EXHIBIT 10(A)

CONFIDENTIAL TREATMENT REQUESTED.

CONFIDENTIAL PORTIONS OF THIS DOCUMENT

HAVE BEEN REDACTED AND HAVE BEEN FILED

WITH THE COMMISSION.

TXU STANDARD PROJECT

PROJECT     

PURCHASE ORDER

 

TXU GENERATION DEVELOPMENT COMPANY LLC

1601 BRYAN

DALLAS, TEXAS 75201

 

Attention: Steve Kopenitz

Telephone Number: (214) 812-4600

Email: skopeni1@txu.com

 

TO: The Babcock & Wilcox Company

        20 South Van Buren Avenue

        P. O. Box 351

        Barberton, Ohio 44203-0351

 

        Attention: R. L. Killion

        Telephone: 330 860-2546

        Email: rlkillion@babcock.com

  

PURCHASE ORDER NUMBER:

25280-000-POA-MBPX-00001

 

AWARD DATE: June 22, 2006

 

PO EFFECTIVE DATE: June 5, 2006

 

PROMISED SHIP DATE:

See Section 5

 

TOTAL PURCHASE VALUE:         $138,426,393.00

 

All prices shown herein are firm.

 

Product:    PC Fired Supercritical Steam Generator

 

PURCHASE ORDER ATTACHMENTS:

Section 1: Scope of Work, Pricing, and Notes

Section 2: Technical Specifications

Section 3: Drawing and Data Requirements

Section 4: General Conditions

Section 5: Special Conditions

Section 6: Supplier Quality Surveillance

Section 7: Expediting Instructions

Section 8: Shipping and Packing Instructions

Section 9: Invoicing Instructions

 

Payment Terms: (See Section 5)

Shipping Terms: (See Section 5)

  

CORRESPONDENCE: Send copies of all correspondence relating to this Purchase
Order to the attention of the Buyer named below at the address shown above.
Purchase Order, item, tag, and stock code numbers must be referenced on
correspondence.

 

INSPECTION: Is Required

(See Section 6 – Supplier Quality Surveillance)

Do not ship any products prior to release by Buyer’s Supplier Quality
Representative.

 

SHIP AND CONSIGN TO:

(See Section 8 - Shipping Instructions)

 

INVOICING:

(See Section 9 - Invoicing Instructions)

Notwithstanding anything to the contrary stated or implied elsewhere in this
Agreement, Seller shall not be entitled to make any claim or seek any relief
under this Agreement to the extent that its performance of the Work is delayed
or otherwise affected by the acts or omissions of Seller or any of its
Affiliates (or any Person for whom Seller or its Affiliates may be responsible)
under any other purchase order or contract entered into in connection with the
Project or the Owner’s Standard Plant Program.   

 

BUYER’S AUTHORIZED REPRESENTATIVE:   SELLER’S ACCEPTANCE:

Signature:

 

 

 

Signature:

 

 

 

  Page 1 of 1    Purchase Order Form

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«PROJECT_ENTITY»

«PROJECT_NAME»

  

PUECHASE ORDER

COMMERCIAL NOTES

 

Print Name:

 

Michael P. Childers

 

Print Name:

 

Richard L. Killion

Title:

 

Chief Executive Officer

 

Title:

 

Vice President, Fossil Steam Supply Systems

Date:

 

 

 

Date:

 

 

PURCHASE ORDER NO: «PO_NUMBER» Rev. «R»

 

Page 2 of 2

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TXU STANDARD PROJECT

PROJECT     

SECTION 1

PRICING AND COMMERCIAL DATA

Firm, fixed prices to design, manufacture, shop test and deliver DDP Jobsite
(per Incoterms 2000) one (1) pulverized coal fired supercritical steam
generator, complete with appurtenances, accessories and auxiliary equipment, in
accordance with the Technical Specifications in Section 2 hereto:

 

ITEM

  

QTY

  

DESCRIPTION

  

PRICE

(Lump

Sum Price)

   PROJECT 3

1.1

  

Lot

   Design, furnish materials, fabricate, test and deliver one (1) pulverized
coal fired supercritical steam generator, complete with appurtenances,
accessories and auxiliary equipment, in accordance with the Technical
Specifications in Section 2 hereto.   

Lot Net

   $ 133,947,693       ITEMS INCLUDED IN ITEM 1.1      

1.1.1

  

Lot

   Drawings and data in accordance with Material Requisition, Section 2, and
Drawings and Data Requirements, Section 3   

Lot Net

     Included in Item 1.1

1..1.2

  

Lot

   Expediting and scheduling reports in accordance with Expediting Requirements,
Section 7   

Lot Net

     Included in Item 1.1

1.1.3

  

Lot

   Instructions/manuals for storage, erection, operation, training and
maintenance in accordance with Specification(s) requirements, Section 2,
Material Requisition   

Lot Net

     Included in Item 1.1

1.1.4

  

Lot

   Shipping and exporting/importing documentation in accordance with Shipping
Instructions, Section 8   

Lot Net

     Included in Item 1.1

1.1.5

  

Lot

   On-site Training per Section 2 Material Requisition.   

Lot Net

     Included in Item 1.1

1.1.6

  

Lot

   Price for Spare Parts for Start Up, Testing and Commissioning   

Lot Net

     Included in Item 1.1

 

By Seller:                     

   By Buyer:                     

Section 1 – Pricing and Commercial Data

Page 1 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 1

PRICING AND COMMERCIAL DATA

 

ITEM

  

QTY

  

DESCRIPTION

  

PRICE

(Lump

Sum Price)

   PROJECT 3 1.1.7    Lot    Price for Special Tools    Lot Net    Included in
Item 1.1 1.1.8    Lot    Provide existing Structural Steel design information
from B&W reference plant to Bechtel as described in Section 2, Technical
Specification    Lot Net    Not Applicable 1.1.9    Lot    “Category 1”
Modularization (shop weld horizontal banks together in accordance with Section
5, Appendix 11)    Lot Net    Included in Item 1.1 1.1.10    Lot    Provide
Performance Testing Services    Lot Net    Included in Item 1.1 1.1.11    Lot   
Supply 36” wide Coal Feeders in lieu of 24”    Lot Net    Included in Item 1.1
1.1.12    Lot    Extend the boiler outlet flue from each air heaters to the rear
boiler column line    Lot Net    Included in Item 1.1 1.1.13    Lot    Include
Bottom Ash Seal Skirt for transition from furnace bottom ash hopper into bottom
ash system supplied by Others    Lot Net    Included in Item 1.1 1.1.14    Lot
   Supply equipment required to use Natural Gas as the auxiliary fuel for
ignitors in lieu of No. 2 fuel oil for (6) of the (8) Units in accordance with
the scope and terminal points described in Section 2, Technical Specification.
   Lot Net    Not Applicable

 

By Seller:                     

   By Buyer:                     

Section 1– Pricing and Commercial Data

Page 2 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 1

PRICING AND COMMERCIAL DATA

 

ITEM

  

QTY

  

DESCRIPTION

  

PRICE

(Lump

Sum Price)

   PROJECT 3

1.1.15

   Lot   

Other Miscellaneous Items (per Section 2, Technical Specifications):

 

a)      Include Supply of Steam Sampling in SH/RH Outlet Pipes

 

b)      Supply First Fill Lubricants

 

c)      Include additional Sootblower Erosion Shields on horizontal tubes near
side walls

 

d)      Supply silencer(s) for the power operated relief valves supplied as part
of the sootblower steam supply system

   Lot Net    Included in Item 1.1

1.1.16

  

Lot

   Comply with the standard technical specification, 3GS-J21G-00001 Guide
Specification for Instrumentation, Controls and Electrical Requirements of
Packaged Systems (Section 2, Attachment 7) as modified in Section 4 of Appendix
A of the Material Requisition.   

Lot Net

   Included in Item 1.1

1.1.17

  

Lot

   Comply with the coatings specification requirements as described in the
Technical Specification for Pulverized Coal Fired Supercritical Steam Generator,
25262-000-3PS-MBPX-00002 of the Material Requisition (Section 2, Attachment 1).
  

Lot Net

   Included in Item 1.1

1.1.18

  

Lot

   Supply FD and PA Fan Motors designed for 13.8 kV and comply with the 60 Hz
load test for each separate type of medium voltage motor as described in
Attachment Specification for Medium Voltage Motors, 3SS-EM-503 (Section 2,
Attachment 2B).   

Lot Net

   Included in Item 1.1

1.1.19

  

Lot

   Comply with over-speed test requirement for all centrifugal fans (PA Fans) as
described in MRA-MBPX-00002 Appendix H of the Material Requisition.   

Lot Net

   Included in Item 1.1

1.1.20

  

Lot

   Include supply of steam coil air heater control valves and condensate traps
  

Lot Net

   Included in Item 1.1

 

By Seller:                     

   By Buyer:                     

Section 1 – Pricing and Commercial Data

Page 3 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 1

PRICING AND COMMERCIAL DATA

 

ITEM

  

QTY

  

DESCRIPTION

  

PRICE

(Lump

Sum Price)

   PROJECT 3

1.1.21

   Lot    Provide small bore piping in shop spooled pieces    Lot Net     
Included in Item 1.1

1.2

  

Lot

  

Allowance for services of erection representative(s) for two hundred ninety one
(291) man-weeks duration during erection of each Unit, excluding air travel
transportation, but including accommodation, meals and transportation in the
United States, which are to be billed at per diem rates, working sixty hours per
week, six (6) working days per week will be invoiced at $10,200 per week. Any
hours worked more sixty (60) hours per week will be invoiced at a rate [$152]
per hour.

 

To the extent the total number of man-weeks of technical representative services
rendered is less or more than the number of man-weeks included herein, Seller
agrees that Buyer will either deduct (if less) or add (if more) the
corresponding amount from the Agreement Price included herein.

  

Lot Net

   $ 2,968,200

 

By Seller:                     

   By Buyer:                     

Section 1 – Pricing and Commercial Data

Page 4 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 1

PRICING AND COMMERCIAL DATA

 

ITEM

  

QTY

  

DESCRIPTION

  

PRICE

(Lump

Sum Price)

   PROJECT 3

1.3

     

Allowance for services of commissioning engineer(s) for one hundred thirty five
(135) man-weeks duration during the commissioning of each Unit, excluding air
travel transportation, but including accommodation, meals and transportation in
the United States, which are to be billed at per diem rates, working sixty hours
per week, six (6) working days per week will be invoiced at $11,100 per week.
Any hours worked more sixty (60) hours per week will be invoiced at a rate
[$215] per hour

 

To the extent the total number of man-weeks of commissioning engineer’s services
rendered is less (if more) than the number of man-weeks included herein, Seller
agrees that Buyer will either deduct (if less) or add (if more) the
corresponding amount from the Agreement Price included herein.

   Lot Net    $ 1,498,500

1.4

     

Allowance for air travel transportation. Allowance for accommodations, meals and
local ground transportation to and from the site and other sundry expenses for
the technical representatives in Item No. 1.2 and Item No. 1.3. are included in
the weekly rates shown above. Reimbursement of air travel expenses shall be
based on reasonable costs incurred by the technical representatives. Note that
the starting point for transportation to the Sites is from domestic airports
local to Barberton, Ohio or similar US domestic location.

 

To the extent the total allowance utilized for technical representative services
rendered is less or more than the price included herein; Seller agrees that
Buyer will either deduct (if less) or add (if more) the corresponding amount to
the Allowance, as applicable, and the Agreement Price included herein will be
adjusted based on the rates included in 1.4.

   Lot Net    $ 12,000

 

By Seller:                     

   By Buyer:                     

Section 1 – Pricing and Commercial Data

Page 5 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 1

PRICING AND COMMERCIAL DATA

 

ITEM

  

QTY

  

DESCRIPTION

  

PRICE

(Lump

Sum Price)

   PROJECT 3

1.5

   Lot   

Allowance for transportation of Overseas Equipment from port of Houston to
Jobsite. (Allowance)

 

To the extent the total allowance utilized for transportation is less or more
than the price included herein in item 1.5, Seller agrees that Buyer will either
deduct (if less) or add (if more) the corresponding amount to the Allowance, as
applicable, and the Agreement Price included herein will be adjusted.[Seller
will provide firm price within forty-five (45) days after the effective date of
this Agreement]

        TBD

1.6

  

Lot

   Extended Warranty for Substantial Completion “cure period” pursuant to
Section 5 Clause SC-52 (Additional Commissioning Time)       $ 135,000/mo

1.7

  

Lot

   Letter of Credit        
  Included with
Project 1                       TOTAL         $138,426,393                

2.0 OPTIONAL PRICES

 

ITEM

  

QTY

  

DESCRIPTION

  

PRICE

(Lump

Sum Price)

  

EXTENSION

PROJECT 3

2.1

     

Include supply of Main Steam Stop Valve

(Option Valid to 8/1/06)

      $ 398,838

2.2

      NOT USED      

2.3

     

Hoists for SCR Catalyst loading (2nd hoist per level) and air heaters

(Option Valid to 8/1/06)

      $ 325,826

 

By Seller:                     

   By Buyer:                     

Section 1 – Pricing and Commercial Data

Page 6 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 1

PRICING AND COMMERCIAL DATA

 

ITEM

  

QTY

  

DESCRIPTION

  

PRICE

(Lump

Sum Price)

  

EXTENSION

PROJECT 3

  2.4      

Special air heater clutch (to enable online servicing of motor)

(Option Valid to 7/20/06)

      $ 52,413   2.5       NOT USED       2.6       NOT USED       2.7       NOT
USED       2.8      

Include Supply of ERV Silencer

(Option Valid to 8/20/06)

      $ 25,625   2.9.A      

Eliminate supply of material for small bore (2.0” OD and less) spooled pipe and
fittings included in Seller’s base scope of supply

(Option Valid to 9/20/06)

      $ (371,500 ) 2.9.B      

Supply small bore pipe (2.0” OD and less) and fittings as bulk material for
field fabrication in lieu of spooled pipe included in Seller’s base scope of
supply

(Option valid to 9/20/06)

      $ (307,750 ) 2.10      

Eliminate the over speed test requirement for all centrifugal fans (PA Fans) as
described in Item 1.1.19 above.

(Option valid to 7/20/06)

      $ (99,138 ) 2.11       Revise the break point between 4160V and 13.8 kV
for medium voltage motors from 3000 Hp to 3500 Hp       $ (67,250 ) 2.12      
Revise the break point between 4160V and 13.8 kV for medium voltage motors from
3000 Hp to 4000 Hp       $ (136,838 )

 

By Seller:                     

   By Buyer:                     

Section 1 – Pricing and Commercial Data

Page 7 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 2

TECHNICAL SPECIFICATIONS

The following listed documents are attached or enclosed herewith and made part
of this Agreement. All documents listed in the Material Requisition as
appendices and attachments are considered to be part of the Technical
Specifications as this term is used throughout this Agreement.

 

Material Requisition No.

   Revision

****

  

--------------------------------------------------------------------------------

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

 

By Seller:                     

   By Buyer:                     

Section 2 – Technical Specifications

Page 1 of 1

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TXU STANDARD PROJECT

PROJECT     

SECTION 3

DRAWINGS AND DATA REQUIREMENTS

Drawing and Data Requirements

Drawings, instructions and data shall be submitted in accordance with the
Document Submittal Requirements form (DSR) included in Section 2, Material
Requisition, Appendix B of the] Material Requisition (MR)
25262-000-MRA-MBPX-00002.

The DSR identifies the following critical information relative to the Suppliers
submittal of the required drawings, information, and data:

 

  1. Description of each document to be submitted

 

  2. Submittal schedule for each document (1)

 

  3. Information to be included with each document

 

  4. Reason for document submittal to Buyer (for information, for review, etc)

 

  5. Whether Liquidated Damages apply to late submittal of each document

 

  6. Definition of Buyer’s document review status

 

--------------------------------------------------------------------------------

(1) Submittal dates are provided as duration of calendar days from the
appropriate milestone (award, shipment, etc. as noted). The indicated durations
represent the date that documents are required to be actually received by Buyer.

The initial submittal of each document shall be transmitted to Buyer’s
representatives designated below, in accordance with the DSR submittal schedule
beginning on the effective date of this Agreement.

Documents shall be submitted complete with all relevant detail information for
design, and operation. Submit all drawings, data, and documentation in the
language and system of units specified in Appendix A of the Material
Requisition. Submittals shall be revised at Buyer’s request to comply with the
requirements of Section 5, Appendix 5, Clause 2.0. Seller shall identify
components on Seller’s documents using Buyer provided numbering system.

Drawing turnaround time shall be as specified in Section 5, Special Conditions,
SC-9, titled “Document Turnaround”.

Other information relative to document submittals that the Seller shall comply
with is also included in the DSR.

Seller shall maintain complete and accurate records of all differences between
work as per the final installed and accepted configuration, as actually shipped,
and as designed (as indicated on reviewed engineering drawings). All final
piping isometric drawings must show each field weld location and each piping
spool or piece number.

All documents shall be submitted with either a hard copy Document Transmittal
form, or with an electronic notification notice to comply with Section 5,
Appendix 5, Clause 2.0. Seller shall forward a copy of the Document Transmittal
form or provide electronic notification of transmittal, to the following
individuals:

 

By Seller:                     

   By Buyer:                     

Section 3, Drawing and Data Requirements

Page 1 of 2

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Hard copies shall be sent to:

 

   Bechtel Power Corporation    5275 Westview Drive    Frederick, MD 21703
Attention:    Project Administrator Project Name:    TXU Multi Plant Purchase
Order No.:    25280-000-POA-MBPX-00001

Electronic notification shall be sent to:

 

Project Administrator    {To be notified later}   
                                          Project Expediter    {To be notified
later}                                              Project Engineering
Representative(s)    {To be notified later}   
                                         

Electronic File Format

All documents as required by the Document Submittal Requirement form shall be
forwarded to the Buyer via an FTP Site or other previously agreed upon server
connection. Files submitted by the Seller shall preferably be in a native
format, previously approved by the Buyer. If Buyer agrees to accept files in
other formats, the priority would be:

 

  1. PDF

  2. TIFF

  3. JPG

  4. HTML

  5. HPGL

Seller must obtain prior written approval from Buyer if Seller wants to submit
documents using a file format other than those listed above.

Quality Requirements for Scanned Files:

Scanned files shall be in a PDF format for text, multi-sheet documents and a
TIFF format for documents that are considered image files. Documents must be
scanned at a minimum of 200 dpi. Seller shall perform necessary quality checks
to ensure the files are de-speckled. All scanned files must be named with the
document number and an extension of PDF or TIFF to indicate the format used. The
electronic file will be considered the “record copy” except where hard copies
are specified in the DSR included in Section 2, Material Requisition, Appendix
B.

Hard Copies

Hard copies of documents are specified in the DSR included in Section 2,
Material Requisition, Appendix B.

Document Security

Seller acknowledges that the FTP server is not a password protected site, and
that any alternate security provisions for transfer files, such as encryption,
should be implemented by the Seller as appropriate to his company’s procedures

 

By Seller:                     

   By Buyer:                     

Section 3, Drawing and Data Requirements

Page 2 of 2

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TXU STANDARD PROJECT

PROJECT     

GENERAL CONDITIONS

TABLE OF CONTENTS

 

Clause

  

Title

   Page No.

GC-1

   ENTIRE AGREEMENT    2

GC-2

   CHANGES    2

GC-3

   DELIVERY    3

GC-4

   TITLE AND RISK OF LOSS    3

GC-5

   INFRINGEMENT    4

GC-6

   COMPLIANCE    5

GC-7

   SUSPENSION    6

GC-8

   TERMINATION FOR CONVENIENCE    7

GC-9

   TERMINATION FOR DEFAULT    7

GC-10

   NON-WAIVER    9

GC-11

   APPLICABLE LAW    9

 

By Seller:                     

   By Buyer:                     

Section 4, General Conditions

Page 1 of 9

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GENERAL CONDITIONS

GC-1 ENTIRE AGREEMENT

 

1.1 This Agreement embodies the entire agreement between Buyer and Seller. The
Parties shall not be bound by or liable for any statement, representation,
promise or understanding not set forth herein. Nothing contained in proposals,
correspondence, discussions, order acknowledgements or other of Seller’s forms
has any effect on this Agreement unless specifically incorporated herein.

 

1.2 No modifications to this Agreement shall be valid unless reduced to writing
and signed by both Parties pursuant to Clause GC-2 (Changes).

GC-2 CHANGES

 

2.1 Buyer, through its authorized procurement representative, may at any time
direct, in writing, changes, including but not limited to changes in any one or
more of the following: (1) drawings or specifications; (2) additions to or
deletions from quantities ordered; (3) Delivery schedule; (4) method of shipment
or packing; (5) place of Delivery; or (6) other changes as requested by Seller
by reference to this Clause GC-2 (Changes) and which are agreed to by Buyer in
writing. If any such change causes an increase or decrease in the cost or timing
required to provide the Equipment, or otherwise affects Seller’s ability to meet
its obligation, an equitable adjustment shall be made in the Agreement Price or
Delivery schedule and/or other relevant terms and the Agreement shall be
modified by written amendments or revisions executed by authorized
representatives. Any request by the Seller for adjustment under this Clause GC-2
(Changes) must be asserted promptly by written notice to Buyer’s authorized
representative and in no case later than within twenty (20) Days from the date
of receipt by Seller of the notification of a change, unless the Parties
mutually agree to extend the time required to assess and determine the resulting
impact. Buyer shall respond to Seller’s request for adjustment within thirty
(30) days of receipt of Seller’s notice. However, nothing in this clause shall
excuse Seller from proceeding with the order as changed. Failure by Seller to
timely give the required notice hereunder will preclude Seller’s right to
request any adjustment. In the event that Buyer and Seller are not able to reach
agreement on a firm price for a Buyer directed change after good faith
negotiations by the Parties or in case of an emergency endangering life or
property or the Facility has ceased operation or is materially and adversely
affected in its operation requiring immediate corrective action, Seller will
proceed with implementation of the change on a time and materials basis,
including a reasonable profit. In such event, Seller agrees to provide in a
timely manner such documentation as is reasonably sufficient for Buyer to
determine the accuracy of impact of the change on a time and material basis.

 

2.2 If this Agreement requires Buyer to review and comment on Seller’s technical
documents, Seller shall submit, within twenty five (25) Days from the date of
Seller’s receipt of such comments, any request for adjustment resulting from
implementation of Buyer’s comments. No adjustment will be made hereunder unless
Buyer, through its authorized procurement representative, confirms the change in
writing.

 

2.3 A Change in Law affecting Seller’s Work under this Agreement and occurring
after the Effective Date of this Agreement shall be considered a change and will
be handled in accordance with Clause GC-2.1 above, provided that Seller gives
notice to Buyer of such Change in Law no later than five (5) Business Days after
such Change in Law is made, together with details as to the impact of such
Change in Law on performance of the Work.

 

By Seller:                     

   By Buyer:                     

Section 4, General Conditions

Page 2 of 9

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2.4 Suspension instructed by Buyer pursuant to Clause GC-7 (Suspension) will
also be treated as a change and will be handled in accordance with Clause GC-2.1
above, unless such suspension arises as a result of any fault, defect or other
failure to perform which is attributable to Seller.

GC-3 DELIVERY

Timely performance and Delivery of Seller’s obligations shall be in accordance
with the Guaranteed Milestone Dates. However, to the extent Buyer’s failure to
fulfill any of its material obligations under this Agreement, (except payment
obligations), actually and demonstrably delays Seller in the performance of its
critical path activities, Seller shall be entitled to an equitable adjustment to
the affected Guaranteed Milestone Date(s) and an equitable adjustment to the
Agreement Price. Seller shall give notice to Buyer within five (5) Business Days
after the occurrence of such Buyer delay. Such notice will specify the nature of
the occurrence and the reason(s) why Seller believes additional time should be
granted and the length of the delay and additional costs occasioned by reason of
such Buyer delay. Strict compliance with this Clause GC-3 (Delivery) is a
condition precedent to any entitlement to an extension of the affected
Guaranteed Milestone Date(s) and/or to an adjustment to the Agreement Price.
Failure by Seller to timely give the required notice hereunder will preclude
Seller’s right to invoke the protection of this Clause GC-3 (Delivery). Seller
shall use its reasonable efforts to minimize or avoid the delay caused by the
Buyer delay and the initial notice provided by Seller shall describe in detail
the efforts of Seller that have been or are going to be made in this regard.
Upon mutual agreement of the Parties to Seller’s entitlement to an equitable
adjustment to the affected Guaranteed Milestone Date(s) and an equitable
adjustment to the Agreement Price, this Agreement shall be modified by written
amendment or revision executed by the Parties’ authorized representatives.

GC-4 TITLE AND RISK OF LOSS

 

4.1 All Equipment furnished by Seller hereunder shall become the property of
Buyer or Owner, as applicable upon (i) payment therefor, or (ii) Delivery to the
Jobsite, whichever occurs earlier. In order to protect Buyer or Owner’s interest
in items of Equipment with respect to which title has passed to Buyer or Owner
but which remains in the possession of Seller, Seller shall segregate such items
of Equipment and shall take or cause to be taken all steps necessary under the
Applicable Laws to maintain Buyer’s or Owner’s title and to protect Buyer or
Owner against claims by other parties with respect thereto.

Notwithstanding the foregoing, Seller warrants that upon passage of title to the
Equipment in accordance with this Clause GC-4 (Title and Risk of Loss), Buyer or
Owner will have good and indefeasible title to such Equipment, and such
Equipment will not be subject to any lien, privilege, security interest or other
defect in title. If any Equipment is replaced, title in the replacement
Equipment shall vest in Buyer or Owner upon the earlier of (1) payment therefor
and (2) its Delivery to the Jobsite. IN THE EVENT OF ANY NONCONFORMITY WITH THE
FOREGOING WARRANTY, SELLER, AT ITS OWN EXPENSE, UPON WRITTEN NOTICE OF SUCH
FAILURE, SHALL INDEMNIFY OWNER AND BUYER FROM THE CONSEQUENCES OF AND DEFEND THE
TITLE TO SUCH EQUIPMENT AND IF, NECESSARY, SHALL PROMPTLY REPLACE SUCH EQUIPMENT
AND ANY OTHER AFFECTED PORTION OF THE WORK, AND SUCH OBLIGATION SHALL SURVIVE
THE EXPIRATION, CANCELLATION OR TERMINATION OF THIS AGREEMENT, INCLUDING THE
WARRANTY PERIOD.

 

4.2 Notwithstanding anything to the contrary in this Agreement, Seller shall be
responsible for and shall bear any and all risk of loss or damage to the
Equipment until Delivery to the

 

By Seller:                     

   By Buyer:                     

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Jobsite. Upon such delivery to the Jobsite, Seller shall cease to bear the risk
of loss or damage to the Equipment; provided however, that any loss or damage to
the Equipment, whenever occurring, which results from Seller’s nonconforming
packaging or crating or from any defect in such Equipment shall be borne by
Seller.

GC-5 INFRINGEMENT

 

5.1 SELLER SHALL, AT ITS OWN EXPENSE, FULLY HOLD HARMLESS, INDEMNIFY AND DEFEND
INDEMNIFIED PARTIES UNDER THIS AGREEMENT AGAINST ANY CLAIM, SUIT, ACTION,
PROCEEDING OR INVESTIGATION WHICH IS BASED UPON A CLAIM, WHETHER RIGHTFUL OR
OTHERWISE, THAT ANY EQUIPMENT, OR ANY PART THEREOF, OR AN OTHER ITEMS OR
SERVICES FURNISHED BY SELLER UNDER THIS AGREEMENT CONSTITUTES AN INFRINGEMENT OF
ANY DOMESTIC OR FOREIGN PATENT, COPYRIGHTS OR OTHER INTELLECTUAL PROPERTY,
TRADEMARK, PROPRIETARY OR CONFIDENTIAL RIGHTS, OR UNAUTHORIZED DISCLOSURE OR USE
OF ANY TRADE SECRET AND SELLER SHALL PAY ALL RESULTING DAMAGES INCLUDING LEGAL
EXPENSES AS PROVIDED IN CLAUSE GC-5.3 BELOW. IF, IN ANY SUCH CLAIM, SUIT,
ACTION, PROCEEDING OR INVESTIGATION, A TEMPORARY RESTRAINING ORDER OR
PRELIMINARY INJUNCTION IS GRANTED, SELLER SHALL MAKE EVERY REASONABLE EFFORT, BY
GIVING A SATISFACTORY BOND (OR OTHER FINANCIAL INSTRUMENT REASONABLY
SATISFACTORY TO BUYER) TO SECURE THE SUSPENSION OF THE INJUNCTION OR RESTRAINING
ORDER. In case said Equipment, or any part thereof, are in such suit or action
held to constitute infringement and/or use is permanently enjoined, the Seller
shall, at its own expense, subject to the following provisions, either procure
for the Buyer and Owner an irrevocable, royalty-free license to continue using
such Equipment, or with Buyer’s prior written approval which shall not be
unreasonably withheld, replace same with substantially equal but noninfringing
Equipment or modify them so they become noninfringing, provided that no such
replacement or modification shall in any way amend or relieve Seller of its
Equipment Performance Guarantees, warranties, guarantees or other obligations
set forth in this Agreement. Further, Seller agrees that it shall not settle any
suit for which it is providing indemnity under this Clause GC-5 (Infringement)
without the prior consent of the Indemnified Parties, such consent not to be
unreasonably withheld so long as such settlement completely discharges or
releases the indemnifiable claims against the Indemnified Parties and does not
impose by way of consent decree, injunction or otherwise any restraint or
limitations on such parties; operations or upon the operation or other use of
the Facility. Buyer acknowledges it may be required to enter into certain
license agreements, which shall be provided by Seller at no additional cost to
Buyer or Owner, with regard to the use of Seller proprietary computer software.

 

5.2 The preceding paragraph shall not apply to any Equipment, or any part
thereof, manufactured to Buyer’s or Owner’s detailed design or modifications to
any Equipment or part thereof made by Buyer or Owner. As to such Equipment or
part, the Seller assumes no liability whatsoever for infringement.

 

5.3 Special Conditions Clauses SC-21.4, 21.5 and 21.6 shall apply to any
indemnity claim made pursuant to this Clause GC-5 (Infringement).

 

5.4 NOT USED

 

5.5 Notwithstanding any proprietary legends or copyright notices to the contrary
and subject to Special Conditions Clause SC-22 (Nondisclosure), Indemnified
Parties may copy or reproduce documents and information furnished by Seller in
connection with Seller’s

 

By Seller:                     

   By Buyer:                     

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proposal and with this Agreement and distribute such copies or reproductions to
others for the limited purposes of designing, financing, constructing, altering,
operating, maintaining or permitting the Project. SELLER SHALL USE ITS
REASONABLE EFFORTS TO OBTAIN NECESSARY PERMISSION AND RELEASES FROM ANY THIRD
PARTIES PLACING PROPRIETARY RIGHTS OR COPYRIGHTS ON SUCH DOCUMENTS OR
INFORMATION.

 

5.6 Any idea, invention, work of authorship, drawing, design, formula,
algorithm, utility, tool, pattern, compilation, program, device, method,
technique, process, improvement, development or discovery (collectively,
“Intellectual Property”), whether or not patentable, or copyrightable, or
entitled to legal protection as a trade secret or otherwise, that Seller or its
Subcontractors may conceive, make, develop, create, reduce to practice, or work
on, in whole or in part, in the course of performing the Work shall be owned and
retained by Seller and its Subcontractors as appropriate. Seller hereby grants
and shall procure grant to Buyer, Owner and Owner’s Affiliates of an
irrevocable, nonexclusive royalty-free license (which license is freely
assignable (a) to any Financing Party or any assignee of such Financing Party,
(b) to any party to which the Project is sold or otherwise transferred, and
(c) to any successor in interest to Buyer’s or Owner’s rights hereunder), to use
all such Intellectual Property, background Intellectual Property, related
proprietary rights and specialized knowledge of Seller and its Major
Subcontractors which, in each case, form a part of the Work and Equipment to the
extent reasonably necessary for the operation, maintenance, repair, permitting,
financing, construction or alteration of the Project or any subsystem or
components thereof in connection with the Project. Seller shall use commercially
reasonable efforts to procure a license in the same terms as the above license
from each Major Subcontractor. Any license to use any Intellectual Property
pursuant to this Clause GC-5.6 shall not include an express or implied license
to make, have made, or use component parts, or construct, create or reverse
engineer equipment. Seller shall, at Buyer’s or Owner’s expense, execute or
cause the execution of any documentation reasonably requested by Buyer or Owner
in order to effectuate the foregoing. Seller agrees that all documents, as well
as any drawings, tracings, specifications, calculations, memoranda, data, notes
and other materials which are supplied by Buyer and come into the possession of
Seller, shall be used solely with respect to this Project and shall, except for
Seller’s file copies, be delivered to Buyer upon Final Completion. Buyer
acknowledges it may be required to enter into certain license agreements, which
shall be provided by Seller at no additional cost to Buyer or Owner, with regard
to the use of Seller proprietary computer software provided during the execution
of this Agreement.

GC-6 COMPLIANCE

 

6.1 Seller agrees that all Equipment shall have been produced, sold, delivered
and furnished in material compliance with all Applicable Laws to which the
Equipment is subject, provided that the foregoing will not require Seller to
make any modification to the Equipment with respect to changes in Applicable Law
occurring after the Substantial Completion Date, recognizing that changes in
Applicable Law after the Effective Date are subject to Clause GC-2.3. Seller
shall execute and deliver to Buyer any documents as may be required to effect or
to evidence such compliance.

 

6.2 SELLER HEREBY AGREES TO INDEMNIFY, DEFEND AND HOLD INDEMNIFIED PARTIES
HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LEGAL ACTIONS, FINAL JUDGMENTS,
REASONABLE ATTORNEYS’ FEES, CIVIL FINES AND ANY OTHER LOSSES WHICH ANY OF THEM
MAY INCUR AS A RESULT OF THE SALE OR DELIVERY TO BUYER HEREUNDER OF EQUIPMENT
WHICH DOES NOT MEET ALL REQUIREMENTS OF SUCH LAWS AND REGULATIONS.

 

By Seller:                     

   By Buyer:                     

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6.3 Seller shall comply with all applicable export or import rules and
regulations. When required by the Agreement shipping/delivery terms, Seller is
to obtain any necessary export license in a timely manner to avoid shipment
delays. When Buyer is required by the Agreement shipping/delivery terms to
obtain any necessary export license, or to meet the import rules and regulations
of the destination country, Seller is to timely provide all necessary assistance
to Buyer and its agents. SELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS
INDEMNIFIED PARTIES FROM ANY PENALTIES, SUITS, LIABILITIES OR COSTS (INCLUDING
ATTORNEY FEES) CAUSED BY SELLER’S FAILURE TO COMPLY WITH APPLICABLE EXPORT AND
IMPORT RULES AND REGULATIONS OR TO COMPLY WITH ITS EXPORT AND IMPORT OBLIGATIONS
SET FORTH IN THIS AGREEMENT.

 

6.4 Seller shall comply, and shall require its Subsellers to comply, with all
Applicable Laws in effect from time to time relating to the Work, the Equipment
and/or the Project, and shall give all applicable notices pertaining thereto.
Seller shall ensure that the Equipment, as designed, engineered and,
manufactured, complies and when fully operated is capable of complying with all
Applicable Laws.

 

6.5 Seller agrees to comply with all Applicable Laws regarding the import or
export of technical data or information or any product based thereon and shall
not ship or communicate or allow to be shipped or communicated, either directly
or indirectly, any technical data or information or any product based thereon in
connection with the Work to any country or from any country to or from which
such shipment or communications is prohibited by Applicable Law.

GC-7 SUSPENSION

 

7.1 Notwithstanding any other provisions of this Agreement, Buyer may at any
time suspend Seller’s performance upon written notice of such suspension
indicating the effective date of such suspension. Thereafter, Seller shall
promptly resume performance as directed by Buyer specifying the effective date
of resumption of suspended performance. In the event of such suspension (unless
such suspension arises as a result of any fault, defect or other failure to
perform which is attributable to Seller), Seller shall be entitled to an
equitable adjustment to the affected Guaranteed Milestone Date(s) pursuant to
Clause GC-2 (Changes) and reimbursement for additional costs reasonably and
necessarily incurred by Seller in effectuating such suspension to the extent
that such additional costs are actually incurred, if claimed within thirty
(30) days after resumption of performance. Seller shall use all reasonable
efforts to minimize such suspension costs. Upon mutual agreement as to the
additional costs to which Seller is entitled on account of such suspension,
Seller shall be entitled to invoice Buyer for such costs and Buyer shall make
payment of such invoice within forty five (45) days of invoice receipt.

 

7.2 In the event that the period of a suspension or multiple suspensions
instructed by Buyer pursuant to Clause GC-7.1 (unless such suspension arises as
a result of any fault, defect or other failure to perform which is attributable
to Seller) exceeds a period of three hundred sixty five (365) cumulative Days,
except for suspensions which may be attributable to Force Majeure, Seller may,
at its sole option and, on giving Buyer at least forty five (45) Days prior
written notice, request that the Buyer terminate the Agreement in accordance
with Clause GC-8 (Termination for Convenience), or request that the terms of
this Agreement affected by such suspension be renegotiated.

 

By Seller:                     

   By Buyer:                     

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GC-8 TERMINATION FOR CONVENIENCE

 

8.1 Seller’s performance under this Agreement may be terminated by Buyer for its
convenience in accordance with this clause in whole, or, from time to time in
part whenever Buyer shall elect. Any such termination shall be effected by
delivery to Seller of a notice of termination specifying the extent to which
performance under the Agreement is terminated, and the date upon which such
termination becomes effective. Upon receipt of any such notice, Seller shall,
unless the notice requires otherwise: (1) immediately discontinue work on the
date and to the extent specified in the notice; (2) place no further orders for
materials or services other than as may be necessarily required for completion
of any portion of the Work that is not terminated; (3) promptly make every
effort to obtain cancellation on terms reasonably satisfactory to Buyer of all
contracts with Major Subcontractors unless Seller is directed by Buyer to take
other actions with respect to the same which may include assignment of all or
some of those contracts to Owner (or to Owner’s designee, which may be any
affiliate or any third party purchaser) on terms satisfactory to such assignee;
and (4) assist Buyer upon request in the maintenance, protection, and
disposition of property acquired by Buyer under this Agreement. For the
elimination of doubt, only the Buyer may terminate for convenience.

 

8.2 If requested in writing within a mutually agreeable time frame after notice
of termination (Buyer and Seller shall use their best efforts to mutually agree
within thirty (30) days), the Buyer will pay to Seller, as full compensation the
sum of the following amounts (which shall not be greater than the amounts
identified in Clause SC-19) (Termination Payment Schedule)): (1) all amounts due
and not previously paid to Seller for Equipment completed in accordance with
this Agreement prior to such notice, and for Work thereafter completed as
specified in such notice; (2) a reasonable amount for any Equipment then in
production, provided that no such adjustment shall be made in favor of Seller
with respect to any Equipment which is Seller’s standard stock; (3) reasonable
costs of settling and paying claims arising out of the cancelled contracts; and
(4) a reasonable profit for costs incurred in the performance of the Work in
production which has been terminated.

 

8.3 The total sum to be paid to Seller under this Clause GC-8 (Termination for
Convenience) shall not exceed the Agreement Price as reduced by the amount of
payments previously made by Buyer under the Agreement and as further reduced by
the portion of the Agreement Price attributable to Work not terminated, and will
not include any consideration for loss of anticipated profits on terminated
Work, all claims for which Seller agrees to waive.

GC-9 TERMINATION FOR DEFAULT

 

9.1 Buyer may terminate the whole or any part of Seller’s performance under this
Agreement in any one of the following circumstances; (1) if Seller substantially
fails to make Delivery of the Equipment or to perform within the time specified
herein or any agreed extension thereof; or (2) if Seller delivers substantially
nonconforming Equipment; or (3) if Seller fails to provide adequate assurance of
Seller’s ability to meet the quality standards of this Agreement; or (4) if
Seller abandons or fails to perform any of the other material provisions of this
Agreement in accordance with its terms or fails to make progress as to endanger
performance of this Agreement; or (5) if Seller shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect, becomes insolvent, does not pay its debts as
they become due or makes an assignment for the benefits of creditors; or (6) if
Seller makes a material representation which is intentionally false or
intentionally misleading; or (7) if Seller violates any

 

By Seller:                     

   By Buyer:                     

Section 4, General Conditions

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Applicable Law with regard to this Agreement which results in an adverse impact
to Buyer or Owner; or (8) if Seller assigns or transfers this Agreement (or any
right or interest herein) in breach of Clause SC-13 (Assignment); or (9) if
insolvency, receivership, reorganization, or bankruptcy or similar proceedings
are commenced against Seller and such proceeding shall remain undismissed or
unstayed for a period of thirty (30) Days. Except for (5) or (6) or (8) or
(9) for which no further notice shall be required or cure period allowed, in the
event of any such failure, Buyer will provide Seller with written notice of the
nature of the failure and Buyer’s intention to terminate for default. Except for
(5) or (6) or (8) or (9), for which no cure period is allowed, in the event
Seller does not commence implementation of reasonable corrective action within
ten (10) days of such notice or diligently pursue such action to completion
within sixty (60) days of such notice, Buyer may by written notice terminate
this Agreement. Upon the occurrence of an event as described in (5) or
(9) above, Buyer may, without prejudice to any other right or remedy it may have
under or in respect of this Agreement, take possession of all materials,
equipment, tools and machinery owned or held by Seller pertaining to this
Agreement.

 

9.2 In the event Buyer terminates this Agreement in whole or in part as provided
in this Clause GC-9 (Termination for Default), Buyer may either (1) procure,
under such terms and in such manner as Buyer may deem appropriate, items of
equipment which are similar to the items so terminated and Seller shall be
liable to Buyer for any additional costs for such similar equipment and related
services or complete the Work with respect to the terminated items of Equipment
and the remaining scope of Work; or (2) exercise any other rights or remedies
available to Buyer at law or in equity (including, without limitation demanding
damages and payments from Seller); provided, that Seller shall continue the
performance of this Agreement to the extent not terminated under the provisions
of this Clause GC-9 (Termination for Default).

 

9.3 Seller agrees to assist Buyer in the event that re-procurement action is
necessary or Buyer elects to complete the remaining Work as a result of default,
by co-operation in the transfer of information, in the disposition of Work in
progress or residual material, and in the performance of other reasonable
requests made by Buyer. Without limitation of the foregoing, to the extent
requested in writing by Buyer, Seller shall promptly assign to Buyer any
contract with a Major Subcontractor or any other subcontractor relating to the
supply of items reasonably determined by Buyer to be critical to the timely
completion of Seller’s Work (“Other Critical Subcontractor”).

 

9.4 Seller shall use commercially reasonable efforts to ensure that all
subcontracts signed with a Major Subcontractor or Other Critical Subcontractor
contain provisions, which Seller may not waive, release, modify or impair,
giving Seller an unrestricted right, without the consent of the subcontractor in
question, to assign the relevant subcontract and any or all benefits, interests,
rights and causes of action arising under it to Buyer and/or its designees (and
such assignment right will be assigned as part of such assignment). From time to
time, on Buyer’s request, Seller shall furnish Buyer with written demonstration
of its compliance with this Clause GC-9.4.

 

9.5 If, after notice of termination of this Agreement, it is determined for any
reason that Seller was not in default under the provisions of this clause, or
that the default was excusable under the provisions of this Agreement, the
rights and obligations of the Parties shall be the same as if the notice of
termination had been issued pursuant to Clause GC-8 (Termination for
Convenience).

 

By Seller:                     

   By Buyer:                     

Section 4, General Conditions

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GC-10 NON-WAIVER

 

10.1 A Party’s waiver of any breach or failure to enforce any of the terms,
covenants, conditions or other provisions of this Agreement at any time shall
not in any way affect, limit, modify or waive that Party’s right thereafter to
enforce or compel strict compliance with every term, covenant, condition or
other provision hereof, any course of dealing or custom of the trade
notwithstanding.

 

10.2 A requirement that a Seller-furnished document is to be submitted for or
subject to “Authorization to Proceed”, “Approval”, “Acceptance”, “Review”,
“Comment” or any combination of such words or words of like import shall mean,
unless the Agreement clearly indicates otherwise, that the Seller shall, before
implementing the information in the document, submit the document, obtain
resolution of any comments and Buyer’s authorization to proceed. Such review
shall not mean that a complete check will be performed. Authorization to proceed
shall not constitute acceptance or approval of design details, calculations,
analysis, tests, or construction methods or materials developed or selected by
Seller and shall not relieve Seller from full compliance with requirements of
this Agreement.

GC-11 APPLICABLE LAW

 

11.1 The rights and obligations of the Parties to this Agreement shall be
governed by and construed in accordance with the laws of the State of Texas,
without reference to conflicts of laws rules thereof.

 

By Seller:                     

   By Buyer:                     

Section 4, General Conditions

Page 9 of 9

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TXU STANDARD PROJECT

PROJECT __

SECTION 5

SPECIAL CONDITIONS

TABLE OF CONTENTS

 

CLAUSE

  

TITLE

   PAGE
NO.

SC-1

   DEFINITIONS    4

SC-2

   EQUAL OPPORTUNITY    9

SC-3

   INDEPENDENT SELLER    9

SC-4

   EXPEDITING    10

SC-5

   QUALITY STANDARDS    10

SC-6

   WARRANTIES    12

SC-7

   PROGRESS    14

SC-8

   PROGRESS REPORTS    14

SC-9

   DOCUMENT TURNAROUND    15

SC-10

   BUYER’S USE OF SELLER’S SUPPLIED DESIGN DATA    15

SC-11

   BACKCHARGES    15

SC-12

   AUTHORIZED REPRESENTATIVES    16

SC-13

   ASSIGNMENT    16

SC-14

   ON-SITE SERVICES OF SELLER’S REPRESENTATIVES    17

SC-15

   HAZARDOUS MATERIAL DISCLOSURE REQUIREMENTS    20

SC-16

   SALES AND USE TAX REQUIREMENTS    20

SC-17

   PRICE AND PAYMENT    21

SC-18

   PAYMENT SCHEDULE    23

SC-19

   TERMINATION PAYMENT SCHEDULE    25

SC-20

   RELEASE AGAINST LIENS AND CLAIMS    25

SC-21

   INDEMNITY    26

SC-22

   NONDISCLOSURE    27

SC-23

   RESERVED    27

 

By Seller:                     

   By Buyer:                     

Section 5, Special Conditions

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SC-24

   RESERVED    27

SC-25

   LABOR DISPUTES AND LOCAL CONDITIONS    27

SC-26

   PARENT COMPANY GUARANTEES    28

SC-27

   RECORDS    28

SC-28

   SCHEDULE AND PERFORMANCE GUARANTEES AND TESTING    28

SC-29

   EFFECTIVE DATE    28

SC-30

   LIMITATION OF LIABILITY    28

SC-31

   BUYER DEFAULT    30

SC-32

   BUYER FURNISHED INSURANCE    30

SC-33

   MARINE CARGO INSURANCE    31

SC-34

   SURVIVAL    32

SC-35

   DISPUTE RESOLUTION    33

SC-36

   FORCE MAJEURE    33

SC-37

   SAFETY FOR BUYER REPRESENTATIVES    35

SC-38

   OFFICIALS NOT TO BENEFIT    35

SC-39

   NOTICES    36

SC-40

   DEFERRED DELIVERY    36

SC-41

   ORDER OF PRECEDENCE    37

SC-42

   QUANTITY GUARANTEES    37

SC-43

   RULES OF INTERPRETATION    38

SC-44

   PUBLICITY    39

SC-45

   CO-OPERATION IN FINANCING    39

SC-46

   BUYER’S APPROVAL OF SELLER’S MAJORSUBCONTRACTORS    39

SC-47

   TRAINING    41

SC-48

   APPENDICES    41

SC-49

   STANDARD PLANT PROGRAM    41

SC-50

   DRAWBACK RIGHTS    42

SC-51

   REPLACEMENT OR REPAIR    42

 

By Seller:                     

   By Buyer:                     

Section 5, Special Conditions

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SC-52     ADDITIONAL COMMISSIONING TIME    43 SC-53     STRUCTURAL STEEL DESIGN
   43 SC-54     INTELLECTUAL PROPERTY ESCROW AGREEMENT    43 APPENDIX 1    FORM
OF CONDITIONAL WAIVER AND RELEASE UPON PROGRESS PAYMENT    APPENDIX 2    FORM OF
CONDITIONAL WAIVER AND RELEASE UPON FINAL PAYMENT    APPENDIX 3    FORM OF
UNCONDITIONAL WAIVER AND RELEASE UPON FINAL PAYMENT    APPENDIX 4    PERFORMANCE
GUARANTEES AND LIQUIDATED DAMAGES    APPENDIX 5    SCHEDULE GUARANTEES   
APPENDIX 6    EQUIPMENT INVOICE SCHEDULE    APPENDIX 7    TERMINATION PAYMENT
SCHEDULE    APPENDIX 8    B & W PARENT COMPANY GUARANTEE    APPENDIX 9   
PERFORMANCE LETTER OF CREDIT    APPENDIX 10    NARRATIVE ON DELIVERY AND
FABRICATION    APPENDIX 11    GUARANTEED QUANTITIES    APPENDIX 12    ASSIGNMENT
AGREEMENT    APPENDIX 13    LIST OF MAJOR SUBCONTRACTORS    APPENDIX 14    TXU
GUARANTEE    APPENDIX 15    TECHNOLOGY ESCROW AGREEMENT (LATER)   

 

By Seller:                     

   By Buyer:                     

Section 5, Special Conditions

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SPECIAL CONDITIONS

 

SC-1 DEFINITIONS

Where the following terms appear in this Agreement with initial capitalization,
they shall have the meaning set forth below.

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

“Acceptable Bank” means a bank, the long term senior debt obligations of which
are rated “AA-” or better by Standard & Poor’s or “Aa3” or better by Moody’s or
whose obligations are guaranteed, insured or otherwise credit enhanced by a bank
or financial institution the long term senior unsecured debt obligations of
which are so rated.

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

“Agreement” or “Purchase Order” means this Agreement, or Purchase Order,
Section 1 through Section 9 in their entirety, including the General Conditions,
Special Conditions, all exhibits, appendices, schedules and supplements hereto
(each of which is hereby incorporated herein by reference), as amended from time
to time in accordance with the provisions of this Agreement.

“Agreement Price” means total sum of the amounts payable to Seller pursuant to
Section 1 of this Agreement, as adjusted pursuant to the terms of this
Agreement.

“Applicable Laws” means and includes any applicable statute, license, law, rule,
regulation, code, ordinance, judgment, decree, writ, legal requirement, order or
the like, of any national, federal, provincial, state or local court or other
Governmental Authority, and all rules and regulations promulgated thereunder, as
any of the same may be amended, modified, codified, replaced or reenacted, and
the written interpretations thereof by any Governmental Authority.

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

“Buyer” means TXU Generation Development Company LLC, a Delaware limited
liability company, and its permitted assigns and successors.

“Change In Law” means the enactment, adoption, modification or repeal after the
Effective Date of this Agreement of any Applicable Law, that establishes
requirements that adversely affect Seller’s costs or schedule for performing the
Work; provided, however it shall not be a Change In Law pursuant to this
Agreement if there is a change in any national, federal, provincial or any other
income tax law or a change in any other law imposing a tax, duty, levy, impost,
fee, royalty, or similar charge based on the importation or exportation of any
item or service for which Seller is responsible hereunder or a change relating
to payroll taxes or a change relating to property taxes.

 

By Seller:                     

   By Buyer:                     

Section 5, Special Conditions

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“Confidential Information” means information, ideas or materials now or
hereafter owned by or otherwise in the possession or control of, or otherwise
relating to, one Party or any of its Affiliates or the Owner or any of its
Affiliates, including proprietary or non-public information concerning the
Project and such Person’s business, operations, financial condition,
projections, or assets, historical information inventions, business or trade
secrets, know-how, techniques, data, reports, drawings, specifications,
blueprints, flow sheets, designs, or engineering, construction, environmental,
operations, marketing or other information, together with all copies, summaries,
analyses, or extracts thereof, based thereon or derived therefrom. Confidential
Information shall not include any information that: (i) is already in the public
knowledge or which becomes public knowledge absent any violation of the terms of
this Agreement; (ii) was already in the possession of a Party prior to
disclosure by the other Party and was not previously received from the Buyer,
the Owner or any of their respective Affiliates; (iii) a Party obtains from
another Person which such Party reasonably believes was not under an obligation
of confidentiality; or (iv) is independently developed by any Party or any of
its Affiliates without reference to the Confidential Information.

“Day” or “day” means calendar day; any twenty-four hour period or fraction
thereof beginning and ending at midnight.

“Delivery” or “delivery” means delivery of the Equipment to the Site i.e. at
Buyer’s designated location at the Site (DDP Site, according to Incoterms 2000).

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

“Effective Date” means June 5, 2006.

“Equipment” or “Boiler” means the boiler equipment including the technical
advisory services and training services as defined in Section 2 of this
Agreement.

“Equipment Delivery LDs” means liquidated damages amounts set forth in
Section 5, Appendix 5 that are payable by Seller to Buyer for failure to meet
Guaranteed Milestone Dates.

“Facility” or “Plant” for the purposes of this Agreement means the Project,
which includes the Seller-supplied Equipment, to be constructed by the Buyer for
Owner at the Site location under the terms of the Prime Contract. For testing
purposes as described in Section 5, Appendix 4, Facility refers to all the
equipment at the Site operating together.

“Final Completion” means the satisfaction of all the conditions for the
achievement of final completion pursuant to the terms of the Prime Contract

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

“First Fire on Coal” means the point at which one coal mill has been placed in
service for initial break in and the associated burners are firing on coal.

“Force Majeure” means any event, matter, or thing that adversely prevents or
delays the performance of any obligation arising under this Agreement, but only
to the extent such event,

 

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matter or thing is demonstrably beyond the reasonable control of the Party
claiming the same and the effect of such event, matter or thing would not have
been avoided had such Party used reasonable care or acted in compliance with
Industry Standards. Subject to the foregoing, such events, matters or things may
include occurrences such as: war, blockade, revolution, insurrection, riot, act
of terrorism, or public disorder or acts of emergency; expropriation,
requisition, confiscation, or nationalization; export or import restrictions
(but not to the extent due to an increase in export or import duties or taxes)
by any Governmental Authority; embargoes or sanctions; fire; flood; earthquake;
volcano; tide, tidal wave, or perils of the sea; Abnormally Severe Weather
Conditions; an epidemic or quarantine; and acts of God; provided, further, that
the following events, matters or things shall not constitute an event of Force
Majeure: (i) the absence of sufficient financial means to perform obligations,
or the absence of sufficient financial means of Seller or any Subcontractor to
perform any of the Work, including the insolvency or bankruptcy of any
Subcontractor; (ii) any labor disturbance, strike or dispute involving Seller’s
or its Affiliates’ workers or personnel or any Subcontractor’s workers or
personnel or any independent contractor engaged by Seller or any of its
Subcontractors (unless such labor disturbance, strike or dispute is part of a
national or regional labor disturbance, strike or dispute); or any labor
disturbance, strike or dispute limited to employees of Seller and/or its
Subcontractors; (iii) mechanical failures unless caused by an event of Force
Majeure; (iv) storms and other climatic or weather conditions other than
Abnormally Severe Weather Conditions; and (v) the unavailability or shortages of
labor or equipment or materials.

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

“Guaranteed Substantial Completion Date” means the date which is to be set forth
in the Prime Contract, as such date may be modified in accordance with the terms
of the Prime Contract.

“Guaranteed Final Completion Date” means the date that is 365 Days after the
Substantial Completion Date, which date may be adjusted pursuant to the terms
and conditions of the Prime Contract.

“Guaranteed Milestone Dates” means the Seller’s Guaranteed Document Milestone
Dates and Seller’s Guaranteed Milestone Delivery Dates as set forth in
Section 5, Appendix 5.

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

“Independent Engineer” means, if Owner shall elect to finance the development of
the Project, an independent engineer of recognized expertise, selected by the
Financing Parties, and such independent engineer’s successors and permitted
assigns.

“Indemnified Parties” means Buyer, Owner, Independent Engineer, the Financing
Parties, and Buyer’s and Owner’s Affiliates, directors, officers, and the
successors and permitted assigns of each of them.

“Industry Standards” means those standards of design, engineering, and
fabrication that are applicable to the Equipment and materials, and components,
as such standards are specified in

 

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   By Buyer:                     

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this Agreement; provided, however, if the relevant standard is not so specified
or is ambiguous therein, “Industry Standards” shall mean those standards of care
and diligence normally practiced by suppliers of a similar nature for similar
power projects in the United States, or that conform in all material respects to
the manufacturer’s operation and maintenance guidelines, in each case as
applicable to the equipment in question, taking into account such equipment’s
size, service and type.

“Jobsite” or “Site” means the geographic location at which Buyer for Owner will
construct the Facility in Section 5, Appendix 5, Attachment 1.

“Major Subcontractor” means a Subcontractor whose contract or contracts (in the
aggregate) with Seller, or any of its Subcontractors require payments by Seller
(or Subcontractor) of at least Two Million Dollars ($2,000,000).

“Material Requisition or Technical Specifications” means the specifications
including appendices or attachments defining the technical requirements that are
included in Section 2 of the Agreement.

“Mechanical Completion” means the satisfaction of all the conditions for the
achievement of mechanical completion pursuant to the terms of the Prime
Contract.

“Owner” means any Person(s) which owns the Facility

“Owner’s Engineer” means any engineering firm or firms or other engineer or
engineers (which may be employees of Owner) selected and designated by Owner and
who shall have authority to act on behalf of Owner.

“Owner’s Standard Plant Program” means the program of building standardized,
pulverized coal power generation facilities at a number of sites which may
include the following sites in the State of Texas: Monticello, Martin Lake, Big
Brown, Trading House, Lake Creek, Valley, and Morgan Creek.

“Party” or “Parties” means Buyer or Seller or both.

“Performance Guarantees” mean the Seller’s performance guarantees for the
Equipment as set forth in Section 5, Appendix 4 of this Agreement.

“Performance Letter of Credit” means an irrevocable standby letter of credit in
favor of Buyer and from an Acceptable Bank and in the form set forth in
Section 5, Appendix 9 adapted so as to meet the requirements of Clause SC-18.5.

“Person” means any individual, corporation, company, voluntary association,
partnership, incorporated organization, trust, limited liability company, or any
other entity or organization, including any Governmental Authority.

“Performance LDs” means liquidated damage amounts set forth in Section 5,
Appendix 4 that are payable by Seller to Buyer for failure to meet Seller’s
Performance Guarantees set forth in Section 5, Appendix 4.

“Prime Contract” or “EPC Contract” means a contract to be entered into for the
engineering, procurement and construction of the Facility.

 

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“Program Cap” means an amount equal to *** Dollars ($***).

“Project” means the Facility, the Site location, and all work, equipment, labor,
services and materials to be provided and performed by Buyer under the Prime
Contract with the Owner.

“Proprietary Operating Information” means Confidential Information containing
elements of Owner’s or its Affiliates’ proprietary operating system that has
been identified in writing as “Proprietary Operating Information.”

“Reliability LDs” means liquidated damages amounts set forth in Section 5,
Appendix 4 that are payable by Seller to Buyer for failure to meet guaranteed
EEAF.

“Seller” means The Babcock & Wilcox Company, and its successors and permitted
assigns.

“Seller Lien” shall have the meaning set forth in Clause SC-20 (Release Against
Liens and Claims).

“SP Project” means a power generation project in connection with Owner’s
Standard Plant Program.

“SP Purchase Orders” means this Agreement and all other purchase orders with
Seller in connection with Owner’s Standard Plant Program.

“Subcontractor” or “Subseller” or “Subvendor” means any Person (of any tier),
including any vendor, that performs any portion of the Work in furtherance of
Seller’s obligations under this Agreement.

“Substantial Completion” means the satisfaction of all the conditions for the
achievement of substantial completion pursuant to the terms of the Prime
Contract.

“Substantial Completion Date” means the day on which the Substantial Completion
under the Prime Contract has occurred.

“Substantial Completion LDs” means the liquidated damages to be paid by Seller
to Buyer subject to the provisions of Section 5, Appendix 4.

“Total Liability Limitation” means an amount equivalent to *** percent (***%) of
the Agreement Price, provided however that the cumulative aggregate liability of
Seller to Buyer under this Agreement and any other SP Purchase Orders shall not
exceed the Program Cap.

“Under the Hook” means that the Equipment can be lifted from the delivering
conveyance without use of cutting torches or extensive removal of shipping
braces.

“Warranty Period” shall have the meaning set forth in Clause SC-6.2, as may be
extended.

“Work” means all of the obligations to be performed by Seller pursuant to this
Agreement, including the supply and delivery of the Equipment.

*** Confidential Material Redacted and Filed Separately with the Commission.

 

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   By Buyer:                     

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SC-2 EQUAL OPPORTUNITY

 

2.1 Seller is aware of, and is fully informed of Seller’s obligations under
Executive Order 11246 and, where applicable, shall comply with the requirements
of such Order and all orders, rules and regulations promulgated thereunder
unless exempted therefrom.

 

2.2 Without limitation of the foregoing, Seller’s attention is directed to 41
CFR Section 60-1.4 and the clause entitled “Equal Opportunity” which, by this
reference, is incorporated herein.

 

2.3 Seller is aware of and is fully informed of Seller’s responsibilities under
Executive Order No. 11701 “List of Job Openings for Veterans” and, where
applicable, shall comply with the requirements of such Order and all orders,
rules and regulations promulgated thereunder unless exempted therefrom.

 

2.4 Without limitation of the foregoing, Seller’s attention is directed to 41
CFR Section 60-250 et seq. and the clause therein entitled “Affirmative Action
Obligations of Contractors and Subcontractors for Disabled Veterans and Veterans
of the Vietnam Era” which by this reference, is incorporated herein.

 

2.5 Seller certifies that segregated facilities, including but not limited to
washrooms, work areas and locker rooms, are not and will not be maintained or
provided for Seller’s employees. Where applicable, Seller shall obtain a similar
certification from any of its suppliers performing work for Seller in connection
with this Agreement.

 

2.6 Seller is aware of and is fully informed of Seller’s responsibilities under
the Rehabilitation Act of 1973 and, where applicable, shall comply with the
provisions of the Act and the regulations promulgated thereunder unless exempted
therefrom.

 

2.7 Without limitation of the foregoing, Seller’s attention is directed to 41
CFR Section 60-741 and the clause therein entitled “Affirmative Action
Obligations of Contractors and Subcontractors for Handicapped Workers” which, by
this reference, is incorporated herein.

 

2.8 Seller shall assist minority business enterprises to obtain business
opportunities by identifying and encouraging minority suppliers, contractors and
subcontractors to participate to the extent possible consistent with their
qualifications, quality of work and obligations of the Seller to Buyer and
Owner.

 

2.9 The foregoing provisions of this clause shall only apply to the extent that
United States manufacturing facilities are utilized for the purposes of this
Agreement.

 

2.10 Seller acknowledges that Owner and its Affiliates are committed to the
development, utilization and inclusion of certified women and minority owned
businesses, as well as small businesses, businesses owned by veterans and
service-disabled veterans, and businesses located in historically underutilized
business zones, in Owner’s and its Affiliates’ sourcing and procurement
processes. Seller agrees to provide information regarding utilization of such
businesses as Buyer or Owner reasonably requests. Seller shall further provide
Buyer with reasonably satisfactory evidence that its Major Subcontractors were
selected in a non-discriminatory manner and, at least in part, on the basis of
their qualifications and capabilities.

 

SC-3 INDEPENDENT SELLER

 

3.1

Seller represents that it is fully experienced, properly qualified, registered,
licensed, equipped, organized and financed to perform the Work under this
Agreement. Seller shall act as an

 

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independent contractor and not as an agent of Buyer or Owner in performing this
Agreement, maintaining complete control over its employees and all of its
Subcontractors. Nothing contained in this Agreement or any lower-tier
subcontract awarded by Seller shall create any contractual relationship between
any such Subcontractor and either Buyer or Owner. Seller shall perform its Work
hereunder in accordance with its own methods subject to compliance with the
Agreement.

 

SC-4 EXPEDITING

 

4.1 The Equipment, including all warranty Work, shall be subject to expediting
by Buyer. Buyer’s representatives shall be afforded escorted access during
working hours to Seller’s plants after giving reasonable prior notice, and
Seller agrees to procure a similar right for Buyer, for expediting purposes with
respect to Seller’s Major Subcontractors. Seller shall supply schedules,
progress reports and unpriced copies of Seller’s purchase orders with Major
Subcontractors for Buyer’s use in expediting. Seller shall promptly notify Buyer
in writing upon discovery of any actual or anticipated delays. Such notice shall
include an estimate as to the period of delay, cause, and corrective actions
being taken. Slippage in Seller’s schedule which may impact the achievement of
Delivery by any of the Guaranteed Milestone Delivery Dates shall be deemed to be
reasonable grounds for insecurity in which event Buyer may demand in writing
that Seller provide adequate written assurances that Seller will perform on
time.

 

4.2 If in Buyer’s reasonable opinion, Seller’s actual progress is insufficient
to comply with the schedule requirements of this Agreement, Buyer may provide a
written notice requesting that Seller provide adequate assurances demonstrating
that corrective measures have been effected to restore Buyer’s security. If
within seven (7) Business Days from Buyer’s notice, Seller has not either
provided a recovery plan acceptable to Buyer, or remedied the condition to
Buyer’s reasonable satisfaction, Buyer and Seller shall jointly establish a
corrective action plan which may in part include the assignment of in-shop
expediting personnel to periodically visit and, if necessary, reside at the
manufacturing location(s), as appropriate. Reasonable costs incurred by Buyer in
performance of such corrective action plan shall be charged to Seller in
accordance with the Special Conditions Clause SC-11 titled “Backcharges”.

 

4.3 Notwithstanding the foregoing, Seller shall be solely responsible for the
expediting activities covering its operations and that of its suppliers of any
tier.

 

4.4 Buyer’s rights with respect to escorted access, and to expedite, shall be
extended to Owner, Owner’s Engineer, the Independent Engineer, and such other
entities as Owner may reasonably designate provided, however, Buyer accompanies
such representatives and provided that reasonable prior notice is given as
stated in Clause SC-4.1.

 

SC-5 QUALITY STANDARDS

 

5.1 Seller shall perform its Work such that the Equipment complies with the
standards of quality specified by this Agreement or those customary in the
industry if no requirement is specified. After giving reasonable prior notice,
Buyer’s and/or Owner’s representative shall be afforded escorted access during
working hours to plants of Seller for the purpose of quality surveillance,
observation, examination, inspection and witness of testing and Seller agrees to
procure a similar right for Buyer and/or Owner with respect to Seller’s
suppliers. Buyer’s and/or Owner’s right to inspect, observe, examine, and test
the Equipment shall extend through the manufacturing process, the time of
shipment and a reasonable time after arrival at the final destination. Seller’s
material failure to adhere to the standards of quality required under this
Agreement shall be deemed to be reasonable grounds for insecurity. Buyer may
demand in writing, that Seller provide adequate written assurances of Seller’s
ability to meet said standards.

 

5.2

If, in Buyer’s reasonable opinion, Seller’s quality standards do not to comply
with the requirements of this Agreement, Buyer may provide a written notice
requesting that Seller provide adequate

 

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   By Buyer:                     

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written assurances demonstrating that corrective measures have been effected to
restore Buyer’s security. If within seven (7) Business Days from Buyer’s notice,
Seller has not either provided a recovery plan acceptable to Buyer, or remedied
the condition to Buyer’s reasonable satisfaction, Buyer and Seller shall jointly
establish a corrective action plan which may in part include the assignment of
in-shop inspection personnel to periodically visit and if necessary, reside at
the manufacturing location(s), as appropriate. Reasonable costs incurred by
Buyer in performance of such corrective action plan shall be charged to Seller
in accordance with the Special Conditions Clause SC-11 (Backcharges).

 

5.3 Notwithstanding the foregoing, Seller shall be solely responsible for the
quality standards activities covering its operations and that of its suppliers
of any tier, and the activities performed by Buyer and/or Owner shall not result
in any additional charges to Buyer and shall not affect Seller’s obligation to
perform in accordance with the requirements established by this Agreement.
Furthermore, if Buyer is required to re-inspect an agreed upon witness point at
Seller’s manufacturing facilities (including Seller’s suppliers) due to Seller
delays in conducting such inspection or testing at the mutually agreed upon time
or due to Seller’s Equipment failing to conform to the applicable requirements
of the Agreement with respect to the witness point in the Buyer’s scheduled
inspection visit, costs incurred by Buyer for such re-inspection(s) shall be
charged to Seller in accordance with the Special Conditions Clause SC-11 titled
(Backcharges).

 

5.4 The making or failure to make an inspection, examination or test of, or
payment for, or Delivery of the Equipment shall in no way relieve the Seller
from its obligation to conform to all of the requirements of this Agreement
unless otherwise expressly agreed in writing by Buyer’s authorized
representative, and shall in no way impair Buyer’s right to reject or revoke
nonconforming Equipment, or to avail itself of any other remedies to which Buyer
may be entitled under this Agreement, notwithstanding Buyer’s knowledge of the
nonconformity, its substantiality or the ease of its discovery.

 

5.5 If at any time prior to achievement of Substantial Completion a problem in
the Equipment develops that could potentially delay Substantial Completion or
give rise to a claim of non-conformance, due to any cause, whether originating
from Seller’s failure to comply with its obligations regarding Seller’s scope of
Work or Equipment, or improper maintenance, misuse, or abuse by Buyer or third
parties or other circumstances beyond Seller’s reasonable control, and provided
that Buyer gives Seller written notice of the problem within a reasonable time
after discovery of same, Seller shall promptly remedy or fix Seller’s Equipment
without regard to the origin of the problem. Subsequent to the remedy or fix of
the problem, an investigation will be conducted by Buyer with Seller to
determine the actual origin of the problem and the Party or Parties responsible
shall bear the cost of the repairs including, without limitation, the repair,
replacement, removal, disassembly of any Equipment supplied by Seller (including
disassembly as required to gain access to the Equipment), transportation,
reinstallation, reconstruction, retesting (except for plant operators,
electricity, water and fuel) and reinspection as may be necessary to correct the
nonconformity or defect or demonstrate that the previously defective Equipment
conforms to the requirements of the Agreement (including all labor costs
associated therewith). Any repairs or work performed by Seller, which is
performed for reasons other than for problems attributable to Seller, shall be
considered extra Work to this Agreement and Seller shall be reimbursed and
entitled to an equitable extension of time accordingly.

 

5.6 Buyer’s rights with respect to escorted access, and to inspect, observe,
examine and test, shall be extended to Owner, Owner’s Engineer, the Independent
Engineer, and such other entities as Owner may reasonably designate provided,
however, such representatives are accompanied by Buyer and provided that
reasonable prior notice is given as appropriate.

 

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   By Buyer:                     

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SC-6 WARRANTIES

 

6.1 Seller warrants that Work performed and Equipment furnished under this
Agreement shall:

 

  (a) shall be new and of good and suitable quality and in good condition;

 

  (b) shall conform in all respects to the requirements of this Agreement, the
then current drawings and specifications as approved or accepted by Buyer, all
Applicable Laws in effect as of the Substantial Completion Date, all applicable
codes, standards and permits;

 

  (c) shall be free from any defect in title and free from any charge, lien,
security interest or other encumbrance; and

 

  (d) shall be free of any defects in design, materials or fabrication.

 

6.2 Subject to Clause SC-6.5 with respect to the SCR catalyst, the Warranty
Period is defined as the period extending for twelve (12) calendar months from
date of achievement of Substantial Completion provided further that any
re-performance, repair, or replacement Work, shall be re-warranted for twelve
(12) calendar months after the completion of such Work and the Warranty Period
shall be extended accordingly. The Warranty Period shall not however extend
beyond the earlier of twenty-four (24) calendar months from the actual date of
Substantial Completion or 88 calendar months after the Effective Date, except as
provided in Clause SC-6.8. Buyer may assign Seller’s obligations under this
warranty to Owner, for which assignment notice is required in accordance with
Clause SC-39 (Notices).

 

6.3

Subject to Clause SC-6.5 with respect to the SCR catalyst, if at any time prior
to the expiration of the Warranty Period, Seller, Buyer or Owner discovers any
defect or nonconformity with the warranties stated in Clause SC-6.1, Seller
shall, upon written notice from Buyer or Owner, promptly correct such defects
and non-conformities, in accordance with the requirements of this Agreement, by
redesigning, repairing or replacing the defective Equipment (“Corrective
Action”), at a time reasonably acceptable to Buyer and Owner, without any
additional compensation, provided that such Corrective Action shall not include
the performance of construction and/or installation work associated with the
correction of the defective or non-conforming Equipment at the Site. Corrective
Action shall however include the services of Seller’s technical advisers, if
required, for the investigation of the defect or non-conformity at the Site and
for the inspection, if required, of the Equipment as repaired or replaced at the
Site. In case of an emergency endangering life or property or in a situation
where the Facility has ceased operation or is materially and adversely affected
in its operation, Seller shall take immediate Corrective Action. If Seller does
not commence the Corrective Action immediately as aforesaid, or otherwise within
five (5) Business Days after its receipt of a written warranty notice, or if,
having commenced Corrective Action, Seller does not thereafter continue to
diligently pursue completion of the Corrective Action or if Seller fails to
complete any such Corrective Action within such time as may be reasonable and
appropriate given the circumstances in question (which shall be thirty (30) Days
from the date of the original warranty notice or such longer period as may
reasonably be necessary, provided that Seller diligently pursues Corrective
Action, or as soon as practicable in the case of emergency conditions), Buyer
may take such steps as Buyer determines are necessary to take Corrective Action,
and Seller shall be liable to Buyer for all the reasonable costs of such
Corrective Action. Buyer, at Buyer’s option, may charge such costs against any
monies owed to Seller under this Agreement. All reasonable costs incidental to
taking any Corrective Action incurred by Owner, Buyer or Seller, including
without limitation the engineering, design, repair, replacement (excluding
installation), transportation to and from the Site, shop retesting, and
reinspection as may be necessary to correct the defect or nonconformity or to
demonstrate that previously defective or nonconforming Work conforms to the
requirements of this Agreement shall be borne by Seller and shall be charged to
Seller as appropriate. Additionally, Seller shall be

 

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responsible for and reimburse Buyer for Buyer’s reasonable additional costs
associated with the investigation of the defect or non-conformity and the
necessary Corrective Action, including costs of reviewing and inspecting
Seller’s remedial Work and otherwise administering and enforcing the provisions
of this Clause SC-6 (Warranties). Seller shall pay or reimburse Buyer for any
customs duties or clearance fees payable on parts or components replaced under
warranty. Failure of Buyer to discover defects or nonconformities shall in no
way relieve Seller of its responsibility to promptly make such modifications as
are required to minimize delay and/or damage to the Equipment and other work.

 

6.4 Seller’s warranty obligations shall in no event extend to damage to the
Equipment to the extent such damage is caused by:

 

  (a) a failure by Buyer or Owner to operate and maintain such Equipment in
accordance with Industry Standards or in accordance with the recommendations set
forth in the manuals provided by Seller to Buyer; or

 

  (b) operation of such Equipment by Buyer or Owner materially in excess of
operating specifications for such Equipment as set forth in the manuals provided
by Seller to Buyer; or

 

  (c) normal wear and tear; or

 

  (d) erosion or corrosion;

provided however that nothing in this Clause SC-6.4 shall relieve Seller from
its obligations to meet the specifications for the Equipment set forth in this
Agreement.

 

6.5 Notwithstanding Clauses SC-6.2 and SC-6.3:

 

  (a) the Warranty Period for the SCR catalyst shall extend until the SCR
catalyst has achieved 16,000 operating hours commencing on First Fire on Coal
and there shall be no rewarranty with respect to the SCR catalyst;

 

  (b) in the event that, at any time prior to the expiration of the Warranty
Period described in (a) above, there is a defect or non-conformity relating to
the SCR catalyst, then Seller shall, upon written notice from Buyer or Owner,
promptly correct the defect or non-conformity, including transportation to and
from the Site, without additional compensation;

 

  (c) In the event that Seller disputes that there is a defect or non-conformity
with respect to the SCR catalyst life then Seller may, at its option and
expense, engage a third party emissions testing contractor, reasonably
acceptable to Buyer, to independently measure the SCR performance. Buyer agrees
that the EPA Method 7E and CTM-027method are acceptable methods to determine
whether such a defect or non-conformity exists.

 

6.6 Should any defect in any Equipment, items or parts occur more than twice
during the Warranty Period with respect to the same or similar items or parts,
Seller shall prepare a root cause analysis, reasonably acceptable to Buyer, that
defines the changes, repairs or replacements to the Equipment, item or part
necessary to avoid further failures of such Equipment, item or part, and shall
perform and complete all changes, repairs or replacements indicated in such root
cause analysis, regardless of whether the Warranty Period , shall have expired.
In each case, Seller shall repeat such process on an iterative basis until the
defect is corrected.

 

6.7

SELLER AND BUYER AGREE THAT, IN CONSIDERATION OF THE EXPRESS WARRANTIES WITH
RESPECT TO THE EQUIPMENT AS SET OUT IN THIS CLAUSE SC-6 (WARRANTIES), SUCH
WARRANTIES ARE EXCLUSIVE AND ALL OTHER WARRANTIES RELATED TO THE

 

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EQUIPMENT, WHETHER STATUTORY, ORAL, WRITTEN, EXPRESS OR IMPLIED OR ARISING UNDER
LAW OR EQUITY OR CUSTOM OF THE TRADE, INCLUDING WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED.

 

6.8 Pursuant to the provisions of Clause SC-40 (Deferred Delivery), if Equipment
is shipped to storage by Seller, such Equipment shall be stored in accordance
with Seller’s recommendations; and the Warranty Period shall be extended for the
period such Equipment is in storage up to a maximum extension of twelve
(12) calendar months.

 

6.9 The remedies provided for in this Clause SC-6 (Warranties) with respect to
any Work or Equipment which fails to satisfy the warranties stated in Clause
SC-6.1 during the Warranty Period shall be the sole and exclusive remedies for
Buyer as a result of such failure.

 

SC-7 PROGRESS

 

7.1 Seller shall give Buyer information in advance as to its plans for
performing each part of its Work as required in SC-8 (Progress Reports). If at
any time Seller’s actual progress is inadequate to meet the requirements of this
Agreement, and if such situation is not due to a circumstance for which Seller
is entitled to an extension of time according to the provisions of General
Conditions GC-2 (Changes), GC-3 (Delivery), GC-7 (Suspension), SC-36 (Force
Majeure) and SC-40 (Deferred Delivery), Buyer may so notify Seller, which shall
thereupon take such steps as may be necessary to improve its progress. If,
within a reasonable period of time as determined by Buyer, Seller does not
improve performance to meet the currently approved Purchase Order schedule,
Buyer may require necessary corrective action to meet the currently approved
Purchase Order schedule, without additional cost to Buyer. Neither such notice
by Buyer nor Buyer’s failure to issue such notice shall relieve Seller of its
obligations to achieve the quality of Work and meet other obligations set forth
under this Agreement.

 

SC-8 PROGRESS REPORTS

 

8.1 On a monthly basis, by the 25th Day of each month, or as otherwise agreed to
by Buyer and Seller, Seller shall prepare and submit a written progress report
in a form reasonably acceptable to Buyer, which report shall include information
on Seller’s activities with respect to: (i) a description of Seller’s activities
including engineering submittals, material purchases, manufacturing and testing
progress to meet the Guaranteed Milestone Dates as set forth in this Agreement,
(ii) an identification and evaluation of problems including but not limited to
an explanation and evaluation, in reasonably sufficient detail, of any factors
which have had or are anticipated to have a material effect on meeting the
Guaranteed Milestone Dates as set forth in this Agreement , (iii) fabrication,
assembly, testing, Buyer-witnessed inspection, and Delivery schedule including
monthly updates (iv) a description of the progress payments which have been
received from Buyer as compared with the achievement of progress payment
milestones set forth in Clause SC-18 (Payment Schedule), (v) quality assurance
reports pertaining to Equipment and (vi) all other information reasonably
requested by Buyer.

 

8.2 Seller shall promptly give notice to Buyer of any change to its
manufacturing, testing, or Delivery schedules to the extent such change may
impact Buyer’s activities.

 

By Seller:                     

   By Buyer:                     

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8.3 On the date hereof and within sixty (60) days after the end of each calendar
quarter and until expiration of the Warranty Period, Seller shall deliver to
Buyer a copy of its unaudited quarterly financial statement which shall include
its comparative balance sheet, income statement and cash flow statement for such
quarter. In addition, within ninety (90) days after the end of each fiscal year
of Seller, Seller shall deliver to Buyer a copy of its unaudited annual
financial statement which shall include its comparative balance sheet, income
statement and cash flow statement for such year. Each such annual and quarterly
financial statement shall be prepared in accordance with generally accepted
accounting principles consistently applied. Upon Buyer’s or Owner’s request,
Seller will make a representative available to discuss any such quarterly and
annual financial statement and Seller’s financial status with Buyer and/or
Owner.

 

SC-9 DOCUMENT TURNAROUND

 

9.1 Seller shall meet the respective Guaranteed Document Milestone Dates defined
in Section 2, Material Requisition, Appendix B.

 

9.2 Documents, which are identified in Section 2, Material Requisition, Appendix
B, as subject to Buyer’s review, shall be returned to Seller by Buyer stating
the review status and details of any necessary amendments. Such documents shall
be returned to Seller within twenty one (21) Days of Buyer’s receipt. All
documents not accepted (returned Status 2 or 3 as defined in Section 2, Material
Requisition, Appendix B) must be corrected by Seller and resubmitted within
fourteen (14) Days. The Guaranteed Milestone Date for engineering submittals
shall be extended to reflect any delay in final submittal due to changes ordered
by Buyer in accordance with Clause GC-2 (Changes) provided such changes were not
ordered due to Seller’s failure to comply with its obligations under this
Agreement.

SC-10 BUYER’S USE OF SELLER’S SUPPLIED DESIGN DATA

 

10.1 Excluding changes solely requested in writing by Buyer for Buyer’s
convenience, Seller’s changes of critical engineering submittals such as loads,
locations, interfaces, ratings, or spare part recommendation lists that cause
redesign, rework and/or changes to Buyer-supplied materials shall be
backchargeable to Seller. The backcharges shall be administered in accordance
with Special Conditions Clause SC-11 (Backcharges).

SC-11 BACKCHARGES

 

11.1 In the event Seller’s Work or Equipment is found to be defective as to
workmanship or materials or not to be in material conformance with this
Agreement or any rework of the Equipment is required by Buyer as a result of
deficient technical advisory services rendered by Seller, it is the
responsibility of Seller to promptly correct any deficiency when so directed.
Buyer will take reasonable measures to discover such noncompliance as quickly as
practical; however, failure to do so shall in no way relieve Seller of its
responsibility during the term of this Agreement and during the Warranty Period
to promptly make such modifications as are required.

 

11.2 If upon being notified in writing by Buyer of Seller’s deficient Work or
Equipment, and having been directed to correct the deficient Work or Equipment
by a specific date or another time period agreed to by Buyer depending on the
effect of such deficiency, Seller states or by its actions indicates its
inability or unwillingness to comply, then Buyer shall proceed to accomplish the
corrective work by the most expeditious means available to it and shall be
entitled to backcharge Seller for the cost of the required work. The cost
categories for which Seller is liable hereunder are the same as those prescribed
in Special Conditions Clause SC-6 (Warranties).

 

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   By Buyer:                     

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11.3 The cost of such backcharge work provided for herein or elsewhere in this
Agreement shall be computed as follows:

 

  (a) Engineering and other Home office nonmanual labor and field nonmanual
labor shall be charged at $100/hr.

 

  (b). Manual labor shall be charged at $65/hr valid until the end of 2007 and
thereafter escalated at 5% per year.

 

  (c). Material and subcontracts shall be charged at net delivered cost plus
10%.

 

  (d). Equipment and Tool Rentals shall be charged at prevailing rates in the
area plus 10%.

 

  (e). Thirty percent (30%) shall be added to items A and B for Buyer’s indirect
costs, overhead and administration.

 

11.4 Provided the Project schedule permits, before proceeding on such backcharge
work and, if available, Buyer shall endeavor to furnish Seller with a written
estimate of the cost of performing the work, and solicit Seller’s signed
authorization to proceed. Regardless of Seller’s willingness to provide such
written authorization, Buyer, when forced to proceed with the work, upon
completion of the work will invoice Seller for actual costs incurred, computed
as shown above, or withholds such sum from funds still due Seller under this
Agreement.

 

11.5 In the event the Buyer or Owner have to expend additional time performing
expediting, inspection or engineering activities because Seller states (or by
its actions indicates) its inability or unwillingness to complete the Work in
accordance with the terms of this Agreement, Buyer or Owner shall, on giving
reasonable notice, proceed to perform additional expediting, inspection or
engineering to facilitate completion. This action will be taken using Buyer’s or
Owner’s personnel or agents and Buyer will back charge Seller for the cost of
the work at a rate of US 150 Dollars ($150) per hour (valid until the end of
2007 and thereafter escalated at 5% per year) plus actual and reasonable
expenses.

SC-12 AUTHORIZED REPRESENTATIVES

 

12.1 Before starting Work, Seller shall designate in writing an authorized
representative, project manager and project engineer reasonably acceptable to
Buyer and Owner to represent and act for Seller and shall specify any and all
limitations of such representative’s authority. During periods when Work is
suspended, arrangements shall be made for an authorized representative
acceptable to Buyer for any emergency Work that may be required. All written
communications given to the authorized representative by Buyer shall be binding
on Seller in accordance with this Agreement. Buyer shall designate in writing
one or more representatives to represent and act for Buyer and to receive
communications from Seller. Notification of changes of authorized
representatives for either Seller or Buyer shall be provided in advance, in
writing, to the other Party.

SC-13 ASSIGNMENT

 

13.1 Neither this Agreement nor any rights, duties or obligations hereunder may
be assigned in whole or in part by any Party without the express written consent
of the other Party and any such assignment without such written consent shall be
null and void.

 

13.2

Notwithstanding Clause SC-13.1, upon written notice to Buyer, Seller may,
without such express written consent, assign compensation due or to become due
under this Agreement, provided that

 

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   By Buyer:                     

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any assignment of compensation shall be subject to proper set-offs under this
Agreement in favor of Buyer, any deductions provided for in this Agreement, and
any assurances requested by Buyer.

 

13.3 Notwithstanding Clause SC-13.1, upon written notice to Seller, Buyer may,
without such express written consent, (i) assign all or any part of this
Agreement to a subsidiary or Affiliate of Buyer, (ii) following the execution of
the Prime Contract, assign all or any part of this Agreement to (a) Bechtel
Power Corporation or (b) any other nationally recognized engineering,
procurement and construction contractor having an unsecured debt rating as of
the date of the assignment of at least BBB- as determined by Standard & Poor’s
(or an equivalent rating from an alternative rating source) or
(iii) collaterally assign this Agreement to any Financing Party. In the event
that this Agreement is assigned to an engineering, procurement and construction
contractor other than Bechtel Power Corporation, Seller shall be entitled to a
change under Clause GC-2 (Changes) as a Buyer-directed change.

 

13.4 Upon the assignment of a Party’s obligations hereunder to any permitted
assignee, and such permitted assignee’s assumption in writing of such
obligations, such Party shall be deemed released from and shall have no further
rights, obligations, responsibilities or liabilities under this Agreement;
provided, however, for the avoidance of doubt, that Seller’s right to assign
contained in Clause SC-13.2 shall in no event release Seller from any obligation
under this Agreement.

 

13.5 All of the rights, benefits, duties, liabilities and obligations of the
Parties hereto shall inure to the benefit of and be binding upon their
respective permitted successors and permitted assigns.

 

13.6 On request by Buyer, Seller shall execute a form of assignment agreement in
substantially the form set forth in Section 5, Appendix 12 (Assignment
Agreement) in the event that Buyer gives notice that it wishes to assign this
Agreement pursuant to SC-13.3(ii).

SC-14 ON-SITE SERVICES OF SELLER’S REPRESENTATIVES

 

14.1 For the services provided by Seller’s Representative at the Site, the
following conditions shall apply:

 

  A. Scope of Services

Seller’s representative(s) shall provide technical assistance, expert guidance
and advice to Buyer during installation, start-up, commissioning and testing of
Seller’s Equipment, as reasonably required by Buyer so that the Equipment
becomes fully operational in accordance with the requirements of this Agreement.
Seller’s representative(s) will immediately notify Buyer’s representative if
Seller’s representative(s) becomes aware, that Buyer’s installation, start-up,
commissioning and testing activities of Seller’s Equipment are not in accordance
with Seller’s recommendations and the requirements of this Agreement. Technical
assistance will also include active assistance, testing, adjustment, programming
and other similar services as reasonably required by Buyer.

 

  B. Description of Services and Compensation

Seller’s representative(s) shall:

 

  B.1 Attend meetings held at the Site, when requested by Buyer;

 

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   By Buyer:                     

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  B.2 Confer with construction and start-up personnel regarding Buyer’s plans,
schedules, technical advice, expert guidance, and counsel, and provide for
Buyer’s consideration Seller’s recommendations for work process improvements;

 

  B.3 Provide an interpretation of Seller and/or sub-supplier-supplied documents
as necessary;

 

  B.4 Advise in the process of receiving, handling and storage of Seller
supplied Equipment;

 

  B.5 Coordinate with Seller’s design and manufacturing organizations, and that
of its sub-suppliers, to resolve any issues involving unclear documents, missing
information, missing and/or damaged components;

 

  B.6 Inspect Equipment as it is being installed, checking on clearances,
alignments, and cleanliness, and advise Buyer of any observed errors and/or
omissions;

 

  B.7 Coordinate the resolution of any defective, non-compliant Equipment, and
perform in- process inspection of the corrective action; (for the purposes of
clarity, if Seller’s representative(s) engages in a substantial period of
technical assistance to resolve any defective or non-compliant Equipment, Seller
shall not invoice Buyer for such services of technical assistance)

 

  B.8 Observe the work performed by installation and/or start-up personnel while
Seller’s representative is working on the Equipment and advise Buyer of any
practice or activity which needs to be modified such that Seller’s recommended
installation procedures are followed;

 

  B.9 As required by Seller, arrange and schedule sub-supplier personnel to
perform advisory services for systems within its scope of supply;

 

  B.10 Inspect Equipment during Equipment start-up;, verify pre-operational
checkout activities have been completed and report to Buyer of any observed
errors and/or omissions of Buyer-performed or Owner-performed pre-operational
checkout activities; and

 

  B.11 If witnessed, advise Buyer of any potentially unsafe working condition as
it relates to the Equipment.

 

  C. Responsibility

Seller’s representative(s) shall be experienced and qualified to advise and give
advice as provided in this Agreement and shall act for and on behalf of Seller.
Seller certifies that it is experienced in providing such advice and direction.
Seller shall act independently and not as an agent of Buyer or Owner in
performing this Work and Seller shall maintain complete control and
responsibility over its employees.

 

  D. Insurance

Without in any way limiting Seller’s liability under this Agreement, Seller
including Seller’s Major Subcontractors shall, during the performance of Work by
their personnel at the Site, maintain the following insurance in types and
amounts shown below with insurers reasonably satisfactory to Buyer. Insurance
coverage including the limits to be finalized will be based on specific Project
requirements; provided that additional coverage and/or higher limits shall be
the subject of a change under GC-2 (Changes).

 

By Seller:                     

   By Buyer:                     

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  D.1 Workers’ Compensation

Statutory requirements at the location of work and in accordance with the
statutory requirements applicable to Seller’s Equipment and services under this
Agreement.

(Seller shall not utilize occupational accident or health insurance policies, or
the equivalent, in lieu of mandatory Workers’ Compensation Insurance or
otherwise attempt to opt out of the statutory Workers’ Compensation System).

 

  D.2 Employer’s Liability

$1,000,000 each accident bodily injury by accident

$1,000,000 each employee bodily injury by disease

$1,000,000 annual policy limit bodily injury by disease

 

  D.3 Commercial or Comprehensive General Liability

Including coverage for premises operations, coverage equivalent to broad form
property damage, contractual liability, and products and completed operations
coverage up to 2 years by annual renewal after Final Completion.

$1,000,000 each occurrence bodily injury and property damage:

$2,000,000 annual general aggregate

$2,000,000 products and completed operations annual aggregate

 

  D.4 Automobile Liability

$1,000,000 each accident combined single limit bodily injury and property damage

 

  D.5 Excess or Umbrella Liability

Seller shall purchase and maintain excess or umbrella liability protection over
and above the employer’s liability, commercial general liability, and automobile
liability insurance coverage with a limit of $9,000,000 (nine million) per
occurrence and annual aggregate. Total coverage limits of $10,000,000 (ten
million) each occurrence may be achieved by any combination of primary and
excess limits.

The workers’ compensation insurance and any property insurance maintained by
Seller shall have an insurer’s waiver of subrogation in favor of Owner and
Buyer. In lieu of naming Owner, Buyer and Financing Parties as additional
insured, Seller shall provide Owner, Buyer and Financing Parties with owners and
contractors protective liability insurance with Owner, Buyer and Financing
Parties as the named insured/additional insured as applicable at limits of
$2,000,000 each occurrence/$2,000,000 aggregate.

Prior to performance of any service at the Site, Seller shall furnish Buyer with
an original certificate of insurance and one (1) copy of the certificates of
insurance as evidence of the above required insurance for such Project and such
certificates shall provide for thirty (30) Days written notice to Buyer prior to
cancellation. Seller’s insurance coverage required above shall non-renew
effective January 1 of every year.

The certificates must identify and show the Purchase Order Number and Project
Name.

 

By Seller:                     

   By Buyer:                     

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  E. Visas, Clearances, Site Rules, Facilities

 

  1. Visas, work permits, medical clearances and evacuation shall be the
responsibility of Seller, at no cost to Buyer.

 

  2. Buyer will provide at no cost to Seller, an office including furniture
located at the Site, electricity, toilet trailers, telephone and fax line up to
Seller’s Site office, potable water, heating/ventilation,/ air conditioning and
cleaning for Seller’s Site offices. Seller shall be responsible for all other
office expenses including telephone service, supplies, etc.

 

  3. Seller’s representative shall abide by the Site safety and security
procedures and perform its services per the Site’s work day/work week schedule.
Seller’s representative shall be familiar with and observe local customs and
laws so as to not endanger Buyer’s ability to perform its work.

 

  4. Seller shall obtain the authorization of Buyer’s construction manager
before leaving the Site.

SC-15 HAZARDOUS MATERIAL DISCLOSURE REQUIREMENTS

 

15.1 In the performance of this Agreement, Seller shall comply with all
Applicable Laws, including, but not limited to, those relating to environmental
law, Hazardous Material, and occupational health and safety; provided, however,
that Seller shall not be responsible for obtaining any environmental and
construction permits required under the Applicable Laws at the Site. If this
Agreement calls for the transfer to Buyer and/or Owner by Seller of any chemical
substance or mixture, or any material which may generate or release a chemical
substance or any hazardous agents, Seller shall provide before or with said
transfer a Material Safety Data Sheet (Federal OSHA Hazard Communication
Standard, 29 CFR 1910.1200) (or equivalent form for non-U.S. Sellers) and label
which are current, accurate and complete, which include but are not limited to a
statement of product hazards and precautions for safe use. Copies of the
Material Safety Data Sheet (or equivalent form) shall include the Agreement
number, shipping location, and shall be sent to the shipping location identified
in this Agreement.

 

15.2 If, during the course of the performance of Seller’s Work, Seller or any
Subcontractor discovers in any part of the Site any Hazardous Materials not
arising as a result of the performance of Seller’s Work, Seller shall promptly
advise Buyer.

 

15.3 In SC-15.1, the word “OSHA” applies only to that Equipment manufactured in
the United States.

 

15.4 Seller and its Subcontractors shall label Hazardous Material and train
their employees in the safe usage and handling of such substances and materials,
including any training that is required by Applicable Law.

SC-16 SALES AND USE TAX REQUIREMENTS

 

16.1

This Agreement shall be viewed as a “Separated Contract” within the meaning of
Texas Comptroller’s Sales Tax Rule 34 Tex. Admin. Code § 3.291(a). Seller prices
shall not include any Texas sales, excise, use, value add or similar transfer
taxes with respect to the sale of the Equipment and related services to be sold
to Buyer at the Site, levied by governmental authorities in the United States
and Buyer shall be responsible for such taxes (Buyer’s taxes). Seller shall
invoice Buyer in accordance with the provisions of SC 17.4 below. In addition to
the invoices for the Agreement Price, Seller shall invoice such “Buyer’s taxes”
to Buyer as required by state law. Buyer shall remit such sales tax or produce
an appropriate valid exemption certificate. Buyer will

 

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   By Buyer:                     

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provide, or will cause to be provided to, Seller with any exemption certificates
and other relevant documents in sufficient time to claim any tax exemptions
associated with this Agreement, but in all events will be supplied prior to
shipment of Equipment. Additional taxes along with associated interest and
penalties assessed to Seller by Governmental Authorities for denied exemption
shall be Buyer’s responsibility. The Parties agree to mutually work together in
good faith to implement a tax strategy to minimize the taxes payable by both
Parties in connection with the performance of this Agreement.

 

16.2 Seller is responsible for and the prices specified herein include: taxes
arising out of its performance of the Work including import duties, customs
duties and harbor and other taxes for imported items as specified by Incoterms
2000 (in an amount based upon Delivery in the United States); taxes based on
Seller’s presence in any taxing jurisdiction; and franchise, income and
corporate taxes.

 

16.3 SELLER SHALL PAY ALL OTHER TAXES, LEVIES, DUTIES AND ASSESSMENTS OF EVERY
NATURE, OTHER THAN THOSE EXCLUDED HEREIN, DUE IN CONNECTION WITH WORK UNDER THIS
AGREEMENT; SHALL MAKE ANY AND ALL PAYROLL DEDUCTIONS REQUIRED BY APPLICABLE LAW;
AND HEREBY INDEMNIFIES AND HOLDS HARMLESS THE INDEMNIFIED PARTIES FROM ANY
LIABILITY ON ACCOUNT OF ANY AND ALL SUCH TAXES, LEVIES, DUTIES, ASSESSMENTS, AND
DEDUCTIONS.

SC-17 PRICE AND PAYMENT

 

17.1 Provided that no payment will be due earlier than as provided in SC-18
(Payment Schedule), Seller shall be paid, except as otherwise stated in this
Agreement, thirty (30) Days after the last Day of the month in which the invoice
is submitted, the prices stipulated herein for Equipment, technical advisory
services and training, however, payments in dispute may be withheld or portions
thereof may be deducted if, in Buyer’s reasonable opinion, Seller has not
achieved the agreed to milestone in accordance with Clause SC-18 (Payment
Schedule) of this Agreement. Notwithstanding anything to the contrary in this
Agreement, Buyer shall be entitled to make payment to Seller for materials and
equipment in advance of the dates by which payment would otherwise be required
to be made and in such event title to such materials and equipment shall
transfer to Buyer immediately upon such payment being made.

 

17.2 Payment terms shall be in accordance with this SC-17 (Price and Payment)
and SC-18 (Payment Schedule) provided proper invoices are received in a timely
manner, and subject to any limitations as provided elsewhere in this Agreement.

 

17.3 Seller shall promptly pay each Subcontractor with which Seller has a direct
contract the amount to which such Subcontractor is entitled. Seller shall, by an
appropriate agreement with each such Subcontractor, require such Subcontractor
to make payments to its Subcontractors in a similar manner. Upon reasonable
prior notice, Buyer reserves the right to make payments due hereunder directly
to Subcontractors of Seller whenever Buyer has reason to believe Seller has not
paid or is likely not to pay any amounts due them on a timely basis. The amount
of any such payments made by Buyer directly to Subcontractors shall be credited
against any payments otherwise due from Buyer to Seller.

 

17.4 Buyer may elect to pay Seller through Buyer’s electronic disbursement
system (EDS). Seller shall advise Buyer in writing within ten (10) Days prior to
due date of first invoice of the bank and account number to which EDS payments
may be made to Seller.

 

17.5

As a condition to the validity of each interim invoice and as a condition of
payment to Seller, Seller shall provide to Buyer with each invoice a partial
lien waiver and release from itself in the form as provided in Section 5,
Appendix 1 (Form of Conditional Waiver and Release Upon Progress Payment) and a
partial lien waiver and release from each Major Subcontractor. If any such Major

 

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Subcontractor has completed all work that such Major Subcontractor is to
perform, Seller shall also submit with the invoice a final lien waiver and
release in the form as provided in Section 5, Appendix 2 (Form of Conditional
Waiver and Release Upon Final Payment) from such Major Subcontractor, and
require that such Major Subcontractor submit within ten (10) Business Days an
unconditional final lien waiver and release in the form as provided in
Section 5, Appendix 3 (Form of Unconditional Waiver and Release Upon Final
Payment). As a condition to the validity of Seller’s final invoice and as a
condition of the final payment to Seller, Seller shall provide with such invoice
a final lien waiver and release from itself in the form as provided in
Section 5, Appendix 2, and within ten (10) Business Days of receipt of payment,
Seller shall deliver to Buyer an unconditional final lien waiver and release
from itself in the form as provided in Section 5, Appendix 3.

 

17.6 Acceptance by Seller of the final payment shall constitute a release by
Seller of Buyer, Owner, their respective Affiliates, the Financing Parties, if
any, and every officer, director, manager partner, employee and agent thereof
from all liens (whether statutory or otherwise and including mechanics’ or
suppliers’ liens), claims and liability hereunder with respect to any Work
performed or furnished in connection with this Agreement, or for any act or
omission of Buyer or of any Person relating to or affecting this Agreement,
except claims for which Seller has delivered a notice of dispute to Buyer.

 

17.7 In accordance with Clause SC-16.1 above, if required by Buyer, Seller shall
break down the Agreement Price into the following categories and shall issue the
Buyer separate invoice for each:

 

  (i) “incorporated materials qualifying for exemption as manufacturing
equipment”, which is for the cost of Equipment (equal to the actual raw material
or equipment cost incurred by Seller without the addition of any labor
(including fabrication labor), fees, profit or other costs) that is incorporated
into the Project and qualifies for exemption as “manufacturing equipment”
pursuant to Texas Tax Code § 151.318 or Texas Comptroller’s Sales Tax Rule 34
Tex. Admin. Code § 3.300;

 

  (ii) “incorporated materials not qualifying for exemption as manufacturing
equipment”, which is for the cost of Equipment (equal to the actual raw material
or equipment cost incurred by Seller without the addition of any labor
(including fabrication labor), fees, profit or other costs) that is incorporated
into the Project and does not qualify for exemption as “manufacturing equipment”
pursuant to Texas Tax Code § 151.318 or Texas Comptroller’s Sales Tax Rule 34
Tex. Admin. Code § 3.300;

 

  (iii) “equipment and materials transferred to Owner as tangible personal
property”, which is for the cost of Equipment such as chemicals and lubricants
and operating supplies and spare parts that Seller transfers to Buyer as
tangible personal property;

 

  (iv) “taxable services resold to Owner”; and

 

  (v) labor and other costs, which is a single combined amount for labor;
Equipment that is not included in the above-described categories; rentals;
consumable supplies; taxable services not resold to Owner; and all other costs.

 

17.8 Payment delays by Buyer:

 

  i)

In the event that Buyer fails to make payment of an amount properly invoiced by
Seller and due to Seller under this Agreement in a case where Buyer has not
disputed the payment of such amount, and such failure to pay continues beyond
thirty (30) days after the due date for payment, the Seller shall be entitled to
payment of interest on such

 

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unpaid amount for the period of delay in excess of such thirty (30) days. The
rate of interest shall be calculated at two percent (2%) over the per annum rate
of interest equal to the prime lending rate as may from time to time be
published in the Wall Street Journal (Eastern edition) under “Money Rates”;
provided the interest rate shall never exceed the maximum lawful rate permitted
by Applicable Laws.

 

  ii) In the event that Buyer fails to make payment of an amount properly
invoiced by Seller and due to Seller under this Agreement in a case where Buyer
has not disputed the payment of such amount, and such failure to pay continues
beyond sixty (60) days after the due date for payment, the Seller shall, on
thirty (30) days notice to Buyer given any time after the foregoing sixty
(60) day period, be entitled to suspend performance of the Work and claim an
equitable extension of time (depending upon Seller’s then current production
constraints) and reimbursement of the reasonable costs incurred by such
suspension.

 

  iii) For the avoidance of doubt the above remedies available to Seller shall
not apply in circumstances where the Buyer has exercised a right granted under
this Agreement to withhold payment of sum(s) otherwise due to Seller under this
Agreement.

 

17.9 In addition to Buyer’s rights at law, Buyer shall be entitled to set off
any and all liquidated damages or backcharge amounts due to Buyer under this
Agreement from any and all sums payable to Seller under any other SP Purchase
Order, provided that the foregoing right shall only be exercisable so long as
Buyer under each of the SP Purchase Orders in question is the same Person.

 

17.10 In addition to Seller’s rights at law, Seller shall be entitled to set off
any and all sums due to Seller under this Agreement from any and all sums
payable to Buyer under any other SP Purchase Order, provided that the foregoing
right shall only be exercisable so long as Seller under each of the SP Purchase
Orders in question is the same Person.

SC-18 PAYMENT SCHEDULE

 

18.1 Invoices for furnishing and Delivery of Equipment, Section 1, Item No. 1.1

Each invoice shall be in the percentage amount set forth in Section 5, Appendix
6 (Equipment Invoice Schedule) and submitted upon achievement of respective
milestone but not earlier than the time period set forth in Section 5, Appendix
6. Invoices submitted prior to the last Day of the month will be deemed to have
been submitted on the last Day of the month.

 

18.2 Invoices for Technical Representatives – Section 1, Item Nos. 1.2 to 1.4

Invoices shall be submitted on a monthly basis for 100 % of the value of the
services rendered.

 

18.3 Not used.

 

18.4 Invoice for Training Services – Section 1, Item No. 1.5

Invoice for 100% of amount for the Training Services covered under Section 1,
Item No. 1.5 shall be submitted upon completion of Training Services.

 

By Seller:                     

   By Buyer:                     

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18.5 Seller shall provide a Performance Letter of Credit to Buyer to secure its
obligations under this Agreement and all other SP Purchase Orders as follows:

 

  (i) As a condition to the making of the first payment(s) under any SP Purchase
Order(s), Seller shall provide to Buyer a Performance Letter of Credit with an
initial value of fifteen percent (15%) of such amount(s) paid.

 

  (ii) The value of the Performance Letter of Credit will automatically increase
in the amount of fifteen percent (15%) of each subsequent payment(s) made under
any SP Purchase Order(s), provided however that the value of the Performance
Letter of Credit shall not exceed Fifty Million Dollars ($50,000,000).

 

  (iii) In the event of any demand being made under the Performance Letter of
Credit, the value of such Performance Letter of Credit will automatically be
restored to a value of Fifty Million Dollars ($50,000,000), provided that any
such restoration or restorations shall not exceed an amount equal to Twenty Five
Million Dollars ($25,000,000) in the aggregate.

 

  (iv) On the date that substantial completion is achieved with respect to the
last SP Project to achieve substantial completion as defined in the prime
contact associated with such SP Project, the value of the Performance Letter of
Credit shall be reduced to Ten Million Dollars ($10,000,000).

 

  (v) The value of the Performance Letter of Credit shall be reduced from Ten
Million Dollars ($10,000,000) as follows:

 

  i. On the date of expiration of the warranty period (as extended) for the
first SP Project to reach the end of its warranty period (as extended), the
value of the Performance Letter of Credit shall be reduced by One Million Two
Hundred Fifty Thousand Dollars ($1,250,000);

 

  ii. On the date of expiration of the warranty period (as extended) for the
second SP Project to reach the end of its warranty period (as extended), the
value of the Performance Letter of Credit shall be further reduced by One
Million Two Hundred Fifty Thousand Dollars ($1,250,000);

 

  iii. On the date of expiration of the warranty period (as extended) for the
third SP Project to reach the end of its warranty period (as extended), the
value of the Performance Letter of Credit shall be further reduced by One
Million Two Hundred Fifty Thousand Dollars ($1,250,000);

 

  iv. On the date of expiration of the warranty period (as extended) for the
fourth SP Project to reach the end of its warranty period (as extended), the
value of the Performance Letter of Credit shall be further reduced by One
Million Two Hundred Fifty Thousand Dollars ($1,250,000);

 

  v. On the date of expiration of the warranty period (as extended) for the
fifth SP Project to reach the end of its warranty period (as extended), the
value of the Performance Letter of Credit shall be further reduced by One
Million Two Hundred Fifty Thousand Dollars ($1,250,000);

 

  vi. On the date of expiration of the warranty period (as extended) for the
sixth SP Project to reach the end of its warranty period (as extended), the
value of the Performance Letter of Credit shall be further reduced by One
Million Two Hundred Fifty Thousand Dollars ($1,250,000);

 

By Seller:                     

   By Buyer:                     

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  vii. On the date of expiration of the warranty period (as extended) for the
seventh SP Project to reach the end of its warranty period (as extended), the
value of the Performance Letter of Credit shall be further reduced by One
Million Two Hundred Fifty Thousand Dollars ($1,250,000);

 

  viii. On the date of expiration of the warranty period (as extended) for the
eighth SP Project to reach the end of its warranty period (as extended), the
value of the Performance Letter of Credit shall expire altogether, except with
respect to outstanding warranty claims as at such date.

 

18.6 Buyer shall provide Seller no less than two (2) Business Days notice of its
intention to make a demand under the Performance Letter of Credit.

SC-19 TERMINATION PAYMENT SCHEDULE

 

19.1 Should termination for convenience occur as per Section 4, Clause GC-8
(Termination for Convenience), Seller shall provide reasonable substantiation
for amounts for which Seller is entitled to claim under Clause GC-8 (Termination
for Convenience). Such reasonable substantiation shall be in sufficient detail
to allow evaluation of the amounts properly due to Seller in accordance with
Clause GC-8. The amounts payable by Buyer shall not in any event be greater than
the amount shown in the month said termination occurs in accordance with the
schedule set forth in Section 5, Appendix 7. All invoices for termination shall
be paid within ninety (90) Days after mutual agreement of the termination
amounts properly payable as per Section 4, Clause GC-8 or within thirty
(30) Days after Buyer’s receipt of such termination amounts under the Prime
Contract, whichever occurs earlier. Previously made payments shall be deducted
from such amounts.

SC-20 RELEASE AGAINST LIENS AND CLAIMS

 

20.1 Seller shall not directly or indirectly create, incur, assume or suffer to
be created by it or any Subcontractor, employee, laborer, materialman or other
supplier of goods or services to Seller any right of retention, mortgage,
pledge, assessment, security interest, lease, advance claim, levy, claim, lien,
charge or encumbrance on the Work, the Equipment, the Site, the Project or any
part thereof or interest therein (each a “Seller Lien”). Seller shall keep the
Site, the Work, the Equipment, and all Subcontractor equipment and materials
free of Seller Liens. Seller shall promptly pay or discharge, and discharge of
record, any such Seller Lien or other charges which, if unpaid, might be or
become a Seller Lien. Seller shall immediately notify Buyer of the assertion of
any Seller Lien.

 

20.2 If any Indemnified Party becomes aware of any Seller Lien, such Indemnified
Party may so notify Seller in writing with a copy to Buyer, and Seller shall
then: (a) satisfy and obtain the release of such Seller Lien; or (b) provide to
Buyer a bond (or other similar instrument reasonably satisfactory to Buyer) in
the amount of such lien. If Seller does not promptly, and in any event within
five (5) days after such notice, satisfy such Seller Lien or provide such a bond
(or other similar instrument), then Buyer shall have the right, at its option,
after written notification to Seller, and subject to Applicable Law, to cause
the release of, pay, or settle such Seller Lien, and Buyer at its sole option
may first (y) withhold from any payment otherwise due to Seller hereunder an
amount equal to all costs and expenses incurred by Buyer in causing the release
of, paying, or settling such Seller Lien, including administrative costs,
attorneys’ fees, and other expenses; and (z) if withholding is insufficient to
cover such costs and expenses, then Buyer may draw on the Performance Letter of
Credit in an amount equal to all costs and expenses incurred by Buyer in causing
the release of, paying, or settling such Seller Lien, including administrative
costs, attorneys’ fees, and other expenses.

 

By Seller:                     

   By Buyer:                     

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SC-21 INDEMNITY

 

21.1 SELLER HEREBY INDEMNIFIES AND SHALL DEFEND AND HOLD HARMLESS THE
INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL SUITS, ACTIONS, LEGAL OR
ADMINISTRATIVE PROCEEDINGS, CLAIMS, DEMANDS, DAMAGES, LIABILITIES, INTEREST,
ATTORNEY’S FEES, COSTS, EXPENSES, AND LOSSES OF WHATSOEVER KIND OR NATURE IN
CONNECTION WITH OR INCIDENTAL TO THE PERFORMANCE OF THIS AGREEMENT, INCLUDING
THOSE ARISING OUT OF INJURY TO OR DEATH OF SELLER’S EMPLOYEES, WHETHER ARISING
BEFORE OR AFTER COMPLETION OF THE WORK HEREUNDER AND IN ANY MANNER DIRECTLY OR
INDIRECTLY CAUSED, OCCASIONED, OR CONTRIBUTED TO IN WHOLE OR IN PART, OR CLAIMED
TO BE CAUSED, OCCASIONED OR CONTRIBUTED TO IN WHOLE OR IN PART, BY REASON OF ANY
NEGLIGENT OR OTHERWISE TORTIOUS OR WRONGFUL ACT OR OMISSION, WHETHER ACTIVE OR
PASSIVE OF SELLER, OR OF ITS SUBSELLERS OR OF ANYONE ACTING UNDER ITS DIRECTION
OR CONTROL OR ON ITS BEHALF. SELLER’S AFORESAID INDEMNITY AND HOLD HARMLESS
OBLIGATIONS, OR PORTIONS OR APPLICATIONS THEREOF SHALL NOT APPLY TO THE EXTENT
THAT THE LIABILITY IS CAUSED BY THE NEGLIGENCE OF THE INDEMNIFIED PARTY CLAIMING
SUCH INDEMNIFICATION.

FOR ALL WORK IN THE UNITED STATES, SELLER SPECIFICALLY WAIVES ANY IMMUNITY
PROVIDED AGAINST THIS INDEMNITY BY AN INDUSTRIAL INSURANCE OR WORKERS’
COMPENSATION STATUTE.

 

21.2 SELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE INDEMNIFIED PARTIES
FROM AND AGAINST ANY AND ALL FINES, PENALTIES AND ASSESSMENTS IMPOSED BY ANY
GOVERNMENTAL AUTHORITY INCLUDING REASONABLE LEGAL FEES INCURRED IN CONNECTION
THEREWITH FROM OR RELATED TO ANY FAILURE OF SELLER, OR ANYONE ACTING ON SELLER’S
BEHALF, TO COMPLY WITH (I) ALL APPLICABLE LAWS, INCLUDING PAYMENT OF TAXES AND
DUTIES TO BE PAID BY SELLER AND (II) APPLICABLE PERMITS.

 

21.3 SELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE INDEMNIFIED PARTIES
FROM AND AGAINST ANY AND ALL FINES, PENALTIES, SUITS, ACTIONS, CLAIMS, DAMAGES,
DEMANDS FEES, COSTS, EXPENSES AND LIABILITIES (INCLUDING EMOTIONAL DISTRESS),
INCLUDING REASONABLE LEGAL FEES INCURRED IN CONNECTION THEREWITH, TO THE EXTENT
ARISING OUT OF OR IN CONNECTION WITH ANY HAZARDOUS MATERIAL BROUGHT ONTO THE
SITE OR RELEASED FROM THE EQUIPMENT, EXCEPT TO THE EXTENT RESULTING FROM
IMPROPER USE, HANDLING OR MAINTENANCE BY OWNER OR ANY OTHER PARTY FOR WHOM
SELLER IS NOT RESPONSIBILE AFTER THE EFFECTIVE DATE OF THIS AGREEMENT.

 

21.4 The Indemnified Parties shall promptly notify Seller of any claim or suit
and provide Seller a reasonable opportunity to control the defense and
settlement of any claim or suit tendered to Seller under this clause (an
“Indemnified Claim”). If Seller assumes the defense of Indemnified Parties in
accordance with the provisions of this Clause SC-21 (Indemnity), Seller shall
keep Indemnified Parties consulted and reasonably informed of the claims,
litigation and negotiations of the Indemnified Claim, and shall pay all legal
expenses and reasonable direct costs incurred by the Indemnified Parties in
connection with the Indemnified Claim. Subject to Clause SC 21.5, the
Indemnified Parties shall be entitled to participate in the defense of any
Indemnified Claim at their own expense, and shall provide Seller with all
assistance reasonably requested by Seller at Seller’s expense. Seller agrees
that it shall only settle an Indemnified Claim if such settlement completely
discharges or releases the Indemnified Claim against the applicable Indemnified
Parties and does not impose by way of consent decree, injunction or otherwise
any restraint or limitations on the applicable Indemnified Parties’ operations
or upon the operation or other use of the Equipment or the Facility.

 

By Seller:                     

   By Buyer:                     

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21.5 If Seller fails to assume the defense or to diligently defend any
Indemnified Claim, then the Indemnified Party may, upon giving prior notice to
Seller and at Seller’s expense, contest (or with the prior consent of Seller
(such consent not to be unreasonably withheld) settle) such Indemnified Claim,
and Seller shall be liable for paying the reasonable legal expenses and other
direct costs incurred by Indemnified Parties in connection with the Indemnified
Claim as such expenses and costs accrue.

 

21.6 If the defendants in an action on an Indemnified Claim include both Seller
and an Indemnified Party, and the Indemnified Party reasonably concludes that
there may be legal defenses available to it which are in conflict with those
available to Seller, and that such conflict materially prejudices the ability of
the counsel selected by Seller to represent both Parties, such Indemnified Party
shall have the right to select separate counsel reasonably acceptable to Seller
to participate in the defense of such action on its own behalf at Seller’s
expense.

SC-22 NONDISCLOSURE

 

22.1 Except as required by Applicable Law or applicable stock exchange rules or
regulation, Seller and Buyer agree not to divulge to third parties (other than
its and its Affiliates, and their respective employees, directors, officers,
managers, accountants, attorneys, Financing Parties or authorized
representatives), without the prior written consent of the other, any
Confidential Information, obtained from or through each other in connection with
the performance of this Agreement and Seller and Buyer agree to restrict the use
of such Confidential Information solely to uses related to the Project. Seller
furthers agree that it will not, without the prior written consent of Buyer and
Owner, disclose to any third party any information developed by it or its
Subcontractors in the performance of this Agreement and that such information
will only be used for purposes related to the Project. If so requested by Buyer,
Seller further agrees to require its employees and its Subcontractors and their
employees to execute an appropriate nondisclosure agreement prior to performing
any Work under this Agreement. This non-disclosure obligation shall remain in
full force and effect for five (5) years from the date of Final Completion of
the last SP Project. Notwithstanding anything to the contrary in this Agreement,
Buyer may divulge Confidential Information to Owner and its Affiliates and their
respective employees, directors, officers, managers, accountants, attorneys,
Financing Parties and authorized representatives but solely for uses related to
the Project.

 

22.2 Seller shall, on request by Buyer or Owner, execute a separate
confidentiality agreement with Owner under which Seller shall agree to keep the
Proprietary Operating Information confidential and Seller shall procure that its
Subcontractors similarly execute confidentiality agreements with Owner under
which they shall agree to keep the Proprietary Operating Information
confidential. In addition, on request by Buyer, Seller shall procure that its
employees and the employees of its Subcontractors execute individual
confidentiality acknowledgements under which they will agree to keep the
Proprietary Operating Information confidential.

SC-23 RESERVED

SC-24 RESERVED

SC-25 LABOR DISPUTES AND LOCAL CONDITIONS

 

25.1 Whenever Seller has knowledge that any actual or potential labor dispute is
materially delaying or threatening to materially delay its performance of the
Work, Seller shall promptly give written notice thereof, including all relevant
information with respect thereto, to Buyer.

 

By Seller:                     

   By Buyer:                     

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25.2 Seller acknowledges that it has taken steps necessary to examine and
ascertain the nature and location of and all conditions relevant to the Work and
that it has satisfied itself as to the general and local conditions that can
affect the performance of its obligations.

SC-26 PARENT COMPANY GUARANTEES

 

26.1 Seller shall cause the parent of Seller to execute a Guarantee in the
format as set forth in Section 5, Appendix 8 (B & W Parent Company Guarantee),
which shall: (i) be established by Seller, at Seller’s expense (including any
confirmation charges), (ii) be executed and become operative at the time of
execution of the Agreement; and (iii) be valid for the full period of this
Agreement.

 

26.2 Buyer shall cause TXU US Holdings Company to execute a Guarantee in the
format as set forth in Section 5, Appendix 14 (TXU Guarantee) which shall:
(i) be established by Buyer, at Buyer’s expense (including any confirmation
charges), (ii) be executed and become operative at the time of execution of the
Agreement; and (iii) be valid until it expires in accordance with its terms.

SC-27 RECORDS

 

27.1 Seller agrees to retain for a period of five (5) years from the date of
Final Completion all records relating to its performance of the Work including
Seller’s warranty obligations herein or for such longer period of time as may be
required pursuant to any applicable order or decree of any Governmental
Authority, and to cause all Major Subcontractors engaged in connection with the
Work including the performance by Seller of its warranty obligations herein to
retain for the same period all their records relating to the Work, all at no
additional cost to Buyer. Seller shall provide and procure reasonable access to
such records by Owner and Buyer.

 

27.2 Additionally, Seller agrees to keep and maintain full, complete and
detailed records of all of its costs and allowances as may be claimed by Seller
under this Agreement, including costs incurred in connection with changes priced
on a time and material basis as set forth in Clause GC-2 (Changes). Seller
authorizes independent third parties designated by and paid by Buyer and subject
to Seller’s approval (not to be unreasonably withheld or delayed) to inspect and
audit, during business hours, such records to the extent required to verify the
amounts claimed, including time and material charges. Agreed billing rates,
overhead rates and mark-ups are not subject to audit.

SC-28 SCHEDULE AND PERFORMANCE GUARANTEES AND TESTING

The requirements for Schedule and Performance Guarantees and Testing are
described in Section 5, Appendix 4 (Performance Guarantees and Liquidated
Damages) and Appendix 5 (Schedule Guarantees).

SC-29 EFFECTIVE DATE

 

29.1 This Agreement shall come into full force and in effect as of the Effective
Date.

SC-30 LIMITATION OF LIABILITY

 

30.1

Seller’s cumulative aggregate liability to Buyer under this Agreement for any
claim of any kind, including claims based on fault, negligence (in whole or in
part), strict liability or other basis of liability arising out of or in
connection with this Agreement (including liquidated damages) or breach thereof
shall in no case exceed the Total Liability Limitation; provided, however, that
such Total Liability Limitation shall not apply to, and no credit shall be
issued against such Total Liability Limitation for, liabilities arising out of
Seller’s indemnification obligations under this Agreement,

 

By Seller:                     

   By Buyer:                     

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including the indemnification obligations contained in Clauses SC-16.3 (Sales
and Use Tax Requirements), SC-20 (Release Against Liens and Claims), SC-21
(Indemnity) to the extent such indemnification obligations under SC-21 are
covered by Seller’s or its Affiliates’ insurances or any insurance ordinarily
arranged to cover the risks subject to such indemnification obligations, of
these Special Conditions and in Clauses GC-4 (Title and Risk of Loss), GC-5
(Infringement) and GC-6 (Compliance) of the General Conditions and such
limitation shall not apply in the case of fraud or willful misconduct of Seller
or any of its Subcontractors.

 

30.2 Except

 

  (i) to the extent of damages claimed by third-parties for which either Party
has a duty to indemnify hereunder;

 

  (ii) to the extent that express liquidated damages hereunder are shown to be
consequential in nature;

 

  (iii) to the extent that Seller is entitled to claim for profit under Clause
GC-2 (Changes);

 

  (iv) to the extent that Seller is entitled to claim for costs of suspension
under Clause GC-7 (Suspension);

 

  (v) to the extent of the amounts that Seller is entitled to claim under Clause
GC-8 (Termination for Convenience);

 

  (vi) to the extent that Seller is entitled to claim for costs of suspension
under Clause SC-17.8 (Payment Delays by Buyer); and

 

  (vii) to the extent of the amounts that Seller is entitled to claim under
Clause SC-36.7 (Costs for Force Majeure);

notwithstanding anything else in this Agreement to the contrary but subject to
the foregoing exceptions, no Party (nor that Party’s Subcontractors) shall be
liable to any other Party hereto for any loss of profits, loss of revenue, or
loss of use of the Project, losses or costs based on third party contracts,
losses, costs or expenses of obtaining, maintaining or repaying finance or
capital, or downtime costs, loss of opportunity or goodwill, cost of purchased
or replacement power, claims of customers for such damages, or any loss, damage
or other liability otherwise equivalent to any indirect consequential,
exemplary, or special damages arising from performing or a failure to perform
any obligation under this Agreement, whether such liability arises in contract,
negligence or otherwise.

 

30.3 Seller’s aggregate liability for payment of liquidated damages under
Section 5, Appendix 4 (Performance Guarantees and Liquidated Damages) and
Appendix 5 (Schedule Guarantees), shall not exceed the following:

 

  (a) Seller’s aggregate liability for Document Delivery LDs shall not exceed
**** percent (****%) of the Agreement Price.

 

  (b) Seller’s aggregate liability for Document Delivery LDs, Equipment Delivery
LDs and Substantial Completion LDs shall not exceed **** percent (****%) of the
Agreement Price.

 

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

 

By Seller:                     

   By Buyer:                     

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  (c) Seller’s aggregate liability for Performance LDs and Reliability LDs shall
not exceed **** (****%) of the Agreement Price, provided however that such
limitation shall only apply if Seller has met Minimum Performance Criteria and
Substantial Completion has been achieved by the Guaranteed Final Completion
Date. In addition to receiving the forgoing damages, Buyer shall also have the
right to either (1) require Seller to carry out such modifications as may be
required to achieve the Minimum Performance Criteria or (2) to obtain a
financial settlement from Seller associated with Seller’s liability for failure
to achieve such Minimum Performance Criteria, and in either case Seller’s
liability shall not be limited to the above sub-cap of **** (****%) percent of
the Agreement Price.

 

  (d) Seller’s aggregate liability for all liquidated damages due under the
Agreement shall not exceed **** percent (****%) of the Agreement Price.

 

30.4 It is the intent of Buyer and Seller that if any provision of this
Agreement expressly states that the rights and remedies stated therein are the
sole or exclusive (or words of similar import) rights or remedies for the
failure to satisfy the applicable obligation arising thereunder, that such
rights and remedies shall be the sole and exclusive remedies of the Parties for
failure to satisfy such obligations, notwithstanding any remedy otherwise
available at law or in equity. To the extent the terms of this Agreement do not
provide a remedy for the failure to satisfy an applicable obligation or do not
otherwise state that an applicable remedy is a sole or exclusive (or words of
similar import) remedy, then the Parties may avail themselves of any right or
remedy available at law or in equity for such failure.

SC-31 BUYER DEFAULT

 

31.1 If (a) Buyer becomes bankrupt or insolvent, or in the event any proceeding
is brought against Buyer, voluntarily or involuntarily, under the bankruptcy
laws or any insolvency laws which is not dismissed within ninety (90) Days of
filing, and (b) in either such case either Buyer or Owner or Financing Parties
does not provide financial support for Buyer’s remaining obligations to Seller
within a period of ninety (90) days of Seller’s written request, Seller shall be
entitled to terminate this Agreement by notice or to suspend performance.

SC-32 BUYER FURNISHED INSURANCE

 

32.1 Buyer or Owner shall maintain or cause to be maintained “all risk”
builder’s risk insurance insuring physical loss or damage to the Work until
Substantial Completion including coverage for, but not limited to, flood,
earthquake, hurricane, a 50/50 clause, inland transit and temporary on or
off-site storage of the Equipment and resultant damage arising out of faulty
design, material and workmanship. Seller shall be included as an additional
insured as its interest may appear with a waiver of subrogation, but such
additional insured status, waiver of subrogation and coverage under the policy
shall only be extended to Seller for physical loss or damage caused directly by
Seller’s on-site field technical assistance services or for loss or damage
resulting from transit or temporary storage of the Equipment. If requested in
writing by Seller and to the extent commercially available, coverage shall
include Seller as an additional insured for physical loss or damage not covered
by Seller’s warranty and subject to Seller paying any additional premium for
such coverage. Deductibles for such policy shall be in amounts customary for
this type of facility, not to exceed two hundred fifty thousand Dollars
($250,000) during construction and five hundred thousand Dollars ($500,000)
during testing, and, to the extent loss or damage is caused by Seller, are for
Seller’s account. For periods after the risk of loss has transferred to Owner
under the Prime Contract, Seller’s liability for physical loss or damage to the
Facility shall be limited to five million Dollars ($5,000,000). For purposes of
clarity, the foregoing shall not in any way limit, release or alter Seller’s
warranty obligations under this Agreement.

 

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

 

By Seller:                     

   By Buyer:                     

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32.2 Seller will be provided a certificate of insurance evidencing this
coverage, prior to its arrival on- site, and thirty (30) Days written notice of
cancellation of such insurance.

 

32.3 In the event of a loss, Seller shall cooperate with Buyer and Buyer’s
insurer on the loss adjustment.

 

32.4 Seller’s and each sub-supplier’s respective temporary buildings, tools,
equipment and supplies are not covered under Buyer’s builder’s all risk
insurance policy.

 

32.5 Except as provided above, nothing in this Special Condition Clause SC-32
(Buyer Furnished Insurance) shall relieve Seller of any liability or obligation
to Buyer under this Agreement including Special Condition Clause SC-6
(Warranties).

SC-33 MARINE CARGO INSURANCE

 

33.1 Buyer or Owner will provide or cause to be provided, at its cost, marine
cargo insurance on a “warehouse-to-warehouse” basis, insuring Equipment to be
installed in the Facility against loss or damage arising from customary “all
risk” marine perils including but not limited to war and strikes while in
transit, temporary and off site storage and 50/50 clause. Seller (including
Seller’s subcontractors) shall be included as an additional insured as its
interests may appear on such policy, which shall also include a waiver of
subrogation in favor of Seller and each insured. The deductible on such policy
shall not exceed twenty five thousand Dollars ($25,000) per occurrence.

 

33.2 Seller shall abide by the following requirements, instructions and
conditions of Buyer’s marine cargo insurers and risk management department
including the following:

 

33.2.1 Seller shall not be permitted to utilize “bulk vessels” as defined in
“Lloyd’s Registry” for transportation of Equipment.

 

33.2.2 All critical path material must be stowed under deck unless written
permission is received from Buyer stating otherwise, provided however, that the
ship’s master may order otherwise for safety reason of the vessel and the cargo.

 

33.2.3 Seller shall only utilize vessels which are less than twenty (20) years
old and classed A-1 America Bureau or equivalent to execute shipment of any
Equipment). Buyer may require Seller to comply with any other reasonable
requirements notified to Seller not later than 6 months prior to the date of
first shipment.

 

33.2.4 In the event that Seller wants to utilize a vessel which is twenty
(20) years old, or older, Seller shall 1) provided that the vessel is deemed
insurable by Buyers insurer, be required to pay Buyer for any required
additional insurance premiums and obtain a written waiver from Buyer authorizing
use of subject vessel or 2) if subject vessel is deemed uninsurable by Buyers
insurer, Seller shall obtain, at Seller’s expense, a different vessel which
fully meets all requirements of insurability. Seller’s acceptance of this
requirement is based upon Buyer’s undertaking to provide notice to Seller within
five (5) Days of its rejection of any vessel nominated by Seller, provided
Seller shall provide Buyer at least fourteen (14) Days prior written notice of
its request to utilize a nominated vessel which exceeds the vessel age limits
noted above.

 

33.2.5

Lashing and securing of Equipment will be performed by Seller or Seller’s
authorized representative at the carrier’s berth. Seller must request permission
from Buyer, in writing, and Seller must receive permission from Buyer, in
writing, prior to deviating from the requirement except as otherwise ordered by
the ship’s master related to the safety of the vessel or cargo. Seller will
notify shipping agent of the presence of Buyer’s marine insurance surveyor in
order to

 

By Seller:                     

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facilitate access to the vessel at the time of loading and securing of the
freight, the Parties understand, however, that access to a vessel is dependent
upon the consent of the ship’s master.

 

33.2.6 Vessels furnished by Seller, or Seller’s authorized representative, must
provide any and all special equipment (such as spreaders and tackle) to handle
on-load and off-load of Equipment at port(s) of export, trans-shipment port(s)
of import and at the Site construction wharf, if applicable.

 

33.2.7 Seller will provide at least thirty (30) Days Notice of shipping from
port of export of any Equipment including all requested details and arrangements
as per Section 8 of this Agreement known to Seller at that time. Seller shall
also provide all reasonable assistance to Buyer or the insurers or their
authorized representatives in any survey of loading and discharge and shall
comply with any reasonable requirements or recommendations or conditions made
provided the ship’s master accepts these requirements or recommendations or
conditions. Discrepancies may result in extra expenses as a result of these
requirements or recommendations or conditions. Buyer shall pay such expenses.

 

33.2.8 When Seller is to utilize a barge for transportation of material; Seller
must adhere to the following requirements.

 

  (a) Barge must have a gas free certificate/hot works permit.

 

  (b) Freight/material must be surveyed both at origin and destination points
for any damage prior to or after the barging operation.

 

  (c) Barge must be at loading facility twenty four (24) hours prior to the
commencement of loading operations and available for survey.

 

  (d) Tugs and other units providing power to the barge must be surveyed prior
to departure when barging operations will include an ocean transit.

 

  (e) Tugs must adhere to Buyer’s trip in tow requirement letter when barging
operations will include an ocean transit.

 

  33.2.9 Buyer shall provide Seller a certificate of insurance evidencing the
marine cargo insurance and any specific requirements Seller must comply with in
accordance with such insurance. Buyer shall provide a copy of the final
certificate of insurance not later than ninety (90) Days prior to Seller’s first
Equipment shipment to the Site.

SC-34 SURVIVAL

 

34.1 All provisions of this Agreement which are expressly or by implication to
come into or continue in force and effect after the expiration or termination of
this Agreement, including but not limited to Clauses GC-5 (Infringement), GC-6
(Compliance), SC-6 (Warranties), SC-16.3 (Sales and Use Tax Requirements),
SC-21(Indemnity), SC-22 (Nondisclosure), SC-30 (Limitation of Liability) and
SC-35 (Dispute Resolution) hereof, shall remain in effect and be enforceable
following such expiration or termination.

 

34.2 The provisions of this Agreement are intended for the sole benefit of Buyer
and Seller and there are no third-party beneficiaries hereof, except Indemnified
Parties where expressly provided and as contemplated by the terms of this
Agreement, including Clauses GC-5, Infringement; GC-6 (Compliance); SC-6
(Warranties); SC-16.3 (Sales and Use Tax Requirements), and SC-21 (Indemnity).

 

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SC-35 DISPUTE RESOLUTION

 

35.1 Any and all controversies, disputes or claims between Buyer and Seller
arising out of or in any way relating to this Agreement (“dispute”) shall be
resolved pursuant to the procedures of this Clause SC-35 (Dispute Resolution).

 

35.2 Prior to the initiation of any legal action or proceeding permitted by this
Agreement to resolve disputes arising between Buyer and Seller, the aggrieved
Party shall promptly give notice of the dispute to the other Party (“Notice of
Dispute”) including notification of its intent to invoke this dispute resolution
procedure. If the Parties shall have failed to resolve the dispute within ten
(10) Days of such Notice of Dispute, each Party shall, within five (5) Days
thereafter, nominate an officer of its management to meet at the Site, or at any
other mutually agreed location, to resolve the dispute. Subject at all times to
Clause SC-35.4, if the dispute is not resolved within thirty (30) Days after the
date of delivery of the Notice of Dispute, either Party shall be entitled to
exercise any remedy available at law or equity.

 

35.3 TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO AGREE THAT ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED
AND LITIGATED ONLY IN THE FEDERAL DISTRICT COURT LOCATED IN THE COUNTY OF
DALLAS, STATE OF TEXAS. THE PARTIES, TO THE EXTENT THEY MAY LEGALLY DO SO,
IRREVOCABLY WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS (OR ANY SIMILAR LEGAL DOCTRINE) OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION IN THE FEDERAL
DISTRICT COURT LOCATED IN THE COUNTY OF DALLAS, STATE OF TEXAS, AND IRREVOCABLY
STIPULATE THAT THE FEDERAL DISTRICT COURT LOCATED IN THE COUNTY OF DALLAS, STATE
OF TEXAS SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER SUCH PARTY FOR THE
PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT
OF RELATED TO THIS AGREEMENT. THE PARTIES EACH AGREE, TO THE FULLEST EXTENT
PERMITTED BY FEDERAL LAW, NOT TO RAISE ANY OBJECTION TO THE REMOVAL OR TRANSFER
TO THE FEDERAL DISTRICT COURT LOCATED IN THE COUNTY OF DALLAS, STATE OF TEXAS OF
ANY SUCH PROCEEDING THAT IS INITIALLY BROUGHT IN ANY OTHER COURT. THE PARTIES
ALSO EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE PARTIES EACH
AGREE THAT IT WILL NOT FILE ANY MOTION OR ASSERT ANY DEFENSE IN ANY SUCH
PROCEEDING THAT IS INCONSISTENT WITH THE FOREGOING AGREEMENTS, WAIVERS, CONSENTS
OR STIPULATIONS. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT. AS OF
THE EFFECTIVE DATE OF THIS AGREEMENT, EACH PARTY BELIEVES THAT THE REQUIREMENT
OF DIVERSITY OF CITIZENSHIP OF THE PARTIES (ONE OF THE REQUIREMENTS NEEDED FOR A
FEDERAL COURT TO HAVE SUBJECT MATTER JURISDICTION OVER A DISPUTE BETWEEN THE
PARTIES) IS MET.

 

35.4 Pending final resolution of any dispute, Seller shall proceed diligently
with performance of the Work in accordance with this Agreement and any Buyer’s
decision or instruction.

SC-36 FORCE MAJEURE

 

36.1 Excuse of Performance

 

  (a)

Notwithstanding any other provisions of this Agreement (excepting Clause
SC-36.2(b), GC-2 (Changes), GC-3 (Delivery), and GC-7 (Suspension)), any
obligation of either Party

 

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under this Agreement shall be excused only to the extent that the Party’s
inability to perform is caused by Force Majeure. Each Party shall use all
reasonable efforts to cure, minimize, mitigate or remedy the effects of Force
Majeure.

 

  (b) Notwithstanding that Force Majeure may otherwise exist, the provisions of
this Clause 36 (Force Majeure) shall not excuse the payment of money due by any
Party.

 

36.2 Notification Obligation

If either Party’s ability to perform its obligations under this Agreement is
affected by an event of Force Majeure, such Party shall, within two (2) Business
Day after the occurrence of such event of Force Majeure, give written notice to
the other Party of the occurrence of such event. Within three (3) Business Days
after delivery of such notice, the Party claiming an event of Force Majeure
shall provide reasonable evidence to the other Party of the nature of the event,
its anticipated duration and effect upon the performance of such Party’s
obligations, and any action being taken to avoid or minimize its effect. The
Party claiming an event of Force Majeure shall have a continuing obligation to
deliver to the other Party additional documentation and analysis supporting its
claim regarding an event of Force Majeure promptly after such information is
available to the Party claiming such event of Force Majeure. The burden of proof
shall be on the Party claiming to be affected. Within five (5) Business Days
after an event of Force Majeure has ended, the Party that was affected by such
event of Force Majeure shall give written notice to the other Party of: (i) the
length of time such event of Force Majeure was in effect and such Party was
affected by the impact of such event; and (ii) the effect, if any, such Party
claims such event of Force Majeure had on the applicable Guaranteed Milestone
Delivery Dates. If Seller fails to provide written notice of an event of Force
Majeure within the time specified in this Clause SC-36.2, Seller’s entitlement
to adjustments to the Guaranteed Milestone Delivery Dates shall be reduced to
the extent Buyer has suffered any material adverse impact as a result of
Seller’s delay in providing such written notice.

 

36.3 Scope of Suspension; Duty to Mitigate

The suspension of or impact on performance due to an event of Force Majeure
shall be of no greater scope and no longer duration than is required by such
event. The excused Party shall use its reasonable efforts:

 

  (a) to mitigate the duration of any suspension or delay in, or other impact to
the performance of its obligations under this Agreement;

 

  (b) to continue to perform its obligations hereunder; and

 

  (c) to remedy its inability to perform, as applicable.

 

36.5 Seller’s Remedy

As Seller’s only remedy for the occurrence of an event of Force Majeure, and
provided that Seller has strictly complied with the provisions of this Article
SC-36 (Force Majeure), if an event of Force Majeure occurs the affected
Guaranteed Milestone Delivery Dates shall be adjusted by the period of time, if
any, that Seller is actually and demonstrably delayed in the performance of its
critical path activities as a result of the impact of such an event of Force
Majeure.

 

36.6 Buyer Self-Help

If Seller claims that Force Majeure has caused it to suspend or delay
performance of the Work, and Buyer has given Seller reasonable notice of action
Seller could lawfully and reasonably take

 

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to remove or relieve the Force Majeure but Seller has failed to take such
action, Buyer may, at its sole discretion, but without prejudice to its rights
against Seller under this Agreement, take such action itself to remove or
relieve the Force Majeure and thereafter require Seller to resume full or
partial performance of the Work.

 

36.7 Costs for Force Majeure

In the event that one or more Force Majeure events continues for more than one
hundred thirty (130) Days in the cumulative aggregate, then Seller shall give
notice to Buyer to such effect and, from that date forward, Seller shall be
entitled to reimbursement for additional costs reasonably and necessarily
incurred by Seller on account of prolongation of such Force Majeure to the
extent that such additional costs are actually incurred. Seller shall use all
reasonable efforts to minimize such costs. Upon mutual agreement as to the
additional costs to which Seller is entitled on account of such Force Majeure,
Seller shall be entitled to invoice Buyer for such costs and Buyer shall make
payment of such invoice within forty five (45) days of invoice receipt.

SC-37 SAFETY FOR BUYER REPRESENTATIVES

 

37.1 Seller shall provide safety glasses, hard hats and toe protection, where
applicable, for Buyer representatives while present at or in Seller’s plants and
the plants of Seller’s Subcontractors for any purpose in connection with the
Equipment or any part thereof, being furnished by Seller under this Agreement.
While present at such plants, Buyer’s representatives shall be escorted and
shall comply with Seller’s security rules and wear guest badges at all times.
If, at any time, a Buyer representative deems that the conditions at Seller’s
plants or the plants of Seller’s Subcontractor are unsafe and promptly notifies
Seller accordingly, Buyer’s representative(s) shall be entitled to suspend their
activities (including, but not limited to, any activities relating to
expediting, quality surveillance and delivery) at such plants until such time as
the unsafe conditions are resolved by Seller’s to Buyer’s reasonable
satisfaction.

 

37.2 If any Buyer activities are suspended under this Clause SC-37 (Safety of
Buyer Representatives), Seller shall promptly reschedule any Work required to be
conducted in the presence of a Buyer representative and Seller shall be fully
liable for any resulting delay(s).

SC-38 OFFICIALS NOT TO BENEFIT

 

38.1 Each Party agrees to comply (and to cause its Affiliates to comply) with
all applicable national, federal, state and local laws, ordinances and
regulations of the United States of America regarding bribery of public
officials, including without limitation, all provisions of the United States
Foreign Corrupt Practices Act and any amendments thereto (the “Act”). Each Party
agrees to advise all of its Affiliates’ officers, directors, members, partners,
employees, agents and representatives who are engaged in implementing this
Agreement regarding the purposes and provisions of the Act. Each Party agrees to
take appropriate steps to ensure that it and its Affiliates and their respective
officers, directors, members, partners, employees, agents and representatives
will comply with the Act and will not take any actions that would cause the
other Party to be in violation of the Act, including without limitation
obtaining the agreement of each consultant, Subcontractor or Affiliate it
employs in conducting activities for or on behalf of the Project to comply with
the Act. Seller shall promptly notify Buyer of any violation of this covenant.

 

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SC-39 NOTICES

 

39.1 Any notice or requirement to notify pursuant to the terms and conditions of
this Agreement shall be in writing, shall be effective upon receipt and shall be
either (a) delivered personally; (b) sent by first class recorded delivery post;
or (c) sent by a recognized overnight post or courier service with delivery
receipt requested:

IF TO BUYER:

TXU GENERATION DEVELOPMENT COMPANY LLC

1601 Bryan Street

Dallas, Texas 75201

Attn.: Steve Kopenitz

Copy to:

BECHTEL POWER CORPORATION

5275 Westview Drive

Frederick MD 21703

Attn.: Martin Surabian

AND, IF TO SELLER:

THE BABCOCK & WILCOX COMPANY

20 South Van Buren Avenue

PO Box 351

Barberton OH 44203

Attn.: Richard Killion

SC-40 DEFERRED DELIVERY

 

40.1 Should Buyer elect to delay Delivery to the Site of some or all of the
Equipment at least seventy five (75) Days prior to Seller’s planned ex-works
date, Seller accepts deferred Delivery provided that:

 

  i. Seller’s storage and handling costs shall be paid by Buyer; and

 

  ii. Seller shall be entitled to payment from Buyer as if shipment had been
effected; and

 

  iii. Buyer shall notify Seller at least seventy five (75) Days prior to
Seller’s planned ex-works date or when transport has been mobilized whichever is
the earlier;

 

  iv. Such Equipment shall be stored in accordance with Seller’s recommended
procedures up to a maximum period of one year unless extended by Force Majeure
events.

 

40.2

If the Equipment cannot be delivered to Buyer, as specified in this Agreement,
due to any cause not attributable to Seller, or if Buyer elects in writing not
to receive such Equipment when ready for shipment, Seller shall deliver such
Equipment to storage. If such Equipment is placed in storage, including storage
at the facility where manufactured, the following conditions shall apply:
(a) title shall thereupon pass to Buyer or Owner if it had not already passed;
(b) any amounts otherwise payable to Seller upon Delivery or shipment shall be
payable upon presentation of Seller’s invoices and certification of cause for
storage; (c) other than as provided in the provisions of SC-40.1, all expenses
incurred by Seller, such as for preparation for and placement into storage,
handling, inspection, preservation, insurance, storage, removal charges,
additional costs for Seller retaining risk of loss and any incremental taxes,
including sales and use, shall be payable by Buyer upon submission of Seller’s
invoices; and (d) when conditions permit, Seller

 

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shall resume Delivery of the Equipment to the originally agreed point of
Delivery. Seller shall continue to be liable under this Agreement for the timely
Delivery of the Equipment, as such guaranteed Delivery dates shall be adjusted
as a result of such shipment to storage. Seller shall provide reasonable written
notice to Buyer of its intent to ship to storage any Equipment under this
Agreement.

Notwithstanding the foregoing or any transfer of title to Owner, Seller shall be
responsible for and shall bear any and all risk of loss or damage to the
Equipment during transportation until Delivery thereof in accordance with the
Delivery provisions of this Agreement. Furthermore, while the Equipment is in
such storage, Seller shall be responsible, until Delivery or the first
anniversary of storage whichever is the earlier unless extended by Force Majeure
events, for maintaining the Equipment in accordance with its own recommendations
and, except as provided above, no other provisions of this Agreement shall be
changed or modified as a result of such storage.

SC-41 ORDER OF PRECEDENCE

 

41.1 This Agreement shall be interpreted as a consistent and compatible whole.
If however, an unintentional ambiguity or conflict is discovered to exist
between or among separate provisions contained herein, Buyer and Seller agree to
resolve such conflicts by application of the following order of precedence:

 

  A. Purchase Order Form

 

  B. Section 5 - Special Conditions

 

  C. Section 4 - General Conditions

 

  D. Section 1 - Pricing

 

  E. Section 2 - Technical Specifications

 

  F. Section 3 - Drawings and Data

 

  G. Section 6 - Supplier Quality Surveillance

 

  H. Section 7 - Expediting

 

  I. Section 8 - Shipping Instructions

 

  J. Section 9 - Invoicing Instructions

SC-42 QUANTITY GUARANTEES

 

42.1 To reduce field erection manpower requirements and minimize field welding
the following principles apply to the agreed offsite shop fabrication and
assembly shown in Section 5, Appendix 11 (Guaranteed Quantities):

 

  (a) Truck and rail access is available to the Site. [Rail Service is available
to the following sites: Martin Lake, Big Brown, Monticello; at the other four
sites rail service is located nearby on existing railroads.]

 

  (b) All components will have rigging attachments shop installed as required
and clearly marked with weight, center of gravity and any special rigging
instruction in addition to equipment specific rigging plans included in the
document submittal requirements of this requisition

 

  (c) Match marks which are applied for shop assembly which are not removed for
coating will be left intact.

 

42.2

Seller guarantees that Seller’s quantities will not exceed the quantities for
those items specifically stated in Section 5, Appendix 11 (Guaranteed
Quantities) of these Special Conditions. Buyer will quantify the installed
measurements to Seller The degree to which Seller guaranteed quantities

 

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shown in Section 5, Appendix 11 differ from actual quantities shall be measured
by comparing the final design drawings to the guaranteed quantities as shown in
Section 5, Appendix 11. If the quantities are disputed by Seller, as-built
drawings or additional measurement may be used to assist in resolving the
quantity dispute. In the event Seller fails to meet the quantity guarantees for
items stated in Section 5, Appendix 11 to the Special Conditions, Seller shall,
for each quantity item listed pay the relevant unit rate times the actual number
of units which exceed the quantity guarantee. If unit rates for exceeding
guaranteed quantities are not established for guaranteed items in this
Section 5, Appendix 11 to these Special Conditions, Seller shall compensate
Buyer for Buyer’s additional costs reasonably incurred in receiving, storing,
installing and testing quantities in excess of those guaranteed, such
compensation to be computed in accordance with Clause SC-11 (Backcharges). (See
Example below.) Seller shall not be deemed to have guaranteed quantities for any
items not assigned values in Section 5, Appendix 11, including any associated
minor pieces unless identified in Appendix 11. Minor parts are not included in
the piece counts and are not used in setting the Unit Cost. Minor parts are
defined as small parts of larger assemblies typically functioning as connections
or seals, such as, but not limited to, bolts, nuts, washers, pins, clips,
spacers, and seals and weighing less than 70 lbs. The guaranteed quantities will
be offset in the event actual quantities for other items listed in Section 5,
Appendix 11 are less than the guaranteed quantities. Such credit will be
calculated on a dollar basis against the cost of the liability for exceeding
other relevant quantity guarantees. Buyer will not reimburse Seller for the
amount of offsets which cause an overall credit to Seller.

Example: Appendix 11 includes guaranteed quantities for downcomer pipe with 16
in. diameter and Unit Cost for this item and size. Actual size supplied is 18
in. diameter. No rate is established for an 18 in. diameter downcomer. Actual
quantities exceed guaranteed quantities. Seller then compensates Buyer for
additional costs listed in SC-42.2, Paragraph 1, lines 12, 13, and 14.

SC-43 RULES OF INTERPRETATION

 

43.1 Except as otherwise provided herein, the following rules of interpretation
shall apply to this Agreement:

 

  (a) Terms defined in a given number, tense, or form shall have the
corresponding meaning when used in this Agreement with initial capitals in
another number, tense, or form. The meaning assigned to each term defined herein
shall be equally applicable to both the singular and the plural forms of such
term and vice versa, and words denoting either gender shall include both genders
as the context requires. Where a word or phrase is defined herein, each of its
other grammatical forms shall have a corresponding meaning.

 

  (b) The terms such as “hereof,” “herein,” “hereto,” “hereinafter,” and other
terms of like import are not limited in applicability to the specific provision
within which such references are set forth but instead refer to this Agreement
taken as a whole.

 

  (c) When a reference is made in this Agreement to a Section, Appendix,
Attachment or Clause, such reference is to Section, Appendix, Attachment or
Clause to this Agreement unless otherwise specified.

 

  (d) The word “include,” “includes,” and “including” when used in this
Agreement shall be deemed to be followed by the words “without limitation,”
unless otherwise specified shall not be deemed limited by the specific
enumeration of items, but shall be deemed without limitation. The term “or” is
not exclusive.

 

  (e) A reference to any Party to this Agreement or any other agreement or
document shall include such Party’s predecessors, successors and permitted
assigns.

 

  (f) The Parties have participated jointly in the negotiation and drafting of
this Agreement. Any rule of construction or interpretation otherwise requiring
this Agreement to be construed or interpreted against any Party by virtue of the
authorship of this Agreement shall not apply to the construction and
interpretation hereof.

 

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SC-44 PUBLICITY

Seller shall not make any announcement or publication concerning the Work or the
Project, without Buyer’s and Owner’s prior written consent.

SC-45 CO-OPERATION IN FINANCING

 

45.1 Seller understands that Owner may obtain financing for the Project
consisting of: (a) one or more construction or permanent loans, to be secured by
all or a portion of the Project and Buyer’s rights under this Agreement;
(b) lease financing pursuant to which Buyer may assign this Agreement to one or
more Financing Parties that may then collaterally assign this Agreement to other
Financing Parties or sub-assign all or any portion of Buyer’s rights and
obligations hereunder to Owner or an Affiliate of Owner; or (c) a combination
thereof. In connection therewith, notwithstanding anything contrary in this
Agreement, Seller shall: (x) execute any assignments, any amendments and
modifications hereto reasonably requested by the Financing Parties; (y) promptly
execute or consent to other documents to the extent reasonably required by the
Financing Parties, which consents may, among other things, include provisions
whereby Seller agrees to: (i) provide such Financing Parties reasonable notice
of and opportunity to cure any Buyer’s defaults hereunder; (ii) allow such
Financing Parties (as security for Owner’s financing) to be assigned all of
Buyer’s rights hereunder and in such assets in the event of a default of Buyer;
provided, however, that Buyer and/or Owner shall keep Seller currently informed
of such assignment or reassignment; and (iii) provide for other customary
investor or lender protection provisions that are not in violation of Applicable
Law, and (z) deliver customary legal opinions of counsel to Owner. Buyer shall
reimburse Seller for any reasonable expense of third party professionals engaged
by Seller to comply with its obligations in this Clause SC-45 (Co-operation In
Financing). Seller shall respond promptly to reasonable requests for existing
information regarding the qualifications, experience, past performance and
financial condition of Seller and other matters pertaining to Seller’s
obligations hereunder. Notwithstanding the foregoing, under no circumstances
shall Seller be obligated to enter into any amendment and modification of this
Agreement, or any other agreement with Buyer or the Financing Parties, that
materially (i) reduces Seller’s rights as set forth in this Agreement;
(ii) increases Seller’s cost or risk to perform the Work, or (iii) reallocates
to Seller any risks or obligations that are allocated to Buyer under this
Agreement.

 

45.2 Seller shall provide such data, reports, certifications and other
documents, up to a maximum of ten (10) copies each, or assistance related to the
Work or this Agreement as may be reasonably requested by the Financing Entities
with respect to the financing of the Project; provided, however, that the
provision of this information shall not in any manner modify Seller’s rights or
obligations under any other provision of this Agreement.

 

45.3 Seller shall to the extent reasonably requested by Owner or Buyer, assist
Owner and Buyer in dealing with Governmental Authorities and Financing Entities
in any and all matters relating to the Work (including any interconnection
facilities).

 

45.4 Seller will each use its reasonable efforts to implement the provisions of
this Agreement, and for such purpose, at the reasonable request of the Owner or
Buyer, will, without further consideration, promptly execute and deliver or
cause to be executed and delivered such assistance, or assignments, consents or
other instruments in addition to those required by this Agreement, in form and
substance satisfactory to the Parties, that may reasonably deem necessary or
desirable to implement any provision of this Agreement.

SC-46 BUYER’S APPROVAL OF SELLER’S MAJOR SUBCONTRACTORS

 

46.1 To the extent Seller purchases equipment identified in Section 5, Appendix
13 hereto, (List of Major Subcontractors), it will purchase such equipment from
Subcontractors included on the list or obtain Buyer’s written approval prior to
purchase.

 

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46.2 Seller shall ensure that each Subcontractor is licensed or qualified to do
business and is in good standing under the laws of the jurisdiction where the
Work is to be performed.

 

46.3 All of the contracts with Subcontractors shall conform to the requirements
of this Agreement, insofar as applicable. All Work performed for Seller by a
Major Subcontractor shall be pursuant to an appropriate written agreement
between Seller and Major Subcontractor which shall contain provisions that:

 

  (a) Seller shall reasonably preserve and protect all the rights of Owner or
Buyer under this Agreement and to the Work to be performed under the
Subcontract, so that the subcontracting thereof will not prejudice such rights;

 

  (b) Seller shall require that the Work to be performed under the Subcontract
shall be in accordance with the applicable requirements of this Agreement;

 

  (c) Seller shall require each Subcontractor to make available a representative
with whom Buyer, Owner or the Financing Parties, if any, may, subject to
Seller’s coordination and participation, discuss questions regarding the Work
being performed by the Subcontractor;

 

  (d) Seller shall require each Subcontractor to notify Buyer and Owner in the
event such Subcontractor intends to discontinue supplying any functional spare
parts at any time within five (5) years after completion of such Subcontractor’s
work and permit Owner to order any quantity of any of such parts at the prices
therefor prevailing prior to such discontinuance of supply;

 

  (e) Seller shall require each Subcontractor to enter into a new contract
directly with Owner on the same terms and conditions as such subcontract in the
event that any trustee in bankruptcy for Seller rejects the subcontract, or
Subcontractor terminates such subcontract as a result of the bankruptcy of
Seller, upon notice to Subcontractor; and where requested by such Subcontractor,
presentation of reasonable financial assurances but otherwise not subject to
Subcontractor’s consent;

 

  (f) Seller shall allow assignment, including any performance assurance
provided by such Subcontractor, of such agreement to Buyer or Owner, to another
contractor that replaces the Seller as designated by Owner, or at Owner’s
request, to the Financing Parties, if any, upon the occurrence of an event of
default under the Prime Contract or the termination or expiration of this
Agreement, upon notice to Subcontractor, and where requested by such
Subcontractor, presentation of reasonable financial assurances but otherwise not
subject to Subcontractor’s consent;

 

  (g) Seller shall require each Subcontractor to remove any employee or
independent contractor of such Subcontractor used in the Work or in such
Subcontractor’s warranty obligations within one (1) Business Day after receiving
notice from Buyer that Owner requires removal of such employee or independent
contractor;

 

  (h) Seller shall require each Subcontractor to abide by Seller’s obligations
hereunder and to otherwise hold in strict confidence all of Buyer’s and Owner’s
Confidential Information; and

 

  (i) Seller shall require each Subcontractor to deliver to Buyer and Owner any
“stop-work” notice or termination notice delivered to Seller pursuant to
Applicable Law.

 

By Seller:                     

   By Buyer:                     

Section 5, Special Conditions

25280-000-POA-MBPX-00001

Page 40 of 43

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46.4 In addition to the above provisions, Seller shall:

 

  (a) notify Buyer and Owner in the event it intends to discontinue supplying
any functional spare parts at any time within five (5) years after completion of
its Work and permit Owner to order any quantity of any of such parts at the
prices therefor prevailing prior to such discontinuance of supply;

 

  (b) remove any of its employees or independent contractors used in performance
of the Work including its warranty obligations within one (1) Business Day after
receiving notice from Buyer that Owner requires removal of such employee or
independent contractor, provided that Buyer shall reasonably attempt to consult
with Seller prior to such removal;

 

  (c) deliver to Buyer and Owner any “stop-work” notice or termination notice
delivered to Seller pursuant to Applicable Law.

SC-47 TRAINING

To the extent specified herein, Seller shall develop and implement a program to
adequately instruct and train personnel made available by Owner. Seller grants
Buyer and Owner the right to record all training sessions and replay such
recordings for retraining or training of other employees of Owner, Owner’s
affiliates, and third party O&M service providers for the Equipment.

SC-48 APPENDICES

The Appendices listed herein in the Table of Contents and attached hereto are
incorporated into and are a part of this Agreement.

SC-49 STANDARD PLANT PROGRAM

 

49.1 It is recognized that this Agreement is being signed in conjunction with a
number of other purchase orders signed with Seller (or to be signed with Seller
in the future) in connection with Owner’s Standard Plant Program, under which
purchase orders Seller will supply (or has supplied) equipment which is
identical in all material respects to the Equipment.

 

49.2 It is further recognized that the overall objectives of the Owner’s
Standard Plant Program (“SP Objectives”) are as set out below:

 

  (i) standardization of equipment supply across all SP Projects;

 

  (ii) maximization of the benefits of bulk supply and global sourcing;

 

  (iii) standardization of operation and maintenance practices across all SP
Projects; and

 

  (iv) maximum enhancement of the schedule for engineering, procurement,
construction, commissioning, start-up, testing and completion of each SP
Project.

 

49.3 In the course of performance of the Work under this Agreement, Seller shall
use commercially reasonable efforts to assist Buyer in the realization of the SP
Objectives and shall plan and execute its Work so as to ensure the realization
of the SP Objectives to the maximum practical extent.

 

By Seller:                     

   By Buyer:                     

Section 5, Special Conditions

25280-000-POA-MBPX-00001

Page 41 of 43

--------------------------------------------------------------------------------

49.4 Without limiting Clause 49.3 above;

 

  (a) Seller shall select manufacturing and assembly locations for the Equipment
which are consistent with the SP Objectives;

 

  (b) All similar components provided by Seller under each SP Purchase Order
shall be identical in all material respects so as to ensure full
interchangeability and availability of common spares across all SP Projects; and

 

  (c) Promptly on Buyer’s request, Seller shall establish a combined spare parts
program across all SP Projects, which shall be reasonably acceptable to Buyer
and which shall ensure ready access to spare parts as needed for each SP
Project.

 

49.5 Seller shall provide prompt notice to Buyer as to any enhancements Seller
is proposing to make to the standard production components for its equipment
(together with supporting information as reasonably requested by Buyer) and
Seller shall, if requested in writing by Buyer, modify and improve the equipment
under each SP Purchase Order in order to incorporate such enhancements, provided
that any such enhancements shall be made at no additional cost to Buyer and with
no adverse impact to the schedule under any SP Purchase Order.

 

49.6 Seller shall comply with any written direction from Buyer requiring that
equipment (or components therefor) planned to be supplied to one SP Project
shall be diverted to a different SP Project. Any such written direction by Buyer
shall be treated as a directed change under the SP Purchase Order for the SP
Project from which the equipment (or component) was diverted.

 

49.7 From the Effective Date of this Agreement through the end of the Warranty
Period, should Buyer identify any defect or other deficiency in the equipment
provided under any SP Purchase Order (or under multiple SP Purchase Orders)
which gives Buyer reasonable cause for concern as to the same or similar defects
occurring with respect to other SP Purchase Orders, Seller shall submit to
Buyer, for Buyer’s approval, a plan for correcting and eliminating such defects.
Upon Buyer’s approval of such plan, Seller shall promptly implement such plan
and shall provide regular written reports to Buyer as to the implementation of
such plan.

 

49.8 Seller shall negotiate in good faith with Buyer a long term parts and
service agreement to be signed with Buyer or Owner with respect to the
Equipment.

SC-50 DRAWBACK RIGHTS

This Agreement includes all related US customs duty and import drawback rights
if any (including rights developed by substitution and rights which may be
acquired from Seller’s suppliers) which Seller can transfer to Buyer. Seller
agrees to provide Buyer timely notice of the existence of any such rights and
upon request to supply such documents as required to obtain drawback.

SC-51 REPLACEMENT OR REPAIR

On Buyer’s request, Seller agrees to use its reasonable efforts, at Buyer’s
expense (provided Seller will make reasonable efforts to minimize these
expenses), consistent with the requirements of Clause SC-6.3, to replace or to
repair any defect or non-conformity resulting from Buyer’s failure to install,
operate or maintain the Equipment in accordance with Seller’s operating and
maintenance manuals furnished by Seller to Buyer in accordance with this
Agreement.

 

By Seller:                     

   By Buyer:                     

Section 5, Special Conditions

25280-000-POA-MBPX-00001

Page 42 of 43

--------------------------------------------------------------------------------

SC-52 ADDITIONAL COMMISSIONING TIME

In the event that Substantial Completion is not achieved by the Guaranteed
Substantial Completion Date and the Equipment has achieved its Minimum
Performance Criteria and is subsequently in use for a further extended period
after the Guaranteed Substantial Completion Date and before commencement of the
Warranty Period, then Seller shall be entitled to invoice Buyer an amount of One
Hundred Thirty Five Thousand Dollars ($135,000) for each month (or pro rata for
portions thereof) during such period when such Equipment is in use and such
invoice shall be paid in accordance with Clause SC-17 (Price and Payment),
provided however that Seller shall not be entitled to invoice for such amount to
the extent that any delay in achievement of Substantial Completion is
attributable to Seller.

SC-53 STRUCTURAL STEEL DESIGN

Seller acknowledges that the services of Louis Perry & Associates (“LPA”) may be
used by Buyer and/or Owner during the course of the SP Projects and Seller
agrees that it will release LPA from any restrictions inhibiting its ability to
work for Buyer and/or Owner accordingly.

SC-54 INTELLECTUAL PROPERTY ESCROW AGREEMENT

Within a period of thirty (30) days following the Effective Date, Buyer and
Seller shall negotiate in good faith and execute an escrow agreement pursuant to
which Seller shall be obliged to submit all design documents and information
necessary for completion of the Work to a mutually agreed escrow agent. Such
agreement will include without limitation rights of access and use of such
design documents and information in the event of termination of this Agreement
for Seller’s default, reasonable audit rights in favor of Buyer, Owner and their
respective Affiliates and provision for assignment of the agreement.

 

By Seller:                     

   By Buyer:                     

Section 5, Special Conditions

25280-000-POA-MBPX-00001

Page 43 of 43

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TXU STANDARD PROJECT

PROJECT     

SECTION 5 – APPENDIX 1

FORM OF CONDITIONAL WAIVER AND RELEASE UPON PROGRESS PAYMENT

Reference is made to that certain [            ] Agreement dated as of June __,
2006 (the “Agreement”), between (i) [Add Name] and (ii) TXU Generation
Development Company LLC (“Buyer”). Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Agreement.

[or with respect to Subcontractors:

The undersigned, being duly sworn, states and affirms to Buyer that (i) he/she
is a [insert title of person signing] of [insert name of subcontractor]
(“Subcontractor”), (ii) Subcontractor has been retained by Buyer to assist Buyer
with its Work under the Agreement (the “Project”), (iii) he/she is duly
authorized on behalf of Subcontractor to execute and deliver this Conditional
Waiver and Release Upon Progress Payment (this “Waiver and Release”) on behalf
of Subcontractor, and (iv) he/she is familiar with the facts herein stated.

1. Subcontractor hereby certifies and represents that it has made full payment
of costs, charges and expenses incurred by it or on its behalf on account of
Work performed through the Effective Date (defined below), including labor,
services, materials and equipments supplied to the Project or used in connection
with the Work.

2. Subcontractor further certifies and represents that it has submitted an
invoice to Buyer for an amount equal to              and, to the extent
Subcontractor receives payment therefor, Subcontractor hereby waives, releases,
acquits and forever discharges all of its claims for payment and liens for such
invoice amount, including without limitation any and all mechanic’s or
materialman’s liens, against Owner, Buyer, the Project, the Site, and all of
Owner’s other property, which have arisen out of or in connection with its
performance of the Work under the Agreement and any amendments thereto or with
respect to equipment and materials supplied to or incorporated in the Project
and labor performed through the Effective Date.

3. As additional consideration for such payment, the undersigned hereby
unconditionally agrees to indemnify and hold harmless each of Owner and Buyer
from and against any and all costs, loses, damages, claims, liens, causes of
action, judgments and expenses, including but not limited to attorneys fees and
costs arising out of or in connection with any claims, demands, rights, liens or
causes of action against Owner or Buyer, arising out of the subcontract with
Buyer and asserted by the undersigned or any of its vendors, suppliers or
subcontractors of any tier or any of their respective representatives, officers,
agents or employees.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 1 – Form of Conditional Waiver and Release Upon Progress
Payment

1 of 2

--------------------------------------------------------------------------------

Nothing in this Conditional Waiver and Release Upon Progress Payment shall be
deemed or construed to abrogate, amend or release any contractual obligation of
Subcontractor or Buyer that either explicitly or by its nature survives
occurrence of final completion under such Subcontractor’s purchase order or
other agreement with Buyer.

Executed this      day of                     , 200     (the “Effective Date”).

 

[INSERT NAME OF CONTRACTOR OR

SUBCONTRACTOR, as applicable]

By:  

 

Name:  

 

Title:  

 

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 1 – Form of Conditional Waiver and Release Upon Progress
Payment

2 of 2

--------------------------------------------------------------------------------

TXU STANDARD PROJECT

PROJECT __

SECTION 5 – APPENDIX 2

FORM OF CONDITIONAL WAIVER AND RELEASE UPON FINAL PAYMENT

Reference is made to that certain [            ] Agreement dated as of June
    , 2006 (the “Agreement”), between (i) [Add Name] and (ii) TXU Generation
Development Company LLC (“Buyer”). Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Agreement.

[or with respect to Major Subcontractors:

The undersigned, being duly sworn, states and affirms to Buyer that (i) he/she
is a [insert title of person signing] of [insert name of subcontractor]
(“Subcontractor”), (ii) Subcontractor has been retained by Buyer to assist Buyer
with its Work under the Agreement (the “Project”), (iii) he/she is duly
authorized on behalf of Subcontractor to execute and deliver this Conditional
Waiver and Release Upon Final Payment on behalf of Subcontractor, and
(iv) he/she is familiar with the facts herein stated.

1. Subcontractor has performed all Work and has furnished all materials, labor,
tools and equipment required from Subcontractor under its subcontract with Buyer
through the Effective Date hereof as set forth below.

2. Subcontractor hereby certifies and represents that it has made full payment
of costs, charges and expenses incurred by it or on its behalf on account of
Work performed through the Effective Date (defined below), including labor,
services, materials and equipments supplied to the Project or used in connection
with the Work.

3. Subcontractor further certifies and represents that it has submitted an
invoice for final payment to Buyer for an amount equal to $             and, to
the extent Subcontractor receives payment therefor, Subcontractor hereby waives,
releases, acquits and forever discharges all of its claims for payment and
liens, including without limitation any and all mechanic’s or materialman’s
liens, against Owner, Buyer, the Project, the Site, and all of Owner’s other
property, which have arisen out of or in connection with its performance of the
Work under the Agreement and any amendments thereto or with respect to equipment
and materials supplied to or incorporated in the Project and labor performed
through the Effective Date.

4. As additional consideration for such payment, the undersigned hereby
unconditionally agrees to indemnify and hold harmless each of Owner and Buyer
from and against any and all costs, loses, damages, claims, liens, causes of
action, judgments and expenses, including but not limited to attorneys fees and
costs arising out of or in connection with any claims, demands, rights, liens or
causes of action against Owner or Buyer, arising out of the subcontract with
Buyer and asserted by the undersigned or any of its vendors, suppliers or
subcontractors of any tier or any of their respective representatives, officers,
agents or employees.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 2 – Form of Conditional Waiver and Release Upon Final
Payment

1 of 2

--------------------------------------------------------------------------------

Nothing in this Conditional Waiver and Release Upon Final Payment shall be
deemed or construed to abrogate, amend or release any contractual obligation of
Subcontractor or Buyer that either explicitly or by its nature survives
occurrence of final completion under such Subcontractor’s purchase order or
other agreement with Buyer.

Dated this      day of                     , 200     (the “Effective Date”).

 

[INSERT NAME OF CONTRACTOR OR

SUBCONTRACTOR, as applicable]

By:  

 

Name:  

 

Title:  

 

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 2 – Form of Conditional Waiver and Release Upon Final
Payment

2 of 2

--------------------------------------------------------------------------------

TXU STANDARD PROJECT

PROJECT     

SECTION 5 – APPENDIX 3

FORM OF UNCONDITIONAL WAIVER AND RELEASE UPON FINAL PAYMENT

Reference is made to that certain [            ] Agreement dated as of June __,
2006 (the “Agreement”), between (i) [Add Name] and (ii) TXU Generation
Development Company LLC (“Buyer”). Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Agreement.

[or with respect to Major Subcontractors:

The undersigned, being duly sworn, states and affirms to Buyer that (i) he/she
is a [insert title of person signing] of [insert name of subcontractor]
(“Subcontractor”), (ii) Subcontractor has been retained by Buyer to assist Buyer
with its Work under the Agreement (the “Project”), (iii) he/she is duly
authorized on behalf of Subcontractor to execute and deliver this Unconditional
Waiver and Release Upon Final Payment on behalf of Subcontractor, and
(iv) he/she is familiar with the facts herein stated.

1. Subcontractor hereby certifies and represents that it has made full payment
of costs, charges and expenses incurred by it or on its behalf on account of
Work performed through the Effective Date (defined below), including labor,
services, materials and equipments supplied to the Project or used in connection
with the Work.

2. Subcontractor further certifies and represents that it has received a final
payment from Buyer in an amount equal to $             and Subcontractor hereby
waives, releases, acquits and forever discharges all of its claims for payment
and liens, including without limitation any and all mechanic’s or materialman’s
liens, against Owner, Buyer, the Project, the Site, and all of Owner’s other
property, which have arisen out of or in connection with its performance of the
Work under the Agreement and any amendments thereto or with respect to equipment
and materials supplied to or incorporated in the Project and labor performed
through the Effective Date.

3. As additional consideration for such payment, the undersigned hereby
unconditionally agrees to indemnify and hold harmless each of Owner and Buyer
from and against any and all costs, loses, damages, claims, liens, causes of
action, judgments and expenses, including but not limited to attorneys fees and
costs arising out of or in connection with any claims, demands, rights, liens or
causes of action against Owner or Buyer, arising out of the subcontract with
Buyer and asserted by the undersigned or any of its vendors, suppliers or
subcontractors of any tier or any of their respective representatives, officers,
agents or employees.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 3 – Form of Unconditional Waiver and Release Upon Final
Payment

1 of 2

--------------------------------------------------------------------------------

Nothing in this Unconditional Waiver and Release Upon Final Payment shall be
deemed or construed to abrogate, amend or release any contractual obligation of
Subcontractor or Buyer that either explicitly or by its nature survives
occurrence of final completion under such Subcontractor’s purchase order or
other agreement with Buyer.

Dated this      day of                     , 200     (the “Effective Date”).

 

[INSERT NAME OF CONTRACTOR OR SUBCONTRACTOR, as applicable] By:  

 

Name:  

 

Title:  

 

Acknowledgment

 

STATE OF                                                                )      
) ss.    COUNTY OF                                                           )
  

Subscribed to and sworn to before me on this      day of                     ,
200[  ], by                                 , as [insert title of person
signing] of [insert name of Contractor or Subcontractor, as applicable].

 

 

Notary Public

 

My commission expires:

 

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 3 – Form of Unconditional Waiver and Release Upon Final
Payment

2 of 2

--------------------------------------------------------------------------------

TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 4

PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

 

1.0 DEFINITIONS

In addition to the definitions contained in Section 5, Special Conditions,
Clause SC-1 (Definitions) , the following defined terms are used in this
Appendix:

“Ammonia Consumption Test” means the Performance Guarantee Test conducted by
Seller to determine whether the Facility meets the Performance Guarantee with
respect to Ammonia Consumption and to determine whether the Equipment meets the
Equipment Performance Guarantee with respect to Ammonia Consumption.

“Completed”, when used to describe any Performance Test, means a Performance
Test used by Buyer to demonstrate compliance with Facility Performance
Guarantees or the Reliability Guarantee, as the case may be, by Buyer to Owner.
To the extent applicable, such Performance Test shall also be used to
demonstrate to Buyer Seller’s compliance with the Equipment Performance
Guarantees.

“EAF” or “Equivalent Availability Factor” means an availability factor for the
Facility that will be calculated in accordance with this Appendix 4.

“EEAF” means the Equipment equivalent availability factor that will be
calculated in accordance with this Appendix 4.

“Equipment Performance Guarantees” means Seller’s guarantees respecting the
Equipment as set forth in Material Requisition MRA-MBPX-00002, Appendix A,
Section 6.

“Equipment Performance Tests” means the tests performed to demonstrate whether
Seller has met the Equipment Performance Guarantees.

“Facility Performance Guarantees” means, collectively, the Guaranteed Air
Emissions, the Guaranteed Ammonia Consumption, the Guaranteed Lime Consumption,
the Guaranteed Sorbent Consumption, the Guaranteed Net Electrical Output, the
Guaranteed Net Heat Rate, and the Guaranteed Noise Emissions.

“Functional Tests” means the tests described in Clause 5.0 of this Appendix 4.

“Guarantee Conditions” means, for the Equipment, the conditions defined in
Material Requisition MRA-MBPX-00002, Appendix A, Table 6.1, for the Equipment
Performance Guarantees, and, for the Facility, as agreed between Buyer and Owner
for the Facility Performance Guarantees.

“Guaranteed Air Emissions” means the emissions that will be guaranteed in the
EPC Contract.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

Page 1 of 23

--------------------------------------------------------------------------------

TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 4

PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

“Guaranteed Ammonia Consumption” means the ammonia consumption guaranteed by
Seller to Buyer in Material requisition MRA MBPX-00002, Appendix A, Table 6.1
and will be guaranteed in the EPC Contract.

“Guaranteed Equivalent Availability Factor” or “Guaranteed EAF” means the
Equivalent Availability Factor (EAF) that will be guaranteed in the EPC
Contract, as further defined in Section 5, Appendix 4, Section 3.0 B., c), i).

“Guaranteed Lime Consumption” means the lime consumption that will be guaranteed
in the EPC Contract.

“Guaranteed Net Electrical Output” means the Net Electrical Output that will be
guaranteed in the EPC Contract.

“Guaranteed Net Heat Rate” means the Net Heat Rate that will be guaranteed in
the EPC Contract.

“Guaranteed Sorbent Consumption” means the sorbent consumption that will be
guaranteed in the EPC Contract.

“Guaranteed Noise Emissions” means the noise emissions that will be guaranteed
in the EPC Contract.

“Lime Consumption Test” means the Performance Guarantee Test conducted by Buyer
to determine whether the Facility meets the Performance Guarantee with respect
to Lime Consumption.

“Make Right” with respect to Seller’s obligation to achieve an Equipment
Performance Guarantee, or Minimum Performance Criteria where applicable, or to
meet Functional Test requirements, means that Seller shall make necessary
modifications to the Equipment and perform all other Work, at its sole expense
and risk, so that such obligation is fully satisfied and furthermore, Seller’s
failure to meet such obligation is not subject to payment of liquidated damages
and is not subject to limitations of subcaps included in the Agreement. Seller’s
liability for failure to achieve any make right obligation is however subject to
the aggregate limitation of the liability provision set forth in Section 5,
Clause SC-30 (Limitation of Liability).

“Maximum Net Heat Rate” means a Net Heat Rate equal to ****% of the Guaranteed
Net Heat Rate.

“Minimum Net Electrical Output” means a Net Electrical Output equal to ****% of
the Guaranteed Net Electrical Output.

 

--------------------------------------------------------------------------------

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

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

Page 2 of 23

--------------------------------------------------------------------------------

TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 4

PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

“Minimum Facility Performance Criteria” means, as applicable, Maximum Net Heat
Rate, the Minimum Net Electrical Output, and the continuously monitored
Guaranteed Air Emissions (excluding ammonia emissions, which will be measured
using method CTM-027, within the time limitations permitted by Applicable Law).

“Minimum Performance Criteria” means, with respect to Equipment has the meaning
stated in Section 5, Appendix 4, Clause 3.0 D.

“Net Electrical Output” or “NEO” means the electric output of the Facility
(expressed in kW), measured during the Net Electrical Output Test, as delivered
to the high voltage side of the main step-up transformers.

“Net Electrical Output Test” means the Performance Guarantee Test described in
Clauses 3.0 and 6.0 of this Appendix 4 conducted by Buyer to demonstrate
compliance with the Guaranteed Net Electrical Output.

“Net Heat Rate” with respect to Facility, has the meaning detailed in Clause 6
of this Appendix 4.

“Net Heat Rate Test” means the Performance Guarantee Test described in Clauses
3.0 and 6.0 of this Appendix 4 conducted by Buyer to demonstrate compliance with
the Guaranteed Net Heat Rate.

“Performance Guarantee Tests” means the Thermal Performance Test, the Ammonia
Consumption Test, the Lime Consumption Test, the Air Emissions Test (as set
forth in Section 5, Appendix 4, Table 3.0 A, Item q) and the Sorbent Consumption
Test.

“Performance Liquidated Damages” or “Performance LDs” means liquidated damage
amounts set forth in Clause 3.0 of this Appendix 4 that are payable by Seller to
Buyer for failure to meet certain Equipment Performance Guarantees.

“Performance Tests” means, collectively, the Performance Guarantee Tests, the
Functional Tests, and the Reliability Test.

“Reliability Guarantee” means the guaranteed EAF or EEAF, as the text applies,
as defined in Clause 4.0 of this Appendix 4.

“Reliability Liquidated Damages” or “Reliability LDs” means liquidated damages
amounts set forth in Clause 4.0 of this Appendix 4 that are payable by Seller to
Buyer for failure to meet the Reliability Guarantee.

“Reliability Test” means the Performance Test described in Clauses 4.0 and 5.0
of this Appendix 4 to determine the EAF and EEAF.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

Page 3 of 23

--------------------------------------------------------------------------------

TXU STANDARD PROJECT

PROJECT __

SECTION 5, APPENDIX 4

PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

“Sorbent Consumption Test” means the Performance Guarantee Test conducted by
Buyer to determine whether the Facility meets the Performance Guarantee with
respect to Sorbent Consumption.

“Test Procedures” means the procedures specified for the performance of the
Performance Tests or Equipment Performance Tests, and any other tests reasonably
required by Buyer.

“Thermal Performance Test” means Net Electrical Output Test or Net Heat Rate
Test or both, as the context may require.

 

2.0 GENERAL

 

  A. Seller’s obligations respecting the performance of its Equipment include:

 

  a. The obligations to meet the Equipment Performance Guarantees as set forth
in Section 5, Appendix 4, Clause 3.0 or to pay Performance Liquidated Damages
for acceptable deviations, as stated in that Clause.

 

  b. The obligations to meet the guarantee respecting Equipment Equivalent
Availability Factor (EEAF) as set forth in Section 5, Appendix 4, Clause 4.0 or
to pay Reliability Liquidated Damages for acceptable deviations as stated in
that Clause.

 

  c. The obligations for the Equipment to support successful completion of the
Functional Tests, as required under Section 5, Appendix 4, Clause 5.0.

The above-stated obligations do not relieve Seller of its obligations to meet
any other performance and/or testing requirements stated in the Technical
Specifications.

 

  B. Successful demonstration of each Facility Performance Guarantee and the
Reliability Guarantee, requires both that (a) the Facility demonstrates that it
meets the guaranteed performance level for the particular guaranteed item under
the conditions specified, and (b) Buyer declares and Owner accept that the
particular Facility Performance Test or Reliability Test in which such
demonstration occurs is a Completed Performance Test for purposes of Substantial
Completion or Final Completion (as applicable) under the Prime Contract.

IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT SELLER SHALL NOT BE CONSIDERED TO
HAVE MET ITS OBLIGATIONS UNDER THIS APPENDIX 4 UNLESS THE FACILITY AS A WHOLE
HAS MET THE CRITERIA FOR FINAL COMPLETION, EVEN IF SELLER’S EQUIPMENT PERFORMS
SATISFACTORILY AND BUYER MUST REPERFORM THE APPLICABLE PERFORMANCE TEST FOR
REASONS OUTSIDE SELLER’S CONTROL.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

Page 4 of 23

--------------------------------------------------------------------------------

TXU STANDARD PROJECT

PROJECT __

SECTION 5, APPENDIX 4

PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

 

  C. During any Performance Test, the Facility shall comply with all Applicable
Laws and the Guaranteed Air Emissions in order for the Performance Test to be
considered valid under the EPC Contract.

 

  D. Liquidated damages shall be payable under this Appendix 4 based on the
corrected results of the applicable Completed Performance Test. Seller shall pay
any liquidated damages due under this Appendix upon demand.

 

  E. The Completed Performance Tests (including the Reliability Test) selected
and designated by Buyer for Substantial Completion or Final Completion (as
applicable) will be the tests selected by Buyer, in consultation with Seller,
and accepted by Owner.

 

  F. The Prime Contract will include an initial cure period beginning on the
Substantial Completion Date and ending one hundred eighty (180) days later
(“Cure Period”) for the achievement of the Facility Performance Guarantees. In
the event that the Facility Performance Guarantees have not been achieved on or
prior to the expiry of the Cure Period, Buyer may determine in its sole
discretion either (a) to submit to Owner a remedial plan for achievement of the
Facility Performance Guarantees, or (b) to decline to submit such a remedial
plan.

 

  (i) In the event that Buyer declines to submit a remedial plan then
Performance LDs shall be payable by Seller under this Appendix 4 based on the
results of the Completed Performance Test as determined by Buyer and Owner.

 

  (ii) In the event that Buyer submits a remedial plan (including proposal for
extension to the Cure Period (“Cure Period Extension”) but Owner does not
approve such remedial plan, then Performance LDs shall be payable by Seller
under this Appendix 4 based on the results of the Completed Performance Test as
determined by Buyer and Owner; but, notwithstanding payment of such Performance
LDs, Seller shall, if required by Buyer, continue to exercise all reasonable
efforts during the Cure Period Extension to make all refinements, repairs, and
modifications that may be necessary or desirable to enhance Equipment
performance up to compliance with a 100% level of achievement of all Equipment
Performance Guarantees and shall, if required by Buyer, support the conduct of
further Performance Guarantee Tests during the Cure Period Extension, provided
that Seller’s reasonable additional costs incurred in connection with such
support will be borne by Buyer so long as all Equipment Performance Guarantees
have been met as at the expiry of the initial Cure Period and so long as all
Equipment Performance Guarantees continue to be met during the Cure Period
Extension.

 

  (iii) In the event that there is a Cure Period Extension then Seller’s
liability for Performance LDs with respect to each Equipment Performance
Guarantee shall be reassessed based on the results of the Completed Performance
Test conducted during the Cure Period Extension, as determined by Buyer and
Owner, and

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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(x) to the extent that the Performance LDs as reassessed are less than the
amount of Performance LDs previously paid by Seller pursuant to paragraph
(ii) above, then the amount of the difference shall be refunded to Seller; and

(y) to the extent that the Performance LDs as reassessed exceed the amount of
Performance LDs previously paid by Seller pursuant to paragraph (ii) above, then
the amount of the difference shall be paid by Seller, in addition to the
Performance LDs previously paid by Seller.

 

  (iv) In the event Buyer submits a remedial plan (including proposal for
extension to the Cure Period (“Cure Period Extension”) and Owner approves such
remedial plan, then Seller shall, if required by Buyer, continue to exercise all
reasonable efforts during the Cure Period Extension to make all refinements,
repairs, and modifications that may be necessary or desirable to enhance
Equipment performance up to compliance with a 100% level of achievement of all
Equipment Performance Guarantees and shall, if required by Buyer, support the
conduct of further Performance Guarantee Tests during the Cure Period Extension,
provided that Seller’s reasonable additional costs incurred in connection with
such support will be borne by Buyer so long as all Equipment Performance
Guarantees have been met as at the expiry of the initial Cure Period and so long
as all Equipment Performance Guarantees continue to be met during the Cure
Period Extension.

 

  G. Notwithstanding that this Appendix 4 provides for the liquidation of
Buyer’s damages for Seller’s failure to achieve the Equipment Performance
Guarantees by Final Completion, Seller shall at all times prior to Final
Completion, unless Buyer determines that no further refinements or repairs are
reasonably likely to improve performance, exercise all reasonable efforts to
make all refinements, repairs, and modifications that may be necessary or
desirable to enhance Equipment performance up to compliance with a 100% level of
achievement of all Equipment Performance Guarantees. Unless previously declared
by Buyer, Final Completion for the purpose of establishing liquidated damages
will automatically occur on a date certain. Buyer will, to the extent available,
allow Seller access to Seller’s Equipment for tuning during the Cure Period.

 

  H. Except as provided in Section 5, Appendix 4, Clause 2.0 F, upon payment of
Performance Liquidated Damages under this Appendix 4, no further repairs and
modifications are required to improve performance with regard to the Equipment
Performance Guarantees for which the liquidated damages are paid. This provision
shall not be construed to limit Seller’s warranty obligations pursuant to
Section 5, Special Conditions, Clause SC-6 (Warranties). In the event that the
Facility has achieved Substantial Completion but Seller has not achieved all of
the Equipment Performance Guarantees, Seller shall be obliged at request of
Buyer, to modify, repair, adjust and re-test the Equipment in order to
demonstrate achievement of the Equipment Performance Guarantees. In the event
that by the earlier of expiry of the Cure Period and the Guaranteed Final
Completion Date Seller has failed to achieve any or all of the Equipment
Performance Guarantees Seller shall be liable to pay Performance Liquidated
Damages to Buyer in accordance with of this Appendix 4, Table 3.1, as reasonably
determined by Buyer in respect of those Equipment Performance Guarantees which
Seller has failed to achieve.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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  I. PERFORMANCE LIQUIDATED DAMAGES SHALL ONLY BE ASSESSED AGAINST SELLER IF
LIQUIDATED DAMAGES FOR PERFORMANCE SHORTFALL ARE PAYABLE FROM BUYER TO OWNER
UNDER THE PRIME CONTRACT, PROVIDED IF OWNER SUBSEQUENTLY DOES NOT REQUIRE
PAYMENT OF SUCH LIQUIDATED DAMAGES FROM BUYER TO OWNER THEN BUYER WILL REFUND TO
SELLER ANY SUCH PERFORMANCE LIQUIDATED DAMAGES PREVIOUSLY PAID BY SELLER TO
BUYER.

 

  J. .Further understandings in respect of the Reliability LDs provided in
Clause 4.0 are set out in paragraphs a through e below:

 

  a. Buyer (acting reasonably, fairly and equitably) shall determine
responsibility for shortfalls in the guaranteed Facility EAF as between Buyer,
Seller and Buyer’s other contractors or suppliers based upon the calculated EEAF
of the Seller’s Equipment. If and to the extent that such shortfalls are
determined by Buyer (acting reasonably, fairly and equitably) to be the
responsibility of Seller, Buyer (acting reasonably, fairly and equitably) in
consultation with Seller shall assess and apportion responsibility to Seller.

 

  b. Buyer shall give written notice to Seller of any determination of
responsibility under this clause, and of any resulting assessment and obligation
to pay liquidated damages to Buyer on a weekly basis. Buyer will promptly
provide Seller with full details of all relevant calculations and with copies of
all relevant correspondence and other documents upon which such determination,
assessment and attribution were based. Buyer shall endeavor to reach mutual
agreement as to responsibility for payment of liquidated damages.

 

  c. With respect to Reliability LDs, if Owner does not recover or seek to
recover from Buyer liquidated damages for failure to achieve the guaranteed
Facility EAF under the Prime Contract, Buyer shall not be entitled to recover
Reliability LDs, under this Agreement for Seller’s failure to meet his
guaranteed EEAF.

 

  d. In no event shall the Reliability LDs recoverable from Seller and Buyer’s
other contractors and suppliers be in excess of the amount of Reliability LDs
recovered or sought from Buyer by Owner for failure to achieve the Buyer’s
guaranteed Facility EAF under the Prime Contract.

 

  e. Buyer has the sole right to reasonably determine and declare which tests or
series of tests will be used to demonstrate the overall Facility EAF and
Seller’s EEAF.

 

  K. Performance Tests shall be run in accordance with Appendix 4. Buyer shall
give Seller reasonable prior notice of the date or dates on which the
Performance Tests shall begin and shall consult with Seller as to scheduling for
such Performance Tests.

 

  L. The Parties agree that it would be extremely difficult and impracticable
under the presently known and anticipated facts and circumstances to ascertain
and affix the actual damages

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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that Buyer would incur should the Facility meet the Minimum Performance Criteria
but fail, due to reasons attributable to Seller’s Equipment, to meet the
Facility Performance Guarantees and/or Reliability Guarantee. Accordingly, the
Parties agree that the amounts specified herein for Performance Liquidated
Damages and Reliability Liquidated Damages are not intended as penalties but
rather as reasonable projections of damages that Buyer might incur for failure
to meet the Facility Performance Guarantees and Reliability Guarantee,
respectively.

 

  M. Provided the Facility has achieved Final Completion and the Equipment has
met Minimum Performance Criteria, Seller’s maximum aggregate cumulative
liability for Performance Liquidated Damages and Reliability Liquidated Damages
shall be as set forth in Section 5, Special Conditions Clause SC-30(Limitation
of Liability).

 

  N. The Equipment shall be erected and maintained and operated by Buyer and
Owner, as appropriate, in general conformance with Seller’s erection, operation
and maintenance instructions as provided by Seller in accordance with the
document submittal requirements of this Agreement and as approved by Buyer.

 

3.0 EQUIPMENT PERFORMANCE AND GUARANTEES, COMPLETION, AND PERFORMANCE LIQUIDATED
DAMAGES

 

  A. Equipment Performance Guarantees

Seller’s Equipment will be tested as part of the Performance Tests or as
standalone tests as indicated below. Seller guarantees that in the Completed
Performance Tests declared by Buyer to demonstrate the requirements of the
Facility to achieve Final Completion under the Prime Contract, Seller’s
Equipment will achieve the Equipment Performance Guarantees associated with such
Completed Performance Tests as indicated in Table 3.0 A. .

The following table details the Facility Performance Tests, and the Equipment
Performance Guarantees associated with the Facility Performance Tests:

Table 3.0 A Performance Tests and Associated Equipment Performance Guarantees

 

Facility Performance Test

  

Associated Equipment Performance Guarantees

  

Reference (from Material Requisition
MRA-MBPX-00002, App A)

Performance Guarantee Tests       a.    Thermal Performance Test (Net Electrical
Output and Net Heat Rate Tests)    Boiler Fuel Efficiency    Table 6.1, Item b.
b.       Main Steam Temperature    Table 6.1, Item g. c.       Reheat Steam
Temperature    Table 6.1, Item h. d.       Reheat Pressure Drop    Table 6.1,
Item c.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

 

Facility Performance Test

  

Associated Equipment Performance Guarantees

  

Reference (from Material Requisition
MRA-MBPX-00002, App A)

e.       Pressure Drop, Feedwater Inlet to Superheater outlet    Table 6.1, Item
d. f.       Reheat Spray Flow    Table 6.1, Item f. g.          h.       Flue
Gas Flow Rate    Table 6.1, Items m. and n. i.       Boiler Draft loss    Table
6.1, Item l. j.       Air Heater Leakage    Table 6.1, Item q. k.      
Auxiliary Load    Table 6.1, Item o. l.       Air Emissions    Table 6.1, Item
r. (those emissions to be continuously monitored per Appendix A with respect to
the Equipment) m.    Ammonia Consumption Test    Ammonia Consumption    Table
6.1, Item u. o.    Lime Consumption Test    None    N/A p.    Sorbent
Consumption Test    None    N/A q.    Air Emissions Test (not required for
Substantial Completion)    Air Emissions    Table 6.1, Item r. (continuous and
noncontinuous) Reliability Test(s) for Final Completion       r.    Reliability
Test    Equipment EEAF (Equipment Equivalent Availability Factor)    As
described in Clause 4 of this Appendix 4. Functional Tests for Final Completion
   s.    Noise Emissions Test    Noise Guarantee    Table 6.1, Item t. t.   
ERCOT Tests    None    n/a

Any other Equipment Performance Guarantee will be demonstrated as a standalone
test, if required to be demonstrated by Buyer.

 

  B. Completion

To achieve Substantial Completion with respect to performance guarantees, the
Facility must demonstrate the Minimum Facility Performance Criteria. So long as
the Minimum Facility Performance Criteria is achieved, it is not necessary for
the Equipment Performance Guarantees to be achieved in order for the Facility to
achieve Substantial Completion.

To achieve Final Completion with respect to performance guarantees, the Facility
must:

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

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  a) Either

 

  i) meet 100% of all of the Facility Performance Guarantees during the
Performance Guarantee Tests while meeting the continuously monitored Guaranteed
Air Emissions (as measured by the CEMS, except for ammonia emissions which will
be measured using method CTM-027); or

 

  ii) meet the Minimum Facility Performance Criteria during the Performance
Guarantee Tests while meeting the continuously monitored Guaranteed Air
Emissions (as measured by the CEMS, except for ammonia emissions which will be
measured using method CTM-027) and the applicable performance liquidated damages
must be paid under the Prime Contract; and

 

  b) successfully pass all of the Functional Tests; and

 

  c) Either

 

  i) achieve at least the Guaranteed Equivalent Availability Factor of ****%,
calculated in accordance with Section 5, Appendix 4, Section 4.0 D during the
Reliability Test while meeting the continuously monitored Guaranteed Air
Emissions (as measured by the CEMS, except for ammonia emissions which will be
measured using method CTM-027); or

 

  ii) the applicable liquidated damages must be paid under the Prime Contract
for failure to meet the guaranteed EAF during the Reliability Test while meeting
the continuously monitored Guaranteed Air Emissions (as measured by the CEMS,
except for ammonia emissions which will be measured using method CTM-027); and

 

  d) meet all of the Guaranteed Air Emissions, (continuous and noncontinuous),
per the applicable EPA test methods.

The continuously monitored emissions consist of NOx, CO, SO2, Opacity, Mercury.
The Performance Guarantee Tests are more particularly described in Clause 6.0
below and will be conducted in accordance with the provisions of Clause 7.0
below.

 

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

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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  C. Performance Liquidated Damages

For the following Equipment Performance Guarantees for which liquidated damages
apply, better-than-guaranteed performance (“exceedance”) in one Equipment
Performance Guarantee will be allowed to offset worse-than-guaranteed
performance (“shortfall”) in another Equipment Performance Guarantee:

 

  a. Boiler Fuel Efficiency

 

  b. Reheater Pressure Drop

 

  c. Pressure Drop, Economizer Inlet to Superheater Outlet

 

  d. Reheater Spray Flow

 

  e. Main Steam Temperature

 

  f. Reheat Steam Temperature

 

  g. Boiler Draft Loss

 

  h. Boiler Flue Gas Flow Rate

 

  i. Boiler Auxiliary Load

For each of these Equipment Performance Guarantees, the liquidated damages rates
have been split into output and heat rate components. The aggregate shortfall or
exceedance for each Equipment Performance Guarantee shall be multiplied by the
output and heat rate components of the liquidated damages rates. Excess
performance in the output component of one Equipment Performance Guarantee shall
be allowed to offset shortfalls in the output component of another Equipment
Performance Guarantee. Similarly, excess performance in the heat rate component
of one Equipment Performance Guarantee shall be allowed to offset shortfalls in
the heat rate component of another Equipment Performance Guarantee.

After offsetting between Equipment Performance Guarantees, the resultant
liquidated damages amounts for the aggregate effects of the Equipment
Performance Guarantees on output and heat rate are determined. However, excess
performance in the output component of the Equipment Performance Guarantees can
not offset shortfalls in the heat rate components of the Equipment Performance
Guarantees, and vice versa. Liquidated damages are paid by Seller to Buyer based
on the output and heat rate components of the Equipment Performance Guarantees.

Unless specifically identified above as being an Equipment Performance Guarantee
subject to the offsetting concept described herein (e.g. ammonia consumption),
offsetting shall not be

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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allowed. If Buyer and Seller mutually agree not to demonstrate one or more of
the above listed Equipment Performance Guarantees, then the offsetting
calculation shall exclude the effects of such guarantees. Such offsetting of
guarantees shall be calculated using the values of the corresponding Performance
LDs defined in Table 3.1. An example calculation of the methodology described
above is shown in Section 5, Appendix 4, Attachment 1.

No offsets of any kind shall be applied to the Reliability Guarantee.

If the Equipment fails to achieve an Equipment Performance Guarantee, Seller
shall pay as liquidated damages an amount calculated at the rate shown below.

Table 3.1 Liquidated Damages

 

GUARANTEED PERFORMANCE
PARAMETER

  

REFERENCE (from Tech Spec.)

  

INCREMENTAL AMOUNT

  

LD (US $) PER
INCREMENTAL
AMOUNT

(OUTPUT
COMPONENT)

  LD (US $) PER
INCREMENTAL
AMOUNT
(HEAT RATE
COMPONENT) OFFSETS WITHIN EQUIPMENT PERFORMANCE GUARANTEES ALLOWED A    Boiler
Fuel Efficiency    Table 6.1, Item b.    0.1% point    $****   $**** B    Reheat
Steam Pressure Drop    Table 6.1, Item c.    1.0 psi    $****   $**** C   
Steam/Water Side Pressure Drop    Table 6.1, Item d.    1 psi    $****   $**** D
   Reheat Spray Flow    Table 6.1, Item f.    1000 lb/hr    $****   $**** E   
Main Steam Outlet Temperature    Table 6.1, Item g.    1.0° F    $****   $**** F
   Reheat Steam Outlet Temperature    Table 6.1, Item h.    1.0° F    $****  
$**** G    Boiler Draft Loss    Table 6.1, Item l.    1 in w.c.    $****   $****
H    Boiler Flue Gas Flow Rate    Table 6.1, Item n.    1000 lb/hr    $****  
$**** I    Boiler Auxiliary load    Table 6.1, o    1.0 kW    $****   $**** J   
           NO OFFSETS APPLY (NO SPLIT BETWEEN OUTPUT AND HEAT RATE) K    Ammonia
Consumption    Table 6.1, u    1 lb/hr    $****

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

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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To calculate the liquidated damages for main steam and reheat steam
temperatures, liquidated damages will be paid based on the difference between
the average temperature (after applying any applicable correction factors)
measured during the test period(s) and the lower temperature listed in
guaranteed temperature range listed in Table 6.1 of Section 6 of Appendix A of
MRA-MBPX-00002. However, offset credits shall not be applied for temperature
exceedances if a) such excess temperature is greater than 5 degrees F above the
upper limit of the guaranteed range of temperature in Table 6.1 of Section 6 of
Appendix A of MRA-MBPX-00002, b) such excess temperature is a result of an
increase in the normal setpoint of the control loop without prior Buyer
permission.

Unless specifically identified above, all of the Seller’s Equipment Performance
Guarantees given in Material Requisition MRA-MBPX-00002, Appendix A. Table 6.1
shall be “Make Right” guarantees.

Seller’s right to liquidate a failure to meet the above Equipment Performance
Guarantees are conditioned upon 1) that failure not limiting the ability of the
Facility to operate during any normal mode of operation, 2) the Seller’s
Equipment meets the Minimum Performance Criteria specified in Section 5,
Appendix 4, Section 3.0 D, and 3) that failure not exceeding the values for that
particular Equipment Performance Guarantee given in Material Requisition
MRA-MBPX-00002, Appendix A, Table 6.1 (as indicated by the addition of Note 5
next to the guarantee value).

With respect to those Equipment Performance Guarantees for which Performance
Liquidated Damages are provided, the payment by Seller to Buyer of such
Performance Liquidated Damages in accordance with this Appendix 4 shall be
Buyer’s sole and exclusive remedy in full and final satisfaction of Seller’s
liability for performance shortfall, subject to the provisions of Clause 6.0,
Paragraph C of this Appendix 4 imposing on Seller costs of any retesting to the
extent Performance Tests fail for reasons attributable to Seller.

 

  D. Minimum Performance Criteria:

Minimum Performance Criteria for the Equipment is defined as an aggregate level
of performance such that the calculated output shortfall is not more than 17,333
kW and the calculated heat rate shortfall (meaning higher heat rate) is not more
than 182.7 Btu/kWh HHV. These shortfalls shall be determined by calculating the
output and heat rate shortfalls (or better than guaranteed performance)
attributable to the Equipment using the performance factors indicated below.
Performance factors will be applied to the difference between the corrected test
results and guaranteed values. For example, if the Equipment has 500 kW higher
auxiliary load than guaranteed, this value is multiplied by the applicable
performance factors below to arrive at the performance effect of auxiliary load
on Facility performance. The same procedure is applied to the other guaranteed
parameters given below. The results for each guarantee are summed to arrive at
the aggregate effect of the Equipment on output and

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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heat rate. In determining the aggregate effect of Equipment performance,
Equipment must be operated within design limits for continuous operation.
Performance factors to be used for determination of output and heat rate
shortfalls are as follows:

 

  a. -401 kW and +2.606 Btu/kWh per -1 degree F main steam temperature

 

  b. -435 kW and +1.598 /BtukWh per -1 degree F reheat steam temperature

 

  c. -238 kW and +1.061 Btu/kWh per +1 psi reheat system pressure drop

 

  d. 0 kW and +1.045 Btu/kWh per -0.1% pt boiler fuel efficiency

 

  e. -1 kW and +0.011 Btu/kWh per +1 kW auxiliary load

 

  f. -8 kW and +0.087 Btu/kWh per +1 psi steam/water side pressure drop

 

  g. 0 kW and +0.443 Btu/kWh per +1,000 lb/hr reheat steam spray flow

 

  h. 1.13 kW and +0.0123 Btu/kWh per +1,000 lb/hr flue gas flow rate

 

  i. 292 kW and +3.25 Btu/kWh per +1 in w.c. boiler draft loss

 

4.0 RELIABILITY GUARANTEE, RELIABILITY TEST AND RELIABILITY LIQUIDATED DAMAGES

 

  A. Reliability Guarantee

Seller guarantees that the EEAF, as measured during the Completed Reliability
Test (and calculated in accordance with paragraph (D) below), will not be less
than ****%

 

  B. Reliability Test

The Reliability Test consists of a 720-hour period of operation of the Facility,
is more particularly described in Clause 6.0 below, will be conducted in
accordance with the procedures and protocols described in Clause 7.0 below, and
is a requirement for achieving Final Completion.

 

  C. Reliability Liquidated Damages

If in the Completed Reliability Test, the EEAF is less than the Reliability
Guarantee value listed above, Seller shall pay as liquidated damages an amount
calculated at the rate shown below. If the EEAF is less than the Reliability
Guarantee for reasons that are not solely attributable to Seller, Seller shall
pay an amount equal to the proportionate share of Seller’s responsibility.

 

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

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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EEAF Ranges

  

Liquidated Damages

Less than 97.75% but more than 96%

   $**** per % shortfall

96% or less

   $**** per % shortfall

If the Facility failed to meet the Guaranteed Net Electrical Output,
respectively, during the Completed Net Electrical Output Test, the EAF and EEAF
will be calculated based upon the “bought down” capacity of the Facility (i.e.,
after payment of the applicable Performance Liquidated Damages) for purposes of
this Clause.

For purposes of this Clause the EEAF shall be rounded to the nearest one
hundredth of a percentage point.

 

  D. To determine the EAF, an availability factor (AF) will be calculated for
each dispatch level requested by the Owner during the designated test period.
The sum of the individual AFs, as calculated at each dispatch level, will be
averaged on a time-weighted basis to determine the equivalent availability over
the total test period. EAF is defined as follows:

 

   EAF    = {[(AF1 x DP1) + (AF2 x DP2) +…+ (AFn x DPn)] ÷ TP} x 100%

Where:

         AF    = Availability factor calculated at each individual dispatch
level and dispatch period as follows:    AF    = (NKWHO) ÷ (DL x DP)       If
the dispatch level for any dispatch period is zero, then the corresponding AF
for that dispatch period is 1, provided the Facility is available.    NKWHO    =
Net energy output calculated as the sum of kilowatt-hours generated by the
Facility over each dispatch period, as measured at the high voltage side of the
main transformer using the Facility’s metering devices and as adjusted for the
Facility guaranteed conditions.

 

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

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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DL    =    The net electrical dispatch level, in kilowatts, assigned by the
dispatch authority. The dispatch level shall not be greater than the guaranteed
Net Electrical Output of the Facility. The dispatch level shall be constant over
the dispatch period to which it applies. During periods of ramping the Facility
load up or down to meet a dispatched load, the dispatch level will be considered
the lower of the two dispatch loads assigned by the dispatch authority. The DL
cannot exceed the lesser of (1) the NEO or (2) the Net Electrical Capacity test
results selected by Buyer to demonstrate the Net Electrical Output guarantee to
Owner. DP    =    The period associated with each individual dispatch level,
measured in hours. The sum of the dispatch periods shall equal the total test
period duration. n    =    Total number of DPs in the test period TP    =   
Total test duration, in hours

 

  E. EEAF Calculation:

The EEAF will be determined as noted below.

 

   EEAF    =    [AH-(EUDH+EPDH)]/PH * 100% And:             AH    =    PH – (FOH
+ MOH + POH)    EUDH    =    Unplanned Derated Hours x Size of Reduction / MDC
   EPDH    =    Planned Derated Hours x Size of Reduction / MDC Where:         
   AH    =    Available Hours    PH    =    Period Hours = 720 Hours declared by
Buyer to demonstrate the EAF    FOH    =    Forced Outage Hours attributable to
Seller’s Equipment    MOH    =    Maintenance Outage Hours attributable to
Seller’s Equipment

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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POH   

=       Planed Outage Hours attributable to Seller’s Equipment

EUDH   

=       Equivalent Unplanned Derated Hours attributable to Seller’s Equipment

EPDH   

=       Equivalent Planned Derated Hours attributable to Seller’s Equipment

MDC   

=       Maximum Dependable Capacity = DL (as defined in the EAF equation)

In determining the EUDH and EPDH, the size of the reduction shall be determined
based upon the shortfall in kilowatt-hours in the net electrical output from the
MDC during the period of derated operation attributable to Seller’s Equipment.

In consultation with Seller, Buyer shall “look back” over the data collected
since the declared start of the Reliability Run and Buyer shall declare a
720-hour period to use as the basis of demonstrating the EAF and the Seller’s
EEAF.

When the Facility is required for dispatch and a fault occurs resulting in a
total loss of generation, the period of the forced outage shall begin when the
Facility has been taken out of service such that it is no longer capable of
being dispatched as evidenced by the operation records and shall end when the
Facility has been, or was made ready to have been, returned to the required
operating condition (in accordance with the start-up and ramp-up rates included
in Station Manuals) following completion of the repairs .

A Planned Outage shall begin when the Facility has been taken out of service
such that it is no longer capable of being dispatched by Owners as evidenced by
the operation records and shall end when the Facility has been returned to the
required operating condition (in accordance with the start-up and ramp-up rates
included in the Station Manuals).

Buyer shall have the right at all reasonable times during the Reliability Test
to inspect the Facility and all ancillary parts thereof. If as a result of such
an inspection, Buyer becomes aware of abnormal operating conditions or an
impending failure, and if Owners and Buyer agree (each acting reasonably), the
Facility shall be shut down in order to permit the parties to undertake a
detailed inspection over such period as the parties shall agree to be reasonable
in the circumstances.

 

  F. Reliability Test

Seller shall participate with Buyer in a Reliability Test to demonstrate to
Owner that the Facility can achieve the guaranteed Equivalent Availability
Factor or better during the 720 hour Reliability Test period.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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The period of testing for the Reliability Test shall commence whenever the
Facility is ready after the startup of the Facility and continue until the
Facility has achieved the Guaranteed Equivalent Availability Factor or better
over a period of 720 hours, but not beyond the Guaranteed Final Completion Date.
Buyer may at any time look back over the test data and designate the time period
to be declared as the Reliability Test. Full outage due to Force Majeure events
or interruptions because the power purchaser cannot or will not accept power,
and the related time required to shut down and restart for these outages, will
not be counted as test hours and will extend the 720 hour test period.

 

  a. The Equipment Equivalent Availability Factor (EEAF) and the Facility
Equivalent Availability Factor (EAF) shall be logged from the date of
commencement of the Reliability Test.

 

  b. Buyer will make all reasonable efforts to allow Seller access to the
Equipment in order to minimize repair time.

 

  c. Buyer will advise Seller when any event occurs which affects the EEAF.

 

  d. Seller may have personnel present to monitor operation until the guarantee
period has been completed.

 

  e. Buyer will determine the EAF using the formula as described in Clause 4.0
above.

 

5.0 FUNCTIONAL TESTS

Final Completion of the Facility requires successful completion of Functional
Tests as further detailed herein. Seller’s Equipment will be tested as part of
the Functional Tests. Seller is to demonstrate the Equipment Performance
Guarantees associated with a particular Functional Test in accordance with Table
3A of this Appendix 4.

 

  A. Noise Emissions Test

The Noise Emissions Test will test the noise emissions of the Facility in
accordance with test procedures agreed upon between Buyer and Owner.

 

  B. ERCOT Tests

 

6.0 PERFORMANCE GUARANTEE TESTS

 

  A. Seller’s Equipment will be tested as part of the Performance Guarantee
Tests. Seller is to demonstrate the Equipment Performance Guarantees associated
with a particular Performance Test in accordance with Table 3A of this Appendix
4.

The Performance Guarantee Tests will consist of the following:

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

Page 18 of 23

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PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

 

  (1) Ammonia Consumption Test.

A test shall be performed to demonstrate that the actual average ammonia
consumption rate is less than or equal to the ammonia consumption rate
guaranteed by Seller to Buyer while meeting the maximum allowable ammonia
slippage rate and the emissions guarantees for NOx. The results will be
corrected for deviations from the design ammonia and fuel quality.

 

  (2) Lime Consumption Test.

 

  (3) Sorbent Consumption Test.

 

  (4) Air Emissions Tests

Emissions shall be measured by an Owner approved, independent testing service
during conditions and at output levels that will satisfy the testing
requirements of the air permit and USEPA test requirements (except for ammonia
emissions which will be measured using method CTM-027) and use USEPA test
methods as specified in the air permit. Buyer shall provide all labor other than
Owner-provided operators, supervision, materials, equipment and services
necessary to conduct the Air Emissions Tests.

For all other Performance Tests, Buyer shall use the calibrated permanent plant
CEMS (except for ammonia emissions which will be measured using method CTM-027)
or temporary air pollution control monitoring devices to demonstrate compliance
with the air permit limits and averaging periods.

 

  (5) Thermal Performance Test.

See Section 5, Appendix 4, Clause 6.0 B.

 

  B. Thermal Performance Test

Net Electrical Output

The Net Electrical Output of the Facility shall be determined as the average of
the corrected Net Electrical Output measured during two 4-hour periods, after
correcting to the Guarantee Conditions of the Facility.

Net Heat Rate Calculation

Net Heat Rate (NHR) is not directly measurable and will be determined
analytically based on the average of tests using the NHR calculations described
below:

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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NHR    =                THR                   (NEO/GEO) (BEF)

 

Where:           THR =    Turbine Heat Rate, Btu/kWHr, defined as follows and
determined by the average of two tests in accordance with the “Alternative Test”
described in Paragraph 1.3.3 of ASME PTC 6-1996 “Performance Test Code 6 on
Steam Turbines”, with a test period of four (4) hours each, will be conducted to
determine the turbine cycle heat rate. Test results will be corrected in
accordance with ASME PTC 6 – 1996 “Alternative Test” and Seller’s performance
correction curves for deviations from the Guarantee Conditions. All other group
1 and 2 corrections to the as-tested turbine cycle heat rate will not be
permitted. The corrected test specific heat rates shall agree within 0.5
percent. Measured/calculated data will be used as inputs in the following
formula:   THR =    [M1 (H1 - HF) + M2 (HHR - HCR)]*(TAC)     
                                GEO Where:        M1    =    Turbine inlet steam
flow, lb/hr   H1    =    Turbine inlet main steam enthalpy, Btu/lb   HF    =   
Last HP heater outlet feedwater enthalpy, Btu/lb   M2    =    Reheat steam flow,
lb/hr   HHR    =    Turbine inlet hot reheat steam enthalpy, Btu/lb   HCR    =
   Turbine outlet cold reheat steam enthalpy, Btu/lb   GEO    =    Gross
electrical output at generator terminals adjusted for exciter losses, kW
(adjusted)

 

NEO    =    Net Electrical Output, kW (adjusted) during the NHR Test BEF    =   
Boiler Efficiency Factor, percent/100 TAC    =    Turbine aging correction
factor, determined as described in Clause 7.0, Paragraph A of this Appendix 4.

 

  C. Each Performance Test shall be performed at a time selected by, and at the
discretion of Buyer. Seller shall provide all test personnel and test equipment
as required per Material Requisition MRA-MBPX-00002, Appendix A to test Seller’s
Equipment for the Equipment Performance Guarantees associated with a Performance
Test. If, due to failure of Seller’s Equipment, an additional Performance Test
is required, Seller shall be responsible for the cost of this retest (excluding
fuel and operator costs) based on the scope of testing work allocated to Seller
in Material Requisition MRA-MBPX-00002, Appendix A. With respect to any
Performance Test, Buyer may declare a “Completed Performance Test”, which shall
establish the time of completion for such test if accepted by Owner.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

Buyer shall give reasonable notice to Seller prior to the dates on which any
Performance Test will be made, it being understood that Seller may require
preliminary tests and final adjustments.

 

  D. The performance of the Equipment demonstrated in each Completed Performance
Test will be determined and calculated in accordance with test procedures
consistent with Material Requisition MRA-MBPX-00002, App A, and as mutually
established by Seller, Buyer and Owner, which shall include correction factors
and adjustment curves.

 

  E. All test results obtained from the Performance Tests shall be corrected to
the Guarantee Conditions in accordance with the Test Procedures for the
Facility.

 

  F. All Performance Tests shall be accomplished with the Facility operating
wholly within its design ratings.

 

7.0 TEST PROTOCOLS AND PROCEDURES

 

  A. Guarantee Conditions

All Facility Performance Test results will be adjusted analytically for
deviations from the Guarantee Conditions as set forth in the Facility Test
Procedures. Performance degradation of the steam turbine generator will be
considered, as agreed between Buyer and Owner.

No degradation will be considered in determining whether Seller has met the
Equipment Performance Guarantees.

 

  B. Test Interruptions

With the exception of the Reliability Test, any test interruption attributable
to Buyer experienced during a Facility Performance Test or Equipment Performance
Test will require the re-testing of the applicable Facility or Equipment
Performance Guarantees. Test data gathered from the Facility or Equipment
Performance Test prior to the interruption shall be discarded. If a test
interruption occurs for reasons beyond the control of Buyer, it shall be
mutually agreed to either: (a) resume the Facility or Equipment Performance Test
after the cause of the test interruption has been rectified, or (b) restart the
Facility or Equipment Performance Test.

Upon the occurrence of a Facility or Equipment Performance Test interruption,
Buyer shall notify Owner in accordance with the performance test procedure. Upon
notification of an interruption, Buyer and/or Seller, with Owner’s assistance
will identify the cause, define the

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

Page 21 of 23

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PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

procedure for continuing or stopping the Performance Test or Equipment
Performance Test, and identify the responsibility for any costs incurred for
re-testing.

“Reliability Test Interruption” means any period of time the Facility is out or
derated because of Force Majeure, unavailability of fuel, Owner scheduled
outages (other than at Buyer’s request), faults of the electrical grid, and
failure of Owner to operate the Facility in accordance with the station
operating manuals. Reliability Test Interruptions will be excluded from the
Performance Test period for test data analysis and the Performance Test shall
continue when the interruption is corrected. Reliability Test Interruptions will
extend the test period by an amount of time equal to the interruption.
Reliability Test data collected before the interruption may be included in the
analysis.

Periods of exceedance of emissions limits defined in the Air Permit shall be
treated as a Reliability Test Interruption pursuant to the previous paragraph
(for the duration of the exceedance period), except for periods during which the
emissions exceedance resulted in a Facility derating or shutdown.

Upon a Facility trip caused by the Work, Owner will not be required to return
the Facility to service unless the root cause of the trip has been identified
and the problem has been corrected.

Any time period during a test for which a test interruption occurs that is
beyond the control of Buyer and Seller will be excluded from the test period for
test data analysis. Any interruption that is the consequence of failure of
equipment to meet operating requirements shall not be a test interruption and
shall not be excluded from the test period for test data analysis. Types of
interruptions excluded from the test period shall included interruptions caused
by Force Majeure, test instrumentation malfunction, unavailability of design
fuel or other materials, problems in disposing of discharge materials, and
operating and dispatching decisions and other causes outside Buyer’s and
Seller’s control except as otherwise provided with respect to dispatching
decisions during the Reliability Test. The Reliability Test periods may, at
Buyer’s option, be continuous except for permitted test interruptions per above.

Operator action/inaction, inconsistent with Prudent Utility Practices, or not in
accordance with (or inconsistent with) the performance test procedures, causing
a failure to meet the Guaranteed Emissions levels will not constitute an
emissions violation or test interruption, unless such action or inaction is at
the direction of Buyer and Seller. Emissions data from an exceedance period
attributable to operator action/inaction will be excluded from analysis. All
other data collected during such an exceedance period, at Buyer’s and Seller’s
joint option, will be included in the analysis.

The failure of nonessential automatic controls and instrumentation will not
preclude initiation of the Reliability Test, or require a Reliability Test
interruption if Buyer determines that the failure or unavailability of such
instrumentation would not require a Facility shutdown during normal operation.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 - Performance Guarantees

and Liquidated Damages

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PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES

 

  C. Test Procedures

Seller shall submit Test Procedures in accordance with Material Requisition
MRA-MBPX-00002, Appendix B.

The performance of Seller’s Equipment will be based on acceptance tests in
accordance with Material Requisition MRA-MBPX-00002, Appendix A.

The Performance Tests of the Facility shall be performed using a combination of
permanent Facility instrumentation and special test instrumentation for
measurements.

Seller shall be required to support the overall Performance Test program.
Seller-supplied Equipment will be required to be operated in the normal
configuration and be monitored as the Performance Tests are completed.

Seller shall report the results of the each Equipment Performance Test (unless
aborted) to Buyer. Buyer will report the results of each Performance Test
(reflecting overall Facility performance) to Owner.

Seller shall submit a summary test report (based on indicative fuel analysis)
within three Business Days after completion of each test. The report shall be
sufficient to demonstrate whether the Equipment Performance Guarantees were met
(i.e., including corrections of test data to the Reference Conditions).

Seller shall submit a final test report within 27 Days of test completion. This
detailed test report shall include, as a minimum, a description of the equipment
tested, the instruments with calibration used for the tests, test uncertainty,
test data, results, calculations, laboratory analyses, and application of
corrections to Guarantee Conditions

 

  D. Test Tolerances

Application of zero test tolerance shall apply for the tests and in determining
conformance to guarantees.

No tolerance, margin, or allowance for uncertainties in measurement or
instrumentation will be allowed in determining conformance to Equipment
Performance Guarantee values.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 4 – Performance Guarantees

and Liquidated Damages

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SECTION 5, APPENDIX 5

SCHEDULE GUARANTEES

 

1.0 General - Liquidated Damages (LDs) Reasonable

The Parties agree that Buyer would be damaged by Seller’s failure to meet the
required dates (“Guaranteed Milestone Dates”) set forth in Articles Section 5,
Appendix 5, Clauses 2 and 3 and by any failure to achieve Substantial Completion
by the date which is ninety (90) Days prior to the Guaranteed Substantial
Completion Date and that Buyer’s actual damages in any such event would be
extremely impracticable or impossible to calculate. Accordingly, the Parties
agree that Seller’s liability to Buyer for failure to achieve the specified
dates shall be determined by and limited to amounts as specified below, which
Seller agrees to pay to Buyer in such event as liquidated damages and not as a
penalty.

The Parties have negotiated in good faith for such specific liquidated damages
and have agreed that the amount of such liquidated damages is reasonable in
light of the anticipated harm caused by the breach or fault related thereto and
the difficulties of proof of loss and inconvenience or nonfeasibility of
obtaining any adequate remedy.

Each item of liquidated damages appearing in Section 5, Appendix 5, Clauses 2.0,
3.0, and 4.0 below shall apply separately and independently of every other item
of liquidated damages. To the extent funds withheld by Buyer are not sufficient
to pay any and all liquidated damages arising under this Agreement, Seller shall
pay such liquidated damages upon demand, after receipt of Buyer’s claim and
invoice.

Payment of liquidated damages shall not relieve Seller from its obligation to
carry out and complete the Work in accordance with this Agreement and/or from
any other duties, obligations or responsibilities Seller may have under this
Agreement and, accordingly, shall not prejudice Buyer’s rights in the event of
the failure of Seller to comply with any such obligations, subject to the
provisions of Section 5 (Special Conditions), Clause SC-30 (Limitation of
Liability).

 

2.0 Drawings, Documentation and Engineering Data

 

2.1 Drawings and engineering data shall be submitted by Seller in strict
accordance with Section 2 (Technical Specifications), Material Requisition
(Document Submittal Requirements (DSRs)), Appendix B, shall be complete and of a
high professional quality, and shall be received by Buyer no later than the
“Guaranteed Document Milestone Dates” shown in Section 2 (Technical
Specifications), Material Requisition, Appendix B . The Guaranteed Document
Milestone Dates are the dates such drawings or other documents are to be
received by Buyer at the address stipulated in Section 3 (Drawings and Data
Requirements). In the case of a DSR requiring a group of documents to be
submitted, this means that all of the documents in the group must be received by
Buyer on or before the Guaranteed Document Milestone Date therefor. Seller may
transmit documents by the most expedient means available including electronic
transmission, provided the date Buyer receives such transmission is no later
than the relevant Guaranteed Document Milestone Date. Where electronic
transmission has been made, Buyer shall receive one corresponding paper copy
within seven (7) Days of the electronic transmission.

 

2.2 Steam Generator (Boiler) Document Delivery Milestones

Refer to Section 2 (Technical Specifications), Material Requisition, Appendix B,
entitled (Document Submittal Requirements).

 

By Seller:                     

   By Buyer:                     

 

   Section 5, Appendix 5 – Schedule Guarantees

Page 1 of 8

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SECTION 5, APPENDIX 5

SCHEDULE GUARANTEES

Liquidated damages (“Document Delivery LDs”) as set forth in Table 1.0 below
shall be paid by Seller for document receipt by Buyer later than the applicable
Guaranteed Document Milestone Date.

Table 1.0 – Document Delivery LDs

 

Milestone

   Days
Late   

Document Delivery LDs Per Day

Documents subject to Document Delivery LDs are listed in Section 2 (Technical
Specifications), Material Requisition, Appendix B.

   1 – 30   

$****/Day/DSR milestone item

Late submittals shall be subject to liquidated damages as indicated unless
otherwise excused by the terms of this Agreement

   31+   

$****/Day/DSR milestone item

Example:

 

  1. For 7 Days delay of a document subject to Document Delivery LDs, the LDs
shall be:

7 x $**** = $****.

 

  2. For 35 Days delay of a document subject to Document Delivery LDs, the LDs
shall be:

30 x $**** + 5 x $**** = $****.

 

2.3 The Section 2 (Technical Specifications), Material Requisition, Appendix B,
contains an itemized list of drawings and documents subject to Document Delivery
LDs and identifies the submittal schedule to Buyer. For the purposes of the
Document Delivery LDs in Table1.0 above, documents in Section 2 (Technical
Specifications), Material Requisition, Appendix B listed as subject to Document
Delivery LDs are marked with “Y”.

 

2.4 All drawings submitted for “Review and Comment” shall be returned to Seller
in accordance with Section 5 (Special Conditions), Clause SC-9 (Drawing
Turnaround).

 

2.5 In the event that a given ”Item Number”, as shown in Section 2 (Technical
Specifications), Material Requisition, Appendix B, Column No 1 includes more
than one drawing/document, then Document Delivery LDs for late submittals shall
only be assessed to the individual “Item Number” as a whole and the breakdown of
“drawing/document” information on the drawing list shall not be treated as
separate submittals for purposes of calculating Document Delivery LDs. For the
avoidance of doubt, Document Delivery LDs shall only be assessed against the
delay in submission of the last document submitted within a milestone
group/”Item Number”.

 

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

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 5 – Schedule Guarantees

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SCHEDULE GUARANTEES

 

2.6 Additionally, for purposes of assessing Document Delivery LDs, any document
submittals, which receive status code 1, 2 or 4 shall be deemed to have been
submitted by Seller. If these status code 1, 2 or 4 documents are subsequently
revised by Seller causing rework by Buyer, such rework shall be charged to
Seller’s account in accordance with Section 5 (Special Conditions), Clause SC-
11 (Backcharges).

 

2.7 If any document submittal receives a status code 3 then, for the purpose of
assessing the liability of Seller to pay Document Delivery LDs, such document
shall be deemed not to have been received by Buyer until a revised or
replacement document is received which receives a status code 1, 2 or 4 review
stamp, or unless or until Seller has otherwise provided the necessary
information in another format acceptable to Buyer. As stated in Section 3
(Drawing and Data Requirements), any submittal rejection does not relieve Seller
of any schedule commitments. Subject to the requirements of Clause 2.2 of this
Appendix, Document Delivery LDs for any document receiving a status code 3
review stamp shall begin to accrue on the earlier of (a) the date on which
Seller is notified of the status code 3 review stamp for such document, or
(b) fifteen (15) Days following the date of Buyer’s receipt of such document.

 

2.8 The payment by the Seller to the Buyer of Document Delivery LDs in
accordance with this Clause 2.0 shall be the Buyer’s sole and exclusive remedy
in full and final satisfaction of the Seller’s liability for delay in submission
of such documents, subject to Buyer’s rights under Section 4 (General
Conditions), Clause GC-9 (Termination for Default) and Section 5 (Special
Condition), Clause-SC-4 (Expediting) and subject to Seller’s liability for
payment of other liquidated damages specified in Clauses 3.0 and 4.0 of this
Appendix 5.

 

3.0 Equipment Delivery Milestones

 

3.1 Delivery of all Equipment shall be in accordance with the Delivery
provisions of this Agreement. Delay in Delivery of specified Equipment items
shall be subject to liquidated damages (“Equipment Delivery LDs”) as indicated
in Attachment 1 to this Appendix 5.

 

3.2 Seller agrees to guarantee Delivery of Equipment by the dates set forth in
Attachment 1 to this Appendix 5 (“Guaranteed Milestone Delivery Dates”),
Attachment 1 and shall be subject to liquidated damages as indicated in
Section 5, Appendix 5, Attachment 1 based on the type of Equipment, in the event
of delivery of Equipment later than the applicable Guaranteed Milestone Delivery
Date. In addition, in the event that any item of Equipment is found and shown
by Buyer to be defective or damaged for reason(s) attributable to Seller, Seller
shall be liable to pay Equipment Delivery LDs calculated from the date the
defect or damage is notified by Buyer to Seller until the correction or repair
is completed, except that no such LDs shall be payable for any days
occurring prior to the due date for Delivery of the said item. Buyer shall
notify Seller of any such defect or damage promptly after Buyer’s discovery of
such defect or damage.

 

3.3 The milestones for component deliveries that are guaranteed in Attachment 1
to this Appendix 5 are for Delivery of all components in an identified group in
accordance with the Delivery provisions of this Agreement. Equipment Delivery
LDs will be assessed based upon the date of Delivery of the last major item in
an identified group. The aggregate Equipment Delivery LDs shall not exceed $****
per day for the first 30 days of delays, $**** per day from 31 to 60 days of
delay, and $**** per day after 61 days of delay.

 

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

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 5 – Schedule Guarantees

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3.4 The payment by Seller to Buyer of Equipment Delivery LDs shall be Buyer’s
sole and exclusive remedy in full and final satisfaction of Seller’s liability
for delay in Equipment Delivery, subject to Buyer’s rights under Section 4
(General Conditions), Clause GC-9 (Termination for Default) and Section 5
(Special Conditions Clause), SC-4 (Expediting) and subject to Seller’s liability
for payment of other liquidated damages specified in Clause 4.0 of this
Appendix.

 

3.5 Within forty-five (45) Days from the Effective Date, Seller shall use its
best efforts to (a) complete a traffics and logistics study with respect to
Delivery of the Equipment which is to be shipped from overseas (“Overseas
Equipment”) to the Site in a commercially reasonable and expeditious manner and
(b) provide to Buyer the cost of transportation of the Overseas Equipment from
the Port of Houston to the Site, which cost shall be determined on a “open book”
basis and reflect the conclusions of such study. During the preparation of the
plan described in (a) above, the Parties shall cooperate in developing, and
share information regarding, the study and the proposed costs with respect to
the Delivery.

 

4.0 Guaranteed Substantial Completion Delay Liquidated Damages

 

4.1 If (a) Seller’s Equipment fails to achieve the performance levels necessary
for the Facility to achieve Substantial Completion or (b) defects or
deficiencies in the Equipment prevent its operation, as required, to support
Buyer’s start-up and commissioning of the Facility and its component equipment
and systems (including Performance Test activities for the achievement of
Substantial Completion) or (c) the Equipment is unable to operate in support of
the Performance Tests for Substantial Completion, and to the extent any of the
foregoing causes delay in achieving Substantial Completion beyond the date that
is ninety (90) Days prior to the Guaranteed Substantial Completion Date (as such
date may be extended from time to time under the EPC Contract), then (subject to
provisions of Clause 4.2 and the qualifications set forth below), Seller shall
pay liquidated damages (Substantial Completion LDs) as set forth below to Buyer
for such delay to Substantial Completion beyond the date that is ninety
(90) Days prior to the Guaranteed Substantial Completion Date (the stipulated
amounts to be pro rated for any portion of a Day):

 

Days Late attributed to Seller

  

Substantial Completion

LDs per Day

 

For each Day of delay in achieving Substantial Completion occurring 1 to 90 Days
prior to the Guaranteed Substantial Completion Date

   $ * ***

For each Day of delay in achieving Substantial Completion on or after the
Guaranteed Substantial Completion Date

   $ * ***

 

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

 

By Seller:                     

   By Buyer:                     

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4.2 Subject to Clause 4.3 below, Buyer will provide reasonable access to the
Equipment for tune up and testing for a period of forty five (45) Days,
commencing from the First Fire on Coal, for the start up and commissioning of
the Equipment (including tuning) in accordance with Seller’s commissioning and
test plan as part of the integrated plant commissioning plan. In addition to
such forty five (45) Days (as may be reduced in accordance with Clause 4.3
below), Buyer shall endeavor to provide any additional access time to Seller, if
available, within the overall start up and commissioning period from the
commencement of First Fire on Coal to Guaranteed Substantial Completion Date, so
long as such additional access time does not compromise or interfere with
Buyer’s other commissioning activities.

 

4.3 Such forty five (45) Day period shall be reduced by the number of Days that
the cumulative impact of Equipment Delivery Delay(s) causes First Fire on Coal
to be delayed. In addition, in the event that all other equipment and systems in
the Facility are ready to support First Fire on Coal, and a defect or deficiency
in Equipment is the primary cause of a delay in the First Fire on Coal date,
such forty five (45) Day period also shall be reduced one Day for each Day of
delay caused primarily by such defect or deficiency in the Equipment as
aforesaid.

 

4.4 If Buyer is unable to provide such period of forty five (45) Days (or such
lesser period as provided in Clause 4.3 above), then (notwithstanding that the
date for Guaranteed Substantial Completion Date may have occurred) Days of delay
will not be allocated to the Seller (Seller shall have no liability to the Buyer
for Substantial Completion LDs in these circumstances) until Buyer has provided
it with forty five (45) Days (or such lesser period as provided in Clause 4.3
above) for the start up and commissioning of the Equipment from the First Fire
on Coal date.

 

4.5 For the purposes of calculating the number of Days for the start up and
commissioning of Equipment, if Seller has access to the Equipment to perform
start up related activities required to support Seller’s recommended start-up
sequence for operation and the achievement of Substantial Completion, that Day
shall be counted as a Day for the start up and commissioning of Equipment.

 

4.6 For the avoidance of any doubt, if Buyer fails to make the Equipment
available as contemplated by Clause 4.2 above that Day will not be counted as a
Day for the start up and commissioning of Equipment. Conversely, if Buyer makes
the Equipment available as contemplated by Clause 4.2 above and Seller elects
not to perform startup activities, that Day will be counted as a Day for the
start up and commissioning of Equipment.

 

4.7 It shall be understood that all parties will actively participate in the
coordination and scheduling of startup related activities to achieve Substantial
Completion in an organized, effective and efficient manner.

 

4.8 Further understandings in respect of the Substantial Completion LDs are set
out in paragraphs (i) through (vi) below:

 

  (i) Buyer (acting reasonably) shall determine responsibility for delays as
between Buyer, Seller and Buyer’s other contractors and suppliers. If and to the
extent that such delay is in Buyer’s opinion (acting reasonably) the
responsibility of Seller, Buyer (acting reasonably) shall assess and
proportionately allocate responsibility to the Seller and Buyer’s other
contractors and suppliers as appropriate. Allocation of responsibility for
Substantial Completion LDs will be made in a fair and equitable manner and will
take into consideration all relevant facts and circumstances, including the
performance factors with

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 5 – Schedule Guarantees

Page 5 of 8

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SECTION 5, APPENDIX 5

SCHEDULE GUARANTEES

respect to Equipment Performance Guarantees as referenced in Section 5, Appendix
4, Clause 3.0 D.

 

  (ii) Buyer shall give written notice to Seller of any determination of
responsibility under this Clause 4.0, and of any resulting assessment and
obligation to pay liquidated damages to Buyer on a weekly basis. Buyer will
promptly provide Seller with full details of all relevant calculations and with
copies of all relevant schedules, correspondence and other documents upon which
such determination, assessment and attribution were based.

 

  (iii) With respect to Substantial Completion LDs for the period after the
Guaranteed Substantial Completion Date, if Owner does not recover or seek to
recover from Buyer liquidated damages for failure to achieve Substantial
Completion under the Prime Contract, Buyer shall not be entitled to recover
Substantial Completion LDs from Seller under this Agreement.

 

  (iv) In no event shall the Substantial Completion LDs recoverable from Seller
and Buyer’s other contractors and suppliers in respect of delay to Substantial
Completion after the Guaranteed Substantial Completion Date be in excess of the
amount of Substantial Completion LDs recovered or sought from Buyer by Owner for
failure to achieve Substantial Completion under the Prime Contract.

 

  (v) To the extent that a delay in achievement of Substantial Completion is
caused by one or more previous delays in Delivery of Equipment ("Equipment
Delivery Delays") for which Seller has previously paid the full amount of
Equipment Delivery LDs applicable to that Equipment Delivery Delay under Clause
3.2 above then the following will apply:

 

  (i) in the event that the cumulative impact of such Equipment Delivery
Delay(s) on achievement of Substantial Completion is determined by Buyer, acting
reasonably, to be thirty (30) Days or less then the Equipment Delivery LDs
previously paid shall be treated as Buyer’s exclusive remedy for such Equipment
Delivery Delay(s), subject to Buyer's other rights under Section 4 (General
Conditions), Clause GC-9 (Termination for Default) and Section 5 (Special
Conditions), Clause SC-4 (Expediting) and Seller shall have no liability for
Substantial Completion LDs on account thereof;

 

  (ii) in the event that the cumulative impact of such Equipment Delivery
Delay(s) on achievement of Substantial Completion is determined by Buyer, acting
reasonably, to be more than thirty (30) days then Seller shall be fully liable
for payment of Substantial Completion LDs for the full impact of such Equipment
Delivery Delay(s) on achievement of Substantial Completion, in addition to the
Equipment Delivery LDs previously paid, but Buyer will credit the amount of such
Equipment Delivery LDs paid on account of such Equipment Delivery Delay(s)
against Seller's liability for Substantial Completion LDs.

 

  (iii) Seller will have no liability for Substantial Completion LDs following
the date on which Substantial Completion is achieved, except to the extent that
Substantial Completion LDs have previously accrued.

 

4.9 The payment by Seller to the Buyer of Substantial Completion LDs in
accordance with this Clause 4.0 shall be the Buyer’s sole and exclusive remedy
in full and final satisfaction of Seller’s liability

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 5 – Schedule Guarantees

Page 6 of 8

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SECTION 5, APPENDIX 5

SCHEDULE GUARANTEES

for delay in achievement of Substantial Completion, subject to Buyer’s rights
under Section 4 (General Conditions), Clause GC-9 (Termination for Default) and
Section 5 (Special Conditions), Clause SC-4 (Expediting).

 

5.0 Schedule Incentive

 

5.1 Buyer and Seller will use reasonable efforts to mutually agree on an
enhancement to the default incentive plan described in 5.3 within 90 days after
the Effective Date using the pre-agreed criteria below:

 

  (a) Seller desires an objective incentive plan which provides terms that are
within Seller’s control to decide project cost versus bonus potential;

 

  (b) Enhancements to the incentive plan include prioritization of critical
component deliveries, such as pressure parts; use of schedule data to decide the
basis of other component deliveries in the bonus calculation; the determination
of Number of Early Delivery Days (as defined below), to be greater than the
Lowest Number of Early Delivery Days (as defined below); and

 

  (c) Caps on the aggregate amount of schedule bonus to be no greater than those
set forth in Clause 5.2(c)

In the event that an enhanced incentive plan is not mutually agreed by Buyer and
Seller within ninety (90) Days from the Effective Date, the default incentive
plan set forth in Clause 5.2 will serve as the incentive plan.

 

5.2 Default Incentive Plan

In the event that Seller achieves Delivery of all of the items of Equipment by
dates which are earlier than the Guaranteed Milestone Dates for such items of
Equipment as shown in Section 5, Appendix 5, Attachment 1 then Seller shall be
entitled to receive a bonus payment (“Schedule Bonus”) determined as follows:

 

  (a) the number of days by which Delivery of the last item of Equipment in a
milestone group is earlier than the Guaranteed Milestone Delivery Date for that
milestone group shall be established (in each case, the “Number of Early
Delivery Days”);

 

  (b) the Equipment milestone group (or milestone groups) with the lowest Number
of Early Delivery Days shall be identified (such lowest number of days, the
“Lowest Number of Early Delivery Days”);

 

  (c) Seller shall be entitled to receive a Schedule Bonus equal to $100,000
multiplied by the Lowest Number of Early Delivery Days, provided that Seller’s
entitlement to receive a Schedule Bonus shall be limited to thirty (30) Days in
the aggregate.

For purpose of illustration, the following sets forth two worked examples of the
above:

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 5 – Schedule Guarantees

Page 7 of 8

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SECTION 5, APPENDIX 5

SCHEDULE GUARANTEES

Example X:

 

  (i) assume that Delivery of all items within the “Coal Pulverizers – Base
Plates” milestone group is completed ten days earlier than the Guaranteed
Milestone Date for that milestone group (i.e. Number of Early Delivery Days for
the milestone group = ten days);

 

  (ii) assume that Delivery of all items within the “Coal Pulverizer—Internals”
milestone group is completed five days earlier than the Guaranteed Milestone
Date for that milestone group (i.e. Number of Early Delivery Days for the
milestone group = five days);

 

  (iii) assume that Delivery of all items within all other milestone groups was
completed three days earlier than the Guaranteed Milestone Date for those
milestone groups respectively (i.e. Number of Early Delivery Days for these
milestone groups = three days);

then the Lowest Number of Early Delivery Days = three days and accordingly
Seller shall be entitled to a Schedule Bonus of $300,000 (i.e. $100,000
multiplied by three days).

Example Y:

 

  (iv) assume that Delivery of all items within the “Coal Pulverizers – Base
Plates” milestone group is completed ten days earlier than the Guaranteed
Milestone Date for that milestone group (i.e. Number of Early Delivery Days for
the milestone group = ten days);

 

  (v) assume that Delivery of all items within the “Coal Pulverizer—Internals”
milestone group is completed one day later than the Guaranteed Milestone Date
for that milestone group (i.e. Number of Early Delivery Days for the milestone
group = zero days);

 

  (vi) assume that Delivery of all items within all other milestone groups was
completed three days earlier than the Guaranteed Milestone Date for those
milestone groups respectively (i.e. Number of Early Delivery Days for these
milestone groups = three days);

then the Lowest Number of Early Delivery Days = zero days and accordingly Seller
shall be entitled to no Schedule Bonus.

 

5.3 Further understandings in respect of the Schedule Bonus are set out in
paragraphs (i) through (ii) below:

 

  (i) In the event that any item of Equipment is found and shown by Buyer to
be defective or damaged for reason(s) attributable to Seller, then Delivery
shall not be deemed to have been made until the correction or repair is
completed.

 

  (ii) Upon Delivery of the last item of Equipment shown in Section 5, Appendix
5, Attachment 1 Seller shall submit an invoice to Buyer for any Schedule Bonus
to which Seller is entitled and Buyer shall make payment of such Schedule Bonus
within sixty (60) days of Buyer’s receipt of the invoice.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 5 – Schedule Guarantees

Page 8 of 8

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SECTION 5, APPENDIX 5, ATTACHMENT 1

GUARANTEED MILESTONE DELIVERY DATES

Table 3.0

SELLER’S GUARANTEED DELIVERY DATES TO JOBSITE FROM EFFECTIVE DATE

 

MILESTONES (GROUP)

  

PROJECT     

  

EQUIPMENT DELIVERY LDs *

Coal Pulverizers - Base Plates   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Coal Pulverizer - Internals   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Primary, & Secondary Air Duct erected with structural steel   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Pulverized Coal Fuel Piping and Hangers (Straight Runs)   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Buckstays   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Primary Superheater (Horizontal Banks)   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Primary Superheater Outlet Header   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Windboxes   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Soot Blowers   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Hanger Rods   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Steam Separators & Penthouse Mix Headers   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Upper Furnace Walls   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Burners   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Pendant Reheat Banks   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Pendant Reheat Headers   

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 5, Attachment 1

Guaranteed Milestone Delivery Dates

Page 1 of 3

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PROJECT     

SECTION 5, APPENDIX 5, ATTACHMENT 1

GUARANTEED MILESTONE DELIVERY DATES

SELLER’S GUARANTEED DELIVERY DATES TO JOBSITE FROM NTP

 

MILESTONES (GROUP)

  

PROJECT 3

  

EQUIPMENT DELIVERY LDs

Platen (Secondary) Superheater    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Platen (Secondary) Superheater Headers    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Downcomers    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Furnace Roof Walls    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Horizontal Reheater Sections    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Economizer Banks    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Economizer Outlet Headers    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Lower Furnace Walls    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Back Pass Walls    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Balance of Large Bore Fabricated ASME Sect I Piping (w/Valves and Hangers) and
Pressure Parts    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Air Heaters    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

SCR Components in Duct and Piping    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Reagent System (Dilution Air Skid)    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Balance of Flues & Ductwork w/Hangers, Expansion Joints, Dampners and Turning
Vanes    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

Fans and Motors    ***   

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 5, Attachment 1

Guaranteed Milestone Delivery Dates

Page 2 of 3

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PROJECT     

SECTION 5, APPENDIX 5, ATTACHMENT 1

GUARANTEED MILESTONE DELIVERY DATES

SELLER’S GUARANTEED DELIVERY DATES TO JOBSITE FROM NTP

 

MILESTONES (GROUP)

  

PROJECT 3

  

EQUIPMENT DELIVERY LDs

Catalyst

  

***

  

1 - 10 Days

11-20 Days

21 and more

  

$***/ Day

$***/Day

$***/Day

NOTES TO TABLE 3.0

1. All associated parts and hardware required to install each item shall be
delivered with the item except for minor items that do not impede erection or
operation of the equipment.

2. All other components to complete the Work will be delivered in a manner that
supports Buyer’s erection schedule.

3. Buyer will accept early Delivery of Equipment up to thirty (30) Days before
the Guaranteed Milestone Delivery Dates.

4. Seller will not deliver Equipment packages earlier than thiry (30) Days ahead
of the Guaranteed Milestone Dates without prior written consent of Buyer.

5. Buyer has the right to delay delivery of any item in accordance with
Section 5, Article SC-40, “Deferred Delivery”.

6. The aggregate liquidated damages amount on component deliveries shall not
exceed $ *** per day, for first 30 days of delays, $ *** per day, from 31 – 60
days of delay, and $ *** per day after 61 days of delay.

 

--------------------------------------------------------------------------------

*** Confidential Matieral Redacted and Filed Separately with the Commission.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 5, Attachment 1

Guaranteed Milestone Delivery Dates

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SECTION 5, APPENDIX 6

EQUIPMENT INVOICE SCHEDULE

Seller may submit an invoice for each milestone upon achieving such milestone
but not earlier than the period shown in “Column 1” of as set forth in the Table
below.

Invoices for Section 1, Item No. 1.1 shall be as follows:

 

Invoice, Months

From Effective

Date

  

Payment Milestone

   Project 3  

0

     

1

  

Full Release (initial payment*) Paid

   *** %

2

      *** %

3

      *** %

4

      *** %

5

      *** %

6

      *** %

7

      *** %

8

      *** %

9

      *** %

10

      *** %

11

      *** %

12

      *** %

13

      *** %

14

      *** %

15

      *** %

16

      *** %

17

      *** %

18

      *** %

19

      *** %

20

      *** %

21

      *** %

22

      *** %   

Percent (%) of Total Price

   100.00 %

NOTE 1: Mutually agreeable milestones will be added to the above schedule of
payments.

*** Confidential Material Redacted at filed Separately with the Commission

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 6 – Equipment Invoice Schedule

Page 1 of 2

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SECTION 5, APPENDIX 6

EQUIPMENT INVOICE SCHEDULE

Invoices for Technical Representatives – Section 1, Item Nos. 1.2 to 1.4

One hundred percent (100%) of respective amounts for Item No. 1.2 and one
hundred percent (100%) of Item No. 1.3 shall be submitted monthly based on the
prorated basis of the services rendered in the respective month. The Daily Time
Sheets approved by Buyer’s representative shall be submitted with a monthly
basis.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 6 – Equipment Invoice Schedule

Page 2 of 2

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SECTION 5, APPENDIX 7

TERMINATION PAYMENT SCHEDULE

 

End of Month After Effective Date

 

Measurable Milestone

 

Project     

1

  Notice to Proceed   ***

2

    ***

3

    ***

4

    ***

5

    ***

6

    ***

7

    ***

8

    ***

9

    ***

10

    ***

11

    ***

12

    ***

13

    ***

14

    ***

15

    ***

16

    ***

17

    ***

18

    ***

19

    ***

20

    ***

21

    ***

--------------------------------------------------------------------------------

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

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 7 – Termination Payment Schedule

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SECTION 5 – APPENDIX 8

B&W PARENT COMPANY GUARANTEE

This Guarantee given and delivered by McDermott International, Inc., a company
organized under the laws of Panama, herein called “Guarantor”, to TXU Generation
Development Company LLC, herein called “Buyer,” with respect to Purchase Order
Number TBD , dated [                ] (herein called “Purchase Order”) between
Buyer and The Babcock & Wilcox Company, a Delaware corporation, for the supply
of certain boiler and associated equipment for the [                ] Project.

WITNESSETH

That in order to induce Buyer to enter into the Purchase Order with The Babcock
and Wilcox Company (herein called "Affiliate”), an affiliated company of
Guarantor, and in consideration of Buyer entering into the Purchase Order with
Affiliate, the Guarantor has determined that executing this Guarantee is in its
interest and to its financial benefit and it is hereby agreed as follows:

 

1. Guarantor, for itself, its successors and permitted assigns, hereby
irrevocably and unconditionally guarantees to Buyer, its successors and
permitted assigns, as primary obligor and not as surety, the full and faithful
performance by Affiliate, its successors and assigns of each and every one of
the terms, provisions, conditions, obligations and agreements on the part of
Affiliate to be made, carried out, performed or observed as provided in the
Purchase Order.

 

2. If at any time default is made by Affiliate in the performance of any of the
terms, provisions, conditions, obligations and agreements in the Purchase Order
or in the payment of any sums payable pursuant thereto which are to be made,
carried out, performed, paid or observed by Affiliate, Guarantor will well and
truly perform, or cause to be so performed, such terms, provisions, conditions,
obligations and agreements in the Purchase Order. Save as provided in and
subject to the terms of this Guarantee, any monies which are payable by
Affiliate pursuant to the Purchase Order which may not be recoverable from
Affiliate shall nevertheless be recoverable by Buyer from Guarantor as if
Guarantor were principal debtor. All payments by Guarantor hereunder shall be
made in full, without set-off or counterclaim and free and clear of any
deductions or withholdings in immediately available, freely transferable,
cleared funds to the account of Buyer as notified to Guarantor by Buyer.

 

3. Guarantor agrees that its obligations hereunder shall not be discharged nor
shall they be affected by reason of: (i) any legal limitations, disabilities,
incapacities or want of powers on the part of Affiliate to enter into the
Purchase Order; or (ii) the invalidity or unenforceability of the obligations of
Affiliate under the Purchase Order arising from or related to the liquidation,
winding up or dissolution of Affiliate; or (iii) the appointment of or acts of a
receiver or liquidator on behalf of Affiliate (including, without limitation,
the ability of any liquidator of Affiliate to disclaim obligations of Affiliate
arising under the Purchase Order).

 

4. Guarantor covenants and agrees with Buyer, its successors and permitted
assigns that (i) waiver by Buyer of any of the terms, provisions, conditions,
obligations and agreements of the Purchase Order, (ii) any modification or
changes to the Purchase Order, (iii) the giving of any consent to an assignment
or the making of any assignment of the Purchase Order and (iv) the granting of
extensions of time to Affiliate, its successors and permitted assigns may all or
any of them be made and done without notice to Guarantor and without in any way
affecting, changing or releasing Guarantor from its obligations given under this
Guarantee, and such changes or extensions of time may be granted, such waiver
and consents may be given and such modifications and assignments may be made
without notice to or the consent of Guarantor and without impairing the
obligations of the Guarantee hereby given.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 8 – B&W Parent Company Guarantee

Page 1 of 4

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SECTION 5 – APPENDIX 8

B&W PARENT COMPANY GUARANTEE

 

5. Following the making of demand on the Affiliate (but without having to take
any proceeding against the Affiliate) and after resorting to any letter of
credit provided by Affiliate under the Purchase Order, Buyer may enforce this
Guarantee against Guarantor. The Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and, to the fullest extent permitted by law, any
notice not provided for herein.

 

6. The liability of the Guarantor under this Guarantee shall in no event be
greater than that of Affiliate under the Purchase Order, and the Guarantor shall
have available to it, in any action or proceeding by Buyer seeking performance
of this Guarantee, or damages for its non-performance of this Guarantee, all
defenses and counterclaims which Affiliate would be able to raise in an action
by Buyer against Affiliate seeking performance or damages for non-performance
under the Purchase Order.

 

7. If a demand, in accordance with this Guarantee, is made upon the Guarantor
and the Guarantor duly and properly performs the obligations of Affiliate then,
to that extent only, Affiliate shall be released from such obligations by the
Buyer.

 

8. This Guarantee shall expire upon final fulfillment by Affiliate of all its
obligations under the Purchase Order or in lieu thereof by Guarantor under this
Guarantee. Upon the date of expiry, this Guarantee shall be of no further
effect, except in respect of claims or demands made under this Guarantee on or
before such expiry date.

 

9. On written notice to the Guarantor, this Guarantee may be assigned by Buyer
to any legal entity or entities to whom Buyer’s rights and/or obligations under
the Purchase Order are assigned in accordance with the terms of the Purchase
Order.

 

10. Guarantor represents and warrants that:

(a) It is a corporation, partnership or limited liability company duly and
properly incorporated or organized, as the case may be, validly existing and (to
the extent such concept applies to such entity) in good standing under the laws
of its jurisdiction of incorporation or organization and has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted.

(b) It has the power and authority and legal right to execute and deliver this
Guarantee and to perform its obligations hereunder. The execution and delivery
by it of this Guarantee and the performance of its obligations hereunder have
been duly authorized by proper corporate proceedings, and this Guarantee
constitutes a legal, valid and binding obligation of Guarantor enforceable
against it in accordance with its terms.

(c) Neither the execution and delivery by it of this Guarantee, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof will violate (i) any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on it or any of its subsidiaries
or (ii) its articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws, or
operating or other management agreement, as the case may be, or (iii) the
provisions of any indenture, instrument or agreement to which it or any of its
subsidiaries is a party or is subject, or by which it is bound, or conflict with
or constitute a default thereunder. No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 8 – B&W Parent Company Guarantee

Page 2 of 4

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PROJECT     

SECTION 5 – APPENDIX 8

B&W PARENT COMPANY GUARANTEE

action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by it or any of its
subsidiaries, is required to be obtained by it or any of its subsidiaries in
connection with the execution and delivery of this Guarantee or the performance
by it of its obligations hereunder or the legality, validity, binding effect or
enforceability of this Guarantee.

 

11. This Guarantee is governed by, and shall be construed in accordance with,
the laws of the State of Texas without reference to the conflict of laws rules
thereof. This Guarantee is intended to be fully enforceable in accordance with
its terms and constitutes a guarantee of Affiliate’s obligations and liabilities
arising out of or in connection with the Purchase Order. In the event that any
issue, matter or dispute arises under the Purchase Order which is resolved under
the Purchase Order, including any issue, matter or dispute which is resolved in
accordance with the dispute resolution provisions under the Purchase Order, such
issue, matter or dispute shall be deemed to have been conclusively determined
for the purpose of this Guarantee and neither party to this Guarantee will
thereafter take any steps to argue that such issue, matter or dispute should be
resolved under this Guarantee in any different manner from the resolution under
the Purchase Order and the parties waive any right to do so.

 

12. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO AGREE THAT ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTEE SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE OR FEDERAL DISTRICT COURT LOCATED IN THE COUNTY
OF DALLAS, STATE OF TEXAS. THE PARTIES, TO THE EXTENT THEY MAY LEGALLY DO SO,
IRREVOCABLY WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS (OR ANY SIMILAR LEGAL DOCTRINE) OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION IN THE STATE OR
FEDERAL DISTRICT COURT LOCATED IN THE COUNTY OF DALLAS, STATE OF TEXAS, AND
IRREVOCABLY STIPULATE THAT THE STATE OR FEDERAL DISTRICT COURT LOCATED IN THE
COUNTY OF DALLAS, STATE OF TEXAS SHALL HAVE IN PERSONAM JURISDICTION AND VENUE
OVER SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR
PROCEEDING ARISING OUT OF RELATED TO THIS GUARANTEE. THE PARTIES EACH AGREE, TO
THE FULLEST EXTENT PERMITTED BY FEDERAL LAW, NOT TO RAISE ANY OBJECTION TO THE
REMOVAL OR TRANSFER TO THE FEDERAL DISTRICT COURT LOCATED IN THE COUNTY OF
DALLAS, STATE OF TEXAS OF ANY SUCH PROCEEDING THAT IS INITIALLY BROUGHT IN ANY
OTHER COURT. THE PARTIES ALSO EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTEE. THE PARTIES EACH AGREE THAT IT WILL NOT FILE ANY
MOTION OR ASSERT ANY DEFENSE IN ANY SUCH PROCEEDING THAT IS INCONSISTENT WITH
THE FOREGOING AGREEMENTS, WAIVERS, CONSENTS OR STIPULATIONS. EACH OF THE PARTIES
HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER, OR
IN CONNECTION WITH THIS GUARANTEE.

Guarantor hereby irrevocably appoints McDermott International Inc. at 757 N.
Eldridge Parkway, Houston, Texas 77079 as its agent for service of process. Each
party agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 8 – B&W Parent Company Guarantee

Page 3 of 4

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TXU STANDARD PROJECT

PROJECT     

SECTION 5 – APPENDIX 8

B&W PARENT COMPANY GUARANTEE

To the extent Guarantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property based on place of personal
jurisdiction, Guarantor hereby irrevocably waives such immunity with respect to
its obligations under the Guarantee.

IN WITNESS WHEREOF, Guarantor has executed this Guarantee this      day of
                    , 2006.

MCDERMOTT INTERNATIONAL, INC.

 

Signed:  

 

Name:   Title:  

 

  (Duly Authorized Officer of Guarantor) Witness by:  

 

Name:   Title:  

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 8 – B&W Parent Company Guarantee

Page 4 of 4

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 10

NARRATIVE ON DELIVERY AND FABRICATION

Seller’s proposed narrative description of method of delivery (multi-modal ship
– rail – truck – heavy haul) and level of shop fabrication or modularization
(fully assembled modules with casing attached or casing and columns both
attached, fully shop assembled pipe spools with valves and fittings attached;
size of shipping containers, equipment preservation, etc.) is summarized below.

 

Component Description

  

Number of
Pieces

(Refer to N-2)

  

Narrative on Delivery and Fabrication

      All deliveries are by truck unless otherwise noted. Downcomer System      
Shipped as loose pieces with weld end preps included. Supply Tubes       Shipped
as loose pieces of size suitable for truck shipment. Weld end preps included.
Riser Tubes       Shipped as loose pieces of size suitable for truck shipment.
Weld end preps included. Furnace Upper Water Wall Headers       28 Shipped as an
assembly attached to respective water wall panel. 2 Shipped loose. Furnace
Intermediate Water Wall Headers       Shipped as an assembly attached to
respective water wall mix panel. Furnace Lower Water Wall Headers       Shipped
as an assembly attached to spiral hopper assembly. Primary Superheater Headers
      Shipped as an assembly with tube stubs provided. Reheater Headers      
Shipped as an assembly with tube stubs provided. Upper Economizer Headers      
Shipped as an assembly with tube stubs provided. Intermediate Economizer Headers
      Shipped as an assembly with tube stubs provided. Lower Economizer Headers
      Shipped as an assembly with tube stubs provided. Sat. Steam Pipe (Drum To
Boiler)       Not Applicable. By-Pass, Steam Separator to Economizer      
Shipped as loose pieces of size suitable for truck shipment. Weld end preps
included. Steam Separators       Shipped as an assembly with nozzle connections
provided. Water Collection Tank       (1) WCT Shipped in (2) TWO pieces with
nozzle connections provided. Weld end preps included Economizer Link Pipe      
Shipped as loose pieces of size suitable for truck shipment. Weld end preps
included. Superheater Links       Included as part of Superheater header
Desuperheater       Shipped as an assembly with weld end preps provided. Primary
Superheater Interconnecting Pipe       2 Circuits, Shipped as (4) loose pieces
of size suitable for truck shipment. Weld end preps included.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 10 – Narrative on Delivery and Fabrication

Page 1 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 10

NARRATIVE ON DELIVERY AND FABRICATION

 

Component Description

  

Number of
Pieces

(Refer to N-2)

  

Narrative on Delivery and Fabrication

Superheater # 3 (Finishing) Interconnecting Pipe       2 Circuits, Shipped as
(2) loose pieces of size suitable for truck shipment. Weld end preps included.
Furnace Loose Tubes (Roof and RW Screen)       Shipped as loose pieces of size
suitable for truck shipment. Weld end preps included. Furnace Water Wall Panels
      Shipped as membraned panels. Attachments which do not extend greater than
3” from the face of the panel are shop installed. Headers are attached where
applicable. Loose field material supplied at panel splits. Furnace Roof Panels
      Shipped as membraned panels. Attachments which do not extend greater than
3” from the face of the panel are shop installed. Loose field material supplied
at panel splits. Wing wall Panels       Not Applicable Roof Headers      
Shipped as an assembly with tube stubs provided. Boiler (Rear Pass) Wall Panels
      Shipped as membraned panels. Attachments which do not extend greater than
3” from the face of the panel are shop installed. Headers attached where
applicable. Loose field material supplied at panel splits. Boiler (Rear Pass)
Roof Panels       Not Applicable Boiler (Rear Pass) Loose Tubes       Shipped as
loose pieces of size suitable for truck shipment. Weld end preps included.
Primary Superheater #1 Loose Tubes       Ship with Economizer 2-section high
sheet modules Primary Superheater #1 Tube Sections      

25 modules one bank high with 10 sections per module, and 125 – two banks high
sheet modules with 2 sections per module

125 pendants sections

Superheater # 2 Tube Sections (Platens)       Shipped as individual sections
with two 20 tube rows per section. Castings, supports and tube shields (if
applicable) are shop attached. Side to side ties/spacers and seal plates at roof
are supplied loose. Superheater # 2 loose tubes       Not Applicable Superheater
# 3 loose tubes       Not Applicable Superheater # 3 (Finishing) Tube Sections
      Shipped as two banks with the front bank containing 47 sections and the
rear bank

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 10 – Narrative on Delivery and Fabrication

Page 2 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 10

NARRATIVE ON DELIVERY AND FABRICATION

 

Component Description

  

Number of
Pieces

(Refer to N-2)

  

Narrative on Delivery and Fabrication

      containing 47 sections. Inlet and outlet manifold headers are shop
attached to each bank as required. Castings, supports and tube shields (if
applicable) are shop attached. Side to side ties/spacers and seal plates at roof
are supplied loose. Primary Reheater Loose Tubes       Not Applicable Primary
Reheater Tube Sections      

251 3-section high sheet modules with connecting tubes attached

125 pendant sections

Final Reheater Tube sections       125 pendant sections Economizer Loose Tubes
(Stringers, loose tubes to and from Economizer under RSH)       Shipped as loose
pieces of size suitable for truck shipment. Weld end preps included. Economizer
Tube Sections      

250 2-section high sheet modules under PSH

251 2-section high sheet modules under RSH

Hanger Rods, Spring Supports       Shipped as loose pieces. Buckstays & Furnace
Guides       Shipped as loose pieces. Access Doors & Instrument Inserts      
Doors and frames shipped as a complete assembly separate from panels. Tight Roof
Casing       Shipped as separate casing panels with stiffeners attached where
possible. Economizer Casing       Shipped as separate casing panels with
stiffeners attached where possible. Penthouse Platework       Shipped as
separate casing panels with stiffeners attached where possible. Framing and
support beams shipped loose. Furnace Bottom Seals       Shipped as loose pieces.
Furnace Wall Boxes       Wall Boxes which do not extend greater than 3” from the
face of the panel are shop installed. Otherwise, they are shipped loose.
Scallop & Seal Bars       Shipped as individual pieces as required for field
installation. Misc. Structural Steel       Fly Ash Hoppers       Shipped as
separate casing panels with stiffeners attached where possible. Bottom Ash
Hoppers       N/A Flue Gas Duct (sections or panels)       Shipped as knocked
down panels with stiffeners attached. Panel sizes suitable for truck shipment.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 10 – Narrative on Delivery and Fabrication

Page 3 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 10

NARRATIVE ON DELIVERY AND FABRICATION

 

Component Description

  

Number of
Pieces

(Refer to N-2)

  

Narrative on Delivery and Fabrication

Gas Outlet Duct       Shipped as knocked down panels with stiffeners attached.
Panel sizes suitable for truck shipment. Primary Air Duct (sections or panels)
      Shipped as knocked down panels with stiffeners attached. Panel sizes
suitable for truck shipment. Secondary Air Duct (sections or panels)      
Shipped as knocked down panels with stiffeners attached. Panel sizes suitable
for truck shipment. Burner Windbox       Shipped as separate casing panels with
stiffeners attached where possible. Internal trusses shipped loose as pieces.
Dampers       Shipped as loose pieces for field assembly into flues and ducts.
Expansion Joints       Shipped as loose pieces for field assembly into flues and
ducts. Inlet Duct To FD Fan       FD Fan To Air Heater Duct       Shipped as
knocked down panels with stiffeners attached. Panel sizes suitable for truck
shipment. Air Heater By Pass Duct       N/A Air Preheater (Regenerative)      
See Air Heater Description provided in Attachment 1 Air Preheater Baskets      
See Air Heater Description provided in Attachment 1 Steam Coil Air Heater(s)   
   Level of shop fabrication as determined by vendor. Fuel Feeders       Level
of shop fabrication as determined by vendor. Pulverizers       Main ship units
per pulverizer include (but not limited to) gear box base plate assembly, bottom
housing assembly, tension cylinder assembly, gear drive, yoke, yoke seal
assembly, intermediate housing assembly, ring seat assembly, roll wheel
assembly, pressure frame assembly, spring frame, top housing assembly, and swing
valve assembly. Numerous smaller ship units for items such as nuts, bolts,
gaskets, rings, seals, steel, etc, will also be provided. Burners & Ignitors   
   Main burner assembly and ignitor shipped separately. Miscellaneous items
shipped loose to field include (but not limited to): windbox extension flange,
slip seal assembly, nuts, bolts, gaskets, drive yoke, washers, pins, retainer
rings and plates, coal elbow, ignitor transformer, and misc. steel.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 10 – Narrative on Delivery and Fabrication

Page 4 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 10

NARRATIVE ON DELIVERY AND FABRICATION

 

Component Description

  

Number of
Pieces

(Refer to N-2)

  

Narrative on Delivery and Fabrication

Sootblowers       Level of shop fabrication as determined by vendor. Circulating
Pumps & Drives       Level of shop fabrication as determined by vendor.
Secondary Air Fan       Level of shop fabrication as determined by vendor.
Primary Air Fan       Level of shop fabrication as determined by vendor. Seal
Air Fan       Level of shop fabrication as determined by vendor. Selective
Catalytic Reduction       Reactor box shipped as separate casing panels with
stiffeners attached where possible. Support beams shipped loose. 504 Catalyst
blocks shipped independently. Ammonia Skid(s)       Skid is completely shop
assembled by vendor Bidder Supplied Pipe      

2.5” OD and larger pipe will be delivered as shop assembled spool pieces of size
suitable for truck shipment. Fittings and flanges included with shop spools.
Valves delivered loose to field.

 

Pipe systems smaller than 2.5” OD will be delivered as loose bulk material
(pipe, fittings, flanges, etc.) for fit-up and routing in the field.

Pipe Hangers:       Shipped as loose pieces as required for each piping system.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 10 – Narrative on Delivery and Fabrication

Page 5 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 10

NARRATIVE ON DELIVERY AND FABRICATION

Size 34.5-VI-78 (98” Casing) Modular Rotor Trisector

PRELIMINARY SHIPPING VOLUMES PER AIR PREHEATER

 

     

Component

   Unit of
Measure    Quantity
(For
(Information
Only)    Length
(ft.)    Width
(ft.)    Height
(ft.)

1

   Cold end center section    Piece    1    62    13    12

1

   Hot end center section    Piece    1    62    13    7

1

   Duct corner    Piece    6    29    11    3

1

   Duct panels    Bundles    2    25    11    4

1

   Pipe braces    Box    2    30    3    3

1

   Cold end primary center section    Piece    1    23    11    12

1

   Hot end primary center section    Piece    1    23    12    7

1

   Post & trunnion assembly    Piece    1    26    7    7

1

   Rotor module includes baskets    Piece    18    26    11    11

1

   Main pedestal & axial seal plate    Piece    2    15    13    2

1

   Side pedestal components    Bundles    2    22    11    1

1

   Rotor drive panel    Piece    1    22    6    1

1

   Gas & air side panels    Bundles    4    18    9    3

1

   Primary pedestal ass’y    Piece    2    15    8    1

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 10 – Narrative on Delivery and Fabrication

Page 6 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 10

NARRATIVE ON DELIVERY AND FABRICATION

PRELIMINARY SHIPPING VOLUMES PER AIR PREHEATER

 

     

Component

   Unit of
Measure    Quantity
(For
(Information
Only)    Length
(ft.)   Width
(ft.)    Height
(ft.)

1

   Rotor drive base    Piece    1    7   5    3

1

   Support bearing    Box    1    9   9    3

1

   Guide bearing housing    Box    1    10   10    6

1

   Guide bearing    Box    1    2   2    2

1

   Wash pipes – hot & cold    Box    2    27   3    1

1

   Seals    Box    11    4   3    2

1

   Pocket rings    Bundles    8    12   2    3

1

   Leakage control system sensors    Box    3    6   2    2

1

   Rotor angles    Box    2    6   3    2

1

   Pin rack    Box    4    6   3    2

1

   Oil circ. Systems    Box    2    4   4    3

1

   Miscellaneous    Box    4    8   3    3    Total Shipping Measures       lb.
   ft3     

1

   Shipped from Wellsville       1,916,000    90,400                          
   Grand Total       1,916,000    90,400                          

 

Note 1:   Deviation from shipping configuration described above could be subject
to Section 5, Clause SC-11, Backcharges, if it causes an increase to Buyer’s
erection effort.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 10 – Narrative on Delivery and Fabrication

Page 7 of 7

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TXU STANDARD PROJECT

PROJECT     

SECTION 5 – APPENDIX 12

ASSIGNMENT AGREEMENT

This Assignment Agreement (this “Agreement”) is made and entered into as of
            ,             , 2006, by and among:

(1) [            ] a              corporation (the “Assignor”);

(2) [SELLER NAME], a              corporation (“Seller”); and

(3) [            ] a              corporation (“Assignee”).

WHEREAS, Assignor and Seller entered into that certain purchase order dated as
of             , 2006 relating to the              Project (the “Purchase
Order”).

WHEREAS, the terms of the Purchase Order permit the assignment and assumption
contained herein.

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, do hereby agree as follows:

1. Assignment and Assumption. Effective as of the date of this Agreement,
Assignor hereby assigns to Assignee all of its obligations, duties, rights,
title, benefit, privileges and interest in and to the Purchase Order and
Assignee hereby accepts such assignment and assumes and agrees to observe and
perform all of Assignor’s obligations and duties under the Purchase Order.

2. Release of Assignor. Effective as of the date of this Agreement, Assignor
shall be deemed released from and shall have no further rights, obligations,
responsibilities or liabilities under the Purchase Order.

3. Terms of the Purchase Order. The terms of the Purchase Order, including but
not limited to Seller’s representations, warranties, covenants, agreements and
indemnities, are incorporated herein by this reference. Seller acknowledges and
agrees that the representations, warranties, covenants, agreements and
indemnities contained in the Purchase Order shall not be superseded hereby but
shall remain in full force and effect to the full extent provided therein. In
the event of any conflict or inconsistency between the terms of the Purchase
Order and the terms hereof, the terms of the Purchase Order shall govern.
Further, all obligations of the Assignor, under the Purchase Order, including
but not limited to all payment obligations shall be faithfully performed by
Assignee. All disclaimers, limitations of liability, waivers, and releases by
Assignor in the Purchase Order apply fully to Assignee.

4. Security Instruments. Effective as of the date of this Agreement, Assignor
shall assign to Assignee all of its rights, title, benefit, privileges and
interest in and to any parent company guarantee,

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 12 – Assignment Agreement

Page 1 of 3

--------------------------------------------------------------------------------

letter of credit or any other security instrument provided by Seller to Assignor
under the terms of the Purchase Order. Seller shall assist in effecting any such
assignment.

5. Acknowledgement. Seller and Assignee acknowledge and accept the terms of this
Agreement and agree to be bound to each other with respect to all matters
arising out of and under the Purchase Order in all respects as if Assignee and
Seller had originally executed the Purchase Order as “Buyer” and all references
to the “Buyer” in the Purchase Order shall be construed accordingly to refer to
Assignee.

6. Governing Law and Jurisdiction. This Agreement is governed by, and construed
in accordance with, the laws of the State of Texas without reference to the
conflict of laws rules thereof. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
PARTIES HERETO AGREE THAT ALL SUCH ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE FEDERAL DISTRICT
COURT LOCATED IN THE COUNTY OF DALLAS, STATE OF TEXAS. THE PARTIES, TO THE
EXTENT THEY MAY LEGALLY DO SO, IRREVOCABLY WAIVE ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS (OR ANY SIMILAR LEGAL DOCTRINE) OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION IN THE FEDERAL DISTRICT COURT LOCATED IN THE COUNTY OF DALLAS,
STATE OF TEXAS, AND IRREVOCABLY STIPULATE THAT THE FEDERAL DISTRICT COURT
LOCATED IN THE COUNTY OF DALLAS, STATE OF TEXAS SHALL HAVE IN PERSONAM
JURISDICTION AND VENUE OVER SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY SUCH
DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT OF RELATED TO THIS AGREEMENT.
THE PARTIES EACH AGREE, TO THE FULLEST EXTENT PERMITTED BY FEDERAL LAW, NOT TO
RAISE ANY OBJECTION TO THE REMOVAL OR TRANSFER TO THE FEDERAL DISTRICT COURT
LOCATED IN THE COUNTY OF DALLAS, STATE OF TEXAS OF ANY SUCH PROCEEDING THAT IS
INITIALLY BROUGHT IN ANY OTHER COURT. THE PARTIES ALSO EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE PARTIES EACH AGREE THAT IT
WILL NOT FILE ANY MOTION OR ASSERT ANY DEFENSE IN ANY SUCH PROCEEDING THAT IS
INCONSISTENT WITH THE FOREGOING AGREEMENTS, WAIVERS, CONSENTS OR STIPULATIONS.
EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT. AS OF THE DATE OF
THIS AGREEMENT, EACH PARTY BELIEVES THAT THE REQUIREMENT OF DIVERSITY OF
CITIZENSHIP OF THE PARTIES IS MET.

7. Further Actions. Each party hereto agrees, upon the written request of any
other party hereto, to execute documents and take any further step as may be
reasonably necessary in order to implement and give full effect to the terms of
this Agreement; provided, however, no party hereto shall be required to sign any
document it has a reasonable and good faith objection to until the other parties
amend the documents to remove the objecting party’s objections.

8. Counterparts. This Agreement may be executed in counterparts, each of which
is deemed to be an original, but all of which together shall constitute one and
the same instrument.

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 12 – Assignment Agreement

Page 2 of 3

--------------------------------------------------------------------------------

9. Superseded Assignments. It is acknowledged and agreed by all parties hereto
that this Agreement supersedes and replaces any and all prior assignment
agreements regarding the Purchase Order and any and all such prior assignment
agreements shall be of no further force or effect.

IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives.

 

[ASSIGNOR NAME] By:  

 

Title:  

 

[SELLER NAME] By:  

 

Title:  

 

[ASSIGNEE NAME] By:  

 

Title:  

 

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 12 – Assignment Agreement

Page 3 of 3

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 13

MAJOR SUBCONTRACTORS LIST

The following is a list of the Major Subcontractors which are acceptable for use
by the Seller for the supply of equipment in accordance with this Agreement.

 

COMMODITY

  

VENDOR

  

COUNTRY

Air Heater

   Air Preheater    USA

Rotary Basket Design

   Balcke Duerr Rothemuhle (acceptable if baskets rotate and NOT housing and
with Buyer’s final approval)    Germany    Howden (fixed rotor design only)   
UK

Coal Feeders

   Stock Equipment    USA    Merrick    USA

Dampers

   Mader Damper    USA    TLT Dampers    USA    Bachmann Dampjoint    Canada   
Effox    USA

FD Fans (Axial Type)

   TLT Babcock    USA    Howden    Denmark    Flakt-Woods    Sweden    Shanghai
Blower    PRC    TLT Turbo    Germany

PA Fans (Centrifugal)

   TLT Babcock    USA    Howden    USA    Flakt Woods    USA    Robinson    USA
   Shanghai Blower    PRC

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 13 – Major Subcontractors List

Page 1 of 6

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 13

MAJOR SUBCONTRACTORS LIST

 

COMMODITY

  

VENDOR

  

COUNTRY

Pulverizer Gearboxes

  

Hitachi

  

Japan

  

Chicago Gear (Formosa Gear)

  

Taiwan

Large Motors

  

Siemens

  

USA

  

Rockwell

  

USA

  

GE

  

USA

  

TECO-Taiwan

  

Taiwan

  

SEMC

  

China

Pulverizer Motors

  

Siemens

  

USA

  

Rockwell

  

USA

  

GE

  

USA

  

TECO-Taiwan

  

Taiwan

  

SEMC

  

China

SCAH

  

Aerofin

  

USA

  

Lynchburg Air Preheater

  

USA

  

Cincinnati Heat Exchanger

  

USA

Safety Valves

  

Dresser Consolidated

  

USA

  

Crosby

  

USA

  

Tyco (Simco)

  

USA

Sootblowers

  

Diamond Power

  

USA

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 13 – Major Subcontractors List

Page 2 of 6

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 13

MAJOR SUBCONTRACTORS LIST

 

COMMODITY

  

VENDOR

  

COUNTRY

Large Block Valves

   Atwood Morrill   

USA

  

Crane Pacific

  

USA

  

Edwards (Flowserve)

  

USA

  

Tyco

  

USA

  

Velan (McJunkin)

  

USA

  

Weir Valves

  

USA

Feedwater Stop/Check Valves

  

Atwood Morrill

  

USA

  

Crane Pacific

  

USA

  

Edwards (Flowserve)

  

USA

  

Tyco

  

USA

  

Velan (McStay)

  

USA

  

Weir Valves

  

USA

Control Valves

  

Fisher (AE Ehrke)

  

USA

  

Edwards

  

UK

  

Copes Vulcan

  

USA

  

CCI

  

USA

  

Masonelian

  

USA

Ammonia Dilution Air Skid

  

DNX

  

USA

  

Glex

  

USA

  

Ely Energy

  

USA

  

Wahlco

  

USA

Catalyst

  

Cormetech

  

USA

  

Halder Topso

  

USA

  

Argillon

  

Germany

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 13 – Major Subcontractors List

Page 3 of 6

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 13

MAJOR SUBCONTRACTORS LIST

 

COMMODITY

  

VENDOR

  

COUNTRY

Sublet Fabrication of Boiler Pressure Part Components    B&W Beijing Company   
PRC    Vulcan    Romania    Rafako    Poland    SES Tlmace    Slovakian Republic
   Sefako    Poland    HMHI    China    Doo San Heavy    Korea Sublet
Fabrication of platework (flues, ducts, casings, component fabrications, etc.)
   Vipco    Thailand    Eurotech    Thailand    B&W Beijing Company    PRC    JR
McDermott    USA    Merrill Iron    USA    Southeastern Platework    USA   
Dynasteel    USA    Titan    USA    Mountain States Sheet Metal    USA    PSP   
USA    Chet Morrison    USA    Torsco    Mayalasia    Song-da Jurong    Vietnam
   CNPC#7    PRC    Beijing Power Equipment    PRC

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 13 – Major Subcontractors List

Page 4 of 6

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 13

MAJOR SUBCONTRACTORS LIST

 

COMMODITY

  

VENDOR

  

COUNTRY

Raw Materials - Tubes

  

Benteler

V&M

Sumitomo

Michigan Seamless

Changwon

  

Germany

France/Germany

Japan

USA

Korea

Raw Materials – Pipe & Forgings

  

Wyman Gordon

V&M

Federal

F Monchieri

Scot Forge

  

USA/UK

France/Germany

USA/Europe

Italy

USA

Recirculation Pumps

  

KSB

Hayward Tyler

Sulzer

Johnston

  

Germany

UK

Germany

USA

Headers

  

Trenergy

Taylor Forge

Wagner

Turner

Factory Sales

Vulcan

Scott Process

Sefako

B&W Beijing Company

Mechanica de la Pena

  

Canada

USA

USA

USA

USA

Romania

USA

Poland

PRC

Spain

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 13 – Major Subcontractors List

Page 5 of 6

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 13

MAJOR SUBCONTRACTORS LIST

 

COMMODITY

  

VENDOR

  

COUNTRY

Burners

   East End Welding    USA

 

By Seller:                     

   By Buyer:                     

Section 5, Appendix 13 – Major Subcontractors List

Page 6 of 6

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 14

TXU GUARANTEE

This Guarantee given and delivered by TXU US Holdings Company, a Texas
corporation, herein called “Guarantor”, to The Babcock & Wilcox Company, a
Delaware corporation, herein called “Seller,” with respect to Purchase Order
Number              TBD             , dated June [    ], 2006 (herein called
“Purchase Order”) between TXU Generation Development Company LLC and Seller for
the supply of certain equipment for the [                    ] Project.

WITNESSETH

That in order to induce Seller to enter into the Purchase Order with TXU
Generation Development Company LLC (herein called “Devco”), an affiliated
company of Guarantor, and in consideration of Seller entering into the Purchase
Order with Devco, the Guarantor has determined that executing this Guarantee is
in its interest and to its financial benefit and it is hereby agreed as follows:

 

1. Guarantor, for itself, its successors and permitted assigns, hereby
irrevocably and unconditionally guarantees to Seller, its successors and
permitted assigns, as primary obligor and not as surety, the full and faithful
performance by Devco, its successors and assigns of each and every one of the
terms, provisions, conditions, obligations and agreements on the part of Devco
to be made, carried out, performed or observed as provided in the Purchase
Order.

 

2. If at any time default is made by Devco in the performance of any of the
terms, provisions, conditions, obligations and agreements in the Purchase Order
or in the payment of any sums payable pursuant thereto which are to be made,
carried out, performed, paid or observed by Devco, Guarantor will well and truly
perform, or cause to be so performed, such terms, provisions, conditions,
obligations and agreements in the Purchase Order. Save as provided in and
subject to the terms of this Guarantee, any monies which are payable by Devco
pursuant to the Purchase Order which may not be recoverable from Devco shall
nevertheless be recoverable by Seller from Guarantor as if Guarantor were
principal debtor. All payments by Guarantor hereunder shall be made in full,
without set-off or counterclaim and free and clear of any deductions or
withholdings in immediately available, freely transferable, cleared funds to the
account of Seller as notified to Guarantor by Seller.

 

3. Guarantor agrees that its obligations hereunder shall not be discharged nor
shall they be affected by reason of: (i) any legal limitations, disabilities,
incapacities or want of powers on the part of Devco to enter into the Purchase
Order; or (ii) the invalidity or unenforceability of the obligations of Devco
under the Purchase Order arising from or related to the liquidation, winding up
or dissolution of Devco; or (iii) the appointment of or acts of a receiver or
liquidator on behalf of Devco (including, without limitation, the ability of any
liquidator of Devco to disclaim obligations of Devco arising under the Purchase
Order).

 

4. Guarantor covenants and agrees with Seller, its successors and permitted
assigns that (i) waiver by Seller of any of the terms, provisions, conditions,
obligations and agreements of the Purchase Order, (ii) any modification or
changes to the Purchase Order, (iii) the giving of any consent to an assignment
or the making of any assignment of the Purchase Order and (iv) the granting of
extensions of time to Devco, its successors and permitted assigns may all or any
of them be made and done without notice to Guarantor and without in any way
affecting, changing or releasing Guarantor from its obligations given under this
Guarantee, and such changes or extensions of time

 

Seller’s Initials:                     

   Buyer’s Initials:                     

Section 5, Appendix 14 – TXU Guarantee

Page 1 of 4

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PROJECT     

SECTION 5, APPENDIX 14

TXU GUARANTEE

may be granted, such waiver and consents may be given and such modifications and
assignments may be made without notice to or the consent of Guarantor and
without impairing the obligations of the Guarantee hereby given.

 

5. Seller may enforce this Guarantee without first making demand on, or taking
any proceeding against, Devco or resorting to any other security, guarantee or
other means of payment and no action (or inaction) by Seller in respect of any
such security, guarantee or other means of payment shall prejudice or affect
Seller’s rights under this Guarantee. The Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein.

 

6. The liability of the Guarantor under this Guarantee shall in no event be
greater than that of Devco under the Purchase Order, and the Guarantor shall
have available to it, in any action or proceeding by Seller seeking performance
of this Guarantee, or damages for its non-performance of this Guarantee, all
defenses and counterclaims which Devco would be able to raise in an action by
Seller against Devco seeking performance or damages for non-performance under
the Purchase Order.

 

7. If a demand, in accordance with this Guarantee, is made upon the Guarantor
and the Guarantor duly and properly performs the obligations of Devco then, to
that extent only, Devco shall be released from such obligations by the Seller.

 

8. Upon written notice to Seller, Guarantor may, without Seller’s consent,
assign its obligations under this Guarantee to any of its Affiliates (as such
term is defined in Section 5 (Special Conditions) Clause SC-1) who has an
unsecured debt rating equivalent to or better than the unsecured debt rating of
Guarantor as of the date of this Guaranty (such rating, the “Threshold Rating”),
as determined by either Standard & Poor’s or Moody’s (or if either one or both
are not available, an equivalent rating from an alternative rating source
reasonably acceptable to Seller).

Upon the assignment of Guarantor’s obligations hereunder to any permitted
assignee, and such permitted assignee’s assumption in writing in of such
obligations, Guarantor shall be deemed released from and shall have no further
rights, obligations, responsibilities or liabilities under this Guaranty.

Guarantor shall be deemed released from and shall have no further obligations,
responsibilities or liabilities under this Guaranty on the earlier of (x) the
date Devco assigns the rights and obligations of the Purchase Order to Bechtel
Power Corporation or another nationally recognized engineering, procurement and
construction contractor as permitted in the Purchase Order and (y) the date
Devco has written commitments from lenders or equity investors (where the lead
lender or investor has a Tangible Net Worth (as defined below) of at least One
Hundred Fifty Million Dollars ($150,000,000) and an equivalent or higher credit
rating than the Threshold Rating) to provide financing for the Project in an
amount equal to or no less than the portion of the remaining obligations then
remaining to be paid under the Purchase Order. “Tangible Net Worth” shall mean
the sum of (i) assets, including permits, contracts and leases, less
(ii) intangible assets, including goodwill, patents, copyrights and trademarks,
less (iii) total liabilities.

 

9. Guarantor represents and warrants that:

(a) It is a corporation duly and properly incorporated or organized, as the case
may be, validly existing and (to the extent such concept applies to such entity)
in good standing under the

 

Seller’s Initials:                     

   Buyer’s Initials:                     

Section 5, Appendix 14 – TXU Guarantee

Page 2 of 4

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TXU STANDARD PROJECT

PROJECT     

SECTION 5, APPENDIX 14

TXU GUARANTEE

laws of its jurisdiction of incorporation or organization and has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted.

(b) It has the corporate power and authority and legal right to execute and
deliver this Guarantee and to perform its obligations hereunder. The execution
and delivery by it of this Guarantee and the performance of its obligations
hereunder have been duly authorized by proper corporate proceedings, and this
Guarantee constitutes a legal, valid and binding obligation of Guarantor
enforceable against it in accordance with its terms.

(c) Neither the execution and delivery by it of this Guarantee, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof will violate (i) any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on it or any of its subsidiaries
or (ii) its articles of incorporation or by-laws, or (iii) the provisions of any
indenture, instrument or agreement to which it or any of its subsidiaries is a
party or is subject, or by which it is bound, or conflict with or constitute a
default thereunder. No order, consent, adjudication, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been obtained by it or any
of its subsidiaries, is required to be obtained by it or any of its subsidiaries
in connection with the execution and delivery of this Guarantee or the
performance by it of its obligations hereunder or the legality, validity,
binding effect or enforceability of this Guarantee.

 

10. This Guarantee is governed by, and shall be construed in accordance with,
the laws of the State of Texas without reference to the conflict of laws rules
thereof. This Guarantee is intended to be fully enforceable in accordance with
its terms and constitutes a guarantee of Devco’s obligations and liabilities
arising out of or in connection with the Purchase Order. In the event that any
issue, matter or dispute arises under the Purchase Order which is resolved under
the Purchase Order, including any issue, matter or dispute which is resolved in
accordance with the dispute resolution provisions under the Purchase Order, such
issue, matter or dispute shall be deemed to have been conclusively determined
for the purpose of this Guarantee and neither party to this Guarantee will
thereafter take any steps to argue that such issue, matter or dispute should be
resolved under this Guarantee in any different manner from the resolution under
the Purchase Order and the parties waive any right to do so.

 

11. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO AGREE THAT ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY SHALL BE TRIED
AND LITIGATED ONLY IN THE FEDERAL DISTRICT COURT LOCATED IN THE COUNTY OF
DALLAS, STATE OF TEXAS. THE PARTIES, TO THE EXTENT THEY MAY LEGALLY DO SO,
IRREVOCABLY WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS (OR ANY SIMILAR LEGAL DOCTRINE) OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION IN THE FEDERAL
DISTRICT COURT LOCATED IN THE COUNTY OF DALLAS, STATE OF TEXAS, AND IRREVOCABLY
STIPULATE THAT THE FEDERAL DISTRICT COURT LOCATED IN THE COUNTY OF DALLAS, STATE
OF TEXAS SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER SUCH PARTY FOR THE
PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT
OF RELATED TO THIS GUARANTY. THE PARTIES EACH AGREE, TO THE FULLEST EXTENT
PERMITTED BY FEDERAL LAW, NOT TO RAISE ANY OBJECTION TO THE REMOVAL OR TRANSFER
TO THE FEDERAL DISTRICT COURT LOCATED IN THE COUNTY OF DALLAS,

 

Seller’s Initials:                     

   Buyer’s Initials:                     

Section 5, Appendix 14 – TXU Guarantee

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PROJECT     

SECTION 5, APPENDIX 14

TXU GUARANTEE

STATE OF TEXAS OF ANY SUCH PROCEEDING THAT IS INITIALLY BROUGHT IN ANY OTHER
COURT. THE PARTIES ALSO EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY. THE PARTIES EACH AGREE THAT IT WILL NOT FILE ANY MOTION OR ASSERT ANY
DEFENSE IN ANY SUCH PROCEEDING THAT IS INCONSISTENT WITH THE FOREGOING
AGREEMENTS, WAIVERS, CONSENTS OR STIPULATIONS. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS GUARANTY. AS OF THE DATE OF THIS GUARANTY, EACH PARTY
BELIEVES THAT THE REQUIREMENT OF DIVERSITY OF CITIZENSHIP OF THE PARTIES (ONE OF
THE REQUIREMENTS NEEDED FOR A FEDERAL COURT TO HAVE SUBJECT MATTER JURISDICTION
OVER A DISPUTE BETWEEN THE PARTIES) IS MET.

Guarantor hereby irrevocably appoints TXU US Holdings Company, 1601 Bryan,
Dallas, Texas 75205 as its agent for service of process. Each party agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

To the extent Guarantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property based on lace of personal
jurisdiction, Guarantor hereby irrevocably waives such immunity with respect to
its obligations under the Guarantee.

IN WITNESS WHEREOF, Guarantor has executed this Guarantee this      day of June
    , 2006.

 

TXU US HOLDINGS COMPANY

Signed:  

 

Name:   Title:  

 

  (Duly Authorized Officer of Guarantor)

 

Seller’s Initials:                     

   Buyer’s Initials:                     

Section 5, Appendix 14 – TXU Guarantee

Page 4 of 4

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TXU STANDARD PROJECT

PROJECT     

SECTION 6

SUPPLIER QUALITY SURVEILLANCE INSTRUCTIONS

 

1.0 QUALITY SURVEILLANCE

Seller shall have a documented quality management system that complies with ISO
or equivalent international or national standard. Specific requirements
concerning quality program requirements, implementation and documentation,
including documentation are defined in the Purchase Order. These Supplier
Quality Systems requirements are to be submitted regardless of any previous
submittals made as part of other purchase order requirements.

The “Requirements for Supplier Quality Systems” specification does not delete or
revise any requirements of the bid, purchase, or contract documents. If any
inconsistency is considered to exist between the “Requirements for Supplier
Quality Systems” specification and other bid, purchase or contract documents,
the Seller shall promptly bring it to the attention of the Buyer for resolution.

Seller shall assure that sub-tier suppliers and contractors comply with the
“Requirements for Supplier Quality Systems” specification.

Quality Surveillance is defined as Buyer’s selective review, observation and
evaluation of processes, procurement, manufacturing operations, quality control
systems and programs to assist Buyer in monitoring Seller’s compliance with the
quality requirements of the Purchase Order. Quality Surveillance may consist of
all or part of the following activities.

 

•

 

Quality Planning

 

•

   Surveillance  

•

   Supplier Evaluation

•

 

Quality Program Verification

 

•

   Audit of Quality Programs  

•

   Order Status Verification

 

2.0 SCOPE

 

  2.1 Equipment on this Purchase Order may be subject to quality surveillance,
at any time, by Buyer, Owner or authorized representatives of either, who shall
be granted free access to any and all parts of Seller’s plant(s) or Seller’s
sub-supplier’s plant(s) engaged in the manufacture or manufacturing process of
the Equipment for the purposes of performing quality surveillance. It is
understood that the prices stated in this Purchase Order include these quality
surveillance requirements. Buyer will not consider any Seller requests for extra
cost to comply with these requirements.

 

  2.2 Buyer’s Quality Surveillance Representative shall be allowed access to
Seller’s process control and quality verification records to review process and
quality verification documents. Review of these documents will include
verification of compliance with the specifications and applicable codes or
standards specified in this Purchase Order.

 

  2.3 Seller shall maintain records of Buyer’s review of drawings, data and
procedures as specified in this Purchase Order. Seller shall make copies of
reviewed documents available for use by Buyer’s Quality Surveillance
Representative at Seller’s facility or Seller’s sub-suppliers facilities.

 

  2.4 It is Seller’s responsibility to manufacture the Equipment in accordance
with requirements of this Purchase Order and to inspect the Equipment thoroughly
prior to presentation to Buyer’s Quality Surveillance Representative for
verification of compliance to the Purchase Order. The Equipment that is subject
to release by Buyer’s Quality Surveillance Representative is included in
Section 2, Technical Specifications. Seller shall not ship any Major Equipment
that as is included in Quality

 

By Seller:                     

   By Buyer:                     

Section 6 - Supplier Quality Surveillance Instructions

Page 1 of 3

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TXU STANDARD PROJECT

PROJECT     

SECTION 6

SUPPLIER QUALITY SURVEILLANCE INSTRUCTIONS

Surveillance Plan until final quality surveillance has been satisfactorily
completed by Buyer and a written release for shipment is received from Buyer’s
Quality Surveillance Representative or Buyer authorizes waiver of final quality
surveillance in writing.

 

  2.5 Equipment covered by this Purchase Order will be subject to at least the
minimum level of quality surveillance specified. Detailed requirements for these
activities are provided in the Buyer’s Quality Surveillance Plan in Section 2,
Technical Specifications contained in this Purchase Order. These requirements
define the minimum quality surveillance to be performed by Buyer’s Quality
Surveillance Representative. Seller will submit its recommended inspection and
test plan for major equipment so buyer can identify additional witness points,
if required.

 

  2.6 Buyer’s performance of any quality surveillance or failure to perform any
quality surveillance shall in no way relieve Seller from its obligations to
conform to all of the requirements of this Purchase Order.

 

  2.7 Seller shall provide reasonable facilities for Buyer’s representative to
conduct quality surveillance activities for this Purchase Order. These
facilities include workspace, communication and nominal reproduction support.

 

3.0 DEFINITIONS

 

  3.1 WITNESS POINTS (W) - Witness points are defined as steps in manufacturing
and testing, whereby Seller is obligated to advise Buyer’s Quality Surveillance
Representative at least ten (10) Business Days for North America and fifteen
(15) Business Days for outside of North America in advance of the operation so
that it may be witnessed. Seller may proceed with work past the witness point if
Buyer’s Quality Surveillance Representative had been properly notified for North
America and fifteen (15) Business Days for outside of North America Days prior
to the witness point. In the event Buyer’s Quality Representative defers a
witness point, the next same operation shall be witnessed. Results of Seller’s
inspection/testing shall be available to Buyer’s Quality Surveillance
Representative for review/verification.

 

  3.2 HOLD POINTS (H) - Hold points are defined as critical steps in
manufacturing and testing, whereby Seller is obligated to advise Buyer’s Quality
Surveillance Representative at least ten (10) Business Days for North America
and fifteen (15) Business Days for outside of North America in advance of the
operation so that it may be witnessed. For Headers, Pressure Parts & Membrane
Tube Wall Panels; Structural Steel; and Ducting and Breaching, Seller shall
provide a monthly Supplier Quality notification of inspection points in lieu of
individual notifications and provide short term notice to Buyer’s Supplier
Quality Representative, if resident, at the Seller’s or Subcontractor’s
facilities. Seller may proceed with work past the hold point without witness by
the Buyer’s Quality Surveillance Representative if Buyer’s Quality Surveillance
Representative fails to be present for the Hold Point.

 

  3.3 IN PROCESS (IP) - In-process surveillance may be performed on any
manufacturing, inspection or testing activity. Specific activities may be
identified as in-process quality surveillance points. Buyer’s Quality
Surveillance Representative shall coordinate in-process quality surveillance
according to Seller’s scheduled activities.

 

  3.4 INITIAL VISIT - Prior to the start of manufacturing, the assigned Buyer
Quality Surveillance Representative may conduct an initial visit to review the
quality requirements of the Purchase Order

 

By Seller:                     

   By Buyer:                     

Section 6 - Supplier Quality Surveillance Instructions

Page 2 of 3

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PROJECT     

SECTION 6

SUPPLIER QUALITY SURVEILLANCE INSTRUCTIONS

with responsible Seller management.

 

4.0 QUALITY SURVEILLANCE NOTIFICATION

As a minimum, the following Quality Surveillance Witness and Hold points require
advance Seller notification to Buyer:

 

  4.1 Witness Points

The Witness points are listed in the Material Requisition.

 

  4.2 Hold Points

The Witness points are listed in the Material Requisition.

 

  4.3 Seller is required to provide notification of Witness and Hold points as
stated in paragraphs 3.1 and 3.2.

 

5.0 QUALITY SURVEILLANCE CONTACT

Buyer’s Quality Surveillance contact for this Purchase Order is: Later

(P.O. ENTITY – SHOULD BE SAME AS P.O. COVER PAGE)

(PROJECT NAME – SHOULD BE SAME AS P.O. COVER PAGE)

(STREET ADDRESS)

(MAILING ADDRESS)

(CITY, STATE, COUNTRY, ZIP CODE)

ATTENTION:

TELEPHONE:

FACSIMILE:

E-MAIL:

 

By Seller:                     

   By Buyer:                     

Section 6 - Supplier Quality Surveillance Instructions

Page 3 of 3

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TXU STANDARD PROJECT

PROJECT     

SECTION 7

EXPEDITING INSTRUCTIONS

In addition to the Expediting requirements described in the General or Special
Conditions, the following requirements are applicable to this Purchase Order:

 

1.0 MILESTONE SCHEDULE

Seller shall furnish to Buyer’s Expeditor, no later than four (4) weeks after
award of the Purchase Order, a complete schedule that forecasts or acknowledges
start/finish dates for at the least the following:

 

  •   Order Entry

 

  •   Engineering

 

  •   Material Acquisition

 

  •   Manufacturing status showing at least dates for placement of subcontracts
of material receipt, fabrication start and complete date of components of
Equipment including that of Major Subcontractors, preparation for shipment, etc.

 

  •   Witness and Hold Points for Buyer Quality Surveillance activities

 

  •   Shipment/Delivery

The Milestone Schedule shall show the Seller’s shop order number used for
internal tracking of Buyer’s Purchase Order.

 

2.0 MONTHLY PROGRESS REPORT

Seller shall furnish a Monthly Progress Report to Buyer’s Expeditor in
sufficient detail to allow a realistic evaluation of Seller’s progress towards
Purchase Order completion. As a minimum, the following information shall be
included on all Monthly Progress Reports:

 

  1. An Executive Summary outlining prior month work activities with a forecast
of the work activities or action items that will be performed in the upcoming
month.

 

  2. Status of all Seller drawing and data submittals

 

  3. Major Subcontractor furnished Equipment list showing component, Purchase
Order Number, sub-supplier name and contact information including address, phone
number, facsimile number and e-mail address.

 

  4. Milestone schedule progress update including actual or forecast
start/finish dates and percent complete for all activities with progress tracked
against the original milestone schedule dates.

 

  5. A calendar of holidays and plant shutdowns for Seller and Seller’s
sub-suppliers

 

  6. Status of any labor contracts for Seller and Seller’s sub-suppliers

 

By Seller:                     

   By Buyer:                     

Section 7, Expediting Instructions

Page 1 of 3

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TXU STANDARD PROJECT

PROJECT         

SECTION 7

EXPEDITING INSTRUCTIONS

The initial Monthly Progress Report shall be submitted no later than four
(4) weeks after award of the Purchase Order with subsequent reports being
submitted every month thereafter on a date mutually agreed between Buyer and
Seller.

 

3.0 ORGANIZATION CHART

Seller shall furnish an organization chart to Buyer’s Expeditor showing key
members of Seller’s team plus two (2) levels of management above the designated
Project Manager. For each person/position shown on the organization chart,
Seller shall submit a contact list identifying prime and alternate contacts,
telephone number, facsimile number and e-mail address.

 

4.0 SELLER PURCHASE ORDERS

When requested by Buyer’s Expeditor, Seller shall immediately furnish un-priced
copies of any Seller Purchase Orders issued for major components of Buyer’s
Purchase Order showing sub-supplier name, order number, shipping point and
promised shipment date(s).

 

5.0 SELLER DRAWING AND DATA TRANSMITTALS

Seller shall furnish a copy of all drawing and data transmittals (without
attachments) to Buyer’s Project Expeditor by facsimile or electronic mail. Each
document listed on the transmittal shall include Buyer’s designated document
description reference number or code as set forth in Section 3- Drawing and Data
Requirements.

 

6.0 PACKING LISTS

Prior to any shipment, Seller shall submit a preliminary packing list to Buyer’s
Expeditor and request Buyer’s SCN number to comply with the requirements of
Section 8. Seller’s preliminary packing list descriptions and quantities must
reference Buyer’s corresponding Purchase Order line items, and, if applicable,
tag or stock code numbers. Buyer’S Expeditor will contact Seller if additional
information is needed to reconcile preliminary packing list information with
Purchase Order line items.

Within twenty-four (24) hours after any shipment, Seller shall provide Buyer’s
Expeditor with a copy of the preliminary packing list. Final packing list with
bill of lading as confirmation of the shipment from Seller’s facility to Buyer’s
designated delivery point will be provided within twenty one (21) Days and in
any case prior to receipt of Equipment at the Site.

This requirement also applies to any shipments made directly to Buyer from a
Seller sub-supplier.

 

7.0 SHOP LOADING SCHEDULE

If requested by Buyer, Seller shall furnish a shop loading schedule identifying
all work being performed in Seller’s plant or the plants of Seller’s
sub-suppliers during the same time period that work will be performed for
Buyer’s Purchase Order.

 

8.0 ADDITIONAL REQUIREMENTS

All dates submitted by Seller shall be formatted DD-MMM-YY to avoid confusion
(e.g., May 06, 2003 would be shown as 06-MAY-03.).

 

By Seller:                     

   By Buyer:                     

Section 7, Expediting Instructions

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TXU STANDARD PROJECT

PROJECT     

SECTION 7

EXPEDITING INSTRUCTIONS

 

9.0 BUYER’S EXPEDITING CONTACT

Buyer’s Expediting contact for this Purchase Order is: [To be provided later]

(P.O. ENTITY – SHOULD BE SAME AS PURCHASE ORDER COVER PAGE)

(PROJECT NAME – SHOULD BE SAME AS PURCHASE ORDER COVER PAGE)

(STREET ADDRESS)

(MAILING ADDRESS)

(CITY, STATE, COUNTRY, ZIP CODE)

ATTENTION:

TELEPHONE:

FACSIMILE:

E-MAIL:

 

By Seller:                     

   By Buyer:                     

Section 7, Expediting Instructions

Page 3 of 3

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TXU STANDARD PROJECT

PROJECT     

SECTION 8

PACKING AND SHIPPING INSTRUCTIONS

 

1. Safety: It is the Buyer’s goal to achieve zero accidents and incidents in the
handling and transport of all shipments covered by this Purchase Order. The
Seller and Buyer shall at all times strive to ensure safe handling and transport
of shipments and to avoid any action which could jeopardize the safety of
individuals or result in damage to property.

 

2. Compliance with these instructions: Compliance with these instructions shall
facilitate the prompt delivery and safe receipt of materials and equipment
covered by this purchase order. Buyer may refuse or postpone, at the Seller’s
risk and expense, the acceptance of any materials or equipment covered by this
Purchase Order, until such time as the Seller has satisfactorily met the
provisions of these instructions. If the Seller or Seller’s sub-supplier
delivers materials and equipment covered by this Purchase Order contrary to
these instructions, Buyer may withhold a portion of the Purchase Order price or
back charge Seller to cover any costs that result as a consequence of Seller’s
non-compliance with these instructions.

 

3. Shipments from Seller’s sub-suppliers: Seller shall ensure that these
instructions also apply to each of the Seller’s purchase orders issued to
sub-suppliers for materials and equipment covered by this Purchase Order that
are to be delivered direct to the Buyer’s designated delivery point.

 

4. Supplier Quality “Material/Equipment Release”: If Supplier Quality is
required by the terms of this Purchase Order; Seller shall obtain Buyer’s
Supplier Quality “Material/Equipment Release” (Bechtel Form SQ-231)
authorization or waiver thereof from the Buyer’s representative prior to
initiating shipments.

 

5. Delivery terms: Delivery terms and responsibility for freight charges are
designated on the first page of the Purchase Order and/or in the purchasing
notes. Buyer’s reference to Incoterms shall be in accordance with the
International Chamber of Commerce “Incoterms 2000” publication. Reference to UCC
shall be in accordance with the United States Uniform Commercial Code.

 

6. Transport and Lifting Drawings: To the extent specified in Section 3,
Drawings and Data Requirements, for any single piece of equipment with a gross
weight of 45,000 kilograms or more.

To the extent specified in Section 3, Drawings and Data Requirements, for any
single piece of equipment with a gross weight of between 10,000 and 45,000
kilograms, and with dimensions greater than 10 meters in length or 2.4 meters in
width or 2.4 meters in height. Buyer’s Transport and Lifting Drawings
requirements are also listed in Section 3, Drawings and Data Requirements, of
this purchase order.

 

7. Shipping Plans for FOB Jobsite* (UCC) or CFR, CIF, CPT, CIP, DEQ, DDU, and
DDP (INCOTERMS 2000) Delivery Terms: One Hundred and eighty (180) days after
award Seller shall provide Buyer’s Traffic & Logistics representative with a
shipping plan for equipment and materials purchased under these delivery terms.
If the duration from award to shipment is less than sixty days, Seller’s
shipping plan shall be provided at least one week prior to shipment. The
shipping plan shall include the following items to the extent they are
applicable and available:

 

  A. Estimated number of total shipping units, with estimated total weight
(kilograms) and volume (cubic meters) of shipment,

 

  B. Estimated weight (kilogram) and dimensions (centimeters) of largest
shipping unit,

 

By Seller:                     

   By Buyer:                     

Section 8, Packing and Shipping Instructions

Page 1 of 5

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TXU STANDARD PROJECT

PROJECT     

SECTION 8

PACKING AND SHIPPING INSTRUCTIONS

 

  C. Permits or right-of-way clearances required,

 

  D. Route surveys,

 

  E. Transport and lifting drawings for each over-dimensional (greater than 10
meters long, or 2.4 meters wide or 2.4 meters high) or overweight (greater than
20,000 kilograms) shipping unit,

 

  F. Transportation mode and carrier name if nominated at that time. To be
supplied once nominated at a later date.

 

  G. Estimated shipment dates from supplier’s facility,

 

  H. Preliminary main carriage load and stow plan, and

 

  I. Lifting and handling instructions for all shipping units which supplier
recommends lifting with crane equipment.

FOB Jobsite (UCC) Delivery Term shipments covered by this requirement are for
shipping units with a gross weight of 45,000 kilograms or more, or any single
shipping unit greater than 10 meters in length, or 2.4 meters in width or 2.4
meters in height.

 

8. Special Handling Requirements: Seller shall provide in advance (as specified
in Section 3, Drawings and Data Requirements), and include with each shipment,
all requisite instructions and recommendations for any special handling,
receiving, or storage requirements.

 

9. Material Test Reports or Certifications: Equipment or materials requiring
material test reports or material certifications which arrive at the Seller’s
designated delivery point without subject reports or certificates may be
unloaded at Buyer’s discretion. However, materials or equipment shall not be
considered as received until subject reports or certifications have been
provided.

 

10. Package Markings: Project specific marking instructions for domestic or
international shipment are specified later in this document. Minimum package
marking requirements are as follows:

 

  A. All markings shall be in the English language

 

  B. Shipping marks shall be stenciled on two opposite sides of the shipping
unit (a shipping unit may be a box, carton, pallet, skid, bundle, crate, barrel,
drum, loose self supported piece of equipment, etc.)

 

  C. Lettering shall be between 7.62 and 12.7 cm. (3 to 5 inches) high in
weatherproof black ink to ensure visibility

 

  D. Shipping units that can not be stenciled directly shall be have attached
corrosion resistant metal tags with raised markings

 

  E. ASTM (American Society of Testing and Marking) Standards Number D 5445 –
01, “Standard Practice for Pictorial Markings for Handling of Goods” (available
through www.astm.org), shall apply to all marking and labeling

 

By Seller:                     

   By Buyer:                     

Section 8, Packing and Shipping Instructions

Page 2 of 5

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TXU STANDARD PROJECT

PROJECT     

SECTION 8

PACKING AND SHIPPING INSTRUCTIONS

 

  F. As appropriate, shipping units shall be marked with industry standard
cautionary symbols indicating center of gravity, slinging or lifting points, top
heavy packages, fragile and liquid contents, moisture sensitive contents, etc.

 

  G. Markings indicating:

 

  •   Buyer’s Purchase Order number,

 

  •   Project name,

 

  •   Shipping Control Number (SCN) if assigned, and

 

  •   Shipping unit piece number, gross weight (kilograms) and dimensions
(centimeters).

 

11. Hazardous Materials: Seller shall pack, mark, and document any dangerous or
hazardous materials in accordance with all applicable local, state, national and
international codes, such as, the US Department of Transportation (DOT)
Hazardous Materials Regulations (Title 49 Code of Federal Regulations Parts
100-185), the International Maritime Organization (IMO) International Maritime
Dangerous Goods Code, or the International Air Transport Association (IATA)
Dangerous Goods Regulations. Dangerous or hazardous materials shall be separated
from other materials and packed in separate shipping containers as required by
the applicable codes and regulations. Seller shall provide a current Material
Safety Data Sheet (MSDS) to Buyer’s Expediting representative (who is identified
in Purchase Order Section 6, Expediting Instructions) prior to shipment of any
dangerous or hazardous materials.

 

12. Preparation of Seller Bill of Lading: As a minimum, Seller’s bill of lading
shall include:

 

  A. Buyer’s P.O. number,

 

  B. Project name,

 

  C. Shipping Control Number (SCN) if assigned,

 

  D. If applicable, dangerous or hazardous materials UN number(s) and 24-hour
emergency contact information,

 

  E. Freight charges invoicing instructions

 

13. Freight Charges: Collect or Collect On Delivery (COD) shipments are not
permitted. See Purchase Order delivery terms for freight cost responsibility and
freight invoicing instructions.

 

14. Final Packing List and Bill of Lading: Within twenty-four (24) hours prior
to any shipment, Seller shall provide Buyer’s Expeditor with a copy of the
preliminary packing list. Final packing list with bill of lading as confirmation
of the shipment from Seller’s facility to Buyer’s designated delivery point will
be provided within twenty one (21) Days and in any case prior to receipt of
Equipment at the Site.

 

By Seller:                     

   By Buyer:                     

Section 8, Packing and Shipping Instructions

Page 3 of 5

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TXU STANDARD PROJECT

PROJECT     

SECTION 8

PACKING AND SHIPPING INSTRUCTIONS

 

15. Buyer’s Traffic & Logistics representative:

 

Primary T&L Contact:   

 

Mailing Address:   

 

E-mail Address:   

@Bechtel.com

Telephone Number:   

 

Facsimile Number:   

 

Backup Contact:   

 

E-mail Address:   

@Bechtel.com

Telephone Number:   

 

Facsimile Number:   

 

Normal Business Hours:   

 

 

16. Domestic Shipments (shipments originating in the project location country)
See Exhibit C, Domestic Shipping, Preservation, and Packing Instructions.

 

17. International Shipments (shipments originating outside the project location
country) Seller will submit for review a packing and preservation specification
for international shipments.

Not Utilized

Not Utilized

Export / Import Documentation Package: As required by the country of
importation. Minimally, this would require a bill of lading, commercial invoice
(for custom purposes only but not for submittal to Buyer) and packing list. In
addition, Seller shall present any and all other documentation required, such as
a Certificate of Origin, Fumigation Certificate, Phytosanitary Certificates or
any other requirements pertaining to wood packaging International Standards for
Phytosanitary Measures (ISPM-15), and legalized documentation as required.

PREPARATION – The Seller shall be responsible for correct preparation and
provide certain documents in advance to accompany the export shipment.

Note: Foreign country customs officials place a great deal of emphasis on the
accuracy and completeness of shipping documents. Seller shall closely scrutinize
all requirements when preparing and providing the export invoice and other
documents for shipment to that country.

PACKING LIST – The packing list shall show all of the following information and
details as outlined in exhibit “A”: Additionally,

EACH PACKING UNIT SHALL HAVE A PACKING LIST PLACED INSIDE WITH A COPY OF THE
SAME PACKING LIST IN A WATERPROOF ENVELOPE ON THE OUTSIDE.

CERTIFICATE OF ORIGIN – Seller shall provide if required for importation.

LEGALIZATION - Seller shall provide if required for importation.

 

By Seller:                     

   By Buyer:                     

Section 8, Packing and Shipping Instructions

Page 4 of 5

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TXU STANDARD PROJECT

PROJECT     

SECTION 8

PACKING AND SHIPPING INSTRUCTIONS

 

18. Export Preparation for International Shipments

DESTINATION – The equipment and materials are for ultimate delivery to the
respective job site. If Seller has other delivery address or location indicated
on the purchase order, he shall contact the Buyer’s Traffic and Logistics
representative for special instructions.

PACKAGE – As used in this writing, the term “package” is any outside enclosure
such as a box, skid, crate, barrel, drum, bundle or other such facility used to
enclose or protect the items in transit. Conversely, Buyer cautions Seller not
to use the term “package” in documents. To describe outside enclosures that can
otherwise be described by their specific type. In other words, the term
“package” by itself is not sufficient description for the packing list.

 

19. Packing and Protection for International Shipments

DEFINITION – “Packing” means to efficiently and effectively pack and protect the
products for 12 months, ex-factory, both during loading/unloading and transport
(by road, rail or water), and include all pre-crating protection activities,
such as application of anticorrosion, coating, vacuum, peating, desiccants,
solvents, end caps, etc. Depending on the nature, products are to be protected
against mechanical damage (i.e. shocks, rupture, breakage, loss) corrosion (i.e.
rain, salty atmosphere), sand, wind, humidity, and extreme heat. Utilizing a dry
sea van is not to be used as a substitute for packing material.

Insufficient Protection – If the Seller performs domestic and or export packing
that does not meet the requirement stated above, Buyer may correct the packaging
or re-pack the cargo with all resulting cost to the Seller.

SELLER-OWNED CONTAINERS – Seller supplying his own sea vans or containers for
shipment shall do so on a no deposit no return cost basis to the Buyer.
Containers shall be sea worthy and water tight, with valid CSC (Container Safety
Council) plate, bearing manufactured date to be within 2.5 years from date of
purchase order.

Seller shall comply with project specific shipping identification marks. See
Exhibit “A”.

 

20. Acceptance of Instructions

Seller may not ship before receiving written authorization from the Buyer, in
the form of an SCN release to ship notification. Seller may obtain a block of
SCN Numbers from the Buyer after award of the purchase order. Receipt of the
block of SCN Numbers constitutes a SCN release to ship notification. Seller must
comply with site specific receiving hours, policies, and procedures.

 

21. Proof of Delivery

If the shipping term is DDU / DDP, the Seller is responsible to provide the
Buyer’s Project Traffic Representative with a copy of Proof of Delivery, which
is signed by the Buyer’s job site manager or other authorized person.

 

By Seller:                     

   By Buyer:                     

Section 8, Packing and Shipping Instructions

Page 5 of 5

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TXU STANDARD PROJECT

PROJECT     

SECTION 8, EXHIBIT A

PACKING AND SHIPPING REQUIREMENTS

SHIPPING IDENTIFICATION MARKS

 

SHIPPER – CONSIGNEE – (ULTIMATE CUSTOMER) SCN NO:                      PROJECT
NAME: PURCHASE ORDER NO:                      REV             PACKAGE NUMBER:
DIMENSIONS: L             x W             x H             cm GROSS WEIGHT
            KILOS MADE IN:             

STORAGE CODE:

A= OUTDOORS

B= INDOORS UNCONTROLLED CLIMATE

C= INDOORS CONTROLLED CLIMATE

Requirements for Completing Packing Lists

All packing lists must be typed. Handwritten packing lists are unacceptable.
Copies must be legible.

 

“A” Date: Seller inserts date packing list is prepared.

 

“B” Seller to complete as shipper showing the Buyer entity c/o the Seller.
Should the Seller have sublet the shipper will be the Buyer entity c/o the sub
Seller.

 

“C” Consignee will be the consigning address provided by Buyer T&L/Expeditor.

 

“D” Buyer reference number is the overall contract number provided in the
Purchase Order.

 

“E” Package Number: Seller inserts the appropriate sequencial Number, its
3-digit alphabetic code (as determined by Buyer and given to Seller) and 4-digit
sequential package number.

 

“F” Packing Style: Seller inserts the appropriate packing style (ie. box, crate,
bundle, etc.).

 

“G” Buyer Purchase Order: Seller inserts the complete Buyer Purchase Order
number applicable to the contents of the package.

 

“H” Dimensions: Seller inserts outside dimensions of the shipping package in
centimetres and total cubic metres of the package.

 

By Seller:                     

   By Buyer:                     

Section 8, Exhibit A - Packaging and Shipping Requirements

Page 1 of 2

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PROJECT     

SECTION 8, EXHIBIT A

PACKING AND SHIPPING REQUIREMENTS

 

“I” Weight: Seller inserts the gross and net weight in kilograms of the package.

 

“J” Type of Equipment: Seller insets an “X” in the appropriate box to indicate
the type of equipment in the package.(ie spares, permanent plant, etc.).

 

“K” Buyer Item No.: Seller inserts the complete Buyer item number as shown on
the Buyer Purchase Order.

 

“L” Seller part ID Number: Seller inserts their appropriate item identification
which matches the material marks.

 

“M” Quantity: Seller inserts quantity shipped of each item shown on the packing
lists.

 

“N” Description of Contents of Package: Seller inserts a description of each
item within the package complete with Tag Number and or Drawing/Mark Number as
applicable. Lot description not permitted.

 

“O” Harmonized Code or Tariff number: Buyer requests Seller provide this
information for Buyer use as Buyer uses this shipping data for historical
purposes.

 

By Seller:                     

   By Buyer:                     

Section 8, Exhibit A - Packaging and Shipping Requirements

Page 2 of 2

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PROJECT     

SECTION 8, EXHIBIT C

DOMESTIC SHIPPING, PRESERVATION, AND PACKING INSTRUCTIONS

 

1.0 GENERAL

 

  1.1 SCOPE – If the SELLER’S standard procedures for domestic packaging will
provide equal or better protection than specified herein, this information
should be brought to the attention of BUYER for review and authorization.

If there is any doubt about application of these procedures or certain
provisions hereof, it shall be brought to the attention of the BUYER. The SELLER
shall be solely responsible for the adequacy of the methods employed for the
preparation of the materials and equipment for shipment.

Materials specified or referenced by manufacturer name or number are intended to
describe the type and quality level of materials desired. There is no intent to
be restrictive or to exclude similar materials by other manufacturers. Actual
selection will be made in strict accordance with the procurement policies
established for this project.

 

  1.2 SCOPE CLARIFICATION – Protection materials and equipment during ocean
shipment to the jobsite is covered by paragraph 3.0 of Section 8, entitled
“Export Preparation and Packing.”

 

  1.3 PURPOSE – The requirements for domestic packaging are herein specified in
order that the materials and equipment to be shipped will be protected against
all environmental conditions including humidity, moisture, rain, dust, dirt,
sand, mud, salt air and salt spray. Further, the specifications are intended to
facilitate the handling of project goods.

 

2.0 SKIDDING REQUIREMENTS

Materials will generally be handled by mechanical devices such as forklifts or
cranes. As such, proper packing to facilitate handling is necessary.

 

  2.1 CARDBOARD OR FIBERBOARD BOXES – Any single unit in excess of 50 pounds or
any dimension exceeding 3 feet shall, as a minimum, have skidding material
banded to it. When possible, multiple cartons shall be consolidated and banded
to a single skid. Any package made of paper products is subject to deterioration
due to moisture and humidity. Therefore, any single or multiple cardboard or
fiberboard boxes must be sealed.

 

  2.2 LOOSE MATERIALS – When practical, all loose materials must be skidded in
such a manner as to accommodate ease of handling. Any materials not skidded must
be capable of being handled by forklifts by nature of design

 

By Seller:                     

   By Buyer:                     

Section 8, Exhibit C – Domestic Shipping, Preservation and Packing Instructions

Page 1 of 4

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SECTION 8, EXHIBIT C

DOMESTIC SHIPPING, PRESERVATION, AND PACKING INSTRUCTIONS

 

  2.3 HEAVY AND OVERSIZED PIECES – Each shipment of heavy or oversized equipment
will, generally, be evaluated on a case by case basis. However, each shipment
must be protected in such a manner as to avoid damage in transit. All nozzles,
valves, gauges, or any other protrusions must be protected. Sling points and
centers of gravity shall be properly indicated.

 

3.0 PIPING MATERIALS

 

  3.1 Metallic Piping

Metallic piping materials and components shall be protected and prepared for
shipment whether they are fabricated or installed on a package unit or
disassembled for separate shipment. After the required testing and inspection,
the metallic piping materials and components shall be protected as follows:

 

  A. Threaded or socket-weld connections shall be cleaned and plugged, or capped
with metal or plastic protectors.

 

  B. The open ends of pipe shall be protected with metal or plastic caps; except
that plastic caps shall be used for stainless steel and exotic metallic
materials such as monel, titanium, etceteras. The ends will also be sealed with
one full wrap of waterproof cloth-backed duct tape.

 

  C. A metal or plastic cap shall be used to protect weldolets, secured by a
steel strap or tape around the pipe. No tack welding shall be permitted.

 

  3.2 Valves

For shipment, gate and globe valves shall be in the closed position, and plug
and ball valves shall be in the open position. Valve flange facings shall be
protected in accordance with Paragraph 4.1.2 below. Butt-welding ends shall be
protected per Paragraph 4.1.2 below. Threaded or socket welding ends shall be
protected per Paragraph 4.1.3 below.

 

4.0 INSTRUMENTATION AND ELECTRICAL EQUIPMENT

 

  4.1 Control Valves

 

  A. Positioner door shall be opened, and interior protected with Ludlow VPI
Wrap, Daubert VCI paper or porous bags of vapor phase inhibitor. The door shall
be closed and sealed with petroleum jelly applied to door seal before closing.

 

  B. The control valve stems shall be coated with Nox-Rust X-207.

 

By Seller:                     

   By Buyer:                     

Section 8, Exhibit C – Domestic Shipping, Preservation and Packing Instructions

Page 2 of 4

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PROJECT __

SECTION 8, EXHIBIT C

DOMESTIC SHIPPING, PRESERVATION, AND PACKING INSTRUCTIONS

 

  C. Threaded or socket-weld connections shall be cleaned and plugged, or capped
with metal or plastic protectors.

 

  4.2 Relief Valves

 

  A. Exposed operating parts shall be coated with Nox-Rust X-207 or substitute.

 

  B. Line blinds shall be installed on both inlet and outlet lines.

 

  C. The top of the tail pipe on relief valves that discharge to the atmosphere
shall be sealed to prevent the entrance of water.

 

  4.3 Displacer Type Level Transmitters

 

  A. Door shall be opened and interior protected with Ludlow VPI Wrap, Daubert
VCI (or substitute) paper on porous bags of vapor phase inhibitor. The door
shall be closed and sealed with petroleum jelly applied to door seal before
closing.

 

  B. The transmitters shall be shipped with shipping stops in place to prevent
displacer from moving.

 

  4.4 Transmitters, Controllers, Recorders and Indicators

Enclosure door shall be opened and interior protected with Ludlow VPI Wrap,
Daubert VCI ( or substitute) paper on porous bags of vapor phase inhibitor. The
door shall be closed and sealed with petroleum jelly applied to door seal before
closing.

 

  4.5 The covers shall be removed and the threads lubricated with petroleum
jelly. Covers shall be replaced following lubrication.

 

  4.6 Electronic Positive Displacement and Turbine Meters

The covers shall be removed and the threads lubricated with petroleum jelly.
Covers shall be replaced following lubrication.

 

  4.7 Gauge Glasses

 

  A. The block valves between the gauge glass and the equipment it serves shall
be closed.

 

  B. Waterproof, cloth backed duct tape shall be wrapped over the glass in the
gauge glass.

 

By Seller:                     

   By Buyer:                     

Section 8, Exhibit C – Domestic Shipping, Preservation and Packing Instructions

Page 3 of 4

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PROJECT __

SECTION 8, EXHIBIT C

DOMESTIC SHIPPING, PRESERVATION, AND PACKING INSTRUCTIONS

 

  4.8 Electronic Control Panels and Alarm Panels

For instruments with volumes exceeding 0.028 m3, the doors shall be opened and
Cortec VCI 101 devices or Cortec VCI 110 emitters ( or substitute) installed
inside the instrument. One VCI 101 device or one VCI 110 emitter shall be used
for each 0.028 m3. The door shall be closed and sealed with petroleum jelly
applied to door seal before closing.

 

  4.9 Electronic Analyzers

For instruments with volumes exceeding 0.028 m3, the doors shall be opened and
Cortec VCI 101 devices or Cortec VCI 110 emitters shall be installed inside the
instrument. One VCI 101 device or one VCI 110 emitter shall be used for each
0.028 m3. The door shall be closed and sealed with petroleum jelly applied to
door seal before closing.

 

  4.10 Analyzer Houses

All openings, vents, doors, etceteras shall be closed and sealed with
waterproof, cloth-backed tape. The house must be sealed against infiltration of
outside environment into the structure.

 

5.0 AUSTENITIC STAINLESS STEEL SURFACES

Austenitic stainless steel surfaces of equipment, vessels, pipe, pipe fittings
and flanges shall be cleaned and protected under the appropriate painting
specification as designated in the Project Specific Adaptation sheets. Coating
requirements contained in the Project Specific Adaptation are pre-approved prior
to issue.

 

By Seller:                     

   By Buyer:                     

Section 8, Exhibit C – Domestic Shipping, Preservation and Packing Instructions

Page 4 of 4

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PROJECT     

SECTION 9

INVOICING INSTRUCTIONS

Invoices shall be submitted as follows.

 

1. The original and three (3) copies of Seller’s commercial invoice along with
copies of the original signed Bill of Lading (only applicable for shipment to
Jobsite invoice) must be mailed to:

TXU Development Generation Company LLC

c/o Ken Smith

1601 Bryan Street

Dallas, TX 25201

With a copy to:

Bechtel Power Corporation

5275 Westview Drive

Frederick MD 21703

Attention: Project Expediter

                  TXU Standard Project

Purchase Order No. 25280-000-POA-MBPX-00001

 

2. Buyer may modify these invoicing instructions by notice to Seller at any
time.

 

3. Buyer will require Seller to execute and provide partial or final waivers and
releases of liens and claims, as applicable, in connection with or in any way
related to the performance of this Agreement as a condition to each payment in
accordance with Special Conditions Clause SC-17.

 

By Seller:                     

   By Buyer:                     

Section 9, Invoicing

Page 1 of 1