirements of this Agreement);

 

  (g) Contractor has completed all Work on or with respect to the Phase I Portion of the Project so that the Phase I Portion of the Project is capable of being operated in the normal course of business in accordance with the operating procedures set forth in the draft Project O&M Manual with respect to the Phase I Portion of the Project and Prudent Industry Practices, except for any remaining items set forth in the Phase I Punch List;

 

  (h) Contractor and Owner have agreed on the components of the final Phase I Punch List (although there may be disagreement about the value of the components of Work reflected thereon);

 

  (i) Contractor has obtained all Contractor Permits required for Phase I Substantial Completion; and

 

  (j) Contractor has completed the training of Owner-provided Personnel required for the operation and maintenance of the Phase I Portion of the Project pursuant to Appendix A.

6.4.2 Notice and Report of Phase I Substantial Completion. When Contractor determines that it has satisfied the conditions for Phase I Substantial Completion in accordance with Section 6.4.1, Contractor shall deliver a Notice of such determination (“Notice of Phase I Substantial Completion”) to Owner in the form set forth in Appendix I-4. The Notice of Phase I Substantial Completion will contain a certification by Contractor that it has satisfied all of the conditions for Phase I Substantial Completion pursuant to this Section 6.4 and a report with sufficient detail (including preliminary laboratory results sufficient for a reasonable person to conclude that there is a high probability that the final laboratory results will confirm that the applicable conditions of Phase I Substantial Completion have been achieved) to enable Owner to determine whether Contractor has achieved such requirements. Contractor shall provide to Owner final laboratory results promptly upon receipt, but in no case later than thirty (30) days after the Completed Phase I Performance Test.

6.4.3 Achievement of Phase I Substantial Completion. Within 10 Business Days of receipt by Owner and the Owner Engineer of the Notice of Phase I Substantial Completion, Owner shall inspect the Phase I Portion of the Project, and/or cause the Phase I Portion of the Project to be inspected by the Owner Agents, Owner


Engineer and/or the Financing Engineer, and Owner shall either: (a) deliver to Contractor a written acceptance of Contractor’s Notice of Phase I Substantial Completion in the form set forth in Appendix I-3 (the “Certificate of Phase I Substantial Completion”), or (b) notify Contractor in writing that it disputes Contractor’s certification that the conditions for Phase I Substantial Completion have been met, stating the reasons therefor or that Owner cannot confirm that such conditions have been satisfied. If Owner delivers the Certificate of Phase I Substantial Completion, the date of the Certificate of Phase I Substantial Completion will be deemed the “Phase I Substantial Completion Date; provided, however, for the purposes of any Contractor delay damages for failing to cause the Phase I Substantial Completion Date to occur prior to the Required Phase I Substantial Completion Date, such damages shall cease to accrue on the date Owner receives the Notice of Phase I Substantial Completion upon which the Phase I Substantial Completion Date is ultimately achieved. If Owner notifies Contractor that it disputes satisfaction of the conditions for Phase I Substantial Completion or cannot verify such satisfaction, then Contractor shall either promptly undertake such action or Work as is necessary to meet such conditions or verify satisfaction of such conditions and issue another Notice of Phase I Substantial Completion to Owner or refer the matter to dispute resolution in accordance with this Agreement. In the event Contractor prevails in the Dispute, the date of Owner’s receipt of the then applicable Notice of Phase I Substantial Completion will be deemed the Phase I Substantial Completion Date.

If Owner fails to respond to a Certificate of Phase I Substantial Completion within such 10 Business Day period and subsequently disputes that Phase I Substantial Completion has been achieved, Owner shall waive any Late Phase I Substantial Completion Damages, if any, that would have otherwise accrued for the number of days equal to the number of days by which Owner’s response was delayed beyond the 10 Business Day period.

6.4.4 Care, Custody and Control During Dispute Resolution Regarding Phase I Substantial Completion. In the event of a Dispute regarding whether Phase I Substantial Completion has been achieved, Owner may elect to either take care, custody and control of the Phase I Portion of the Project or have Contractor retain care, custody and control of the Phase I Portion of the Project. If the Dispute is resolved in favor of Contractor determining that Phase I Substantial Completion was achieved and Owner has elected to have Contractor retain care, custody and control of the Phase I Portion of the Project, then Phase I Substantial Completion will be deemed to have occurred on the date on which Owner received Contractor’s then applicable Notice of Phase I Substantial Completion; provided, however, that turnover of the care, custody and control of the Phase I Portion of the Project to Owner will occur on the Business Day following the day on which the Dispute is resolved. If the Dispute is resolved in favor of Owner, Contractor shall (i) provide Owner with a Recovery Plan for achievement of Phase I Substantial Completion, and (ii) if Owner has taken care, custody and control of the Phase I Portion of the Project, return care,


custody and control of all or the incomplete portions of the Phase I Portion of the Project, in Owner’s discretion, to Contractor until it satisfies the conditions for Phase I Substantial Completion and Owner issues the Certificate of Phase I Substantial Completion in accordance with Section 6.4.3; provided, however, that prior to the return of care, custody and control of the Phase I Portion of the Project to Contractor, Owner shall perform all repairs, replacements or refurbishments required to return the Phase I Portion of the Project to be returned to Contractor to its condition at the time of turnover thereof to Owner, excepting only ordinary wear and tear.

6.5 Creation of Phase I Punch List. When Contractor believes that a Phase I Portion of the Project system is ready for commissioning and startup, Contractor shall prepare and deliver to Owner an initial list setting forth (a) all those certain minor, non-safety items that do not impact the performance (including reliability, activated carbon output, operability, safety or mechanical or electrical integrity) of the Phase I Portion of the Project or compliance with Applicable Legal Requirements, including Permits, and which remain to be performed to complete the Work related to the Phase I Portion of the Project, (b) the proposed time limits within which Contractor will complete such remaining Work, and (c) Contractor’s plan to complete such Work on or before the Target Substantial Completion Date. Upon its receipt of such list, Owner shall review the same and notify Contractor of any proposed revisions thereto. Such list shall be subject to additions and deletions as systems are added or completed, or as defects are identified by the Parties. Owner’s Authorized Representative and Contractor’s Authorized Representative shall then meet, consult in good faith and, prior to the Phase I Substantial Completion Date, agree upon the final list and plan, including the approved time limits within which Contractor shall perform such remaining Work and the value of the items of Work described therein (the “Phase I Punch List”). Once the items on the Phase I Punch List have been identified, Contractor shall promptly begin working on the items thereon. The plan for completing the Work specified in the Phase I Punch List may be amended by Contractor at any time prior to Substantial Completion upon Notice to Owner to reflect the progress of completing such Work; provided, however, that any such amendment to the plan must reasonably provide for the completion of all such Work by the Target Substantial Completion Date. The review and comment by Owner or its representatives of any matter relating to the Phase I Punch List will not relieve Contractor of its obligations under this Agreement.

6.6 Transfer of Possession and Control of the Phase I Portion of the Project to Owner. On or before the Phase I Substantial Completion Date, Contractor and Owner shall agree upon a schedule of the dates and times, if any, when Contractor will require a reduced operation or complete shut down of the Phase I Portion of the Project or the imposition of operating restrictions on the Phase I Portion of the Project in order to complete the Work remaining on the Phase I Portion of the Project under this Agreement; provided, however, that (a) such schedule shall provide for no more than 10 days of reduced operation and no more than 5 days of complete shutdown of the Phase I Portion of the Project and (b) such schedule will


provide for such reduced operation or complete shutdown, or the imposition of operating restrictions on, the Phase I Portion of the Project only during a scheduled outage, if any, so as to accommodate Owners’ reliance on the activated carbon from the Phase I Portion of the Project. Subject to Section 6.4.4, on the Phase I Substantial Completion Date or the date of termination of this Agreement, if earlier, Owner shall take and thereafter be solely responsible for the care, custody, control, operation, and maintenance of the Phase I Portion of the Project. Following transfer of possession and control of the Phase I Portion of the Project to Owner, Contractor (and its Subcontractors and the Owner Suppliers) will have reasonable access to the Phase I Portion of the Project consistent with the schedule established in accordance with, and the other requirements of, this Section 6.6 and the cooperation of Owner as necessary for Contractor to complete any Work still remaining to be performed hereunder, including the Phase I Punch List items. Following issuance of the Certificate of Phase I Substantial Completion to Owner, Contractor shall comply with health, safety and security rules of Owner supplied reasonably in advance (including permit-to-work procedures and requirements), which will be consistent with Prudent Industry Practices, regarding activities at the Phase I Portion of the Project and the associated portion of the Project Site so transferred and shall coordinate its activities at the Phase I Portion of the Project and the associated portion of the Project Site with any other Person performing work, operation, maintenance or other activities at such location.

6.7 Substantial Completion.

6.7.1 Preliminary Repairs, Replacements and Refurbishments. Between the Phase I Substantial Completion Date and the conduct of the Performance Tests, Owner shall cause the Phase I Portion of the Project to be operated and maintained in accordance with (a) the O&M Manual delivered to Owner pursuant to Section 6.4.1(f), (b) Prudent Industry Practices and (c) Applicable Legal Requirements (collectively, the “Phase I Operating Requirements”). At least 30 days prior to the date Contractor proposes to conduct the Performance Tests for Substantial Completion, Contractor shall provide Notice to Owner of all repairs, replacements or refurbishments required by the Phase I Operating Requirements that have not been performed and that are required in order to return the Phase I Portion of the Project to its condition at the time of turnover thereof to Owner upon occurrence of Phase I Substantial Completion (excepting only ordinary wear and tear). In the event of any disagreement between Owner and Contractor with respect to these requirements, such dispute shall be resolved by the decision of the Financing Engineer; provided that any reasonable repairs, replacements or refurbishments required by Contractor shall be made. All repairs and replacements required by this Section 6.7.1 shall be properly performed and completed within a reasonable time prior to the commencement of the Performance Tests. If Owner’s performance of its obligations under this Section delays the conduct of the Performance Test by Contractor beyond the date Contractor would have otherwise conducted such Performance Test as reflected in its Notice delivered pursuant to Section 6.7.3, then


Contractor shall be relieved of liability for any delay or associated delay liquidated damages resulting from such Owner-caused delay and the Project Schedule shall be adjusted on a day for day basis to account for such delay.

6.7.2 Substantial Completion. Each of the following conditions must be met for “Substantial Completion” to occur:

 

  (a) Mechanical Completion and Phase I Substantial Completion have been achieved;

 

  (b) the most recent Completed Performance Test demonstrates concurrent achievement of (i) the Activated Carbon Production Requirement (or the Minimum Carbon Capacity Generation), (ii) the Activated Carbon Specification Requirement, (iii) the Lime Consumption Requirement (or the Maximum Lime Consumption Requirement), (iv) the Net Electrical Output Requirement (or the Minimum Net Electrical Output Requirement), (v) the Environmental Compliance Requirement and (vi) compliance with all Applicable Legal Requirements applicable to Contractor under this Agreement and necessary for the Project to be capable of operations in compliance therewith as applicable and in accordance with Appendix C, all as more particularly set forth in Appendix C;

 

  (c) during the Completed Performance Test, (i) the Project, its individual components, systems, subsystem and Equipment were not operated outside their designed continuous rated limits, (ii) only the normal contingent or operating Personnel performing their anticipated normal operations and maintenance activities with respect to the Project were required to operate and maintain the Project during the conduct of such Completed Performance Test and (iii) no temporary or special equipment that is not part of the Work was required to conduct or complete such Completed Performance Test;

 

  (d) there are no Liens (except those for which a Contractor Lien Bond has been provided in accordance with the terms of this Agreement) resulting from the actions or failure to act of Contractor, its Personnel or any of the Owner Suppliers, other than Liens resulting from the failure of Owner to pay all amounts due to Contractor and/or Owner Suppliers in accordance with the terms of this Agreement;

 

  (e) Contractor has provided to Owner special tools and spare parts identified by Owner after review of the special tools and supplier recommended spare parts list provided by Contractor pursuant to Appendix A which are required in connection with the Project. Special tools may be reconditioned subject to Owner approval;


  (f) the substantially final Project O&M Manual with respect to the Project and all other Submittals required to be submitted prior to or as a condition of Substantial Completion have been provided.

 

  (g) Contractor has completed all Work on or with respect to the Project so that the Project is capable of being operated in the normal course of business in accordance with the operating procedures set forth in the Project operations and the Project and Prudent Industry Practices, except for any remaining items set forth in the Punch List;

 

  (h) Contractor has obtained all Contractor Permits required for Substantial Completion; and

 

  (i) Contractor has completed the training of Owner-provided personnel required for the operation and maintenance of the Project pursuant to Appendix A.

6.7.3 Notice and Report of Substantial Completion. When Contractor determines that it has satisfied the conditions for Substantial Completion in accordance with Section 6.7.2, Contractor shall deliver a Notice of such determination (“Notice of Substantial Completion”) to Owner in the form set forth in Appendix I-4. The Notice of Substantial Completion will contain a certification by Contractor that it has satisfied all of the conditions for Substantial Completion pursuant to this Section 6.7 and a report with sufficient detail (including preliminary laboratory results sufficient for a reasonable person to conclude that there is a high probability that the final laboratory results will confirm that the applicable conditions of Substantial Completion have been achieved) to enable Owner to determine whether Contractor has achieved such requirements. Contractor shall provide to Owner final laboratory results promptly upon receipt, but in no case later than thirty (30) days after the Completed Performance Test.

6.7.4 Achievement of Substantial Completion. Within 10 Business Days of receipt by Owner and the Owner Engineer of the Notice of Substantial Completion, Owner shall inspect the Project, and/or cause the Project to be inspected by the Owner Agents, Owner Engineer and/or the Financing Engineer, and Owner shall either: (a) deliver to Contractor a written acceptance of Contractor’s Notice of Substantial Completion in the form set forth in Appendix I-3 (the “Certificate of Substantial Completion”), or (b) notify Contractor in writing that it disputes Contractor’s certification that the conditions for Substantial Completion have been met, stating the reasons therefor or cannot confirm that such conditions have been satisfied. If Owner delivers the Certificate of Substantial Completion, the date of the Certificate of Substantial Completion will be deemed the “Substantial Completion Date”; provided, however, that for the purposes of any Contractor delay damages for failing to cause the Substantial Completion Date to occur prior to the Required Substantial Completion Date, such damages shall cease to accrue on the date Owner


receives the Notice of Substantial Completion upon which the Substantial Completion Date is ultimately achieved. If Owner notifies Contractor that it disputes satisfaction of the conditions for Substantial Completion or cannot verify such satisfaction, then Contractor shall either promptly undertake such action or Work as is necessary to meet such conditions or verify satisfaction of such conditions and issue another Notice of Substantial Completion to Owner or refer the matter to dispute resolution in accordance with this Agreement. In the event Contractor prevails in the Dispute, the date of Owner’s receipt of the then applicable Notice of Substantial Completion will be deemed the Substantial Completion Date.

If Owner fails to respond to a Certificate of Substantial Completion within such 10 Business Day period and subsequently disputes that Substantial Completion has been achieved, Owner shall waive any Late Substantial Completion Damages, if any, that would have otherwise accrued for the number of days equal to the number of days by which Owner’s response was delayed.

Notwithstanding the foregoing, if Contractor is ready, willing and able to perform the Performance Tests and has provided its Notice of such intent pursuant to Section 6.4.2 but is prevented from conducting the Performance Tests for a period of 180 days due to the failure to complete construction of the Multi Hearth Furnaces, then as of the 181st day of such delay Contractor shall be deemed to have passed the Performance Tests as of the date of Owner’s receipt of such Notice and shall thereafter proceed to achieve Final Completion; provided, however, that notwithstanding the foregoing, Contractor shall retain, and be deemed to have retained, care, custody and control of the Project during such period of delay.

6.7.5 Care, Custody and Control During Dispute Resolution Regarding Substantial Completion. In the event of a Dispute regarding whether Substantial Completion has been achieved, Owner may elect to either take care, custody and control of the entire Project or have Contractor retain care, custody and control of the Balance of the Project. If the Dispute is resolved in favor of Contractor determining that Substantial Completion was achieved and Owner has elected to have Contractor retain care, custody and control of the Balance of the Project, then Substantial Completion will be deemed to have occurred on the date on which Owner received Contractor’s then applicable Notice of Substantial Completion; provided, however, that turnover of the care, custody and control of the Balance of the Project to Owner will occur on the Business Day following the day on which the Dispute is resolved. If the Dispute is resolved in favor of Owner, Contractor shall (i) provide Owner with a Recovery Plan for achievement of Substantial Completion, and (ii) if Owner has taken care, custody and control of the entire Project, return care, custody and control of all or the incomplete portions of the Balance of the Project, in Owner’s discretion, to Contractor until it satisfies the conditions for Substantial Completion and Owner issues the Certificate of Substantial Completion in accordance with Section 6.7.3; provided, however, that prior to the return of care, custody and control of the Balance of the Project to Contractor, Owner shall perform all repairs,


replacements or refurbishments required to return the Balance of the Project to be returned to Contractor to its condition at the time of turnover thereof to Owner, excepting only ordinary wear and tear.

6.7.6 Project Punch List. Prior to Substantial Completion, Contractor shall prepare and deliver to Owner an initial list setting forth (a) all those certain minor, non-safety items that do not impact the performance (including reliability, activated carbon output, operability, safety or mechanical or electrical integrity) of the Project or compliance with Applicable Legal Requirements, including Permits, and which remain to be performed to complete the Work related to the Project, (b) the proposed time limits within which Contractor will complete such remaining Work, and (c) Contractor’s plan to complete such Work on or before the Final Completion Date. Upon its receipt of such list, Owner shall review the same and notify Contractor of any proposed revisions thereto. Such list shall be subject to additions and deletions as systems are added or completed, or as defects are identified by the Parties. Owner’s Authorized Representative and Contractor’s Authorized Representative shall then meet, consult in good faith and, prior to the Substantial Completion Date, agree upon the final list and plan, including the approved time limits within which Contractor shall perform such remaining Work and the value of the items of Work described therein (the “Punch List”). Once the items on the Punch List have been identified, Contractor shall promptly begin working on the items thereon. The plan for completing the Work specified in the Punch List may be amended by Contractor at any time prior to Final Completion upon Notice to Owner to reflect the progress of completing such Work; provided, however, any such amendment to the plan must reasonably provide for the completion of all such Work by the Final Completion Date. The review and comment by Owner or its representatives of any matter relating to the Punch List will not relieve Contractor of its obligations under this Agreement.

6.7.7 Possession and Control. On or before the Substantial Completion Date, Contractor and Owner shall agree upon a schedule of the dates and times, if any, when Contractor will require a partial or complete shut down of the Project or the imposition of operating restrictions on the Project in order to complete the Work remaining on the Project under this Agreement; provided, however, that (a) such schedule shall provide for no more than 5 days of partial or complete shutdown of, or imposition of operating restrictions on, the Project, (b) such schedule will provide for such partial or complete shutdown of, or the imposition of operating restrictions on, the Project only during a scheduled outage, if any, so as to accommodate Owners’ reliance on the activated carbon from the Project and (c) to the extent permitted by Applicable Legal Requirements, during any such period of partial or complete shut down of the Project, Contractor shall maintain, or cause to be maintained, the natural gas connection to the MHFs provided as part of the Work to avoid a Contractor-caused interruption in the natural gas supply necessary to maintain the minimum temperature within each MHF as required by the manufacturer to avoid damage to the refractory and other components of the MHF due to temperature loss. Subject to


Section 6.7.5, on the Substantial Completion Date or the date of termination of this Agreement, if earlier, Owner shall take and thereafter be solely responsible for the care, custody, control, operation, and maintenance of the Project. Following transfer of possession and control of the Project to Owner, Contractor (and its Subcontractors and the Owner Suppliers) will have reasonable access to the Project consistent with the schedule established in accordance with, and the other requirements of, this Section 6.7 and the cooperation of Owner as necessary for Contractor to complete any Work still remaining to be performed hereunder, including the Punch List items. Following issuance of the Certificate of Substantial Completion to Owner, Contractor shall comply with health, safety and security rules of Owner supplied reasonably in advance (including permit-to-work procedures and requirements), which will be consistent with Prudent Industry Practices, regarding activities at the Project and the associated portion of the Project Site so transferred and shall coordinate its activities at the Project and the associated portion of the Project Site with any other Person performing work, operation, maintenance or other activities at such location.

6.7.8 Reliability Test.

6.7.8.1 Notice of Commencement; Completed Reliability Test. Within 30 days after Substantial Completion, Contractor shall perform an * day test of the operations of the Project conducted in accordance with the applicable protocols and guidelines set forth in Appendix C (the “Reliability Test”). Contractor shall give Owner at least 10 days’ advance Notice before the commencement of the Reliability Test. After Contractor has completed the Reliability Test demonstrating all of the performance requirements set forth in Appendix C necessary to achieve at least the Minimum Reliability Requirement, it shall give Notice to Owner and the Owner Engineer that it nominates such Reliability Test as a “Completed Reliability Test.” Such Notice will be accompanied by a preliminary test report for such Completed Reliability Test as soon as reasonably practicable but in no event more than 24 hours after the completion of such Completed Reliability Test (or as soon thereafter as such reports are first available to Contractor) providing a summary of the Reliability Test on which it is based and including all raw data taken during such Reliability Test, and a final test report as soon thereafter as possible. A final Completed Reliability Test report must be delivered to Owner in accordance with Appendix C. Contractor shall include sufficient results of testing in the preliminary test report to allow Owner to reasonably determine that there is a high probability that the final test results will confirm that at least the Minimum Reliability Requirement has been achieved. As soon as practicable, but in any event within 10 Business Days after receipt of Notice by Owner and the Owner Engineer, Owner shall give Notice to Contractor either concurring with, indication it cannot confirm concurrence, or rejecting the Completed Reliability Test report and stating its reasons for such Notice, as the case may be. Such procedure shall be repeated until Contractor submits a Notice demonstrating Project performance necessary to achieve at least the


Minimum Reliability Requirement. Subject to Article 17, if Contractor’s Notice of a Completed Reliability Test is rejected by Owner, such test shall not constitute a Completed Reliability Test.

6.7.8.2 Reliability Requirement; Minimum Performance. As a condition precedent to Final Completion, Contractor shall perform the Work with the objective that the Project, under normal operating conditions as prescribed in the O&M Manual, can be reliably operated in accordance with the “Reliability Requirement” as defined in Appendix C (the “Reliability Requirement”); provided, however, that Contractor shall demonstrate, at a minimum, reliable operation of the Project at * percent (*%) of such level (the “Minimum Reliability Requirement”). Contractor shall pay Owner the Buy Down Amount in respect of failure to achieve the full Reliability Requirement as provided in Section 8.4.

6.7.8.3 Increased Throughput Bonus. If during a 24 hour period during the Completed Reliability Test or a different 24 hour period occurring prior to Final Completion, Contractor operates the Project under the Reliability Test conditions and during such 24 hour period demonstrates that the Project can produce, on a rolling average basis, activated carbon product that satisfies the Activated Carbon Production Requirement and the Activated Carbon Specification Requirement at a rate greater than or equal to an aggregate average of * tons per day per MHF across all four (4) MHFs, while continuing to achieve the Reliability Requirement, then Contractor will earn a bonus equal to $* and an additional $* for each additional whole ton per day produced above the aggregate average of * tons per day per MHF across all four (4) MHFs, up to an average of * tons per day (the “Increased Throughput Bonus”); provided, however, that during such twenty-four (24) hour period, no MHF may produce less than * tons per day (and if any MHF falls below this minimum amount, no Increased Throughput Bonus can be earned as a result of such Reliability Test); and provided further, that no production above * tons per day per MHF shall be included in the production calculation; and provided further, that for purposes of earning the Increased Throughput Bonus the full Project performance (including the Multi Hearth Furnaces) shall be included in determining entitlement and Contractor shall not be entitled to relief, credit or adjustment based on performance failures or other performance problems due in whole or in any part of the Project provided under any Owner Contract or which is otherwise part of Owner Suppliers’ Scope, it being the intent of the Parties that such bonus shall only be earned if the complete Project demonstrates such increased throughput. Contractor shall give Owner at least four (4) hours’ prior Notice of the 24 hour period during which the Project will be operated under Reliability Test conditions for purposes of this Section.

6.8 Final Completion.


6.8.1 Criteria for Final Completion of the Project. Each of the following conditions must be met for “Final Completion” to occur:

 

  (a) the Substantial Completion Date has occurred;

 

  (b) the Completed Reliability Test demonstrates that the Reliability Requirement (or the Minimum Reliability Requirement) has been achieved in accordance with the requirements of Appendix C and Applicable Legal Requirements;

 

  (c) all Late Phase I Substantial Completion Damages, Late Substantial Completion Damages, and Buy Down Amounts which have been incurred have been paid by Contractor to Owner;

 

  (d) Contractor has completed all Work and other obligations (except obligations requiring future performance (e.g., warranty Work)), including all Punch List items in accordance with this Agreement;

 

  (e) Contractor has provided all Submittals as required under this Agreement; and

 

  (f) Contractor has delivered to Owner all required final Lien waivers and releases related to the Work as required under Section 5.1.10.

6.8.2 Notice and Report of Final Completion. When Contractor determines that it has satisfied the conditions for Final Completion in accordance with Section 6.8.1, Contractor shall deliver a Notice of such determination (“Notice of Final Completion”) to Owner in the form set forth in Appendix I-4. The Notice of Final Completion will contain a certification by Contractor that it has satisfied all of the conditions for Final Completion pursuant to this Section 6.8 and a report with sufficient detail to enable Owner to determine whether Contractor has achieved such requirements with respect to the Project.

6.8.3 Achievement of Final Completion. Within 10 Business Days of receipt of the Notice of Final Completion by Owner and the Owner Engineer, Owner shall inspect the Project and/or cause the Project to be inspected by the Owner Engineer, Owner Agents, and/or the Financing Engineer, and Owner shall either: (a) deliver to Contractor a written acceptance of Contractor’s Notice of Final Completion in the form set forth in Appendix I-3 (the “Certificate of Final Completion”), or (b) notify Contractor in writing that it disputes Contractor’s certification that the conditions for Final Completion have been met, or stating that it cannot confirm such satisfaction, stating with specificity the reasons therefor. If Owner issues the Certificate of Final Completion, the date of Owner’s receipt of the Notice of Final Completion will be deemed the “Final Completion Date.” If Owner notifies Contractor that it disputes satisfaction of the conditions for Final Completion or cannot confirm such satisfaction, then Contractor shall either promptly undertake


such action or Work as necessary to meet such conditions or verify satisfaction thereof and issue another Notice of Final Completion to Owner or refer the matter to dispute resolution in accordance with Article 17. In the event Contractor prevails in the Dispute, the date of Owner’s receipt of the then applicable Notice of Final Completion shall be deemed the Final Completion Date.

6.8.4 Target Final Completion Date. Contractor shall perform the Work with the objective that the Final Completion Date will occur on or before the Target Final Completion Date.


ARTICLE 7

PERFORMANCE TESTING

7.1 Performance Tests. After Phase I Mechanical Completion, Contractor shall perform, and re-perform if necessary, the Phase I Performance Tests. All Phase I Performance Tests will be conducted in accordance with the requirements of this Agreement and the applicable testing requirements specified in Appendix C. After Phase I Substantial Completion and Mechanical Completion of the Balance of the Project, Contractor shall perform, and re-perform if necessary, the Performance Tests. All Performance Tests will be conducted only after completion of the Owner activities described in Section 6.7.1 and the Performance Tests shall be conducted in accordance with the requirements of this Agreement and the applicable testing requirements specified in Appendix C.

7.2 Notice to Owner.

7.2.1 Phase I Notice. Contractor shall give Owner and the Owner Engineer at least 10 Business Days’ advance Notice of the date on which Contractor intends to commence the initial Phase I Performance Tests to determine Phase I Substantial Completion. Thereafter, Contractor shall give Owner and the Owner Engineer at least 5 Business Days’ advance Notice of all subsequent Phase I Performance Tests, unless a shorter notice period is agreed to in advance and in writing by Owner. Contractor shall notify Owner and the Owner Engineer of such Phase I Performance Tests so that they may be present or represented to witness and monitor all aspects of such tests.

7.2.2 Notice. Contractor shall give Owner and the Owner Engineer at least 10 Business Days’ advance Notice of the date on which Contractor intends to commence the initial Performance Tests to determine Substantial Completion. Thereafter, Contractor shall give Owner and the Owner Engineer at least 5 Business Days’ advance Notice of all subsequent Performance Tests, unless a shorter notice period is agreed to in advance and in writing by Owner. Contractor shall notify Owner and the Owner Engineer of such Performance Tests so that they may be present or represented to witness and monitor all aspects of such tests.

7.3 Completed Performance Tests.

7.3.1 Phase I Performance Tests. After Contractor has completed Phase I Performance Tests demonstrating compliance with all Phase I Performance Test requirements and Phase I Portion of the Project performance necessary to achieve Phase I Substantial Completion, it shall give Notice to Owner and the Owner Engineer that it nominates such Phase I Performance Tests as a “Completed Phase I Performance Test.” Such Notice will be accompanied by a preliminary test report for such Completed Phase I Performance Test as soon as reasonably practicable but in no event more than 24 hours after the completion of such Completed Phase I Performance Test (or as soon thereafter as such reports are first available to Contractor) providing a summary of the Phase I


Performance Tests on which it is based and including all raw data taken during such Phase I Performance Tests, and a final test report within 30 days thereafter. A final Completed Phase I Performance Test report must be delivered to Owner in accordance with Appendix C. Contractor shall include sufficient results of testing in the preliminary test report to allow Owner to reasonably determine that there is a high probability that the final test results will confirm that the applicable conditions of Phase I Substantial Completion have been achieved. As soon as practicable, but in any event within 10 Business Days after receipt of Notice by Owner and the Owner Engineer, Owner shall give Notice to Contractor either concurring with, indication it cannot confirm concurrence, or rejecting the Completed Phase I Performance Test report and stating its reasons for such Notice, as the case may be. Such procedure shall be repeated until Contractor submits a Notice demonstrating Project performance necessary to achieve Phase I Substantial Completion, as applicable. Subject to Article 17, if Contractor’s Notice of a Completed Phase I Performance Test is rejected by Owner, such test shall not constitute a Completed Phase I Performance Test.

7.3.2 Other Performance Tests. After Contractor has completed Performance Tests demonstrating compliance with all Performance Test requirements and Project performance necessary to achieve Substantial Completion, it shall give Notice to Owner and the Owner Engineer that it nominates such Performance Tests as a “Completed Performance Test.” Such Notice will be accompanied by a preliminary test report for such Completed Performance Test as soon as reasonably practicable but in no event more than 24 hours after the completion of such Completed Performance Test (or as soon thereafter as such reports are first available to Contractor) providing a summary of the Performance Tests on which it is based and including all raw data taken during such Performance Tests, and a final test report within 30 days thereafter. A final Completed Performance Test report must be delivered to Owner in accordance with Appendix C. Contractor shall include sufficient results of testing in the preliminary test report to allow Owner to reasonably determine that there is a high probability that the final test results will confirm that the applicable conditions of Substantial Completion have been achieved. As soon as practicable, but in any event within 10 Business Days after receipt of Notice by Owner and the Owner Engineer, Owner shall give Notice to Contractor either concurring with, indication it cannot confirm concurrence, or rejecting the Completed Performance Test report and stating its reasons for such Notice, as the case may be. Such procedure shall be repeated until Contractor submits a Notice demonstrating Project performance necessary to achieve Substantial Completion. Subject to Article 17, if Contractor’s Notice of a Completed Performance Test is rejected by Owner, such test shall not constitute a Completed Performance Test.

7.3.3 Individual Test Reports. After Contractor has completed any Performance Test, it shall provide to Owner a preliminary test report for each such test as soon as reasonably practicable but in no event more than 24 hours after the


completion of such test (or as soon thereafter as such reports are first available to Contractor) providing a summary of such test and including all raw data taken during such test and, if Contractor believes such test has been passed, a final test report within 30 days thereafter. If Contractor believes such test has been passed, Contractor shall include sufficient results of such testing in the preliminary test report to allow Owner to determine that there is a high probability that the final test results will confirm that such test has been passed. Contractor shall not be required to provide an individual test report (preliminary or final) pursuant to this Section 7.3.3 if the results of such test are, at the same time, to be included in the reports to be provided by Contractor pursuant to Section 7.3.1 or Section 7.3.2.

7.4 Repetition of Tests. (a) If any Performance Test is not conducted in accordance with the requirements of this Agreement or fails to demonstrate satisfaction of the applicable Performance Requirements, then Contractor shall, as part of the Work, (a) promptly take all actions necessary to correct any deficiencies in order to cure such failure, and (b) re-perform the Performance Tests as many times as required until achievement of the applicable Performance Requirements is demonstrated pursuant to this Agreement.

(b) If a Change Event causes a failure to pass a Performance Test, then Contractor work will be reimbursed on a time and materials basis for the conduct of a re-test.

7.5 Re-Setting of Project. Promptly after the completion of any Performance Test, Contractor shall perform whatever Work is necessary, including re-setting of Equipment (to the extent settings were allowed to be changed during any Performance Test) and repairs of damage or modifications caused by testing, to ensure that the normal operating control settings and configurations for the portion of the Project involved in such testing are maintained.

7.6 Operation of the Project. In the event that either (a) Contractor has not conducted a successful Phase I Performance Test within 30 days after the Target Phase I Mechanical Completion Date or (b) Contractor has not conducted a successful Performance Test within 30 days after the Target Mechanical Completion Date, then Owner shall have the right to operate and maintain the Phase I Portion of the Project or the entire Project, as applicable, prior to completion of the applicable Performance Test to produce activated carbon and (with respect to the Balance of the Project) electricity, in each case, for the benefit of Owner, subject to the following conditions:

 

  (a) All costs of such operation and maintenance that would be borne by Owner after Final Completion (including but not limited to costs of supplies, feed stock, chemicals, fuels and lubricants, operating personnel, overhead, debt service, taxes and transportation) shall be borne by Owner during this period of interim operation and maintenance, and


  (b) This right of Owner shall not operate to, or be construed to, delay, limit, prevent or in any way impede Contractor’s right to control the Project in order to conduct additional Performance Tests at its discretion.


ARTICLE 8

PERFORMANCE AND COMPLETION REQUIREMENTS,

LIQUIDATED DAMAGES AND BONUS

8.1 Phase I Substantial Completion Requirements.

8.1.1 Phase I Performance Requirements. The Project shall meet the Phase I Performance Requirements described in Sections 8.1.1.1 through 8.1.1.3 when tested pursuant to a Completed Phase I Performance Test performed in accordance with the requirements of Appendix C and the other provisions of this Agreement and Applicable Legal Requirements. In addition to the foregoing, the Phase I Portion of the Project must be capable of continuous commercial operations in compliance with Applicable Legal Requirements.

The requirements set forth in Sections 8.1.1.1 through 8.1.1.3 are the “Phase I Performance Requirements”.

8.1.1.1 Activated Carbon Capacity Generation. The activated carbon capacity generation from each MHF and the associated components of the Phase I Portion of the Project will not be less than the number of tons/day/MHF set forth in Appendix C when corrected to design conditions and with each component relied upon functioning within its design limits and original equipment manufacturer requirements (“Phase I Activated Carbon Production Requirement”).

8.1.1.2 Activated Carbon Quality Specification. The activated carbon produced from the Phase I Portion of the Project will satisfy the particle size requirements and the sodium bromide solution application requirements set forth in Appendix C (“Phase I Activated Carbon Specification Requirement”).

8.1.1.3 Environmental Compliance Requirement. The Phase I Portion of the Project will comply with all requirements of the emissions table set forth in Appendix C applicable to the Phase I Portion of the Project and all environmental Applicable Legal Requirements and all environmental requirements of the Permits applicable to the Phase I Portion of the Project (“Phase I Environmental Compliance Requirement”).

8.1.2 Phase I Substantial Completion Date. Contractor shall perform the Work with the objective that the Phase I Substantial Completion Date will occur on or before the Target Phase I Substantial Completion Date.

8.2 Substantial Completion Performance Test Requirements.

8.2.1 Performance Requirements. The Project shall meet the Performance Requirements described in Sections 8.2.1.1 through 8.2.1.5 (or the


Minimum Performance Requirements described below) when tested pursuant to a Completed Performance Test performed in accordance with the requirements of Appendix C and the other provisions of this Agreement and Applicable Legal Requirements. In addition to the foregoing, the Project must be capable of continuous commercial operations in compliance with Applicable Legal Requirements.

The requirements set forth in Sections 8.2.1.1 through 8.2.1.5 are the “Performance Requirements”.

8.2.1.1 Activated Carbon Capacity Generation. The activated carbon capacity generation from (a) each MHF and the associated components of the Project will not be less than the number of tons/day/MHF set forth in Appendix C, and (b) the Project will satisfy the delivery rate, extraction rate, grinding and processing rate into storage silos, set forth in Appendix C, when corrected to design conditions and with each component relied upon functioning within its design limits and original equipment manufacture requirements (collectively the “Activated Carbon Production Requirement”).

8.2.1.2 Activated Carbon Quality Specification. The activated carbon produced from the Project will satisfy the particle size requirements and the sodium bromide solution application requirements set forth in Appendix C (the “Activated Carbon Specification Requirement”).

8.2.1.3 set forth in Appendix C (the “Activated Carbon Specification Requirement”).

8.2.1.4 Lime Consumption Requirement. Pebble lime consumption rate shall not exceed the number of tons/hr set forth in Appendix C directly proportional to the quantity (in tons) of coal necessary to produce activated carbon that satisfies the Activated Carbon Specification Requirement under the then present activated carbon throughput level and sulfur related Environmental Compliance Requirement (the “Lime Consumption Requirement”).

8.2.1.5 Net Electrical Output Requirement. The Net Electrical Output from the Project will not be less than the megawatt production requirements set forth in Appendix C, when corrected to design conditions and during Project operation satisfying the Activated Carbon Production Requirement (the “Net Electrical Output Requirement”).

8.2.1.6 Environmental Compliance Requirement. The Project will comply with all requirements of the emissions table set forth in Appendix C, all environmental Applicable Legal Requirements and all environmental requirements of the Permits applicable to the Project (the “Environmental Compliance Requirement”).


The requirements set forth in Section 8.2.1.6 through Section 8.2.1.8, together with the requirements set forth in Section 8.2.1.1 and Section 8.2.1.5, are the “Minimum Performance Requirements”.

8.2.1.7 Minimum Carbon Capacity Generation. The “Minimum Carbon Capacity Generation” is *% of the Activated Carbon Production Requirement for each component associated with the MHF and Project requirements set forth in Section 8.2.1.1.

8.2.1.8 Maximum Lime Consumption Requirements. The “Maximum Lime Consumption Requirement” is *% of the full Lime Consumption Requirement set forth in Section 8.2.1.3.

8.2.1.9 Minimum Net Electrical Output Requirement. The “Minimum Net Electrical Output Requirement” is *% of the full Net Electrical Output Requirement set forth in Section 8.2.1.4.

Each percentage point described in the Minimum Performance Requirements shall be measured in tenths of a percentage, with percentages less than 0.49% constituting the immediately lower percentage value and percentages greater than 0.50% constituting the immediately higher percentage value, excepting only that the lowest percentage shall be the absolute minimum.

8.2.2 Target Substantial Completion Date. Contractor shall perform the Work with the objective that the Substantial Completion Date for the Project will occur on or before the Target Substantial Completion Date.

8.2.3 Target Final Completion Date. Contractor shall perform the Work with the objective that Final Completion of the Project will occur on or before the Target Final Completion Date.

8.3 Late Substantial Completion Damages.

8.3.1 Late Phase I Substantial Completion Liquidated Damages. If Phase I Substantial Completion does not occur on or before the Required Phase I Substantial Completion Date, Contractor shall pay liquidated damages to Owner for such delay for each and every day that elapses between the Required Phase I Substantial Completion Date and the date on which Phase I Substantial Completion occurs (“Late Phase I Substantial Completion Damages”). The per-day Late Phase I Substantial Completion Damages payable pursuant to this Section shall be $* per day. The Late Phase I Substantial Completion Damages payable pursuant to this Section 8.3.1 are subject to the aggregate limitation for delay liquidated damages set forth in Section 16.1.2. Notwithstanding the payment of Late Phase I Substantial Completion Damages, Contractor shall continue to expeditiously perform, repair, replace and fix the Work until Phase I Substantial Completion is achieved. The Parties agree that it would be extremely difficult and impracticable to determine


precisely the amount of actual damages that would be suffered by Owner as a result of Contractor’s failure to achieve Phase I Substantial Completion Date by the Required Phase I Substantial Completion Date. The Parties further agree that the Late Phase I Substantial Completion Damages are fair and reasonable. The Parties agree that each is estopped to argue the invalidity, unenforceability or otherwise question the reasonableness of the Late Phase I Substantial Completion Damages, as they represent the allocation of risk between the Parties and the basis of the bargain. Late Phase I Substantial Completion Damages will not (i) limit Contractor’s liability for its failure to perform any of its other obligations hereunder, including Defects in the Work, or its obligations to achieve Final Completion, or (ii) limit Owner’s remedies for Contractor’s failure to perform any of its other obligations hereunder. Liquidated damages under this Section 8.3.1 are understood to be an estimate of actual damages and not a penalty, and to represent Contractor’s sole liability and Owner’s sole remedy for the deficiency under this Section 8.3.1 giving rise to the liquidated damages liability.

8.3.2 Late Substantial Completion Liquidation Damages. If Substantial Completion does not occur on or before the Required Substantial Completion Date, Contractor shall pay liquidated damages to Owner for such delay for each and every day that elapses between the Required Substantial Completion Date and the date on which Substantial Completion occurs (“Late Substantial Completion Damages”). The per-day Late Substantial Completion Damages payable pursuant to this Section shall be $* per day for the first 30 days of delay and then $* for each additional day of delay. The Late Substantial Completion Damages payable pursuant to this Section 8.3.2 are subject to the aggregate limitation for delay liquidated damages set forth in Section 16.1.3. Notwithstanding the payment of Late Substantial Completion Damages, Contractor shall continue to expeditiously perform, repair, replace and fix the Work until Substantial Completion is achieved. The Parties agree that it would be extremely difficult and impracticable to determine precisely the amount of actual damages that would be suffered by Owner as a result of Contractor’s failure to achieve the applicable Substantial Completion Date by the Required Substantial Completion Date. The Parties further agree that the Late Substantial Completion Damages are a fair and reasonable substitute therefor. The Parties agree that each is estopped to argue the invalidity, unenforceability or otherwise question the reasonableness of the Late Substantial Completion Damages, as they represent the allocation of risk between the Parties and the basis of the bargain. Late Substantial Completion Damages will not (i) limit Contractor’s liability for its failure to perform any of its other obligations hereunder, including Defects in the Work, or its obligations to achieve Final Completion, or (ii) limit Owner’s remedies for Contractor’s failure to perform any of its other obligations hereunder. Liquidated damages under this Section 8.3.1 are understood to be an estimate of actual damages and not a penalty, and to represent Contractor’s sole liability and Owner’s sole remedy for the deficiency under this Section 8.3.1 giving rise to the liquidated damages liability


8.3.3 Overlap of Delay Liquidated Damage Periods. In the event that the Phase I Substantial Completion Date has not occurred and Contractor is paying Late Phase I Substantial Completion Damages pursuant to Section 8.3.1 above and the date on which Late Substantial Completion Damages are first due from Contractor occurs, pursuant to Section 8.3.2, then Contractor shall not be obligated for any single day to pay Liquidated Damages under both Section 8.3.1 and Section 8.3.2, but shall only be obligated to pay the Liquidated Damages under Section 8.3.2.

8.3.4 Payment of Delay Liquidated Damages. Contractor shall pay Owner for daily liquidated damages accrued in respect of the fixed daily amounts under Section 8.3 for each month (or any part of a month) of such delay, on or before the 30th day of the immediately succeeding month. Owner shall have the right to offset any liability of Contractor under this Section 8.3.4 against any amount owed by Owner to Contractor under this Agreement. If Contractor is required to pay delay liquidated damages under Section 8.3.2 hereof, Contractor’s obligation to pay such delay liquidated damages (other than damages accrued) shall cease upon the occurrence of Substantial Completion based on the Minimum Performance Requirements.

8.4 Buy Down.

8.4.1 Cure Period. If Contractor does not achieve the full Performance Requirements and the full Reliability Requirement, in each case within 60 days after the occurrence of the Substantial Completion Date, then Contractor shall pay to Owner the Buy Down Amount pursuant to this Section 8.4 based on the results of the most recent Completed Performance Test certified by the Financing Engineer.

8.4.2 Buy Down Amount. As liquidated damages for the failure to achieve the full Performance Requirements and the full Reliability Requirement as demonstrated by the results of the most recent Completed Performance Test and Completed Reliability Test, certified by the Financing Engineer, Contractor shall pay the following liquidated damages (the “Buy Down Amount”) based on the results of such recent Completed Performance Test and Completed Reliability Test.

8.4.2.1 Activated Carbon Production. For failure to achieve the full Activated Carbon Production Requirement and subject to the limit set forth in Section 16.1.3, Contractor shall pay liquidated damages calculated as follows:

 

   

*% for any one or more components of the full Requirement - $*

 

   

*% for any one or more components of the full Requirement - $*

 

   

*% for any one or more components of the full Requirements - $*


   

The amounts shall be pro-rated for each tenth of a percentage, rounded as provided in Section 8.4.2.5 below.

8.4.2.2 Lime Consumption. For exceeding the Lime Consumption Requirement, Contractor shall pay liquidated damages calculated as follows:

 

   

*% of the full Requirement - $*

 

   

*% of the full Requirement - $*

 

   

*% of the full Requirement - $*

 

   

*% of the full Requirement - $*

 

   

*% of the full Requirement - $*

 

   

The amount shall be pro-rated for each tenth of a percentage, rounded as provided in Section 8.4.2.5 below.

 

   

The liquidated damages payable pursuant to this Section 8.4.2.2 are subject to the applicable individual limitation on performance liquidated damages as provided in Section 16.1.4.

8.4.2.3 Net Electrical Output. For failure to achieve the full Net Electrical Output Requirement, Contractor shall pay liquidated damages calculated as follows:

 

   

*% of the full Requirement - $*

 

   

*% of the full Requirement - $*

 

   

*% of the full Requirement - $*

 

   

*% of the full Requirement - $*

 

   

*% of the full Requirement - $*

 

   

The amount shall be pro-rated for each tenth of a percentage, rounded as provided in Section 8.4.2.5 below.

 

   

The liquidated damages payable pursuant to this Section 8.4.2.3 are subject to the applicable individual limitation on performance liquidated damages as provided in Section 16.1.4.

8.4.2.4 Reliability. For failure to achieve the full Reliability Requirement (satisfied at *%) and subject to the limit set forth in Section 16.1.3, Contractor shall pay liquidated damages calculated as follows:

 

   

*% -$*

 

   

*% - $*

 

   

*% - $*


   

The amount shall be pro-rated for each tenth of a percentage, rounded as provided in Section 8.4.2.5 below.

 

   

The liquidated damages payable pursuant to this Section 8.4.2.4 are subject to the applicable individual limitation on performance liquidated damages as provided in Section 16.1.3.

8.4.2.5 Percentage Calculation. Each percentage point described in Section 8.4.2.1 through 8.4.2.4 shall be measured in tenths of a percentage, with percentages less than 0.49% constituting the lower percentage value and percentages greater than or equal to 0.50% constituting the immediately higher percentage value (e.g., 5.149% would be 5.1% and 5.150% would be 5.2%), excepting only that the lowest percentage shall be the absolute minimum.

8.4.3 Reasonableness. Contractor and Owner acknowledge and agree that the terms and amounts of the Buy Down Amounts are reasonable considering the damages that Owner if Contractor fails to achieve the full Performance Requirements or the full Reliability Requirement. These amounts are agreed upon and fixed as liquidated damages because of the difficulty of ascertaining as of the date hereof the exact amount of damages that would be sustained in such event and are Owner’s sole monetary damage remedy for Contractor’s failure to achieve the full Performance Requirements and the full Reliability Requirement.

8.4.4 Payment of Buy Down Amount. Contractor shall pay any Buy Down Amount it is required to pay Owner on or before the 90th day after the date on which Substantial Completion occurred (or the date of termination of this Agreement if the Substantial Completion Date does not occur). To the extent that Owner is holding Retainage, the full amount of such Retainage so held shall be applied to reduce the amount of the Buy Down Amount owed to Owner on a dollar for dollar basis. The aggregate amount payable by Contractor in respect of the Buy Down Amount is subject to the aggregate limitation for performance liquidated damages as provided in Section 16.1.3.

8.4.5 Limitation on Right to Minimum Performance Requirements and/or Minimum Reliability Requirement. If the Project does not demonstrate satisfaction of each of the Minimum Performance Requirements and/or the Minimum Reliability Requirement, then Contractor (a) shall not be entitled to pay the Buy Down Amount and (b) must continue to prosecute the Work under this Agreement in order to cause the occurrence of (i) Substantial Completion, with respect to the Minimum Performance Requirements, thereby terminating Contractor’s Obligation to continue paying delay liquidated damages pursuant to Section 8.3 and (ii) Final Completion, with respect to the Minimum Reliability Requirement.

8.5 Early Phase I Substantial Completion Bonus. If the Phase I Substantial Completion Date occurs before the Target Phase I Substantial Completion


Date, then Contractor will earn a bonus equal to (a) $* per day for the first thirty days and (b) $* per day for each additional day by which the Phase I Substantial Completion Date is earlier than the Target Phase I Substantial Completion Date (the “Early Phase I Substantial Completion Bonus Amount”); provided, however, that for purposes of earning the Early Phase I Substantial Completion Bonus the full Phase I Portion of the Project performance (including the Multi Hearth Furnaces) shall be included in determining entitlement and Contractor shall not be entitled to relief, credit or adjustment based on performance failures or other performance problems due in whole or in part to any part of the Phase I Portion of the Project provided under any Owner Contract or which is otherwise part of Owner Suppliers’ Scope, it being the intent of the Parties that such bonus shall only be earned if the complete Phase I Portion of the Project demonstrates early performance.

8.6 Early Substantial Completion Bonus. If the Substantial Completion Date occurs before the Target Substantial Completion Date, then Contractor will earn a bonus equal to $* per day for the first 30 days by which the Substantial Completion Date is earlier than the Target Substantial Completion Date and $* per day for each earlier day (the “Early Substantial Completion Bonus Amount”); provided, however, that for purposes of earning the Early Substantial Completion Bonus Amount the full Project performance (including the Multi Hearth Furnaces) shall be included in determining entitlement and Contractor shall not be entitled to relief, credit or adjustment based on performance failures or other performance problems due in whole or in any part of the Project provided under any Owner Contract or which is otherwise part of Owner Suppliers’ Scope, it being the intent of the Parties that such bonus shall only be earned if the complete Project demonstrates early performance.


ARTICLE 9

THE WARRANTY PERIODS

9.1 General Warranty of Work, Materials and Equipment. Contractor hereby warrants to Owner that:

 

  (a) the Work will be designed, furnished and performed (i) in accordance with Professional Standards, and (ii) in compliance with the provisions of this Agreement (including, without limitation the provisions of Appendix A which require that certain components of the Project designed for a * tons per day capability and/or a turn-down or reduced capacity capability) and all Applicable Legal Requirements in effect on the Effective Date or, in respect of the Work described in a Change Order, the date of such Change Order;

 

  (b) the Work will be free from Defects in workmanship and material; and

 

  (c) all Contractor Equipment and Materials provided by Contractor will be new and unused at the time of their delivery to the Project Site, except reconditioned special tools approved by Owner as provided in Section 6.4.1(e).

9.2 Owner Supplier Work. Until Substantial Completion, Contractor shall:

 

  (a) assist Owner in enforcing Owner’s warranty rights under Owner Contracts and managing the warranty response by Owner Suppliers; and

 

  (b) perform such construction, disassembly and testing and related services as are necessary to complete warranty repairs or corrections of defects manifest in Owner Suppliers’ Scope under the Owner Contracts.

9.3 Nonconforming Work. During the applicable Warranty Period, Owner, Owner Agents, Owner’s Authorized Representative, and/or other Persons that Owner has given Contractor Notice that such Persons are authorized by Owner to act on its behalf (“Owner Authorized Parties”), to the extent of their authority, shall have the authority to require Contractor to re-perform, repair or replace any Work (including Contractor Equipment and Materials) that does not conform to the requirements of Section 9.1 (“Warranty Defect”), including the obligation to perform any Work or activity necessary to access the Work to be re-performed, repaired or replaced and any Work or activity necessary to recover, finish or otherwise cover and return to full operating status the Work to be re-performed, repaired or replaced; provided, however, that neither the identification of a Warranty Defect nor any decision made by Owner in good faith either to exercise or not to exercise their rights under this Article 9, will give rise to any duty or responsibility of Owner.


9.4 Contractor’s Warranty Work. If Owner gives Contractor Notice of a Warranty Defect during the applicable Warranty Period, Contractor shall, at its sole expense, promptly (consistent with the access provided by Owner) correct such Warranty Defect by repair or replacement at Contractor’s sole option, which repair or replacement will include all access and restoration Work associated therewith. To the extent that correction of the Warranty Defect involves the re-performance, repair, re-supply or replacement of any item supplied or performed pursuant to an Owner Contract, Contractor shall assist Owner in procuring such re-performance, repair, re-supply or replacement by the Owner Supplier and the costs incurred by Owner on account thereof to correct such Warranty Defect will be added to the Total Work Cost. The plan for the repair or replacement of a Warranty Defect shall be made in consultation with Owner and Contractor shall schedule any Work in respect of the Warranty Defect during off-peak hours consistent with (a) Owner’s operating requirements so as to minimize, to the maximum possible extent, loss of production or use of any portion of the Project. Contractor shall use commercially reasonable efforts to conduct its Work associated with a Warranty Defect on a timely basis (inclusive of overtime) if Owner reasonably determines that an expedited schedule is necessary to avoid or minimize the effects on activated carbon production. Except as provided above and subject to Section 9.12, Contractor shall bear all costs and expenses associated with correction of any Warranty Defect notified to Contractor during the applicable Warranty Period. Such costs shall include the costs of necessary disassembly, transportation, reassembly, retesting, reworking, repair, or replacement of such Warranty Defect, engineering, and the costs of testing reasonably required to verify that the repaired or replaced Work conforms to the applicable Warranties and the requirements of this Agreement. Contractor shall collect and assemble all warranty documents and deliver them to Owner prior to the expiration of the applicable Warranty Period or termination of this Agreement, whichever is earlier. Any repair and replacement performed by Contractor pursuant to this Article 9 shall constitute Work and the provisions of this Article 9 apply to such Work.

9.5 Warranty Periods.

9.5.1 Duration. The “Warranty Period” commences (a) for the Phase I Portion of the Project, on the Phase I Substantial Completion Date and (b) for the Balance of the Project, on the Substantial Completion Date, and in each case expires on the first (1st) anniversary of the date it commenced. If any Work is required to be completed, repaired, replaced, or otherwise corrected pursuant to this Article 9, the Warranty Period for such repaired, replaced or corrected Work will be one (1) year from the date that such repair, replacement, or correction is completed; provided, however, that in no case will the Warranty Period for such repaired, replaced or corrected Work extend beyond the second (2nd) anniversary of the date the Warranty Period initially commenced.

9.5.2 Transfer. Upon the earlier of (a) the termination of this Agreement, or (b) the end of the Warranty Period, Contractor shall, promptly and


without any other obligation on the part of Owner, transfer to Owner all Subcontractor Warranties that extend beyond the applicable Warranty Period under this Article 9. Prior to transferring the extended warranties to Owner, Contractor shall maintain and enforce such warranties and shall not materially modify or amend such warranties without the prior written consent of Owner, which may be withheld for any reason.

9.6 Subcontractor Warranties. Contractor shall use its commercially reasonable efforts to obtain other warranties, including additional and extended warranties, for the benefit of Contractor and Owner from Subcontractors in relation to their respective portions of the Work. Copies of all such warranties obtained by Contractor shall be provided to Owner promptly upon execution of the applicable Contractor Subcontract by Contractor. Such warranties will be written to survive Contractor’s tests, inspections and approvals and will be assignable, as provided in the next sentence, to Owner without Subcontractor’s consent. On the earlier of (a) the Substantial Completion Date for such Work or (b) the termination of this Agreement, Contractor shall assign to Owner any Subcontractor warranty for Work or Equipment provided by Contractor hereunder.

9.7 Root Cause Repairs. If there are 2 or more failures of any component during the Warranty Period (either original or as may be extended as a result of failures during the original Warranty Period), then, at the request of Owner, Contractor shall perform a root cause analysis investigation of such failures and, if such investigation (a) reveals a Warranty Defect, make such repairs, replacements or adjustments necessary to correct the Warranty Defect; or (b) reveals a defect in Owner Suppliers’ Scope (“Owner Supplier Defect”), provide the assistance described in Section 9.2 on a cost reimbursable basis in respect thereof if requested by Owner. As requested by Owner, Contractor shall submit, as part of its root cause analysis investigation and report, all design and performance calculations related to such component failure. IF SUCH FAILURE IS CAUSED BY A DEFECT IN OWNER SUPPLIERS’ SCOPE, ALL COST ASSOCIATED WITH THE ROOT CAUSE ANALYSIS SHALL BE REIMBURSABLE TO CONTRACTOR.

9.8 Cure Rights of Owner for Breach of Warranty. Promptly upon receipt by Contractor of Notice from Owner identifying a Warranty Defect (which period will be as short as possible, but in no event longer than 2 Business Days if the Project is forced out of service or is operating on a restricted basis), Contractor shall give Notice to Owner of when and how such Warranty Defect will be remedied; provided, however, that Contractor will conduct its cure activities in a commercially reasonable and prompt manner; provided, further, in cases of imminent danger to life or property or forced outage of the Project, Contractor shall make best efforts to remedy such Warranty Defect as soon as possible, taking into consideration mobilization to the Project Site and availability of Contractor Personnel. If Contractor does not begin and diligently proceed to complete said remedy within the time period specified in the corrective approach, Owner after Notice to Contractor, shall have the


right to perform or to have performed by third parties the necessary remedy, and the costs thereof (including a warranty thereon) shall be borne by Contractor; provided, however, that any such warranty Work performed by a third party shall no longer be subject to the provisions of Section 9.1.

9.9 Title to Warranty Work. Title to all Equipment and Materials provided in performing warranty Work, including all repairs, replacements and corrections, will pass to Owner immediately upon the inclusion thereof into the Project and otherwise will be subject to the provisions of Section 2.5.1.

9.10 Exclusions. The warranty set forth in Section 9.1 will not apply to Defects in, damage to or breakdown of the Work after care, custody and control has been turned over to Owner in accordance with this Agreement to the extent such Defect, damage or breakdown is caused by:

 

  (a) Owner’s failure to operate or maintain the Project in accordance with Prudent Industry Practices;

 

  (b) Owner’s failure to give Contractor Notice of a Warranty Defect actually known to Owner promptly after its discovery by Owner;

 

  (c) continued operation of the Project following identification of the Defect, to the extent such continued operation exacerbates the Defect or creates additional Defects that require warranty Work;

 

  (d) normal wear and tear; or

 

  (e) Owner’s denial of Contractor’s reasonable request for access to the Defect for the performance of Contractor’s warranty obligations, such access to be consistent with Project operations and Prudent Industry Practices.

 

  (f) Exclusions contained in purchase documents of Contractor’s equipment vendors that are approved by Owner.

9.11 Primary Liability. Subject to Section 9.10(f) above, Contractor has primary liability with respect to the warranties set forth in Section 9.1 of this Agreement, whether or not any Defect or other matter is also covered by a warranty of a Subcontractor, and Owner needs only look to Contractor for corrective action. The refusal of a Subcontractor or other third party to correct defective Work will not excuse Contractor from its liability as to the warranties provided herein.

9.12 General Limitations on Warranties and Remedies. EXCEPT FOR THE PROVISIONS OF ARTICLE 6 AND 8 RELATING TO THE RELIABILITY TEST, THE REMEDIES PROVIDED IN THIS ARTICLE 9 ARE THE EXCLUSIVE REMEDIES OF OWNER AND THE SOLE OBLIGATION AND LIABILITY OF CONTRACTOR ARISING OUT OF CLAIMS FOR WARRANTY DEFECTS OR


DEFECTS IN THE WORK IDENTIFIED AFTER THE SUBSTANTIAL COMPLETION DATE FOR SUCH WORK. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 9, CONTRACTOR DOES NOT MAKE ANY OTHER EXPRESS WARRANTIES, OR ANY IMPLIED WARRANTIES, OF ANY KIND WHATEVER RELATING TO THE WORK TO BE SUPPLIED BY CONTRACTOR UNDER THIS AGREEMENT OR TO THE FACILITY, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, CUSTOM OR USAGE OR OTHERWISE.


ARTICLE 10

CHANGES

10.1 Changes. Without invalidating this Agreement, by issuance of a written order, in the form set forth in Appendix I-5, (each such order, a “Change Order”) (a) changes to the Work or the Project may be made, including any addition to, deletion from, suspension of or other modification to the quality, function or intent of the Work or the Project, and (b) to the extent specifically provided for in this Article 10, adjustments may be made to the Project Schedule (including the Target Contract Dates and the Required Contract Dates), Performance Requirements, the Construction Price, the Target Total Work Cost, the Milestone Payment Schedule or the other obligations or liabilities of the Parties under this Agreement (all of the foregoing, “Changes”). Changes may only be authorized by Change Orders issued in accordance with this Article 10; provided, however, that Contractor shall not be required to make any Change that (x) requires it to perform work that is not rationally or functionally related to the Work described in this Agreement on the Effective Date, or (y) requires Contractor to transport and dispose of Owner Hazardous Substances for which Owner is responsible under this Agreement. Except for an emergency in which imminent harm to Persons or damage to property can only be avoided by proceeding with a Change without approval by Owner, in no event shall Contractor unilaterally undertake a Change until (i) a Change Order has been approved by Owner, or (ii) if a disagreement exists with respect to a proposed Change Order as described in Section 10.2.2, Contractor has received Notice from Owner to proceed under protest.

10.2 Procedure for Changes.

10.2.1 Changes Initiated by Contractor. Within 10 Business Days after Contractor becomes aware of any circumstances, including Change Events, which Contractor has reason to believe may necessitate a Change, Contractor shall issue to Owner a “Change Order Request.” All Change Order Requests will include, to the extent then reasonably available (and thereafter promptly updated as information becomes available) to provide, documentation sufficient to enable Owner to determine: (a) the factors necessitating the possibility of a Change; (b) the impact the Change is likely to have on the Fixed Component; (c) the impact the Change is likely to have on the timely achievement of the Project Schedule (including the Target Contract Dates and the Required Contract Dates, as applicable); (d) the impact the Change is likely to have on the Craft Labor Hour Target, (e) the impact the Change is likely to have on the Reimbursable Component, (f) the impact the Change is likely to have on the Target Total Work Cost; (g) the impact the Change is likely to have on the quality, function or intent of the Work or any of the other obligations or liabilities of the Parties under this Agreement, and (h) such other information which Owner may reasonably request in connection with such Change; provided, however, that the information required by clause (a) is the only essential element to be provided within the initial 10 Business Day period. Owner may, but except as provided in Section 10.3 below will not be obligated to, issue a Change Order pursuant to a


Change Order Request. Owner must provide its response to Contractor’s Change Order Request within 10 Business Days after receipt thereof. Unless otherwise stated by Owner in writing or in the case of an emergency in which imminent harm to Persons or damage to property can only be avoided by proceeding with work outside the Work, any work outside the Work described in this Agreement performed by Contractor prior to its having received an executed Change Order from Owner will be considered unauthorized work and will be at Contractor’s sole risk and expense. In no event will a Recovery Plan or other document or Submittal constitute a Change Order under this Agreement, unless such document is clearly titled a “Change Order” and otherwise satisfies all of the requirements of a Change Order under this Article 10.

10.2.2 Changes Initiated by Owner. If Owner desires to make a Change constituting a modification to the quality, function, intent or scope of the Work (including aspects of the Work relating to the operation or care, custody and control of the Project), it shall submit a “Change Order Notice” to Contractor. Contractor shall promptly review the Change Order Notice and provide Notice to Owner of the estimated cost to develop the Change Order, which Notice will be accompanied with reasonable supporting documentation. Within 10 Business Days (or if 10 Business Days is not reasonably adequate, then as promptly thereafter as practicable) after Owner and Contractor agree to the cost of developing the Change Order estimate, Contractor shall provide Owner with Notice of the options for implementing the proposed Change (including, if possible, any option that does not involve an extension of time or additional cost) and the estimated effect(s), if any, that each such option would have on the Performance Requirements, Fixed Component, Craft Labor Hour Target, Reimbursable Component, the Target Total Work Cost, the Milestone Payment Schedule, the Project Schedule (including the Target Contract Dates and the Required Contract Dates), and any of the other obligations or liabilities of the Parties under this Agreement. The timing of Work to be performed pursuant to a Change directed by Owner must be consistent with resources available to Contractor. Based upon such information, Owner may, but will not be obligated to, issue a Change Order making a Change based upon such Change Order Notice. If Owner and Contractor cannot promptly reach agreement on the matters listed in the Change Order Notice, or cannot agree that the matters under discussion constitute a Change, Owner may, at its sole discretion, order Contractor by Notice to promptly proceed to complete the Change in accordance with Owner’s interpretation of the matter under Dispute. Contractor may refuse to implement a Change ordered pursuant to this Section 10.2 only if such Change (a) would constitute a violation of Applicable Legal Requirements, (b) requires Contractor to perform work that is not rationally or functionally related to the Work, or (c) requires Contractor to transport and dispose of Hazardous Substances for which Owner is responsible under this Agreement.

10.3 Change Events. Except as otherwise provided herein, if and to the extent that:


  (a) a Force Majeure event or Change of Law (other than any Excluded Change of Law);

 

  (b) a suspension of the Work in accordance with this Agreement (for an improperly issued stop work order);

 

  (c) adverse impact on the Work pursuant to Section 2.2.13.3 or Section 3.9, other than for a Hazardous Substance for which Contractor is responsible;

 

  (d) a delay or other adverse impact arising from a discovery pursuant to Section 2.5.5;

 

  (e) a delay or failure of Owner or an Owner Supplier to perform its obligations in accordance with this Agreement or an Owner Contract (except in either case to the extent such delay or failure is attributable to Contractor or Subcontractors);

 

  (f) a change in Owner’s policies and procedures after Substantial Completion that adversely affect the performance of the Work;

 

  (g) any Separate Contractor of Owner, any of the Engineers, or any other designee or invitee of Owner performing work on the Project Site fails to comply with the reasonable coordination requirements Contractor is entitled to impose under this Agreement, causing a material interference with the performance of the Work, except to the extent such interference results from the fault of Contractor or its Subcontractors;

 

  (h) delay in issuance of the Full Notice to Proceed after September 8, 2008;

 

  (i) a delay or other net impact on Contractor resulting from a change order executed or option exercised under an Owner Contract, except to the extent arising from failure of Contractor (or its Subcontractors) to perform obligations in accordance with this Agreement;

 

  (j) a delay or other adverse impact on Contractor resulting from Owner’s exercise of its right to prevent the specific exercise of Contractor’s authority under Appendix M, except to the extent attributable to the fault of Contractor or its Subcontractors;

 

  (k) an Owner Test Interruption occurs.

(each, a “Change Event”), causes Contractor to suffer a delay in the critical path of the Work, increases Contractor’s costs in performing the Work or otherwise increases the costs of the Work, impacts the ability of the Work to achieve the Performance Requirements, or adversely impacts Contractor’s ability to perform any of its other


material obligations under this Agreement, then Owner shall, by Change Order, equitably adjust the Required Contract Dates in accordance with Section 10.4, equitably increase the Fixed Component in accordance with Section 10.5, equitably adjust the Milestone Payment Schedule, and/or equitably adjust the Performance Requirements or other obligations of Contractor so adversely impacted.

10.4 Changes Involving Schedule Extensions. To the extent that Contractor demonstrates that a Change (or the Change Event necessitating a Change) as described in Section 10.2.2 or Section 10.3 will delay the achievement of the Required Contract Dates, then Owner shall cause a Change Order directing such Change (or resulting from such Change Event) to equitably extend the Required Contract Dates to account for the delay in the critical path of the Work.

10.5 Changes to the Fixed Component. In the event a Change Order or Change Event under Article 10 increases or decreases the cost of the Work, reflected in the Fixed Component, subject to Contractor’s reasonable efforts to mitigate the impact of such event, an equitable adjustment shall be made to the Fixed Component.

10.6 Continued Performance Pending Resolution of Disputes. Notwithstanding and pending resolution of any Dispute with respect to a Change, Contractor shall proceed on a time and materials basis, upon receipt of Notice from Owner, with the performance of any Change Order issued by Owner. If Owner and Contractor cannot reach agreement on the schedule adjustment or estimated cost of the Change within a reasonable period (not to exceed 15 days after which Contractor is ordered to proceed under protest) either Party may submit the matter for dispute resolution pursuant to Article 17.

10.7 Options for Implementing Changes. Whenever there are different possible Changes that can be made in response to a Change Event and those Changes have different effects on the Project Schedule (including the Required Contract Dates), Fixed Component, the Craft Labor Hour Target, the Reimbursable Component, the Target Total Work Cost, Performance Requirements or other obligations or liabilities of the Parties under this Agreement, then Owner may in its sole discretion (but consistent with the objective of achieving the lowest Total Work Cost) select from among such Changes, with the concomitant adjustments to the Project Schedule (including the Required Contract Dates), Fixed Component, the Craft Labor Hour Target, the Reimbursable Component, and Performance Requirements and other obligations or liabilities of the Parties under this Agreement in accordance with this Article 10.

10.8 Documentation. All claims by Contractor for adjustments to the Fixed Component, the Craft Labor Hour Target, the Reimbursable Component, the Target Total Work Cost, Contractor’s fee, Performance Requirements, Project Schedule (including the Required Contract Dates) and/or other obligations or liabilities of the


Parties under this Agreement as a result of any Change shall be supported by verifiable detailed documentation provided to Owner.


ARTICLE 11

FORCE MAJEURE

11.1 Force Majeure Event. As used in this Agreement, an event of “Force Majeure” will mean any event that: (a) prevents or hinders the affected Party (the “Affected Party”) from performing its obligations under this Agreement or complying with any conditions required of it under this Agreement, resulting in an actual delay in the performance of the Work, increases the cost of performing the Work, or otherwise materially and adversely affects the Affected Party’s performance hereunder, (b) is beyond the reasonable control of and not the result of the fault or negligence of the Affected Party (including such Affected Party’s Personnel), (c) could not have been prevented by the exercise of reasonable diligence by the Affected Party or its Personnel or Subcontractors and (d) occurs on or after September 1, 2008.

For purposes of clause (b) above, the following events shall, by way of example, be considered to be beyond the reasonable control of an Affected Party: acts of God, war, civil insurrection, epidemic, earthquake, tornado, quarantine, hurricane and other natural disasters, terrorism and sabotage (in each case, domestic and foreign) and the threat and results thereof, the complete unavailability of fuel (but not an increase in the cost of available fuel), public disorder, lightning and other abnormal or severe climatic conditions, national or regional strikes or labor stoppages, strikes or labor stoppages by employees of Suppliers of Specially Manufactured Equipment, and imminent threat of any of the foregoing that could reasonably affect the safety or security of individuals on, or damage to, the Project Site.

In no instance will the following be considered events beyond Contractor’s reasonable control or constitute a Force Majeure event: (i) strikes or labor disturbances involving the Personnel of Contractor or any of its Subcontractors at the Project Site (unless such strike or labor disturbance is national or regional in nature or as otherwise provided in Section 2.17 due to actions of Owner or entities acting on its behalf), (ii) weather other than as described in the second paragraph of this Section 11.1, (iii) any delay or failure of Contractor to obtain Equipment or Materials because of the delay or failure of any Subcontractor to perform any obligation to Contractor, unless such delay or failure is caused (A) by strikes or labor stoppages by employees of the Supplier of Specially Manufactured Equipment, or (B) by an independent event of Force Majeure, (iv) the failure of or delay in delivery in the issuance of Contractor Permits, unless such delay or failure is caused by an independent event of Force Majeure, (v) Equipment and Materials failure, unless such failure is caused by an independent event of Force Majeure, (vi) domestic and/or foreign transportation delays, unless such delays are caused by an independent event of Force Majeure, or involve Specially Manufactured Equipment or (vii) Excluded Changes in Law.


11.2 Burden of Proof. The burden of proof as to whether a Force Majeure event has occurred and the associated relief will be upon the Party claiming relief from such event.

11.2.1 Excused Performance. The Affected Party will not be held in default or be liable for delay or failure in performing its obligations hereunder because of a Force Majeure event if, and to the extent that (a) the Affected Party has taken reasonable alternative measures to mitigate the consequences thereof, and (b) such Force Majeure event is not the result of any failure of the Affected Party to perform any of its obligations under this Agreement; provided, however, that the Affected Party gives Notice within 10 Business Days after it became aware of the occurrence of such Force Majeure event. Such Notice will, to the extent practicable, specify the nature of the occurrence, the reasons why adjustments to this Agreement should be granted, and the projected length of the delay occasioned by reason of such Force Majeure event. Within 10 Business Days after submission of such Notice, the Affected Party shall provide a more detailed Notice of the impact of the occurrence, its recovery plan (the “Preliminary Mitigation Plan”) and a more detailed estimate of the effect on this Agreement. Such Notice will be updated as soon as possible after additional information becomes available to the Affected Party. Strict compliance with this Section 11.2.1 is required.

11.2.2 Scope of Excused Performance. The suspension of performance resulting from such Force Majeure event will be of no greater scope and of no longer duration than is reasonably required by the Force Majeure event.

11.2.3 Prior Obligations and Liabilities. No obligations or liability under this Agreement that arose before the occurrence of the Force Majeure event will be excused (except to the extent adversely impacted by the Force Majeure event) as a result of the occurrence of such Force Majeure event for any period prior to the occurrence of such Force Majeure event.

11.2.4 Continued Performance. The Affected Party shall continue to perform its obligations under this Agreement to the maximum extent possible. When the Affected Party is able to fully resume performance of its obligations hereunder, the Affected Party shall give Notice to the other Party to that effect and shall promptly resume such performance.

11.2.5 No Affect on Payment Obligations. Under no circumstance will an event of Force Majeure excuse a Party’s obligations to make payments when due under this Agreement, unless such Force Majeure event results in a failure of the Federal Reserve wire system or other failure of the banking system that deprives a Party access to otherwise available funds.


ARTICLE 12

INDEMNIFICATION

12.1 Indemnity. To the fullest extent permitted by Applicable Legal Requirements and subject to Section 12.5, Contractor hereby assumes liability for, and shall indemnify, defend and hold harmless Owner and its respective members, managers, partners, Affiliates, officers, employees, representatives, agents, the Engineers, as well as the Financing Parties and their employees, officers, representatives and agents (collectively, the “Owner Indemnitees”) from and against all liability, claims, suits, actions, costs (including reasonable attorneys’ fees, charges and disbursements), expenses, damages, losses, fines, interest, penalties, assessments, judgments, demands, causes of action, and other litigation of any kind and character (collectively “Claims”) that may be imposed on, incurred by or asserted against any Owner Indemnitee to the extent arising out of (x) negligence or willful misconduct of Contractor, its Personnel or Subcontractors, and in any way relating to or arising out of:

 

  (a) any bodily injury (including death) to any Person;

 

  (b) any damage to the tangible property of third parties to the extent resulting from or in connection with the negligence or intentional misconduct of Contractor, any Subcontractor or their respective Personnel or Affiliates;

or (y) fines, penalties, and costs imposed upon Owner or any Owner Indemnitee by any Governmental Authority because of a violation by Contractor or its Subcontractors or either Contractor’s or Subcontractors’ Personnel of any Applicable Legal Requirements.

12.2 Obligations with Respect to Liens. Contractor shall indemnify, save harmless and defend the Owner Indemnitees from and against any and all Contractor Liens (excepting Liens filed by Owner Suppliers) filed in connection with the performance of the Work, except to the extent Owner has failed to pay the amount properly due to Contractor in accordance with the terms hereof for Work in respect to which a Lien has been filed, including all costs and expenses and attorneys’ fees, charges and disbursements incurred in discharging or defending such Contractor Liens, if and to the extent that Contractor was not justified in withholding the payment underlying such Lien. Contractor shall cause such Contractor Lien to be canceled or discharged of record by the filing of a bond or otherwise or furnish Owner with a Contractor Lien Bond. If Contractor does not promptly satisfy such Contractor Lien or fails to provide Owner with a Contractor Lien Bond in lieu thereof within the period specified in Section 5.6.1(b), then Owner may, after at least 10 days prior Notice to Contractor, cure or release such Contractor Lien by payment of money or otherwise, and if Owner arranges a Contractor Lien Bond with respect to such


Contractor Lien, Contractor shall reimburse Owner for the reasonable cost of arranging such Contractor Lien Bond, within 30 days after request therefor by Owner.

12.3 Obligations with Respect to Intellectual Property. Contractor shall fully indemnify, save harmless and defend the Owner Indemnitees from and against any and all Claims for the infringement (actual or alleged) or misappropriation of any Intellectual Property, proprietary or confidentiality rights with respect to materials and information designed, specified or used by any of Contractor or Contractor’s Personnel in performing the Work or in any way incorporated in or related to the Work, unless the infringing item was specified by Owner or arises from the infringement or misappropriation of any Intellectual Property by an Owner Supplier. If, in any such Claim, a temporary restraining order or preliminary injunction is granted, then Contractor shall make every reasonable effort, by giving a satisfactory bond or otherwise, to secure the suspension of the injunction or restraining order as soon as possible. If, in any such Claim, the Project, or any part, combination or process thereof, is held to constitute an infringement and its use is enjoined, then Contractor, at Contractor’s sole option, cost and expense, shall either promptly (a) secure for Owner an irrevocable, royalty free, perpetual, non-exclusive license, at no cost to Owner, authorizing continued use of the infringing process, item or other Work without impairing the performance or operating cost of the Project, or (b) either replace the affected Work or portion, combination or process thereof with non-infringing, without impairing the performance or operating cost of the Project, components or parts or modify the same so that they become non-infringing; provided, however, that in connection with any such replacement or modification, Contractor shall be responsible for any Work necessary to access the item to be replaced or modified, and any Work necessary to recover, finish or otherwise cover and return to full operating status the item to be replaced or modified and removing the item to be replaced or modified, or reinstalling the item so replaced or modified, in each case as and to the extent necessary, to fully complete the replacement or modification of such item into the Project. Furthermore, if such Claim for infringement or misappropriation threatens to affect the operation of the Project or any portion thereof in the reasonable judgment of Owner, Contractor shall promptly undertake the obligations set forth in the previous sentence. The foregoing notwithstanding, Contractor’s liability under this paragraph for infringement or misappropriation by Suppliers supplying manufactured equipment to Contractor shall be limited to the remedies for infringement or misappropriation contained in the applicable Contractor Subcontract between Contractor and such Supplier, so long as Contractor includes in such Contractor Subcontract an indemnity of Owner by the vendor substantially the same as the foregoing.

12.4 Owner Indemnity. To the fullest extent permitted by Applicable Legal Requirements and Section 12.5, Owner hereby assumes liability for, and shall indemnify, defend and hold harmless Contractor and its members, managers, officers, Affiliates, employees, representatives, Subcontractors, and agents (collectively, the “Contractor Indemnitees”) from and against all Claims that may be imposed on,


incurred by or asserted against any Contractor Indemnitee and in any way relating to or arising out of (x) negligence of Owner and in any way relating to or arising out of:

 

  (a) any bodily injury (including death) to any Person;

 

  (b) any property damage (except where the risk of such damages has been assumed by Contractor elsewhere herein);

 

  (c) either the presence of any Owner Hazardous Substances or the Release or threatened Release of any Owner Hazardous Substances, on or from the Project Site, except to the extent caused by the Release or threatened Release by Contractor, any Subcontractor or their respective Personnel or Affiliates as described in Section 2.2.13.2; or

(y) fines or penalties and the cost of any remedial requirements imposed on Contractor or its Subcontractors by any Governmental Authority because of a violation by Owner or any Owner Personnel of any Applicable Legal Requirements; provided, however, that Owner will not be responsible for paying any portion of a fine that is imposed upon Contractor or its Subcontractors as a result of a prior violation for which Owner was not responsible.

12.5 Notice and Legal Defense. Promptly after receipt by a Owner Indemnitee or a Contractor Indemnitee (an “Indemnitee”) of any Claim or notice of the commencement of any action, administrative or legal proceeding, or investigation in connection with an actual or potential Claim as to which any indemnity provided for in this Article 12 or Section 2.2.13.2(d) may apply, the Indemnitee shall give Contractor or Owner, as the case may be, Notice of such fact; provided, however, that the failure to give such Notice will not relieve the indemnifying Party of its obligations to indemnify the Indemnitee, except to the extent that the indemnifying Party is materially and adversely affected thereby. The indemnifying Party shall assume on behalf of the Indemnitee, and conduct with due diligence and in good faith, the defense thereof with counsel reasonably satisfactory to the Indemnitee; provided, further, the Indemnitee shall have the right to be represented therein by counsel of its own selection and at its own expense (such expense not to be subject to indemnification hereunder); provided, further, if the defendants in any such action include both the indemnifying Party and the Indemnitee, and if the Indemnitee has reasonably concluded that there may be legal defenses available to it that are different from, additional to or inconsistent with those available to the indemnifying Party, then the Indemnitee will have the right to select separate counsel to participate in the defense of such action on its own behalf. The indemnifying Party shall consult with each Indemnitee throughout the pendency of the Claim regarding the investigation, defense, settlement, compromise, trial, appeal or other resolution thereof, and without the prior consent of each Indemnitee, the indemnifying Party shall not enter into any settlement of any Claim that would lead to liability, constitute an admission of liability, dismiss a Claim without prejudice, or create any financial or other obligation


on the part of any such Indemnitee for which such Indemnitee is not entitled to indemnification hereunder.

12.6 Failure to Defend Action. If any Claim arises as to which any indemnity provided for in this Article 12 or Section 2.2.13.2(d) may apply, and the indemnifying Party fails to assume the defense of such Claim with reasonable promptness after the receipt by the indemnifying Party of notification thereof, then the Indemnitee against which the Claim is made, instituted or commenced may, at the indemnifying Party’s expense, contest, or settle, such Claim, providing the indemnifying Party with reasonable advance Notice of any settlement decision. All costs and expenses incurred by the Indemnitee in connection with any such contest, settlement or payment may be deducted from any amounts due to the indemnifying Party under this Agreement, with all such costs in excess of the amount deducted to be reimbursed by the indemnifying Party to the Indemnitee promptly following, but not later than 15 days following, the demand therefor.

12.7 No Limitation to Workers’ Benefits. In any and all Claims against any Indemnitee by any employee of a Party or its Personnel, the indemnification obligations under Article 12 (except Sections 12.1(a) and 12.4(a)) shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable by or for the Party under workers’ or workmen’s compensation acts, disability benefit acts or other employee benefit acts.

12.8 Limitation on Indemnification. In no event shall the indemnification provisions of this Article 12 or Section 2.2.13.2(d) require an indemnifying Party to provide indemnification under this Agreement for any Claim, loss, liability or other damage incurred by an Indemnitee to the extent caused by the negligence or misconduct of such Indemnitee or to the extent such indemnification is prohibited under Applicable Legal Requirements.


ARTICLE 13

REMEDIES AND TERMINATION

13.1 Termination for Convenience. Owner shall have the right, in its sole discretion, to terminate this Agreement, including portions of the Work to be performed by Contractor hereunder, in each case for its sole convenience (without necessity of giving a reason to Contractor), at any time upon 2 Business Days’ prior Notice thereof to Contractor. In the event of any termination for convenience by Owner pursuant to this Section 13.1 and compliance by Contractor of its obligations under Sections 13.1.2, 13.4.1 (as applicable) and 13.4.3 in connection with such termination, Contractor shall be relieved of its obligations and liability under this Agreement with respect to this Agreement or the portion of Work so terminated from and after the date of such termination.

13.1.1 Termination Payment. If this Agreement is terminated under this Section 13.1, then, subject to Sections 13.1.1, 13.1.2, 13.4.1 (as applicable) and 13.4.3, as Contractor’s sole and exclusive remedy hereunder, Contractor will be entitled to payment of (a) the Fixed Component earned through the effective date of termination, (b) all cancellation charges necessarily incurred by Contractor in relation to its Subcontractors, (c) an amount equal to other reasonable termination-related actual costs necessarily incurred by Contractor, including its obligations under this Article 13, (d) reasonably incurred actual costs of demobilization, and (e) Sales Taxes properly paid by Contractor for which it has not been reimbursed (the “Termination Payment”). Contractor shall calculate amounts due pursuant to this Section 13.1.1, which amounts will be subject to audit by Owner. Notwithstanding a termination hereunder, the Parties shall remain liable to each other for liabilities that have accrued under other provisions of this Agreement prior to such termination, and provided, further, the Parties shall remain obligated and liable for obligations under this Agreement that by their express terms survive termination. The Parties recognize, agree and acknowledge that Owner’s termination right hereunder is a permitted action under this Agreement and not a breach hereof or a default hereunder. Payment of the Termination Payment (or any portion thereof) will be made by Owner within 30 days following an invoice therefor accompanied by reasonable documentation in support thereof.

13.1.2 Termination Obligations. The following shall be obligations of Contractor in connection with any full or partial termination of this Agreement: (a) Contractor’s execution and delivery of all documents and taking reasonable steps, including the assignment of Contractor’s contractual rights, as Owner may require, for the purpose of fully vesting in Owner all right, title and interest of Contractor in and to all Subcontracts which Owner elects to assume, warranties, guarantees, Work and other agreements pertaining to the Work that Owner elects to assume; provided, however, that such Work, upon transfer, will not be subject to Article 9, (b) Contractor’s execution and delivery (and using reasonable commercial efforts to cause Subcontractors and Owner Suppliers to execute and deliver) to Owner of all


waivers and releases, in form and substance reasonably acceptable to Owner, required to establish that the Project and the Project Site, and any and all interests, estates or improvements related thereto, are free from any and all Liens arising out of or in connection with performance by Contractor, any Subcontractor or any Owner Supplier so terminated, but only to the extent that (i) Contractor (or, in the case of any Owner Contract, an Owner Supplier) has been paid for such work in accordance with the terms of this Agreement or the Owner Contract, as applicable, and (ii) only with respect to the portion of the Work so terminated, (c) Contractor’s prompt delivery to Owner of any other information reasonably requested by Owner, and (d) Contractor’s removal from the Project Site of all of Contractor’s waste, debris, Personnel and property of Contractor (except as provided in Section 13.4.1).

13.1.3 Termination Due to Force Majeure. Either Party shall have the right to terminate this Agreement at any time by giving Notice thereof to the other Party if the Work is suspended for more than 270 days due to Force Majeure, with such termination being handled under this Section 13.1.

13.2 Termination Upon Contractor Event of Default. If a Contractor Event of Default occurs, then Owner may, without prejudice to any other right or remedy Owner may have under this Agreement, at any time terminate this Agreement, such termination becoming effective as provided in Section 13.4.3. For purposes hereof, a “Contractor Event of Default” shall occur if:

 

  (a) Contractor abandons or suspends progress of the Work for more than more than * days for any reason other than Force Majeure or as otherwise permitted by this Agreement;

 

  (b) Contractor assigns or attempts to assign its rights or obligations under this Agreement or any part thereof to any Person without the prior written consent of Owner;

 

  (c) a Contractor Act of Bankruptcy occurs;

 

  (d) Contractor does not perform any of its material obligations under this Agreement;

 

  (e) Contractor fails or refuses to comply with any Applicable Legal Requirements applicable to Contractor under this Agreement, which failure or refusal could result in a material adverse effect on Owner, the Work or the Project;

 

  (f) any representation or warranty made by Contractor herein or in any Application for Payment or other document submitted to Owner under this Agreement is false in any material respect when made;


  (g) Contractor fails or refuses to pay any amount that is due to Owner under this Agreement;

 

  (h) Contractor does not obtain and maintain the insurance required of it pursuant to Section 2.9; provided, however, that if Contractor’s failure to maintain such insurance is caused by the bankruptcy of a carrier providing its insurance, without limiting Owner’s rights to procure insurance pursuant to Section 2.9, a Contractor Event of Default pursuant to this clause will not occur if Contractor’s failure is rectified within 7 Business Days of such failure;

 

  (i) Contractor fails or refuses or is unable at any time during the course of the Work, except in the event of Force Majeure event or during a suspension of the Work for reasons that give Contractor the right under this Agreement to so suspend the Work, to provide or implement a Recovery Plan required hereunder to the reasonable satisfaction of Owner; or

 

  (j) the Contractor Guaranty fails to be in full force and effect.

Notwithstanding anything in this Agreement to the contrary, the events described in this Section 13.2 will not constitute a Contractor Event of Default unless and until: (i) Owner has given Notice to Contractor specifying with particularity the existence of such default which, unless cured (if a cure period applies), constitutes a Contractor Event of Default that gives Owner a right to terminate its obligations to Contractor for cause under this Section 13.2, and (ii) in the case of Sections 13.2(a), 13.2(d), 13.2(e), 13.2(f), 13.2(g) or 13.2(i) only, Contractor has failed to cure such default within 30 days after receipt of such Notice, or in the case such default cannot be cured within 30 days, has failed within 30 days to initiate and thereafter diligently and continuously pursue actions reasonably likely to cure such default within an additional 90 days.

13.3 Termination for Agreed Circumstances. Owner has the right, in its sole discretion, to terminate this Agreement or any portion hereof at any time by giving Notice thereof to Contractor upon the occurrence of any of the following events:

 

  (a) Final Completion does not occur within * days following the Target Final Completion Date; or

 

  (b) Substantial Completion does not occur within * months following the Required Substantial Completion Date; or

 

  (c) Contractor is not obligated to pay amounts otherwise owed to Owner hereunder due to its limitation on liability set forth in Section 16.1 and the Project is more than * days behind Schedule.


13.4 Consequences of Termination; Actions upon Termination.

13.4.1 Assumption and Succession. Upon any termination pursuant to this Article 13, in addition to any other rights or remedies that Owner may have under this Agreement, Owner may at its option elect to: (a) assume responsibility for and take title to and possession of the Project and any or all work, Materials or Equipment remaining at the Project Site that are part of the Work, Construction Aids and any and all other Materials or Equipment located outside the Project Site that are part of the Work, with suitable compensation therefor; provided, however, that such Work, upon transfer, will not be subject to Article 9, and (b) succeed to the interests of Contractor in any or all Subcontracts (including leases). Upon termination of this Agreement by Owner in accordance with this Article 13, if requested by Owner, Contractor shall (a) withdraw from the Project Site, and (b) as requested by Owner in writing, assign one or more of its Contractor Subcontracts to Owner or any designee of Owner; provided, however, that such assignee assumes the obligations of Contractor thereunder and Contractor is relieved of liability thereunder for work performed, services rendered and obligations incurred after the date of assumption of such Contractor Subcontract by Owner, and (c) turn over to Owner any Submittals prepared prior to such termination and any Materials, Equipment, and any other designs, purchase orders prepared or ordered prior to such termination, and any tools, schedules, computer files and drawings (in native or original format) that are part of the Work, with suitable compensation therefor (to the extent not previously paid but subject to Section 13.4.2). Owner may employ any other Person (hereinafter, a “Replacement Contractor”) to finish the Work in accordance with the terms of this Agreement by whatever method that Owner may deem expedient. In addition, Contractor shall not remove any Equipment, Materials or tools that (w) have been fabricated especially for or are unique to the Project, (x) are incorporated in or are attached to, or are intended to be incorporated in or attached to, the Project, (y) constitute temporary or permanent scaffolding or supporting elements for the construction of the Project, or (z) the removal of which could damage the Project or any portion thereof then constructed, or otherwise materially adversely affect or delay the construction, use or maintenance of the Project, with suitable compensation therefor (to the extent not previously paid but subject to Section 13.4.2). Contractor shall not have any further responsibility therefor upon such termination.

13.4.2 Completion of the Work. In the event of any termination for a Contractor Event of Default, Owner may, at its option and at its expense, finish the Work by whatever method Owner reasonably deems expedient; provided, however, that, as Contractor’s sole liability on account of such termination, Contractor shall be liable to Owner for the reasonable costs of cover and transitioning the Work to the Replacement Contractor. Owner shall be entitled to withhold payments which Contractor determines are due to it prior to the date of termination, along with other amounts for which Contractor is entitled to compensation under Section 13.4.1, until completion of the Work and determination by Owner that Contractor is entitled to such payments. Any amounts not paid hereunder if ultimately due shall bear interest


at the Late Payment Rate. Owner may in its discretion employ the Replacement Contractor to finish the Work by whatever method or means Owner in its discretion may deem expeditious; provided, however, that the balance of Work will be completed utilizing reasonable methods of construction management and construction consistent, to the maximum feasible extent, with the Project Schedule and as otherwise provided herein. In the event that any termination of this Agreement by Owner because of a Contractor Event of Default pursuant to Section 13.2 is later adjudicated to have been improper, then Contractor shall be entitled to recover such amounts as Contractor is entitled to under Section 13.1.

13.4.3 Actions Upon Termination. Upon receipt of Notice from Owner of termination of this Agreement pursuant to either Section 13.1, Section 13.2 or Section 13.3, Contractor shall: (a) cease performance of the Work to the extent directed by Owner in the Notice and complete necessary demobilization in connection with such termination, (b) take all actions that Owner may direct, for the protection and preservation of the Work and the Project (in whatever stage of completion), (c) transition the administration of the Owner Contracts to Owner, (d) enter into no further Subcontracts related to the Project or the Work, and (e) at Owner’s instruction, assign its rights under any or all Subcontracts to Owner or Owner’s designee. In addition, upon any such termination of this Agreement, Contractor shall be relieved of its obligation for performance under any Subcontracts assigned to Owner or its designee for work performed, services rendered or materials or equipment supplied after the effective date of such assumption. The effective date of any termination of this Agreement pursuant to this Article 13 shall be the date established in the Notice of such termination delivered by the Party exercising its termination right hereunder.

13.5 Owner Monetary and Non-Monetary Defaults; Contractor Draw Conditions on Pre-Financial Closing Letter of Credit.

13.5.1 Non-Payment. If Contractor has not received any undisputed payment due it hereunder within 10 days after Contractor has provided Notice to Owner of its failure to make the specified payment when due and owing or if an Owner Act of Bankruptcy occurs, then Contractor may stop Work until such Owner default is cured, at which time Contractor shall re-commence performance of the Work in a timely fashion. If (a) Contractor has not received any undisputed payment within 30 days after the date such payment is due (b) if an Owner Act of Bankruptcy continues for more than 30 days, or (c) Contractor draws on the letter of credit placed pursuant to the Letter Agreement or, if replaced by the Pre-Financial Closing Letter of Credit, the Pre-Financial Closing Letter of Credit because Owner has not extended or replaced it before its expiration, then Contractor may terminate this Agreement upon providing Notice of termination to Owner. In the event of such termination, Contractor shall receive compensation in accordance with Section 13.1.1 (together with any payment that has accrued but has not been paid to it under this Agreement


as of the date of such termination) as its sole remedy and the exclusive damages resulting from such termination.

13.5.2 Non-Monetary Default. If any Owner Event of Default (other than a payment default as described in Section 13.5.1 above) occurs, then (a) to the extent such Owner Event of Default materially and adversely affects Contractor’s ability to achieve any of the Required Contract Dates, increases Contractor’s cost to perform the Work or otherwise adversely affects the provisions of this Agreement, Contractor, if it so requests, shall be entitled, and Owner shall execute, a Change Order as provided in Section 10.3, 10.4, 10.5 and 10.7 (b) Contractor shall be entitled to any other right or remedy permitted under this Agreement (other than termination if such Owner Event of Default can be fully cured by a Change Order issued in accordance with Article 10 and in compliance with Applicable Legal Requirements) as a result of such Owner Event of Default, and (c) Contractor shall be entitled to suspend its performance of the Work, such suspension to become effective upon Owner’s receipt of Notice thereof from Contractor. “Owner Events of Default” shall occur if:

 

  (a) Owner fails or refuses to comply with any Applicable Legal Requirements under this Agreement, which failure or refusal results in a material adverse effect on Contractor;

 

  (b) any representation or warranty made by Owner herein or in any other document submitted to Contractor under this Agreement is false in any material respect when made;

 

  (c) Owner fails to perform any of its material obligations under this Agreement;

 

  (d) Owner fails to maintain insurance required hereunder; provided, however, that if Owner’s failure to maintain such insurance is caused by the bankruptcy of a carrier providing its insurance, an Owner Event of Default pursuant to this clause will not occur if Owner’s failure is rectified within seven (7) Business Days of such failure;

 

  (e) Owner makes an assignment in violation of the provisions hereof; or

 

  (f) the Owner Guaranty fails to be in full force and effect.

Notwithstanding anything in this Agreement to the contrary, the events described in the definition of an Owner Event of Default will not constitute a Owner Event of Default, unless and until: (i) Contractor has given Notice to Owner specifying with particularity the existence of such event that, unless corrected (if a cure period applies), constitutes an Owner Event of Default, and (ii) in the case of Sections 13.5.2(a), (b), (c), or (f), such default has not been cured within 30 days after receipt of such Notice, or in the case that such default cannot be cured within 30


days, Owner has not within 30 days initiated or caused to be initiated and thereafter diligently pursued actions reasonably likely to cure such default within an additional 90 days; provided, however, if the event described in Section 13.5.2(f) occurs and Owner has not provided the reasonable evidence therein required within 10 days of Notice by Contractor, Contractor may suspend performance of the Work until such evidence is provided or it has the right to terminate upon Owner’s failure to cure as hereinbefore provided.

13.5.3 Draw Conditions for Pre-Financial Closing Letter of Credit and Letter Agreement. In addition to any other draw rights expressed in the Pre-Financial Closing Letter of Credit and under the Letter Agreement, in the event of an Owner payment default pursuant to Section 13.5.1 occurring prior to the Financial Closing, Contractor shall have the right, without limiting any of its other rights herein, to draw on the letter of credit placed pursuant to the Letter Agreement or, if replaced by the Pre-Financial Closing Letter of Credit, the Pre-Financial Closing Letter of Credit to the extent necessary to immediately recover the amount of outstanding unpaid and undisputed Contractor invoices, and any such draw shall satisfy such payment default amount so drawn. Further, at any time Contractor has a right to terminate this Agreement prior to Financial Closing, Contractor may immediately draw the full amount of the letter of credit placed pursuant to the Letter Agreement or, if replaced by the Pre-Financial Closing Letter of Credit, the Pre-Financial Closing Letter of Credit to secure funds for payment of amounts due Contractor under Section 13.1.1.

13.6 Duty to Mitigate Damages. Each Party shall have the duty to mitigate damages to it arising from any default hereunder by the other Party.


ARTICLE 14

SECURITY

14.1 Guarantees. Owner shall furnish to Contractor the Owner Guaranty on the Commencement Date. Contractor shall furnish to Owner the Contractor Guaranty on the Commencement Date. The Owner Guaranty shall remain in effect until the earlier of (a) Financial Closing and (b) the date on which Owner has fully performed all of its obligations to Contractor under this Agreement. The Contractor Guaranty shall remain in effect until Contractor has fully performed all of its obligations to Owner under this Agreement.


ARTICLE 15

REPRESENTATIONS AND WARRANTIES

15.1 Representations and Warranties of Contractor. Contractor hereby represents and warrants to Owner as follows:

 

  (a) Due Organization of Contractor. Contractor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite power and authority to own and operate its business and properties and to carry on its business as such business is now being conducted and is duly qualified to do business in the State of Louisiana and in any other jurisdiction in which the transaction of its business makes such qualification necessary;

 

  (b) Due Authorization of Contractor; Binding Obligation. Contractor has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement by Contractor have been duly authorized by all necessary action on the part of Contractor. This Agreement has been duly and validly executed and delivered by Contractor and, assuming due execution and delivery by Owner, constitutes the legal, valid and binding obligation of Contractor enforceable against Contractor in accordance with its terms, except as such enforcement may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors’ rights in an action (whether considered in an action at law or in equity) generally, or (ii) general equitable principles (whether considered in any action at law or in equity);

 

  (c) Non-Contravention. The execution, delivery and performance of this Agreement by Contractor and the consummation of the transactions contemplated hereby do not and shall not contravene the governing documents of Contractor and do not and shall not conflict with or result in a breach of or default under any indenture, mortgage, lease, agreement, instrument, judgment, decree, order or ruling to which Contractor is a party or by which it or any of its properties is bound or affected;

 

  (d) Regulatory Approvals. All governmental or other authorizations, approvals, orders or consents required in connection with the execution, delivery and performance of this Agreement by Contractor have been obtained or shall be obtained in due course; and


  (e) Intellectual Property. Contractor has the right to grant all of the Intellectual Property rights it has purported to grant under this Agreement.

15.2 Representation and Warranties of Owner. Owner hereby represents and warrants to Contractor as follows:

 

  (a) Due Organization of Owner. Owner is a limited liability company duly organized and validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own and operate its business and properties and to carry on its business as such business is now being conducted and is duly qualified to do business in the State of Louisiana;

 

  (b) Due Authorization of Owner; Binding Obligation. Owner has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder and the execution, delivery and performance of this Agreement by Owner have been duly authorized by all necessary limited liability company action on the part of Owner. This Agreement has been duly and validly executed and delivered by Owner and, assuming due execution and delivery by Contractor, constitutes the legal, valid and binding obligation of Owner enforceable against Owner in accordance with its terms, except as such enforcement may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors’ rights in an action (whether considered in an action at law or in equity) generally, or (ii) general equitable principles (whether considered in any action at law or in equity);

 

  (c) Regulatory Approvals. All governmental or other authorizations, approvals, orders or consents required in connection with the execution or delivery of this Agreement by Owner have been obtained; and

 

  (d) Non-Contravention. The execution, delivery and performance of this Agreement by Owner and the consummation of the transactions contemplated hereby do not and shall not contravene the certificate of formation or limited liability company agreement of Owner and do not and shall not conflict with or result in a breach of or default under any indenture, mortgage, lease, agreement, instrument, judgment, decree, order or ruling to which Owner is a party or by which it or any of its properties is bound or affected.


ARTICLE 16

LIMITATIONS OF LIABILITY

16.1 Limitation of Contractor’s Liability for Liquidated Damages.

16.1.1 Aggregate Limitation for Liquidated Damages. To the fullest extent permitted by Applicable Legal Requirements, Contractor’s overall cumulative liability for liquidated damages to Owner arising under Sections 8.3 and 8.4 will in no event exceed an amount equal to * percent (*%) of the Total Contractor Compensation, and Owner releases Contractor from, and waives all right of recovery against Contractor for, any damages beyond such limit of liability for defaults specified in Sections 8.3 and 8.4.

16.1.2 Aggregate Limitation for Delay Liquidated Damages. To the fullest extent permitted by Applicable Legal Requirements, Contractor’s overall cumulative liability for delay liquidated damages to Owner arising under Section 8.3 will in no event exceed an amount equal to * percent (*%) of the Total Contractor Compensation, and Owner releases Contractor from, and waives all right of recovery against Contractor for, any damages beyond such limit of liability for defaults specified in Section 8.3.

16.1.3 Aggregate Limitation for Performance Liquidated Damages. To the fullest extent permitted by Applicable Legal Requirements, Contractor’s overall cumulative liability for performance liquidated damages to Owner arising under Section 8.4 will in no event exceed an amount equal to * percent (*%) of the Total Contractor Compensation, and Owner releases Contractor from, and waives all right of recovery against Contractor for, any damages beyond such limit of liability for defaults specified in Section 8.4.

16.1.4 Individual Limitations for Performance Liquidated Damages. Notwithstanding the provisions of Section 16.1.3 above, to the fullest extent permitted by Applicable Legal Requirements, Contractors liability for the following performance liquidated damages to Owner arising under Section 8.4 shall in no event exceed amounts equal to the following amounts, and Owner releases Contractor from, and waives all right of recovery against Contractor for, any damages beyond such limit of liability for defaults specified in Section 8.4:

16.1.4.1 Lime Consumption Requirement as described in Section 8.3.1.3 – * Dollars ($*); and

16.1.4.2 Net Electrical Output Requirement as described in Section 8.3.1.4 – * Dollars ($*).

16.2 Consequential Damages. In no event will either Party (or its Affiliates) be liable to any other Party, Affiliate, or to Contractor’s Subcontractors for any special, incidental, indirect, exemplary, punitive, or consequential costs or


damages of any nature (including damages from the use of or loss of any facility, equipment or property; loss of anticipated profits or revenues; loss of opportunity; loss of productivity; loss of shop space; claims of customers; costs of obtaining or maintaining loans or debt service payable thereunder; or loss of goodwill). The foregoing limitation is not intended to limit a Party’s liability to any Person indemnified under this Agreement for claims of a third party. The Parties agree that any liquidated damages provided for under this Agreement or the direct damages of Owner payable by Contractor in connection with termination of this Agreement because of a Contractor Event of Default will not be considered “special, incidental, indirect or consequential” costs or damages under this Section 16.2.

16.3 Overall Limitation of Liability. The total aggregate liability of Contractor to Owner, the Financing Parties, or any other party claiming through either of them hereunder on claims of any kind in any way arising out of the Work or Contractor’s alleged breach of this Agreement, shall in no case exceed an amount equal to * percent (*%) of the Total Contractor Compensation for (a) after Contractor has conducted a Performance Test, but failed to achieve the minimum requirements necessary to successfully pass such Performance Test, amounts expended on rework, repair, replacement or other modifications and additional work to correct defects or errors for which Contractor is financially responsible under the terms of the Agreement, and (b) all liquidated damages paid by Contractor to Owner pursuant to Article 8 or (c) other damage or liability amounts paid to Owner hereunder; provided that such limitation of liability shall not apply to or limit Contractor’s liability:

 

  (i) for any loss, claim or damage suffered or sustained due to willful misconduct of Contractor or any Subcontractor;

 

  (ii) for any indemnity obligation of Contractor under Article 12;

 

  (iii) with respect to any claims against Owner by any Subcontractor of Contractor;

 

  (iv) for any failure of Contractor to obtain or maintain the insurance required under Article 2.9 hereof; and

 

  (v) before Contractor has conducted a Performance Test, but failed to achieve the minimum requirements necessary to successfully pass such Performance Test, amounts expended on rework, repair, replacement or other modification and additional work to correct defects or errors for which Contractor is financially responsible under the terms of the Agreement.

16.4. Application. Limitations and waivers of liability, releases from liability and exclusive remedies provided for herein will be applicable, valid and enforceable irrespective of whether any claim or liability is based on breach of contract, breach of warranty, indemnity, tort (including negligence) or any other legal theory, and


benefits thereof will extend to each Party and its members, officers, directors, Affiliates and Personnel. This paragraph shall survive the completion or any termination of this Agreement


ARTICLE 17

DISPUTE RESOLUTION

17.1 Dispute Resolution Between the Parties.

17.1.1 Cooperation. Owner and Contractor desire that this Agreement operate between them fairly and reasonably. If any disputes, differences, or questions (collectively, “Disputes”) arise between the Parties in respect of this Agreement or the subject matter hereof, representatives of the Parties shall cooperate, in good faith, to attempt to amicably resolve the Dispute. If any Party believes that such representatives will not be able to resolve the Dispute, such Party may invoke the further dispute resolution procedures of this Section 17.1 and of Section 17.2.

17.1.2 Management Discussions. If representatives of the Parties cannot resolve a Dispute within 15 days, each Party shall prepare a written statement of its position and deliver it to the other Party within 10 days after the expiry of the initial 15 day period, and one or more senior officers from each Party shall meet in person within 15 days in an effort to resolve the Dispute. If the senior officers of either Party determine at any time that the Dispute cannot be resolved without referral of the Dispute to an independent third party, such Party shall notify the other Party that it wants to submit the Dispute to mediation or arbitration in accordance with Sections 17.1.3 or 17.2, respectively; provided, however, that no Party shall seek arbitration of any Dispute until a period of at least 20 days has elapsed since the Dispute was referred to such senior officers, without a resolution having been reached. The pendency of a Dispute shall not delay progress of the Work or relieve either Party from its duty to perform its obligations under this Agreement.

17.1.3 Voluntary Mediation. If a Dispute cannot be resolved by the Parties pursuant to Sections 17.1.1 or 17.1.2, the Parties shall endeavor to resolve such Dispute by mediation which, unless a Party objects to mediation by giving Notice to the other Party prior to commencement of the mediation, shall be a condition precedent to arbitration. Unless the Parties mutually agree otherwise, mediation shall be in accordance with the then-current Construction Industry Mediation Procedures of the American Arbitration Association. Requests for mediation shall be filed in writing with the other Party and with the American Arbitration Association.

17.2 Arbitration.

17.2.1 Rules and Arbitrators. All Disputes that cannot be resolved by the Parties pursuant to Section 17.1 shall be exclusively and finally settled by self-administered arbitration with 3 arbitrators conducted in accordance with the then current Construction Industry Arbitration Rules of the American Arbitration Association or any successor thereto (the “Rules”), except as modified herein. Each Party to the arbitration shall select one arbitrator and the 2 arbitrators selected by the Parties shall select a third arbitrator within 15 days. If the 2 arbitrators fail to reach


agreement on the third arbitrator within such time limit, either Party may initiate the selection of the third arbitrator by resort to the American Arbitration Association. In any proceeding conducted under this Section 17.2 by the American Arbitration Association, (a) no discovery shall be allowed with respect to appointment of an arbitrator and limited discovery shall be allowed with respect to disqualification of an arbitrator, (b) the arbitration hearing may be scheduled upon not less than 10 days prior written notice to the Parties and shall not exceed 3 days in length, (c) direct testimony shall be presented by the Parties solely through written submissions, and (d) the final decision shall be rendered within 30 days of submission of the matter for arbitration.

17.2.2 Impartiality, Independence and Qualifications of Arbitrators. Each person serving as an arbitrator (including the arbitrators selected by each Party) shall be impartial and independent third parties, shall perform his or her duties with diligence and in good faith, and have practiced law as a licensed attorney for at least 20 years and have substantial legal experience in connection with the design, construction and operation of fossil fuel-fired electric generating facilities. If a person with such expertise is not reasonably available, then an arbitrator with at least 20 years experience in the design, construction and operation of equivalent heavy industry experience (e.g. refineries, chemical facilities, etc.) may be selected. Upon objection of a Party, under the Rules, to the appointment or continued service of an arbitrator, the Parties shall attempt to reach agreement upon such disqualification and, in the absence of such agreement, shall submit the matter to arbitration in accordance with this Section 17.2 for resolution. If a Party-appointed arbitrator is disqualified, his or her replacement shall be selected by the Party appointing the original arbitrator. If the third arbitrator is disqualified, his or her replacement shall be selected in accordance with the procedure outlined in Section 17.2.1.

17.2.3 Costs and Discovery. Subject to the remaining terms of this Agreement, each Party shall bear the cost of the arbitrator which it selects and the Parties shall equally bear all other costs of arbitration, including the cost of the third arbitrator. If the arbitrators find that a frivolous claim has been pursued by a Party or a Party engages in egregious conduct, the arbitrators may award all (or any portion) of any expenses of arbitration incurred in connection with the Dispute (including attorneys’ fees, charges, disbursements, expenses of expert witnesses and fees of the arbitrators) to the Parties in such proportion as may be determined by the arbitrators. The arbitrators may permit and/or limit the scope of discovery as may be reasonable under the circumstances. Time is of the essence in any Dispute, and the arbitrators shall be permitted to issue monetary sanctions against any Party if, upon a showing of good cause, such Party is unreasonably delaying the proceedings. In no event shall any costs incurred by Contractor in participating in dispute resolution proceedings hereunder constitute a cost under the Reimbursable Component.

17.2.4 Limitations. No Party shall submit a Dispute to arbitration when institution of legal or equitable proceedings based on such Dispute would be


barred by the applicable statute of limitations. The arbitrators may not amend or modify this Agreement, enter an award for damages that are prohibited hereunder or limit any of the remedies set forth in this Agreement.

17.2.5 Additional Relief. Nothing in this Article 17 will preclude any Party from taking (or requesting any judicial or other authority to order) any measure in aid of arbitration prior to the commencement of or during the arbitration proceedings for the preservation of its rights and interests.

17.2.6 Venue and Timing. The arbitration shall take place in New Orleans, Louisiana, and shall be conducted in English. The arbitrators shall render their award (the “Award”) within 180 days from submission of the Dispute to arbitration. The Award shall be final and binding on the Parties hereto and non-appealable and may be confirmed and enforced in any court of competent jurisdiction, unless the Award is procured by corruption or fraud. Except as provided in this Section 17.2, each Party hereby excludes and waives irrevocably any rights or application or appeal to the courts of any jurisdiction to the fullest extent permitted by Applicable Legal Requirements. The court may correct the Award before confirmation, if (a) there was manifest error in any mathematical calculation or manifest error in the description of any Person, thing or property referred to in the Award, (b) the arbitrators exceeded their powers by including in the decision or award a matter not submitted to them and the decision or award may be corrected without affecting the merits of the decision upon the matter submitted, and (c) the Award is imperfect in a matter of form, which can be corrected without affecting the substance of the Award. If an Award is vacated, the matter will be resubmitted for resolution according to the terms of this Agreement.

17.2.7 Continued Performance. Unless otherwise agreed in writing, Contractor shall continue to perform the Work and Owner shall continue to make payments, both in accordance with this Agreement, pending the resolution of any Dispute hereunder.

17.2.8 Consolidation. The Parties agree that if a third party (including an Owner Supplier or a Subcontractor) is substantially involved in a common question of fact or law or whose presence is necessary if complete relief is to be afforded and/or inconsistent decisions are to be avoided, then the Parties will use their respective reasonable efforts to consolidate such third party into the dispute resolution process herein contained, making such accommodating adjustments as are fair and appropriate to accommodate additional parties; provided, however, that such third party has consented to such inclusion and agrees to be bound by the Award of the arbitrators.

17.2.9 When Inapplicable. The provisions relating to mandatory arbitration will not be applicable to a claim asserted in an action in court by a person who is under no obligation to arbitrate such claim with either of the Parties to this


Agreement insofar as the Parties to this Agreement may desire to assert any rights of indemnity or contribution with respect to the subject matter of such action.

17.2.10 Cross Examination. Testimony may be admitted by sworn affidavit; provided, however, that the opposing Party must be given the right to cross-examine any witness whose testimony is so admitted.

17.2.11 Survival. The provisions of this Article 17 will survive the expiration or earlier termination of this Agreement.


ARTICLE 18

CONFIDENTIALITY

18.1 Confidential Information. Each of the Parties has a proprietary interest in information that will be furnished pursuant to this Agreement. The Parties shall keep in confidence and will not disclose any such information which in good faith is proprietary and which is specifically designated in writing as being proprietary (“Confidential Information”) without the prior written permission of the disclosing Person (the “Disclosing Party”) or use any such information for other than the purpose for which it is supplied, except as provided herein. Information relating to commercial terms of this Agreement shall also be treated as Confidential Information; provided, however, that such obligation is not intended to restrict Owner from use of the form of agreement. Each Party agrees that the other Party may disclose any Confidential Information to its or their consultants, representatives and to such other persons, including the Financing Parties and potential owners or Affiliates, as may be necessary to perform its or their obligations under this Agreement or any document related to the Project or the Financing thereof to which it is a party or, in the case of Owner, to develop, finance or sell an interest in the Project or any entity owning an equity interest directly or indirectly in the Project. Each Party shall be responsible for requiring any third party (excluding such Party’s (or its Affiliates), officers, directors, members, managers, employees and counsel who, in each case, will be informed of the requirement to comply with the terms of this Section 18.1) to which it wishes to disclose Confidential Information to enter into a confidentiality agreement on substantially the terms of this Article 18 or, in the case of Financing Parties, if Owner is unable to get any Financing Party to agree to such terms after expending a reasonable effort to do so, on reasonable terms and conditions that are customary for confidentiality agreements for similarly situated parties receiving proprietary information comparable to the Confidential Information; provided, however, that if a third party (a party other than Owner, or its Affiliates, officers, directors, members, managers, employees and counsel) has agreed in a writing provided to Contractor to maintain the confidentiality of Confidential Information in connection with the Project, such third party shall not be required to enter into another confidentiality agreement pursuant to this Article 18. Each Party agrees with respect to Confidential Information, to hold the same confidential for the shorter of a period of 5 years from receipt or for a period of 3 years from the earlier to occur of termination or Final Completion. The provisions of this Article 18 shall not apply

 

  (a) to information which the receiving Person (the “Receiving Party”) can substantiate:

 

  (i) was in the possession of the Receiving Party at the time it was initially furnished, without a breach of this provision;


  (ii) is or becomes part of the public domain without a breach of this provision;

 

  (iii) is received from a third party who is, as far as reasonably can be determined, under no limitation or restriction regarding disclosure; or

 

  (iv) information the Disclosing Party authorizes the Receiving Party to describe.

Such information shall not be deemed to be within one of the foregoing exceptions if it is merely embraced by more general information available on a non-confidential basis to the Receiving Party;

 

  (b) to the extent that a Receiving Party is required to disclose Confidential Information pursuant to Applicable Legal Requirements (including in connection with a Financing), or uses information in connection with any legal proceeding or Dispute under Article 17 hereof; provided, however, that promptly upon a Receiving Party becoming aware that Confidential Information may be required to be disclosed pursuant to Applicable Legal Requirements, the Receiving Party gives Notice to the other Party and, in consultation with the Disclosing Party, takes reasonable steps to make the Disclosing Party’s Confidential Information subject to reasonably available procedures for maintaining its confidentiality; or

 

  (c) to any Record Documents or other Submittals related to the Project to the extent disclosure thereof is reasonably necessary in connection with the design, engineering, construction, operation, maintenance, improvement, modification, expansion or other activity related to the Project; provided, however, that Owner shall require the recipient of Confidential Information contained therein to maintain the confidentiality of such Confidential Information on terms substantially similar to the terms of this Article 18 and to limit use of such Confidential Information to the Project.

18.2 Publicity. Contractor agrees that all public relation matters arising out of or in connection with the Work will be the sole responsibility of Owner. Therefore, Contractor shall obtain Owner’s prior written approval of the text of any announcement, publication, technical report, article, photograph or any other media release, or general public communication concerning the Work that specifically mentions Owner or any of its Affiliates or the Project or the Project Site or any of the Financing Parties which Contractor or its Subcontractors or any of their respective Affiliates wish to release for publication. Contractor shall include in each Contractor Subcontract a provision requiring each Subcontractor to adhere to the requirements of this Section 18.2. Owner shall obtain Contractor’s prior written approval of the text


of any announcement, publication, technical report, article, photograph or any other media release or general public communication concerning the Work that specifically mentions Contractor or any of its Affiliates which Owner wishes to release for publication.

18.3 Prior Confidentiality Agreements. The provisions of this Article 18 supersede all prior agreements (including confidentiality obligations under the Letter of Intent) between Contractor and Owner regarding the confidentiality of any information or documents regarding the Project or the matters described in this Agreement. Any such prior agreements between the Parties or their respective predecessors or Affiliates shall have no force or affect on or after the Effective Date.

18.4 Injunctive Relief. The Parties agree that both injunctive relief and monetary damages, alone or in combination, are appropriate remedies for any breach of this Article 18 by the other Party, its partners, parents, subsidiaries or affiliates, or the employees, agents or consultants of any of them.


ARTICLE 19

COST RECORDS

19.1 Records. Contractor shall maintain fiscal records, books and accounts pertaining to the Project in accordance with generally accepted accounting principles consistently applied.

19.2 Inspection of Books, Records and Audit Rights. Contractor shall keep and maintain full, complete and detailed records, books, accounts and invoices of all of its costs and expenses relating to any Application for Payment and any costs incurred or payments made by or to it pursuant to this Agreement or in connection with the Work. At all times during the progress of the Work and for a period of 2 years after the Final Completion Date, or, if the Final Completion Date does not occur, for 2 years after the termination of this Agreement, Contractor shall afford Owner and its respective auditors and counsel, access at reasonable times to any of the above books and records relating to amounts paid to Contractor on the basis of its costs or damages (including indemnifications) in order to inspect, copy and audit the same or to verify compliance by Contractor with all of the terms and conditions of this Agreement; provided, however, that the right to inspect, access, copy and/or audit Contractor’s books, records, invoices, and accounts shall not extend to agreed rates, agreed lump sum amounts, agreed allowances or to the internal composition of amounts (such as wage markups) expressed as a percentage of other costs.


ARTICLE 20

MISCELLANEOUS

20.1 Authorized Representatives. In order to secure effective cooperation and to deal on a prompt and orderly basis with the various scheduling and administrative issues that may arise in connection with the rights and obligations of the Parties hereunder, each Party shall appoint its own authorized representative (“Authorized Representative”) and notify the other Party in writing of such representative’s name, address, facsimile and telephone number within 10 days after the execution of this Agreement. Either Party may, at any time, change the designation of its Authorized Representative; provided, however, that such Party shall promptly notify the other Party in writing of such change. Each Party’s Authorized Representative shall be authorized to amend this Agreement (including the execution of Change Orders) on behalf of the designating Party and agree upon procedures and provide such information as is necessary for coordinating the efforts of the Parties.

20.2 Assignment/Delegation.

20.2.1 Assignment/Delegation by Contractor. Except as provided in Sections 20.2.2 or 20.17, it is expressly understood and agreed that this Agreement is personal to each of the Parties hereto, and that neither Party shall have the right, power or authority to assign or delegate its rights or obligations under this Agreement or any portion thereof, either voluntarily or involuntarily, or by operation of law without the written consent of the other Party, except that a Party’s rights to payments hereunder may be assigned without the other Party’s consent and except as provided in Section 20.17(a)(iii). Notwithstanding the above, Contractor may have portions of the Work performed by its Affiliates or their Personnel, in which event Contractor shall be responsible for such portions of the Work, such portions of the Work shall be deemed to have been performed by Contractor for all purposes under this Agreement, and Owner will look solely to Contractor in connection with such portions of the Work.

20.2.2 Assignment/Delegation by Owner.

20.2.2.1 Affiliates. Owner reserves the right, in its sole discretion and without the prior consent of Contractor, to assign all or any of its rights and/or to delegate all or any of its obligations under this Agreement to one or more of its Affiliates. Owner shall give Contractor Notice of such assignment and/or delegation. Upon its receipt of Notice of a delegation or assignment of Owner’s obligations under this Agreement, Contractor shall be deemed to have released Owner from all of the obligations so delegated or assigned so long as the assignee/delegate of such obligations assumes the obligations so assigned or delegated and each Owner either reissues or affirms the continued effectiveness of its Owner Guaranty. If Owner or Contractor so requests, then Contractor or Owner (as the case may be) shall, without delay or


conditions, execute a written release that confirms Owner’s release from such obligations or such assignee’s/ delegate’s assumption of such rights or obligations (as the case may be).

20.2.2.2 Third Parties. Owner may assign any or all of its rights and/or delegate any or all of its obligations under this Agreement to any Person other than an Affiliate; provided, however, that Owner will not be relieved of its obligations hereunder so assigned or delegated, unless Contractor consents to such assignment or delegation; provided, further, such consent will not be unreasonably withheld, unreasonably conditioned or unreasonably delayed. If, upon its request for such consent, Contractor has concerns that may lead to its withholding such consent, then Contractor shall promptly identify such concerns to Owner, meet and in good faith discuss with Owner appropriate steps that may be taken to address and resolve such concerns so as to allow for such consent to be granted. If Contractor consents to such assignment, Contractor shall be deemed to have released Owner from all of the obligations so delegated or assigned so long as the assignee/delegate of such obligations assumes the obligation so assigned or delegated; provided, however, that each Owner either reissues or affirms the continued effectiveness of its Owner Guaranty. If Contractor has consented to the delegation of Owner’s obligations as provided above, then, if Owner so requests, Contractor shall execute documentation evidencing such consent and releasing Owner from such delegated obligations. Contractor shall be entitled to reject any such assignment and/or delegation where such assignment and /or delegation would be to one of Contractor’s competitors in the engineering and construction business.

20.2.3 Successors and Assigns. Subject to Sections 20.2.1 and 20.2.2, the provisions of this Agreement shall extend to the benefit of and will be binding upon the successors and assigns of the Parties.

20.3 Reviews, Inspections, Approvals by Owner. The inspection, review, and/or comment by Owner, Owner Site Manager, the Owner Engineer, any Financing Party or the Financing Engineer of any drawing, document, or any other Work or services performed by Contractor, any Subcontractor or Owner Supplier will not (a) alter, amend, waive or relieve any obligation of Contractor under this Agreement, other than the obligation to have allowed such inspection, review and/or comment, (b) impose any liability on Owner, Owner Site Manager, the Owner Engineer, any Financing Party or the Financing Engineer under this Agreement or (c) result in any adjustment of the Fixed Component, Project Schedule, Performance Requirements or other obligations or liabilities of the Parties under this Agreement. Notwithstanding the foregoing, Contractor will be entitled to rely upon any fully-executed Change Order or fully-executed amendment to this Agreement.


20.4 Governing Law; Choice of Forum. This Agreement will in all respects be governed by and construed in accordance with the laws of the State of New York, without giving effect to any choice of law rules thereof, which may direct the application of the laws of another jurisdiction. For purposes of resolving any Dispute arising under this Agreement, and subject to Article 17, the Parties hereby submit to the non-exclusive jurisdiction of the courts of the State of New York and the federal district courts, in each case located in New York.

20.5 Surviving Obligations. The provisions of this Article 20, the indemnification provisions set forth in this Agreement, and other provisions of this Agreement that are by their nature intended to survive termination, cancellation, completion, or expiration of this Agreement, and any expressed limitations or releases from liability, will continue as valid and enforceable obligations of the Parties, notwithstanding any such termination, cancellation, completion, or expiration. Further, termination of this Agreement will not relieve either Party of any obligation hereunder which expressly or by implication survives termination hereof and, except as expressly provided in Article 13 or this Article 20, will not relieve either Party of any obligations or liabilities for loss or damage to the other Party arising out of or caused by acts or omissions of such Party prior to the effectiveness of such termination or arising out of such termination.

20.6 Severability. If any provision of this Agreement is held void, voidable, invalid or inoperative, no other provision of this Agreement will be affected as a result thereof, and, accordingly, the remaining provisions of this Agreement will remain in full force and effect as though such void, voidable, invalid or inoperative provision had not been contained herein. To the extent that any provision is held void, voidable, invalid or inoperative, the Parties shall negotiate an equitable adjustment in the provisions of this Agreement with a view toward effecting the purpose of this Agreement, and the validity and enforceability of the remaining provisions, or portions or applications thereof, will not be affected thereby.

20.7 Notices. All Notices permitted or required to be given under this Agreement will be in writing and will be deemed duly given when received: (a) when sent by telefacsimile transmission; provided, however, that the sender has received electronic or voice confirmation of the recipient’s receipt of such transmission; (b) when confirmation of receipt by the recipient is confirmed by the delivery service, if sent by overnight (or next Business Day) or international courier service; or (c) when received by the recipient, if delivered by personal delivery or mail. All Notices must be in English. Notices will not be effective if given by electronic mail. All Notices shall be delivered or sent to the Parties at their respective address(es) or number(s) shown below or to such other address(es) or number(s) as a Party may designate by prior Notice given in accordance with this provision to the other Party:


If to Owner:    and,
Richard Schlager    Tony Smith
8100 SouthPark Way   

8100 SouthPark Way

Littleton, CO 80120    Littleton, CO 80120
Ph: 303-339-8855    Ph: 303-962-1939
Fax: 303-734-0330    Fax: 303-734-0330

and copy to:

Jonathan Lagarenne

997 Lenox Drive, Building 3

Lawrenceville, NJ 08648-2311

Ph: 609-896-4588

Fax: 609-896-1469

 

If to Contractor:    and,
Ray Kosak   

Bob Walsh

2000 International Park Drive    2000 International Park Drive
Birmingham, AL 35243    Birmingham, AL 35243
Ph: 205-972-6671    Ph: 205-972-6675
Fax: 205-972-6072    Fax: 205-972-6078

and copy to:

Nick Bouler

2000 International Park Drive

Birmingham, AL 35243

Ph: 205-972-6602

Fax: 205-972-6698

20.8 Article and Section Headings. The Article and Section headings herein have been inserted for convenience of reference only and will not in any manner affect the construction, meaning or effect of anything herein contained nor govern the rights and liabilities of the Parties. References to “Articles” and “Sections” in this Agreement shall mean the Articles and Sections of this Agreement unless otherwise expressly noted.

20.9 Duties and Remedies. Except as provided in Article 8, Article 9, Article 18 and any other provision of this Agreement pursuant to which an exclusive


remedy is expressly provided, the duties and obligations imposed by this Agreement and the rights and remedies available hereunder will be in addition to and not in limitation of any duties, obligations, rights and remedies otherwise imposed or available at law or in equity to the Parties.

20.10 No Waiver of Rights. Except as may be specifically agreed in writing, the failure of Owner or Contractor to insist in any one or more instances upon the strict performance of any one or more of the provisions of this Agreement or to exercise any right herein contained or provided by law or equity, will not be construed as, or constitute in any way, a waiver, modification or relinquishment of the performance of such provision or right(s), or of the right to subsequently demand such strict performance or exercise such right(s), and all such rights will continue unchanged and remain in full force and effect. No payment to Contractor by Owner will constitute an acceptance of any Work furnished by Contractor or shall relieve Contractor of any of its obligations or liabilities with respect thereto.

20.11 Entire Agreement. This Agreement, the Letter Agreement and the Site Work Agreement contain the entire agreement between the Parties with respect to the subject matter hereof, and supersedes any and all prior and contemporaneous written and oral agreements, proposals, negotiations, warranties, guarantees, understandings and representations pertaining to the subject matter hereof.

20.12 Amendments. Except as provided in Section 10.2, no amendments or modifications of this Agreement will be valid unless evidenced in writing and signed by both Parties.

20.13 No Third Party Rights. Except as expressly provided herein, this Agreement and all rights hereunder are intended for the sole benefit of the Parties and, to the extent expressly provided, for the benefit of the Parties, Owner and the Indemnitees, and will not imply or create any rights on the part of, or obligations to, any other Person.

20.14 Obligations Non-recourse. Each Party acknowledges that it will not have any recourse against any Affiliates, members, partners, joint venturers, officers, directors, members, managers or employees of the other Party, Owner, or the Engineers, except that the foregoing shall not prejudice Contractor’s rights pursuant to any Owner Guaranty or any Contractor Guaranty.

20.15 Relationship of the Parties. Except with respect to the administration of Owner Contracts pursuant to Appendix M as indicated in Section 2.2.20, as set forth in this Section 20.15 and as otherwise agreed to in writing by the Parties, Contractor will be an independent contractor with respect to the Project, each part thereof, and the Work, and neither Contractor nor its Subcontractors nor the Personnel of either will be deemed to be agents, representatives, employees or servants of Owner in the performance of the Work, or any part thereof, or in any


manner dealt with in this Agreement, unless otherwise agreed to in writing by the Parties. Owner shall neither have the right to control, nor have any actual, potential or other control over, the methods and means by which Contractor or any of its Personnel or Subcontractors conducts their respective independent business operations. Except with respect to the administration of Owner Contracts in accordance with Appendix M, Contractor shall not perform any act or make any representation to any Person to the effect that Contractor, or any of its Personnel or Subcontractors, is the agent, representative, employee or servant of Owner. Notwithstanding the foregoing, for Work conducted in Louisiana and for purposes of Louisiana Revised Statute § 23:1061 (2008), Owner and Contractor agree to recognize Owner as “statutory employer” of Contractor’s employees while Contractor’s employees are providing Work to Owner under this Agreement.

20.16 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

20.17 Cooperation with Financing Efforts. Contractor shall use reasonable efforts to cooperate with Owner in connection with their respective efforts to obtain and maintain Financing; provided, however, Owner agrees to act as a single point of contact between the Financing Parties and Contractor to the maximum extent possible. Without limiting the generality of the foregoing, Contractor:

 

  (a) shall execute such documents as reasonably requested in connection with obtaining and maintaining Financing whereby Contractor (i) certifies to the Financing Parties that this Agreement is in full force and effect and has not been modified and that there are no defaults under this Agreement (except, in each case, as specifically stated in such certification), (ii) represents and warrants to the Financing Parties that this Agreement is enforceable against Contractor, (iii) consents to the collateral assignment of this Agreement to the Financing Parties as security for the debt relating to the Financing, (iv) agrees to give the Financing Parties Notice of a Owner Event of Default contemporaneously with the Notices provided to Owner and an opportunity to cure such defaults, (v) clarifies provisions of this Agreement as reasonably requested by the Financing Parties, and (vi) agrees to cooperate with Owner in the negotiation of such amendments to this Agreement as the Financing Parties may reasonably request;

 

  (b) at Owner’s reasonable request, shall attend and participate in presentations to potential Financing Parties;

 

  (c)

hereby authorizes Owner to (i) provide this Agreement to potential Financing Parties and equity participants (subject to Article 18), and (ii) include a description of the material provisions of this Agreement in


 

any offering circular required for the Financing and/or, if the Financing must be registered in accordance with Applicable Legal Requirements, that Owner may, after consultation with Contractor, file this Agreement as an exhibit to such registration statement (which filing will include requests for confidentiality with respect to pricing and other key commercial terms);

 

  (d) at Owner’s request, shall reasonably cooperate with the Financing Engineer and any rating agencies or other credit enhancement entities associated with a Financing;

 

  (e) at Owner’s request, shall reasonably cooperate in connection with tax-exempt Financing or any Financing or other arrangements effected to reduce Taxes on the Project or the Work; and

 

  (f) Contractor shall provide Owner with legal opinions of in-house counsel to Contractor regarding the execution, delivery and validity of this Agreement and the status of Contractor as Owner will reasonably request in connection with obtaining and maintaining the Financing.

20.18 Financing Engineer. Contractor acknowledges that the Financing Engineer will be engaged for the purpose of providing to the Financing Parties a neutral, third party overview of the Work. The Financing Engineer will be a recognized engineering and consulting firm selected by the Financing Parties and bound by confidentiality obligations substantially similar to those contained in Article 18. The Financing Engineer is expected to provide the Financing Parties with independent opinions with respect to: (a) the status of the Work, (b) the performance of the Work and associated Equipment, (c) Contractor’s Performance Test procedures, (d) Contractor’s quality assurance program for the Work and major components thereof, (e) the results of the Performance Tests, and (f) Applications for Payment and Change Orders submitted by Contractor. The Financing Engineer may attend all monthly meetings. Notwithstanding anything else to the contrary contained herein, the Financing Engineer will have no right to direct Contractor or any portion of the Work or to make any Changes to the Work.

20.19 Owner Engineer. Owner Engineer shall act on Owner’s behalf, in relation to various Project-related matters, including the review of contract documents, attending design and progress meeting, carrying out inspections and the review and approval of test results and most particularly all Performance Test results.

20.20 Review Committee. The Parties recognize that the most efficient and cost effective implementation of the Work will necessitate continual monitoring of the Labor Plan and other strategic decisions that may have a material effect on the Total Work Cost or Project Schedule that the Parties agree to have considered by the Review Committee. Because the nature of labor compensation decisions is expected to require


the balancing of interests and tradeoffs among project objectives, each Party will select 2 representatives to comprise a committee (the “Review Committee”) to consider adjustments to the Labor Plan and other Project execution strategies. The initial members of this Review Committee are to be appointed within 30 days of the Effective Date. Each Party may change its representatives on Notice to the other Party. Each Party shall ensure that its members on the Review Committee act reasonably at all times. The Review Committee will meet on an as-needed basis, but no less frequently than quarterly. With respect to each issue considered by the Review Committee, Contractor and Owner, as appropriate, shall provide adequate materials and information sufficient to allow a reasonable basis on which decisions can be made. The Review Committee will meet promptly and work cooperatively to adopt recommendations that support completion of the Work at the lowest Total Work Cost, except as they otherwise unanimously agree. The Review Committee shall appoint one of its members to provide adequate notice of meetings to the other members and to keep and distribute accurate minutes of its meetings. The Owner Site Manager and the Project Superintendent may be invited to attend meetings of the Review Committee but will not have any voting rights. At such time as Contractor believes that the level of compensation being paid to Craft Labor with respect to a particular Craft Labor Cost Component is or will, in the foreseeable future, not be sufficient to maintain existing Craft Labor or attract additional needed Craft Labor, in each case in a specific Craft Labor Category, for the construction of the Project to support the Project Schedule, Contractor will give Notice to Owner and the Parties, acting through their representatives on the Review Committee, shall take the following actions:

 

  (a) Contractor will provide a reasonably detailed labor analysis, supported by a reasonable level of factual compensation information, with respect to the specific Craft Labor Category(ies) as to which Contractor believes compensation adjustments are necessary. Such analysis shall include (i) Contractor’s recommended changes to the level of Craft Labor Cost Component to be offered to such Craft Labor; (ii) a direct comparison with the then existing level of Craft Labor Cost Component being paid to the same Craft Labor Category(ies) at the Key Benchmark Projects and the Other Benchmark Projects, to the extent such information is available; (iii) a forecast as the projected impact on the Total Work Cost of the Project that would result from Contractor’s recommended changes and (iv) an analysis of any reasonably cost effective alternative to achieve the same goal;

 

  (b) the members of the Review Committee shall consult with each other in good faith and attempt to reach a unanimous decision as to the increased level of Craft Labor Cost Component (or alternative) to be offered to Craft Labor within such Craft Labor Category(ies) and as to when any changes should be implemented;


  (c) if the members of the Review Committee are not able to reach a unanimous decision, then Contractor may implement its recommended changes; provided that the level of the Craft Labor Cost Component to be offered to Craft Labor within the Craft Labor Category in question is no higher than * percent (*%) in excess of (i) the highest level of Craft Labor Cost Component then being paid to Craft Labor within such Craft Labor Category working on Key Benchmark Projects; or (ii) the average level of Craft Labor Cost Component then being paid to craft labor within such Craft Labor Category working on Other Benchmark Projects, whichever is the greater between (i) and (ii).

 

  (d) If such recommended changes would cause the level of the Craft Labor Cost Component for a specific Craft Labor Category to be higher than permitted in clause (c) above, then, either the Review Committee must unanimously agree to make such change or either Party may refer the matter for decision by the senior officers of the Parties. Each Party shall, through its nominated senior officer, prepare a written statement of its position and deliver it to the other Party within 10 days after referral of the matter to the senior officers. The nominated senior officers from each Party shall meet in person within 15 days after the exchange of such written statements in an effort to resolve the matter.


IN WITNESS WHEREOF, the Parties, intending to be legally bound hereby, have caused this Agreement to be executed by their duly authorized officers as of the date first written above.

 

BE&K CONSTRUCTION COMPANY, LLC     RED RIVER ENVIRONMENTAL PRODUCTS, LLC
By:  

/s/ T. W. Vaughn

    By:   /s/ Richard Schlager
Name:   T. W. Vaughn     Name:   Richard Schlager
Title:   President     Title:   Manager
        /s/ C. Jean Bustard
      Name:   Jean Bustard
      Title:   Member


APPENDIX A

Scope of Work

ARTICLE 1 PROJECT OBJECTIVE, DESCRIPTION, AND STATUS

 

1.1 OVERALL OBJECTIVE

The Owner intends to develop a new Greenfield facility to provide activated carbon (“AC”) to its clients and to deliver electrical energy to the local utility. This Scope of Work outlines the Contractor’s role in the design, procurement, erection, training, startup/testing, commissioning and turnover of the Project to Owner (the “Work”).

 

1.2 Project Description and Overall Functional and Operational Requirements

Red River Environmental Products, LLC (“RREP”) is a Greenfield facility to be located in Red River Parish, Louisiana. The Project will manufacture powdered activated carbon (“PAC”) and, depending on market conditions, impregnated PAC (IAC) (the “Project”). The Project, designed to utilize the waste heat from the process to generate electricity for onsite use and for sale, is to be located near the Red River Mine (mine mouth) and use lignite coal as the feedstock. The design for the Project that is the subject of this Appendix A provides for a single production line of four multi-hearth furnaces (“MHFs”). Certain provisions for a future second production line are included in the design for the Project. The first production line will have a nominal production capacity of 125 million pounds per year PAC (2.6 million pounds per week) and will require approximately 300,000 tons per year of lignite coal. This nominal production capacity corresponds to 47 tons per day per MHF. The first production line will be designed for a production capacity of 160 million pounds per year PAC which corresponds to 60 tons per day per MHF.

The high-level overall functional and operational requirements for the Project are as follows:

 

i. Safely and reliably produce a nominal rate of 125 million pounds/year of AC from lignite coal in a new Greenfield facility constructed in Red River Parish, Louisiana.

 

ii. Design operating flexibility into the process that enables production levels to be maintained or improved with target feedstock variability.

 

iii.

Produce AC of a specified quantity, with a quality that reliably meets or exceeds ADA-ES PAC and IAC product specifications. Contractor is not directly responsible for meeting these MHF performance criteria, which are


 

the responsibility of the MHF supplier. However, Contractor will be responsible for the proper design and performance of all coal handling, product handling, and refuse handling Equipment that support the MHFs and whose proper operation is a pre-requisite to the proper operation of the MHFs.

 

iv. Reliably capture waste heat and export excess electrical energy from the AC production process for sale.

 

v. Provide for reliable loadout of the PAC and IAC to truck.

 

vi. Minimize so as to achieve and comply with liquid, gaseous, and solid waste regulatory requirements and permit limits applicable to the project.

 

vii. The Project shall consist of all aspects necessary for operations, including but not limited to:

 

   

four (4) MHFs and support Equipment

 

   

utility supply (gas, power, and water), consisting of electrical interconnects to the utility up to the Project’s dead-end structure, and gas interconnects starting at the gas supplier’s meter set isolation flange, and water interconnect at water supplier’s isolation connection

 

   

lignite coal receiving, handling, sizing, and storage

 

   

power generation, including waste heat recovery boiler and steam turbine generator

 

   

product handling, sizing and storage

 

   

product load out facilities

 

   

emission control systems

 

   

water and wastewater treating systems

 

   

lime handling and receiving systems

 

   

solid waste systems

 

   

sanitary waste systems

 

   

administrative and analytical support areas

THE DETAILED FUNCTIONAL AND OPERATIONAL REQUIREMENTS AND DESIGN CRITERIA FOR THE PROJECT ARE SPECIFIED IN THE FUNCTIONAL AND OPERATIONAL REQUIREMENTS/DESIGN CRITERIA (“F&OR/DC”), RED RIVER ENVIRONMENTAL PRODUCTS, LLC, ACTIVATED CARBON PRODUCTION FACILITY, RED RIVER PARISH LOUISIANA, DOC. NO. CF-2007-016, REV. 1, FEBRUARY 2008 AND AS FURTHER REFINED AND ANTICIPATED IN THE SEPTEMBER 2, 2008 DRAFT OF REVISION 2 TO THE DOCUMENT CURRENTLY BEING NEGOTIATED BY THE PARTIES.


REVISION 2 TO BE COMPLETED AND AGREED BY SEPTEMBER 12, 2008. REVISIONS TO THIS DOCUMENT CAN BE MADE BY MUTUAL CONSENT OF OWNER AND CONTRACTOR.

 

1.3 Owner-Provided Equipment and Services

Owner will provide the following:

 

viii. Multi Hearth Furnaces

 

ix. Project Site development activities including:

 

   

Collect information concerning site water resources, including existing wells, surface waters, and municipal/industrial water sources

 

   

Identify applicable zoning and permitting requirements for the site

 

   

Review gas and electric transportation capacity in the area of the site and prepare interconnect applications

 

   

Obtain Owner Permits as described in Appendix D

 

   

Operations and maintenance Personnel. Specific Personnel requirements and qualifications will be mutually developed and agreed during the Work.

 

1.4 Project Status

Contractor began work on the Crowfoot Project under an LNTP November 13, 2007 which included preparing the Phase 1 Project Execution Plan and confirming cost estimates for developing the Phase 1 detailed engineering based on the engineering previously conducted by Harris Group Inc.. Contractor and RREP executed the Preliminary EPC Agreement on January 29, 2008. Under the Preliminary EPC Agreement, Contractor was tasked with developing the detailed engineering deliverables and Equipment procurement packages in sufficient detail to support a bottom up cost estimate (Front End Loading, Level 3) and construction schedule to be used as the basis for the Construction Price. As part of this effort, Contractor also identified major Equipment procurement activities that are critical to the Project Schedule. Contractor prepared construction drawings and specifications for a limited amount of construction work (i.e., site grading, erosion control, MHF foundations) which is required early to ready the site for MHF installation and support the Project Schedule.

On August 18, 2008, Contractor issued the purchase order for the waste heat recovery boiler and afterburner (“WHRB/AB”). Early procurement of the WHRB/AB is required to maintain Project Schedule based on the fabrication time of the WHRB.

 

  1.4.1

Site Survey and Geotechnical Investigation - Site surveying has been completed and results provided to Contractor. Initial geotechnical investigation were completed at the Project Site by Owner and final


 

reports were issued in October 2007 to Contractor. Additional geotechnical investigations were conducted by Contractor under the Preliminary EPC Agreement.

 

  1.4.2 Environmental Permitting Status

Environmental permitting activities have been initiated for the site. The following is a summary of the current status of the key permitting activities:

 

x. LDEQ issued RREP the Authorization to Construct and the Title V Air Permit on May 28, 2008.

 

xi. USACE provided authorization to Owner that the site work (including construction of the access roads into the site across the northern drainage canal) are authorized by Nationwide Permit No. 39. An amended application will be required if construction plans deviate from those prepared by Contractor and provided to the USACE in support of this authorization.

 

xii. Environment assessments have been conducted for the property. A Phase 1 Environmental Site Assessment (“ESA”) was performed to provide an overall assessment of environmental factors affecting the Project Site, and to provide appropriate inquiry into the previous ownership and uses of the property in order to identify “recognized environmental conditions” (“REC”) with regard to the presence of hazardous substances and petroleum products. This assessment has revealed no evidence of REC in connection with the property. An Environmental Constraints Analysis (“ECA”), consisting of a background review for archaeological resources, potential jurisdictional waters, and threatened and endangered (“T&E”) species was also completed. As part of the ECA, a pedestrian survey was also conducted to determine if potential jurisdictional waters of the United States and/or T&E species habitat exist within the survey area. The ECA concluded that further cultural resource investigations were not necessary; that the approximate percentage of jurisdictional waters/wetlands within the survey area were less than 1 percent (<1.0 acres); and that no T&E species habitat were observed within the survey area.

 

  1.4.3 Project Site Description and Site Infrastructure Status

The Project Site consists of approximately 60 acres located on the south side of Parish Road 604 in Armistead, Red River Parish, Louisiana. There are no paved roads or buildings on the property. The Project Site is accessed from Parish Road 604 to the north. RREP owns the Project Site.

 

  1.4.3.1 Site Infrastructure and Linears (the Utility Facilities)

Road Access – Parish Road 604 provides access to the site. Additionally, an unpaved haul road previously used by the Red River Mine runs the length of the site on the western boundary. Red River Mine has agreed to allow temporary


construction access via a road to be constructed by Contractor on the Northwest corner of the Project Site.

Temporary Facilities – The site is a Greenfield site. As such, there are no existing utilities or infrastructure on the property.

Lignite Feedstock – Coal will be delivered to the crushing and handling area by over-the-road belly dump trucks.

Railroad Spur – Owner is in discussions with the Union Pacific Railroad (UP) regarding the location of the interconnection of a dedicated rail spur to UP’s line. Design and construction (other than general site layout provisions) of the rail spur and connection to the main line have been deferred for the first production line and are not within the scope of this agreement.

Process Water – Process water for the Project will come either from a mine-owned dewatering pond (E6) or future from the South Oxbow of the Red River. Potable Water – Potable water shall be provided from a  3/4 inch line and meter installed by the water company to the project property located in Sections 21 & 28, T12N, R10W, Red River Parish, Louisiana. The line will be extended from an existing line adjacent to Parish Road 604 by the water company. The water company will bore and extend the line under Parish Road 604 to the meter location. At that point they will set the meter just inside the property line which is within the Project Site boundary as defined in Appendix J. The Contractor shall tie-in to the water meter and pipe potable water to the Project use points.

Industrial Water Discharge – No industrial discharge (LPDES regulated) outfall or tie-in will be provided. The Contractor shall design and construct the Project for zero discharge.

Sanitary Sewer – There are no off-site connections for the sanitary sewer. Sanitary sewer shall be provided by on-site septic system designed and installed by Contractor.

Natural Gas – Natural gas will be provided by Crosstex LIG, LLC (“CLIG”). CLIG will install a 4” tap on CLIG’s existing pipeline, a new Measurement / Regulation station (“M/R Station”), a liquid removal facility, and a 4” pipeline (collectively, the “Facilities”) to be located in Sections 21 & 28, T12N, R10W, Red River Parish, Louisiana. The 4” pipeline will extend from CLIG’s existing Armistead Compressor Station site to a new M/R Station located on the Project Site. The Facilities will be designed and constructed by CLIG to accommodate RREP’s potential Project natural gas requirement of a 120,000 SCF/HR flow rate. The 4” pipeline and M/R Station design pressure shall be 720 PSIG maximum allowable operating pressure with regulated pressure to RREP’s Project of 100 PSIG or less (relief devices will be provided to ensure Project natural gas line pressure will be less than 100 PSIG). CLIG will extend the new gas line to the M/R Station location as specified by Contractor. Contractor is responsible for odorization of the gas delivered by Crosstex.-


Electrical Interconnect – Contractor’s interconnection scope will end at the Project’s 34.5kV switchyard dead-end structure (provided by Contractor) on-site. It is currently expected that the local wholesaler, Central Louisiana Electric Company, will extend a 34.5kV line from their existing 138kV transmission facilities approximately 3.8 miles northwest of the Project Site through a step-down transformer and to the Project’s dead-end.

Ash Disposal – Owner is exploring two options for the disposal of the ash created by the production process. One option is to acquire ownership of an open pit from the mining company and convert it to a landfill for the ash disposal. The second option is to transport the ash off site to an existing permitted landfill. Contractor’s scope is through point of loadout into trucks.

Temporary Construction Power – Temporary construction power will be provided by Valley Electric. Valley Electric will provide power to a transformer provided by Valley Electric and located on the Project Site by the Contractor.

ARTICLE 2 DESCRIPTION OF CONTRACTOR’S SCOPE OF WORK

 

2.1 Overall Approach

The Project is being completed using a two-phased contracting approach. The Preliminary EPC Agreement (previously referred to as Phase 1) consisted of an open book phase culminating with the development of a Construction Price for the balance of engineering, construction and commissioning. The Preliminary EPC Agreement engineering scope has been substantially completed.

The Work will include engineering, procurement, construction, training, startup, testing, commissioning, and turnover of the Project to Owner pursuant to the Agreement. The function, intent, and quality required of the Project are defined in the F&OR/DC, Red River Environmental Products, LLC, activated carbon production facility, Red River Parish Louisiana, Doc. No. CF-2007-016, Rev. 2, August 2008 and by the following engineering documents prepared by Contractor under the Preliminary EPC Agreement. In the event of any conflict between provisions within the F&OR/DC and the engineering deliverables listed in Attachment 1 to this appendix, the F&OR/DC shall take precedence for design, construction and interpretation.

 

2.2 Phase 2 Deliverables

The deliverables include all of the scope of work required to procure, design, erect, startup, and commission a fully functioning, reliable Project (excluding the MHFs), consistent with Professional Standards and Prudent Industry Practices that complies with the requirements detailed in the F&OR/DC, Red River Environmental Products, LLC, activated carbon production facility, Red River Parish


Louisiana, Doc. No. CF-2007-016, Rev. 2, August 2008 and the engineering deliverables prepared by Contractor under the Preliminary EPC Agreement.

 

  2.2.1 Updated Project Safety Manual

The Project Safety Manual developed during Phase 1 shall be updated for the Work (if required). This Project Safety Manual shall be accepted by the Owner prior to issuance of the Full Notice to Proceed under the Agreement.

 

  2.2.2 Startup, Commissioning, and Performance Testing Plans, Procedures, and Results

The startup, commissioning, and performance testing process is intended to verify that the installed systems operate in a manner consistent with the design intent. To this end, the Contractor will in conjunction with Owner’s environmental consultant; create and document the startup, commissioning, and Performance Testing plans, procedures, and forms, and obtain Owner approval for same; coordinate functional performance testing of installed systems; and complete all system performance and reliability testing as required by this Agreement to demonstrate that the systems and overall Project perform in accordance with Appendix C.

The Project will be performance tested in three stages, each in accordance with the terms and conditions of the Agreement and Appendix C:

 

   

Upon completion of at least one (1) MHF (“Unit”), such Unit(s), and all associated equipment necessary to independently operate such Unit(s), excluding the power generation, will be performance tested for eight hours to demonstrate initial operation,

 

   

Upon completion of all four (4) Units, the full Project, to include the power island, the emission control system and all material handling systems, will be performance tested for eight hours to demonstrate full Project performance criteria and guarantees, and,

 

   

Upon completion of, or concurrent with such performance test, and prior to Final Completion, the Reliability Test will be performed for * days to demonstrate reliability of the full Project,

Deliverables to be provided during the startup, commissioning, and performance testing process include, but are not limited to:

 

xiii.

Provide complete procedures and/or protocols for startup, commissioning and performance testing, and related documentation forms for approval by the Owner at least three (3) months prior to the scheduled date for each of Phase 1 Mechanical Completion and Mechanical Completion. Test procedures shall at a minimum include statements indicating test objectives, applicable


 

standards, test descriptions, forms, and checklists to be used to control and document the required tests.

 

xiv. Arrange for and provide assistance from Equipment Suppliers to properly and safely check out, start up, and test the Equipment and Project.

 

xv. Provide final “record drawings” reports and documentation, including electrical test reports, coordination studies, circuit breaker final settings, testing and balancing reports, system/Equipment start-up reports, control system point-to-point check out documentation, pressure testing, mechanical system cleaning/flushing reports, verification of conformance to manufacturer’s specifications, final Performance Testing reports/data, and all other documentation reasonably necessary to demonstrate and certify satisfaction of the Performance Requirements included in Appendix C.

 

xvi. Commissioning documentation shall include, but not be limited to:

 

   

Operational description of each system to be tested. This description shall encompass the design intent and define the commissioning scope of each system.

 

   

Equipment tracking forms for each component of the systems being tested. These forms shall track installation and startup of each component.

 

   

Startup and test reports and associated forms of all components requiring startup or testing including alignment, calibration checks, and any other pre-operational testing required prior to Project commissioning and performance testing.

 

   

Records maintained by Contractor when dictated by Applicable Legal Requirements or, that provide traceability of analytical results and instrument calibrations to the National Institute of Standards and Technology (NIST). Provide these records with all test reports.

 

   

Point-to-point and loop check verification forms for each input and output to the plant control system. These forms shall track installation, labeling, and testing with properly calibrated and certified test equipment.

 

   

Control loop tuning verification and documentation of tuning constants via the DCS control system to the degree applicable, or at local controllers if not at the DCS.

 

   

Functional performance test reports that verify every specified operational mode and function of each component and system.

 

   

Project performance test reports that certify operational compliance of the Project with Contractor’s performance guarantees. Reports shall include but not be limited to test data and results, quality assurance/quality control verifications, calculations, performance curves, laboratory and


 

Personnel qualifications, and other information as required to fully demonstrate compliance with Performance Testing.

 

  2.2.3 Operator Training

The Contractor shall provide training to Owner Personnel for operation and maintenance of the completed Project. Training shall be comprehensive and include all aspects of Project operations. During the Work, a general training plan will be prepared by Contractor and approved by Owner.

 

  2.2.4 Record Drawings

 

xvii. Starting six (6) months prior to the scheduled date for Mechanical Completion and continuing to Final Completion, the Contractor shall provide monthly updates and allow Owner access for review of documentation of the following “redlined” documents. Prior to Final Completion, the Contractor shall provide Owner the following documents as final Record Drawings.

 

   

P&ID’s

 

   

General Arrangements

 

   

Single Line Electrical Drawings

 

   

Elementary Electrical Drawings

 

   

Loop Sheets

 

   

Final Tuning Constants

 

   

Interconnection Electrical Drawings

 

   

Undergrounds

 

   

Equipment List

 

   

Instrument Index

 

xviii.

Prior to achieving Final Completion, Contractor shall provide Owner a complete electronic set (PDF and native format [i.e., AutoCAD, Microsoft Word, etc..]), one full size hard copy set, and one one-half ( 1/2) size hard copy set of all Project drawings, together with all manuals (minimum of four copies), and the above listed documents in their as-built condition. When reasonably approved by Owner and in lieu of new manuals, errata and/or replacement pages may be provided to Owner to replace specific pages in manuals previously submitted to and approved by Owner.

 

2.3 OTHER Requirements

The following sections outline other requirements included in the Contractor’s scope of Work

 

xix. Risk Management Plan


xx. Design Requirements/Acceptance Criteria.

 

xxi. Schedule Requirements/Acceptance Criteria.

 

xxii. Quality Assurance Requirements/Acceptance Criteria.

 

xxiii. Project Communications.

 

  2.3.1 Risk Management Plan. Adhere to Owner’ Risk Management Plan as mutually agreed, and specifically be responsible for the preparation and maintenance of a project risk register.

 

  2.3.2 Design Requirements and Acceptance Criteria

All deliverables will be provided to Owner electronically, as specified herein (Applicable Electronic Format) and in hardcopy. The electronic versions will be provided in a mutually-agreed format(s). Design activities performed by Contractor must meet or exceed Professional Standards and Prudent Industry Practices, and are inclusive of the following:

 

xxiv. Conduct design activities in accordance with an Owner-approved Quality Assurance Program and associated implementing procedures.

 

xxv. Define, verify, and control all design documents. Prepare design documents that clearly and fully define the construction activity. Control all design changes to a level commensurate with the original design. Design outputs shall be verified against the design input requirements prior to release.

 

xxvi. Develop calculations to substantiate the validity of the design. Provide calculations in accordance with the Contractor’s Quality Assurance Program and implementing procedures. Calculations shall fully support the design. The design shall not be accepted without complete, checked calculations.

 

xxvii. Prepare technical specifications to define the level of quality for the Equipment, Materials, and methods employed during construction.

 

xxviii. Prepare drawings and schedules in accordance with Contractor’s Owner-approved Quality Assurance Program and associated implementing procedures. Prepare finished AutoCAD and applicable 3D drawings so that prints or reproducibles as well as reductions to half size will be clear and legible. Drawings shall ensure that all major Equipment, lines, valves, and controls are labeled/enumerated to facilitate operation. Careful consideration shall be given to the accuracy, style, and position of all notations. Drawing standards (line weights, layers, fonts, colors etc.) shall be Contractor’s standard practice.

 

xxix. Monitor the design activities to provide proper assurance that the required activity is performed in accordance with the Project Execution Plans, including all quality requirements.


xxx. Conduct design, model, operability, and constructability reviews, incorporate/respond to all Owner comments, and incorporate Owner scope/supplied information prior to release of design. Ensure all design review comments are documented and tracked to closure prior to release of design for construction. Coordinate inspection and testing activities with the Owner and Owner Engineer to avoid duplication of effort.

 

xxxi. Provide Owner access to Contractor’s and its Subcontractors’ and Suppliers’ facilities and Personnel during design and construction for in-progress review and assistance. Coordinate with Owner through on-site visits, quality assurance reviews, and meetings as necessary to facilitate design progress and ensure that the completed Project will meet all functional and operational requirements and design criteria within Contractor’s scope.

 

  2.3.2.1 Engineering Submittal Requirements

 

  (a) Equipment Specifications

To the maximum extent possible, Equipment data sheets will be utilized to specify off-the-shelf equipment such as tanks, pumps, agitators, instruments and vessels. However, when detailed Equipment specifications are required to fully define the Equipment, Contractor will prepare required specifications.

The completed specification will be reviewed by a peer of the originator and approved by the responsible Design Department Manager or Process Manager.

All Equipment specifications will be released for the Owner’s review. The Owner or a designated third party will have ten (10) Business Days to reply with comments. If the Owner has not provided comments to the approval document within ten (10) Business Days, the document shall be deemed approved as submitted. It is understood that the Owner and Contractor may, on occasion, mutually agree to develop and implement accelerated submittal approval procedures to facilitate Project Schedule execution. After the proper reviews and approvals have been obtained, the specifications will be issued for bids with an electronic copy being sent to the project administrative assistant to file in ProjectWise.

During development of an Equipment specification, it may be desirable to make a preliminary release. When this is done, the specification will be clearly identified as a preliminary issue, and the status of the document will be identified as “Release for Information (RFI)” or “Released for Approval/Bid (RFA/RFB)”.

 

  (b) Construction and Material Specifications


Each specification for construction and Materials will be reviewed per Project Execution Plan

Each specification for construction and Materials will be issued to the Owner and/or Owner’s designated third party for review. The Owner will have ten (10) Business Days to make comments prior to the document being released for construction. If the Owner has not provided comments to the approval document within ten (10) Business Days, the document shall be deemed approved as submitted.

 

  (c) Drawings

For drawings that are issued in hard copy format:

 

   

Drawings and documents will be plotted and issued through Contractor’s Document Control Department.

For drawings that are issued electronic format:

 

   

These drawings will be issued through the Contractor’s Document Control Department under transmittal. To the maximum extent possible, ProjectWise will be utilized. PDF format will be used except as approved by the Engineering Project Manager and as required for final Record Drawing transmittal to Owner.

Engineering drawings will incorporate the standard approved title block, border, and drawing arrangement. Drawings will be signed off in accordance with the Project Execution Plan. A drawing list shall be maintained for the project.

 

  a) Handling of Contractor Drawings

The Discipline Design Lead will prepare an internal transmittal for their discipline drawings for release and will deliver the transmittal and original drawings to the Engineering Project Manager. The Discipline Design Lead will see that the appropriate signatures are included and that the status of the drawing is correct on both the drawings and transmittal.

The Engineering Project Manager will review and sign the drawings for release, note internal, Owner, and other distribution, and forward to the Document Control Department for disposition.

A transmittal of all “For Approval” drawings will be issued to the Engineering Expediter for their use in expediting approvals.

Returned Drawings


All Contractor drawings returned with comments will be received by the Engineering Project Manager who will make subsequent distribution.

The responsible Discipline Design Lead will review Owner notes and comments and discuss any discrepancies with the Engineering Project Manager, Discipline Department Manager, or other Discipline Design Leads as required. Provided the comments do not impact Project cost or Project Schedule, the Discipline Design Lead should revise the drawing(s) in accordance with Contractor policy and reissue as outlined in the Project Procedure Manual. Contractor shall notify Owner for resolution of comments that will not be incorporated because of a potential cost or schedule impact.

 

  b) Handling of Supplier Documents

Supplier’s original proposals will be sent to Contractor’s Procurement Lead and the Engineering Project Manager. The Procurement Lead will make distribution in accordance with the Project Distribution Matrix.

Supplier Drawings Received “For Approval”

Suppliers shall submit drawings for approval under transmittal and preferably in electronic format. The drawings are to be submitted to the Engineering Project Manager with a copy to the Engineering Expediter. The Engineering Project Manager will indicate the primary approver and distribution of the documents to be made by the Document Control Department.

The Engineering Project Manager will indicate who should be the primary approver and the time frame for other departments to return comments to the primary approver. The Project Expediter will track the progress of the approval drawings and provide weekly status report to the Engineering Project Manager.

The primary approver will receive marked print(s), coordinate and transfer all appropriate markings to the original approval drawing, and return the drawings to the Engineering Project Manager for disposition.

Drawings will be issued to the Owner at the same time internal distribution is made. The Owner will be responsible for returning the documents and any comments to Contractor primary approver within ten (10) Business Days to satisfy the required return date set forth in the transmittal.

Certified Supplier Drawings


Suppliers shall submit certified drawings under transmittal and preferably in electronic format. The drawings are to be submitted to the Engineering Project Manager with a copy to the Engineering Expediter. The Engineering Project Manager will indicate distribution of the documents to be made by the Document Distribution Department.

 

  (d) Sketches

Where appropriate, design sketches will be used to develop and distribute information in the prosecution of the Work. All design sketches will be prepared on Contractor standard 8  1/2" X 11" or 11" X 17" sketch forms. They will be numbered in the same manner as engineering drawings except that the sketch number will be preceded by the designation “SK”. All sketches are to reference Contractor and if used in the construction of the Project must be sealed by a Professional Engineer registered in the State of Louisiana. Sketches that effect drawings required to be Record Drawings shall be incorporated into the appropriate Record Drawing submittal.

 

  (e) Revisions

All revisions of engineering documents will be clearly indicated on the documents.

Revisions prior to Release for Construction (“RFC”) will be indicated by an alpha character revision indication.

Initial RFC releases will be designated revision 0 (zero), and all previous revision notes will be removed from the body of the drawing.

Revisions subsequent to RFC will be indicated by a numeric revision number. Each revision will include:

 

   

The initials of the person making the revision

 

   

The initials of the engineer responsible for the document

 

   

A brief description of the revision

 

   

A numbered triangle indicating the location of the revision of change in the body of the drawing

 

   

The date of the revision release

All revisions in the body of the drawing should be clouded and carry the numbered triangle corresponding to the revision description in the revision block.


  (f) Profession Engineering Seal

All RFC construction drawing and documents will bear a State of Louisiana Professional Engineering Seal or as required by Louisiana law.

 

  (g) Permanent Record

The active master project file will be maintained in ProjectWise and monitored by the Engineering Project Manager and project administrative assistant

 

  2.3.2.2 REVIEW & APPROVAL OF ENGINEERING SUBMITTALS

Contractor shall deliver as the design progresses, data, calculations, reports, drawings and specifications, and other information set forth below. Contractor shall provide to Owner such other information as may be reasonably requested by Owner prior to release of documents for procurement or construction.

Owner shall be given ten (10) Business Days from receipt of technical information for review and comment. It is understood that the Owner and Contractor may, on occasion, mutually agree to develop and implement accelerated submittal approval procedures to facilitate Project Schedule execution. Contractor shall develop and document the resolution/response to all Owners comments, whether provided in writing by Owner or documented by Contractor after a design review meeting and provide to Owner for concurrence. The Contractor has the responsibility for identifying open issues and establishing a schedule for their closeout.

Contractor shall be obligated to act upon and consider Owner’s comments in good faith. If Owner has failed to deliver comments within such ten (10) Business Days, Contractor will consider documents approved as submitted, but shall consider such comments, thereafter delivered by Owner.

Main drawings shall be to scale and fully detailed with all revisions clearly marked.

All drawings submitted shall be distributed as mutually agreed by the Parties and documented on a document distribution matrix. Final Contractor drawings shall include two hard copies and one electronic copy on disk formatted for use with Contractor’s latest version of AutoCad. Final supplier drawings shall include two hard copies and one electronic copy on disk format where available. Contractor shall not be required to redraw supplier wiring diagrams, schematics, logic, etc. Contractor shall not be required to duplicate Supplier Equipment outlines from documents prepared by Suppliers of Owner-


provided Equipment. Rather, they shall be referenced as a “black box” or space envelope.

Contractor shall be responsible for any discrepancies, errors or omissions in the drawings and the other particulars used, whether or not Owner has reviewed such drawings and particulars. Any review or comments given by Owner shall not relieve Contractor of any design responsibility under this Agreement unless Owner specifically so agrees in writing.

Any technical information that has been modified either by Contractor, the Supplier or by Owner must be reissued. Such reissues may require Change Orders and/or backcharges to Supplier. Contractor shall resubmit drawings in a timely manner such that Owner has up-do-date information.

 

  2.3.2.3 Technical Review Documentation

The following documentation and information shall be supplied in accordance with the engineering schedule for the Work:

 

     Classification

General arrangement and layout drawings

   1

Site Plans (excluding calculations)

   1

PFDs / P&I diagrams

   1

Control System architecture, logic, loop diagrams

   1

Single line electrical diagrams including control schematics

   1

Three line electrical diagrams

   1

Metering and relay schematics including Project/Equipment protectives

   1

Elementary Diagrams

   1

Underground Releases (excluding calculations)

   1

Design Calculations for Electrical, Process, Material Handling, and Emission

   1

Control System Sizing

   1

Equipment Specifications

   2

Civil Releases

   2

Structural Releases

   2

Piping Isometrics & Plans

   2

Electrical/Instrumentation interconnect and wiring drawings

   2

3D computer model review (updated every month)

   3

Equipment lists

   3

Electric power consumption list – Auxiliary Loads

   3

Instrument list

   3

Cable schedules, including cable numbering

   3


Line list

   3

Design Calculations not included in Classification 1

   3

Special tools needed for maintenance and calibration

   4

Supplier recommended spare parts lists and pricing

   4

Description of Document Review Classifications:

 

  1. Contractor shall submit drawings and calculations to Owner for review, comment, and approval before these drawings and calculations may be Released for Design/Construction. Contractor shall submit specifications to Owner for review, comment, and approval before these specifications may be Released for Bid

 

  2. Drawings shall be submitted to Owner when they are Released for Construction. Specifications shall be submitted to Owner for approval when they are Released for Bid. Contractor is not required to halt design, procurement, or construction while waiting for Owner review. However, revisions may be required if Owner’s review reveals the submittal does not comply with the requirements of this Agreement.

 

  3. The Data Base will be updated periodically and provided to Owner not less than every ninety (90) calendar days unless no update has occurred within the last ninety (90) calendar day period.

 

  4. Contractor shall provide Supplier Drawings to Owner before Phase I Mechanical Completion or Mechanical Completion, as applicable.

 

  2.3.3 Schedule Requirements and Acceptance Criteria

 

  2.3.3.1 Project Schedule

The Project Schedule is included as Appendix B to the Agreement. The Contractor shall be responsible for scheduling of all design, procurement, and construction. Work progress will be measured, progress payments calculated and time extensions evaluated by approved updates and revisions to the Project Schedule. The Critical Path Method shall be used to generate the Project Schedule.

The Project Schedule shall show the order and interdependence of activities and the sequence in which the Work is to be accomplished. To the extent practical, each activity will have predecessor and successor ties. No individual onsite construction activity shall have a duration greater than 20 days provided that the start date of that activity is within 30 days of the Project Schedule data date and the Project Schedule shall allow weekly progressing of activities to determine progress to within at least +/-10 percent actual vs. planned activity progress. Once an activity exists on the Project Schedule, it may not be deleted and must remain in the logic unless mutually agreed by Owner and Contractor. When the Project Schedule has been approved by Owner, it will become the baseline Project Schedule and will be used


from that time forward to monitor the Work progress. The Milestone Schedule included as Appendix G of this Agreement provides the progress payment data.

The Contractor shall meet with the Owner and/or his representative(s) at least monthly to review actual progress made to date, activities started and completed to date, and the percentage of Work completed to date on each activity started but not completed. These meetings will be conducted on-site, and with a frequency that complements the nature and urgency of the Work. Upon completion of the joint review, the Contractor shall prepare the progressed baseline Project Schedule and submit it to the Owner. Each month, Contractor will provide Owner with (a) the progressed baseline Project Schedule (Primavera Project Planner (Level 3) resource loaded), in native format, (b) a monthly float analysis, and (c) a hard copy (60-day look ahead until each of Phase 1 Mechanical and Mechanical Completion and 14-day look ahead from Mechanical Completion until Final Completion) Level 3 schedule (which will be delivered with the monthly progress report).

Any updates to the baseline Project Schedule shall incorporate all changes mutually agreed upon by the Contractor and Owner together with all Changes resulting from approved Change Orders. These Change Order changes to the Project Schedule shall be tracked as separate line items on the Project Schedule.

Contractor shall show the following information for each Project Schedule activity:

 

xxxii. Activity Number

 

xxxiii. Activity Description

 

xxxiv. Original Duration in Work Days

 

xxxv. Actual Duration in Work Days

 

xxxvi. Early Start Date

 

xxxvii. Early Finish Date

 

xxxviii. Total Float

 

xxxix. Responsibility Code

Procurement Activities

Tasks related to the procurement of Material or Equipment shall be included as separate activities in the Project Schedule.

Procurement activities include:

 

xl. Material/Equipment submittal preparation, submittal and approval


xli. Negotiations and PO issuing

 

xlii. Delivery of technical documentation required to support detail design

 

xliii. Delivery of O&M Manuals

 

xliv. Material/Equipment fabrication

 

xlv. Owner and Contractor supplied Material and Equipment shipment and delivery

Owner Activities

Owner and other organization(s)’ activities that could impact progress shall be clearly identified. Owner activities include, but are not limited to:

 

xlvi. Owner Design Submittal reviews

 

xlvii. Design review meetings

 

xlviii. Owner conducted inspections/ tests

 

xlix. Required Utility Tie-ins and Outages

 

l. Notices to Proceed

 

li. Delivery of Owner Furnished Material/ Equipment

Construction Activities

Construction activities shall include:

 

lii. Tasks related to mobilization and demobilization of Contractor and each Subcontractor and Supplier

 

liii. Installation of permanent or temporary work by tradesmen and/or Subcontractors

 

liv. Testing and inspections (including special inspections) of installed Work by technicians, inspectors and/or engineers

 

lv. Startup, testing, commissioning, and turnover activities

 

lvi. Training

 

lvii. Administrative tasks necessary to start, proceed with, accomplish or finalize the scope of Work

Contractor activities shall reflect actual workdays, including any overtime, double shifts, weekends and holidays worked.

Responsibility Code


All activities in the Project Schedule shall be identified with the party responsible to perform the task. Responsible parties include:

 

lviii. Contractor

 

lix. Subcontractors

 

lx. Third party engineering firms (if any)

 

lxi. Inspection and testing firms

 

lxii. Owner

 

lxiii. Others

Only one responsible party will be shown for each activity. This party shall be identified by a responsibility code such as “ELEC” for electrical subcontractor.

Substantial and Final Completion

These schedule activities shall be defined in accordance with the Agreement and shall each be a zero duration milestone with an unconstrained date representing the Contractor’s Phase I Substantial Completion, Substantial Completion or Final Completion Dates.

 

  2.3.4 Quality Assurance Requirements and Acceptance Criteria

Contractor will:

 

lxiv. Provide and maintain a documented Quality Assurance Program (including implementing procedures and inspection system) covering the items and services to be furnished under this Appendix A. The program shall include those items and services provided by Contractor’s Subcontractors. The program shall include consideration of the technical aspects of the activities affecting quality from design through procurement of items and services and installation. The program shall provide control over activities affecting quality to an extent consistent with their level of importance. The Contractor shall provide and Owner shall review, and approve, the Quality Assurance program prior to proceeding with the Work.

 

lxv. Ensure Personnel meet the minimum qualification, education, licensing, certification, and training requirements as required by Applicable Legal Requirements.

 

lxvi. The Contractor is responsible for ensuring that construction is completed in accordance with the approved drawings and specifications, and approved field and design changes. Performance Testing and acceptance, including Reliability Testing, shall be in accordance with the Contractor-prepared and Owner-approved test plans and associated procedures.


lxvii. The Contractor shall provide and maintain a complete construction inspection system that is acceptable to Owner and that shall ensure that inspectors are appropriately qualified, trained, and certified. Inspection Personnel shall document items that were inspected, acceptance criteria and results, and identify any non-conforming results. Non-conformances shall be documented in accordance with the Contractor’s approved Quality Assurance Program and shall be tracked to closure to Owner’s satisfaction prior to requesting payment for the nonconforming items or Work. Corrective actions, and actions to prevent their recurrence, shall be implemented to prevent recurring non-conformances.

 

lxviii. Owner will have one or more representative(s) and/or agents on-site, each or any of which may witness and/or conduct inspections and tests throughout construction while Work is in progress. Contractor shall keep Owner’s Personnel and/or agents properly informed of Contractor’s upcoming inspections and tests and track and close Owner identified non-conformances in the same manner as those identified by Contractor’s inspection Personnel. Contractor shall conduct weekly construction coordination meetings with Owner’ on-site representative(s) and/or agents present.

 

lxix. Obtain prior written approval from Owner for any deviations from the Quality Assurance Program and Contractor’s approved Project Execution Plans.

 

lxx. Provide Owner access to all relevant records and/or Personnel.

 

lxxi. Protect Project information and data to prevent unauthorized use, destruction, or loss.

 

lxxii. Contractor shall be responsible for closing all open issues to Owner’s satisfaction associated with non-conforming conditions, corrective actions, design and/or field changes, up-to-date red-line drawings prior to acceptance and/or payment to Contractor.

The acceptable criteria for deliverables includes the following:

 

lxxiii. All deliverables will be fully complete documents. That is, “draft” deliverables do not imply partially complete or unchecked deliverables.

 

lxxiv. All deliverables will include the signature of the responsible author and the signature of the document checker indicating that the document has been properly reviewed according to the approved Quality Assurance Program and implementing procedures and is suitable for release.

 

lxxv.

Documents that do not meet these minimum requirements may, at Owner’s sole discretion, not be accepted. If documents do not meet these minimum


 

requirements, the Contractor must revise and resubmit the documents at no additional cost to Owner within a time frame that does not delay the project.

 

  2.3.5 Project Communications

Meetings and Progress Reports

Weekly Design and Construction Status Meetings: Contractor will hold a status meeting/conference call each week with Owner, at an agreed upon time and place, for the duration of the project. The purpose of the meetings will be to:

 

lxxvi. Report design and construction status versus schedule.

 

lxxvii. Identify potential problems related to technical issues, scope, cost, schedule, and/or safety.

 

lxxviii. Resolve existing problems.

 

lxxix. RFIs.

The Contractor is encouraged to use these meetings during the design phase to review the design and to present in-progress design documents for discussion with Owner’s reviewers prior to release of the documents.

Meeting Minutes (Confirmation Notices)

Provide minutes of each meeting and each teleconference whereby Contractor believes project decisions or commitments are made by or with Owner, Subcontractors, Equipment suppliers and any other entity affecting the Project. The minutes are to be developed and distributed by e-mail within three (3) Business Days of the date of the meeting or teleconference. The minutes are to list the participants and their phone numbers, state the date, indicate the location of the meeting, identify major issues, document resolution of situations and conclusions drawn, serve as a transmittal of documents exchanged, list all action items and describe the effect of the meeting’s conclusions relative to the Project Schedule or Total Work Cost.

Monthly Progress Reports

At a minimum, Contractor shall provide Owner with monthly progress reports detailing cost, schedule, and manpower performance (actual vs. planned); summarize Work performed during the period; Work and major procurements planned for the following month; design, construction, inspection, or delivery issues of concern and corrective actions planned to address the issues.

Project Website

The Contractor shall create, maintain, and administer a Project website for the access and storage of key project documents generated throughout design and construction. The website shall include at a minimum the following items: Contractor’s Quality Assurance Program and Implementing procedures; Project


Execution Plan(s), baseline Project Schedule; working or look-ahead schedule; meeting minutes; progress reports; all engineering and construction deliverables; RFIs; Design Changes; Field Design Changes; inspection and testing procedures and results; Non-Conformance Reports (NCRs); approved for construction drawings and specifications; bid and award packages; commissioning and start-up plans and results; and key project team communications. Documents shall be posted to the website within 24 hours of generation. The website shall be viewable remotely through the internet with secure and controlled access to select project team members.

Requests for Information (RFIs)

Develop RFIs and distribute by e-mail using an Owner-approved RFI process. RFIs are not, and should not be considered, a Change to the Agreement.

Look-Ahead Schedules

During construction, the Contractor shall, on a weekly basis, provide a three week look-ahead schedule that encompasses the Work planned for the upcoming three week period. The schedule shall include key Equipment deliveries, construction activities, testing and inspections, and support required from Owner and other organizations. This schedule shall be reviewed and updated during weekly construction meetings and shall be provided a minimum of one full Business Day prior to the construction meetings.

Design Change Notification

The Contractor shall provide the Owner copies of all field or design changes. Except to the degree mutually agreed-to and amended in writing, the Contractor shall request Owner approval of all design Changes pursuant to the Agreement prior to proceeding with detailed design and/or construction of the Change.


Attachment 1

Engineering Deliverables

P&IDs

 

Area

  

Type

  

Number

  

Title

  

Rev

100    PO    001   

P&ID

Coal Handling System

   B
101    PO    001   

P&ID

Coal Handling System

   B
101    PO    002   

P&ID

Coal Handling Vacuum System

   B
201    PO    001   

P&ID

Multi-Hearth Furnace MHF 1

   B
201    PO    002   

P&ID

Multi-Hearth Furnace MHF 2

   B
201    PO    003   

P&ID

Multi-Hearth Furnace MHF 3

   B
201    PO    004   

P&ID

Multi-Hearth Furnace MHF 4

   B
201    PO    007   

P&ID

Multi-Hearth Furnace Product Cooling Loop Exchangers & Pumps

   B
201    PO    008   

P&ID

Multi-Hearth Furnace MHF 1 & 2 Screw Coolers Water Side

   B
201    PO    009   

P&ID

Multi-Hearth Furnace MHF 3 & 4 Screw Coolers Water Side

   B
301    PO    001   

P&ID

Product Handling Activated Carbon HG Adsorption System

   B
301    PO    002   

P&ID

Product Handling

   B
301    PO    003   

P&ID

Product Handling Product Storage-Truck

   B


401    PO    001   

P&ID

Water Systems & Utilities Demineralize Water & Transfers

   B
401    PO    002   

P&ID

Water Systems & Utilities Raw Water

   B
401    PO    003   

P&ID

Water Systems & Utilities Plant/Treated Water

   B
401    PO    004   

P&ID

Water Systems & Utilities Wastewater

   B
401    PO    005   

P&ID

Water Systems & Utilities Ultrafilter Skid 1

   B
401    PO    006   

P&ID

Water Systems & Utilities Circulating Water

   B
401    PO    007   

P&ID

Water Systems & Utilities Chemical Treatment

   B
401    PO    008   

P&ID

Water Systems & Utilities Potable Water Distribution

   B
401    PO    009   

P&ID

Water Systems & Utilities Plant Air Distribution

   B
401    PO    010   

P&ID

Water Systems & Utilities Plant Air Distribution

   B
401    PO    011   

P&ID

Water Systems & Utilities Instrument Air Distribution

   B
401    PO    012   

P&ID

Water Systems & Utilities Fuel Gas Distribution

   B
401    PO    013   

P&ID

Water Systems & Utilities Utility Stations Air and Plant Water

   B
401    PO    014   

P&ID

Water Systems & Utilities Water Treatment IST Pass Reverse Osmosis

   B


401

   PO    015   

P&ID

Water Systems & Utilities

Water Treatment

2nd Pass Reverse Osmosis

   B

401

   PO    016   

P&ID

Water Systems & Utilities

Water Treatment

Electrodeionization Skid

   B

401

   PO    017   

P&ID

Water Systems & Utilities

Water Treatment

Process Runoff

   B

401

   PO    018   

P&ID

Water Systems & Utilities

Water Treatment

Ultrafilter Skid 1

   B

401

   PO    019   

P&ID

Water Systems & Utilities

Chemical Feed System

   B

401

   PO    020   

P&ID

Water Systems & Utilities

UF Clean in Place System

   B

401

   PO    020   

P&ID

Water Systems & Utilities

UF Clean in Place System

   B

401

   PO    021   

P&ID

Water Systems & Utilities

RO/EDI Clean in Place System

   B

401

   PO    022   

P&ID

Water Systems & Utilities

Water Treatment

   B

501

   PO    001   

P&ID

Power Island

Afterburner Combustor

   B

501

   PO    002   

P&ID

Power Island

High Pressure Steam

   B

501

   PO    003   

P&ID

Power Island

IP/LP Steam System

   B

501

   PO    004   

P&ID

Power Island

Waste Heat Recovery Boiler

   B

501

   PO    005   

P&ID

Power Island

Feedwater

   B


501

   PO    006   

P&ID

Power Island

Boiler Blowdown System

   B

501

   PO    007   

P&ID

Power Island

Condensate System

   B

501

   PO    008   

P&ID

Power Island

Turbine Drain Tank & Gland Steam

   B

501

   PO    009   

P&ID

Power Island

Turbine Generator

Main Steam System

   B

501

   PO    010   

P&ID

Power Island

Generator Cooling System

   B

501

   PO    011   

P&ID

Power Island

Turbine Lube Oil System

   B

501

   PO    012   

P&ID

Power Island

Turbine Generator

Air Ejector System

   B

501

   PO    013   

P&ID

Power Island

Waste Heat Recovery Boiler

Soot Blower & Ash System

   B

601

   PO    001   

P&ID

Emission Control

Off Gas/Afterburner & Boiler Gas Side

   B