Exhibit 10.1

FOIA CONFIDENTIAL TREATMENT REQUESTED

PORTIONS OF THIS EXHIBIT MARKED BY *** HAVE BEEN OMITTED PURSUANT TO A

REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE SECURITIES

AND EXCHANGE COMMISSION

ENGINEERING AND CONSTRUCTION AGREEMENT

between

DUKE ENERGY CAROLINAS, LLC, as Owner

and

SHAW NORTH CAROLINA, INC, as Contractor

for the

CONSTRUCTION OF A COMBUSTION TURBINE COMBINED CYCLE ELECTRICAL GENERATION
FACILITY AT THE DAN RIVER GENERATING FACILITY IN ROCKINGHAM COUNTY, NORTH
CAROLINA

Dated March 8, 2010

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

Table of Contents

 

         Page

1.

  

DEFINITIONS

   1

2.

  

GENERAL PROVISIONS

   12   

2.1

  

Intent of Contract Documents

   12   

2.2

  

Independent Contractor

   12   

2.3

  

Subcontracting; Approved Subcontractors

   12   

2.4

  

Assignment of Subcontracts

   13   

2.5

  

Interpretation

   13   

2.6

  

Inclusion; Order of Precedence

   14   

2.7

  

Days

   14

3.

  

CONTRACTOR RESPONSIBILITIES

   15   

3.1

  

Performance of the Services; Commencement of Work

   15   

3.2

  

Professional Standards

   17   

3.3

  

Sufficient Personnel

   17   

3.4

  

Supervision and Discipline

   18   

3.5

  

Contractor’s Key Personnel

   18   

3.6

  

Design and Engineering

   18   

3.7

  

Quality Assurance Plan

   19   

3.8

  

Safety Management Plan

   19   

3.9

  

[Intentionally Omitted]

   19   

3.10

  

Utility Use

   19   

3.11

  

Spare Parts

   19   

3.12

  

Subcontractor Presence

   20   

3.13

  

Current Records; Record Drawings

   20   

3.14

  

Transportation Costs

   20   

3.15

  

O&M Manuals

   20   

3.16

  

Control of Work

   20   

3.17

  

Emergencies

   21   

3.18

  

Local Conditions

   21   

3.19

  

Use of Site; Owner Access

   21   

3.20

  

Compliance with Laws

   21   

3.21

  

Permits and Approvals

   22   

3.22

  

Periodic Reports and Meetings; Delivery of Project Baseline Documentation

   22   

3.23

  

Signage

   23   

3.24

  

Interference with Traffic

   23   

3.25

  

Supply of Water and Disposal of Sewage

   23   

3.26

  

Housekeeping

   23

4.

  

OWNER RESPONSIBILITIES

   24   

4.1

  

Owner’s Representative

   24

 

i

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4.2

  

Access

   24   

4.3

  

Permits

   24   

4.4

  

Owner Equipment

   24   

4.5

  

Fuel and Utilities

   24   

4.6

  

Operation and Maintenance Staff

   25   

4.7

  

Job Site Rules

   25   

4.8

  

Payment

   25

5.

  

EQUIPMENT AND WORKMANSHIP

   25   

5.1

  

Quality of Equipment and Workmanship

   25   

5.2

  

Cost of Tests

   25   

5.3

  

Samples

   25   

5.4

  

Inspection of Operations

   25   

5.5

  

Examination of Work before Covering

   26   

5.6

  

Uncovering and Making Openings

   26

6.

  

SCHEDULE

   26   

6.1

  

Commencement of Work

   26   

6.2

  

Schedule Requirements; Updates

   26   

6.3

  

***

   26

7.

  

CONTRACT PRICE; COMPENSATION AND PAYMENT

   27   

7.1

  

***

   27   

7.2

  

Determination of *** Payments of Contract Price.

   27   

7.3

  

***

   27   

7.4

  

Deficient Invoices and Payments

   27   

7.5

  

***

   28   

7.6

  

Final Payment

   28   

7.7

  

Certification by Contractor

   29   

7.8

  

No Acceptance by Payment

   29   

7.9

  

Revenue from Use of Facility

   29

8.

  

CHANGE ORDERS

   29   

8.1

  

Changes

   29   

8.2

  

Change Proposals

   29   

8.3

  

Change Orders

   30   

8.4

  

Owner Caused Changes

   30   

8.5

  

Contractor Proposed Changes

   30

9.

  

FORCE MAJEURE

   30   

9.1

  

Event of Force Majeure

   31   

9.2

  

Notice

   31   

9.3

  

Suspension; Termination Due to Force Majeure

   31

 

ii

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10.

  

MECHANICAL COMPLETION; PERFORMANCE TESTING; SUBSTANTIAL COMPLETION; FINAL
COMPLETION

   31   

10.1

  

Mechanical Completion Inspection

   31   

10.2

  

Mechanical Completion

   31   

10.3

  

Performance Testing

   32   

10.4

  

Satisfaction of Performance Testing

   33   

10.5

  

Substantial Completion Punch List

   33   

10.6

  

Substantial Completion

   33   

10.7

  

Final Completion

   34

11.

  

OWNER’S RIGHT TO OPERATE

   35   

11.1

  

Intentionally Omitted

   35   

11.2

  

Owner’s Right to Operate Prior to Satisfaction of Performance Guarantees

   35

12.

  

***

   35   

12.1

  

***

   35   

12.2

  

***

   35   

12.3

  

***

   35   

12.4

  

Payment

   35

13.

  

WARRANTY

   36   

13.1

  

Services Warranty Period

   36   

13.2

  

Equipment Warranty Period

   36   

13.3

  

Extension of Warranty Periods

   36   

13.4

  

Defects

   36   

13.5

  

Responsibility for Warranty Work

   36   

13.6

  

Title Warranty

   37   

13.7

  

Intellectual Property Warranty

   37   

13.8

  

Warranty Assistance

   37   

13.9

  

Conditions of Warranty

   37   

13.10

  

Exclusive Warranties

   37

14.

  

INDEMNIFICATION

   38   

14.1

  

Contractor’s Indemnity

   38   

14.2

  

Owner’s Indemnity

   38   

14.3

  

Intellectual Property Indemnity

   39   

14.4

  

Indemnity Procedures for Third Party Claims

   39

15.

  

INSURANCE

   40   

15.1

  

***

   40   

15.2

  

***

   41   

15.3

  

Contractor’s and Subcontractor’s Standard Insurance Requirements

   43

 

iii

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15.4

  

General Insurance Requirements

   44   

15.5

  

Insurance Pricing Assumptions

   46

16.

  

PROJECT CREDIT SUPPORT

   47   

16.1

  

Financial Information

   47   

16.2

  

***

   47   

16.3

  

***

   47

17.

  

LIMITATION OF LIABILITY

   47   

17.1

  

***

   47   

17.2

  

***

   47

18.

  

LIENS

   47   

18.1

  

Liens

   47   

18.2

  

Discharge or Bond

   47

19.

  

INTELLECTUAL PROPERTY

   47   

19.1

  

Delivery of Documentation

   47   

19.2

  

Ownership of Rights in Documentation

   48   

19.3

  

Ownership of Invention Rights

   48   

19.4

  

Disclosure of Documentation

   48   

19.5

  

Other Licenses

   48

20.

  

CONFIDENTIAL INFORMATION

   49   

20.1

  

Confidentiality Obligations

   49   

20.2

  

Permitted Disclosures

   49   

20.3

  

Publicity

   49

21.

  

ENVIRONMENTAL; HAZARDOUS MATERIALS

   49   

21.1

  

Material Safety Data Sheets

   50   

21.2

  

Facility Use, Storage Removal

   50   

21.3

  

Notice of Presence

   50   

21.4

  

Labeling; Training

   50   

21.5

  

Handling, Collection, Removal Transportation and Disposal

   50   

21.6

  

Notice of Discovery

   51   

21.7

  

Policies and Procedures

   51   

21.8

  

Asbestos Containing Products

   51   

21.9

  

Pre-Existing Hazardous Material

   51

22.

  

TITLE; RISK OF LOSS

   51   

22.1

  

Transfer of Title; Security Interest

   51

 

iv

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

  

22.2

  

Risk of Loss

   52   

22.3

  

Contractor Tools

   52

23.

  

SUSPENSION; DEFAULT; TERMINATION

   52   

23.1

  

Suspension

   52   

23.2

  

Contractor Events of Default

   53   

23.3

  

Owner Remedies

   54   

23.4

  

Owner Event of Default.

   54   

23.5

  

Contractor Remedies

   54   

23.6

  

Termination for Convenience

   54   

23.7

  

Termination for Force Majeure

   55   

23.8

  

Effect of Termination

   55

24.

  

SAFETY; INCIDENT REPORTING

   55   

24.1

  

Environmental, Health and Safety Programs

   55   

24.2

  

OSHA and Other Laws

   56   

24.3

  

Worksite Safety

   56   

24.4

  

Dangerous Materials

   57   

24.5

  

Loading

   58   

24.6

  

Cooperation in Governmental Investigation

   58   

24.7

  

Audit

   58

25.

  

QUALIFICATIONS AND PROTECTION OF ASSIGNED PERSONNEL

   58   

25.1

  

Contractor’s Personnel

   58   

25.2

  

Drug and Alcohol Testing

   59   

25.3

  

Training of Employees

   59   

25.4

  

Compliance with Employment Laws; Policies

   59   

25.5

  

Substitution

   59

26.

  

RECORDS AND AUDIT

   60   

26.1

  

Technical Documentation

   60   

26.2

  

Accounting Records

   60   

26.3

  

Owner’s Right to Audit

   60   

26.4

  

Sales Tax and Privilege Tax Records

   60

27.

  

TAXES

   61   

27.1

  

Employment Taxes

   61   

27.2

  

Sales and Use Taxes on Contractor Tools

   61   

27.3

  

Sales and Use Tax on Equipment; Privilege Tax

   61   

27.4

  

State Property Taxes

   62   

27.5

  

Tax Indemnification

   63   

27.6

  

Pollution Control Equipment Information

   63

 

v

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

28.

  

DISPUTE RESOLUTION

   63   

28.1

  

Resolution by the Parties

   63   

28.2

  

Arbitration Proceedings

   63   

28.3

  

Continuation of Work

   64   

28.4

  

Confidentiality

   64

29.

  

MISCELLANEOUS PROVISIONS

   64   

29.1

  

Governing Laws

   64   

29.2

  

Entire Agreement

   64   

29.3

  

Successors and Assigns

   64   

29.4

  

No Third Party Beneficiaries

   65   

29.5

  

Rights Exclusive

   65   

29.6

  

No Waiver

   65   

29.7

  

Crisis Response

   65   

29.8

  

Survival

   65   

29.9

  

Severability

   66   

29.10

  

Notices

   66   

29.11

  

Vienna Convention

   67   

29.12

  

Counterparts

   67

 

vi

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

EXHIBITS

Exhibit A        Technical Documentation

 

Exhibit A-1

  

Specifications, Scope of Work and Drawings

 

***

 

Attachment 2 - Division of Responsibility (DOR)

 

***

 

***

 

Attachment 5 - P&ID’s

 

Attachment 6 - Equipment List

 

Attachment 7 - Electrical One Lines

 

Attachment 8 - Raw Water Analysis

 

Attachment 9 - Gas Analysis

 

Attachment 10 - Basis of Design - Mechanical

 

Attachment 11 - Basis of Design - Electrical

 

Attachment 12 - Basis of Design - Instrumentation & Controls

 

Attachment 13 - Basis of Design - Civil Structural

 

Attachment 14 - Clarifications and Assumptions

Exhibit A-2

  

Performance Test Procedures and Guarantees

Exhibit A-3

  

Schedule of Drawings

Exhibit A-4

  

Site Description

Exhibit B        Schedule (including Key Contractor Schedule Milestones)

Exhibit C        ***

Exhibit D        List of Contractor Supplied Permits

Exhibit E        List of Owner Supplied Permits

Exhibit F        List of Contractor Key Personnel

 

vii

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

Exhibit G        Subcontractors

 

Exhibit G-1

  

List of Approved Subcontractors

Exhibit G-2

  

List of Subcontracts under ***

Exhibit H        Credit Support

 

Exhibit H-1

  

***

Exhibit H-2

  

***

Exhibit I        ***

 

Attachment 1

  

***

Exhibit J        Owner’s Drug and Alcohol Testing Policy

Exhibit K        ***+

 

Exhibit K-1

   ***

Exhibit K-2

   ***

Exhibit K-3

   ***

 

+ Contractor shall deliver the *** to Owner within *** after the date of the
Full Notice to Proceed.

 

viii

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

ENGINEERING AND CONSTRUCTION AGREEMENT

This ENGINEERING AND CONSTRUCTION AGREEMENT (the “Agreement”) is entered into as
of the 8th day of March, 2010 (the “Effective Date”), between DUKE ENERGY
CAROLINAS, LLC, a North Carolina limited liability company having its principal
place of business in Charlotte, North Carolina (“Owner”), and SHAW NORTH
CAROLINA, INC., a North Carolina corporation having its principal place of
business in Charlotte, North Carolina (“Contractor” and, together with Owner,
collectively the “Parties” and individually a “Party”).

RECITALS

WHEREAS, Owner has announced its intent to procure, construct, install and
commission a new nominally rated 620 MW combustion turbine combined cycle
electric power plant at the Dan River Generating Facility (the “Facility”) in
Rockingham County, North Carolina, which will consist of (i) two combustion
turbine generators, (ii) two natural circulation, duct fired, heat recovery
steam generators and (iii) one reheat condensing steam turbine generator (the
“Project”);

WHEREAS, Contractor is engaged in the business of designing, engineering,
constructing and commissioning power generating facilities;

WHEREAS, Owner has entered into the Owner Equipment Contracts for the supply of
the Owner Equipment, which is intended to be installed and commissioned by
Contractor;

WHEREAS, the Parties have entered into that certain *** Limited Notice to
Proceed (as defined herein) authorizing Contractor to proceed with certain Work
hereunder in a limited manner;

WHEREAS, the Parties have agreed to enter into this Agreement to set forth the
terms and conditions upon which Contractor shall perform the Work hereunder;

NOW, THEREFORE, in consideration of the recitals, the mutual promises herein and
other good and valuable consideration, the receipt and sufficiency of which the
Parties acknowledge, the Parties, intending to be legally bound, stipulate and
agree as follows:

 

1.

DEFINITIONS

The following capitalized words and phrases used in this Agreement shall have
the following meanings unless otherwise noted:

“Affiliate” shall mean, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such first Person at such time,
where “Control” shall mean (a) the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies of a Person,
whether through the ownership of voting securities, as a trustee or executor, by
contract or credit arrangement, or otherwise, or (b) the ownership, directly or
indirectly, of fifty percent (50%) or more of the equity interest in a Person.

 

1

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

“Agreement” shall have the meaning set forth in the first paragraph above and
shall include all Exhibits and all Amendments hereto (including to the extent
applicable, all Change Orders).

“Baseline Budget” shall mean a breakdown of the *** as of the date of the Full
Notice to Proceed, broken down in time-phased increments (based upon the
activities to be completed by Contractor in accordance with the Baseline
Schedule), with such *** organized in a Work Breakdown Structure (WBS) which
allocates such costs to discrete scopes of Work and other specific tasks,
including the Key Contractor Schedule Milestones, as such budget may be revised,
amended, updated or otherwise modified by Change Orders in the manner set forth
herein.

***

“Baseline Schedule” shall mean a network-based detailed Level III CPM schedule
depicting the critical path as of the date of the Full Notice to Proceed,
including the Key Contractor Schedule Milestones, for completion of the Work, as
such schedule may be revised, amended, updated or otherwise modified by Change
Orders in the manner set forth herein. The Parties hereto hereby acknowledge and
agree that the Baseline Schedule shall be derived from, and consistent in all
respects with, the Schedule in effect as of the date of the Full Notice to
Proceed.

“Buck LNTP Reports” shall mean the written reports prepared by Contractor and
delivered to Owner during the period in which Contractor performed work under a
limited notice to proceed for Owner’s Buck Generating Facility project.

“Business Day” shall mean every Day other than Saturday, Sunday or a legal
holiday recognized by the State.

***

“Change” shall have the meaning set forth in Section 8.1.

“Change in Law” shall mean a change to a Law, or a change in the binding
interpretation or application of a Law after the Effective Date that results in
an increase in Reimbursable Costs for Contractor to perform the Work, which
increase in Reimbursable Costs Contractor would not have incurred but for this
Agreement; provided, however, that a “Change in Law” shall not include any
change to a Law that is enacted by any Government Authority prior to the
Effective Date but, by its terms, does not come into effect until after the
Effective Date.

“Change Order” shall have the meaning set forth in Section 8.3.

“Commissioning” shall mean the activities required to be conducted by Contractor
pursuant to the terms of this Agreement in order to bring the Facility from an
inactive condition, when construction is essentially complete, to a state where
the Facility is ready for the commencement of operation, including
pre-commissioning, start-up, individual system and integrated, functional
verification and synchronization of all equipment within the Facility.

“Confidential Information” shall mean, with respect to any Party, all written,
verbal, electronic and other information and documents such Party provides or
makes available to the other Party relating in any way to this Agreement which
are marked as being “Proprietary” to such Party at the time of disclosure, or
for verbal information reduced to a writing and marked or designated as being
“Proprietary” to a such Party within seven (7) Days after such verbal
disclosure. “Confidential

 

2

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

Information” shall not include any Documentation or any other information that:
(a) was already known to the other Party at the time it was disclosed by such
Party; (b) was available to the public at the time it was disclosed by such
Party; (c) becomes available to the public after being disclosed by such Party
through no wrongful act of, or breach of this Agreement by, the other Party;
(d) is received by the other Party without restriction as to use or disclosure
from a third party; or (e) is independently developed by the other Party without
benefit of any disclosure of information by such Party.

“Contract Price” shall mean the ***

“Contractor” shall have the meaning set forth in the first paragraph above and
shall include respective successors and permitted assigns.

“Contractor Default” shall have the meaning set forth in Section 23.2.

“Contractor Permits” shall have the meaning set forth in Section 3.21.

“Contractor’s Project Manager” shall mean the Person whom Contractor designates
in Exhibit F to issue and receive communications on Contractor’s behalf under
this Agreement.

“Contractor’s Site Representative” shall mean the Person whom Contractor
designates in Exhibit F to represent Contractor at the Site.

“Cost Comparison Report” shall mean either, as the context may require:

(a)      a report for a specified period which compares the *** during such
period against *** for such period, including a breakdown of ***

(b)      a report for a specified period which compares the *** such date
against the ***

in each case, *** and together with evidence reasonably required in order for
Owner to ***

“Day” shall mean a calendar day, including Saturdays, Sundays, and holidays.

“Defects” shall have the meaning set forth in Section 13.4.

***

“Design Documents” shall have the meaning set forth in Section 3.6.

“Dispute” shall have the meaning set forth in Section 28.1.

“Documentation” shall mean such materials in printed or electronic format that
are or are to be delivered hereunder or otherwise agreed by the Parties to be
delivered by Contractor to Owner, including Design Documents, specifications
(including the Specifications), schedules (including the Schedule), schematics,
drawings (including Final Completion “as built” drawings in accordance with
Section 19.1 as specified in Exhibit A-3), blueprints, memoranda, letters,
notes, isometrics, computer programs and software, flow charts, logic diagrams,
graphs, studies, system descriptions, lists, charts, diagrams, standards,
criteria, assumptions, measurements, procedures (including the Testing
Procedure), instructions, reports, test data and results, analyses,
calculations, formulas, computations,

 

3

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

plans, empirical and other correlations, models, manuals (including software
manuals and O&M Manuals) and training materials to be provided in accordance
with Exhibit A-1, Attachment 1, that are necessary for the design,
Commissioning, operation, maintenance, modification or decommissioning of the
Facility.

“Effective Date” shall have the meaning set forth in the first paragraph of this
Agreement.

“Electrical Output” shall mean the net electrical power, as measured at the high
side of the main step-up transformer, that is produced by the Facility in
kilowatts (kW) during the Performance Testing, at the test specified operating
conditions, and corrected to the base performance conditions set forth herein
and in Exhibit A-2.

***

“Equipment” shall mean any and all material, structure, buildings, apparatus,
equipment, spare parts, hardware, goods, tools, supplies, and other personal
property, all as intended to become a permanent part of the Facility, that
Contractor furnishes, or is required to furnish, hereunder in accordance with
this Agreement, including the Specifications, or otherwise for the Facility.
“Equipment” includes all of the foregoing items that Contractor furnishes
through a Subcontractor. For the purposes of this Agreement, “Equipment” shall
not include any Owner Equipment.

“Equipment Warranty Period” shall have the meaning set forth in Section 13.2.

“Facility” shall have the meaning set forth in the Recitals.

***

“Final Completion” shall mean that the Facility shall have achieved all of the
conditions set forth in Section 10.7.

“Final Completion Date” shall mean the date on which Final Completion of the
Facility occurs.

“Final Payment Invoice” shall have the meaning set forth in Section 7.6.

***

“Force Majeure” shall mean an unforeseeable event or cause that is beyond the
reasonable control of a Party, including by way of example, but not limited to:

(a)      acts of God, war, riots, insurrection, terrorism, rebellion, floods,
hurricanes, tornadoes, earthquakes, lightning, pandemic, epidemics, and other
natural calamities;

(b)      explosions or fires;

(c)      strikes, lockouts, or other labor disputes, but excluding strikes,
lockouts or work stoppages involving only employees of Contractor;

 

4

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

(d)      a Change in Law, but only to the extent such Change in Law delays a
Party or increases its cost, as demonstrated by credible evidence, in its
performance of its obligations under this Agreement;

(e)      actions or inactions of any Government Authority; and

(f)      delays in obtaining goods or services from any Subcontractor caused by
the occurrence of any Force Majeure event;

provided, however, that an event or cause shall not be an event of Force Majeure
unless it: (i) directly impacts the Work under this Agreement, (ii) is not
attributable to an act or omission of, including a breach of this Agreement by,
such Party, or its employees, officers, agents or Subcontractors, unless such
act or omission is itself a result of Force Majeure, and (iii) cannot be cured,
remedied, avoided, offset, or otherwise overcome by the prompt exercise of
reasonable diligence by such Party (or any Person over whom such Party has
control). For the avoidance of doubt, “Force Majeure” shall not include
(A) changes in general economic conditions such as inflation, interest rates or
other factors of general application, and Contractor shall not be entitled to
equitable relief therefor, and (B) Owner’s inability to meet any of its payment
obligations for whatever reason when due, and Owner shall not be excused from
such obligation.

“Full Notice to Proceed” shall mean the written notice that Owner gives to
Contractor fully authorizing Contractor to proceed with the Work hereunder,
which is anticipated to be given no later than December 1, 2010.

“Government Authority” shall mean any federal, state, county, city, local,
municipal, foreign or other government or quasi-governmental authority or any
department, agency, subdivision, court or other tribunal of any of the
foregoing.

“Government Approvals” shall mean all permits, licenses, authorizations,
consents, decrees, waivers, privileges and approvals from and filings with any
Government Authority required for or material to the development, financing,
ownership, construction, operation or maintenance of the Facility in accordance
with this Agreement, including the CPCN and other work permits, environmental
permits, licenses and construction permits.

“Gross Negligence” shall mean a conscious and voluntary disregard of the need to
use reasonable care, which is likely to cause foreseeable grave injury or harm
to persons, property or both.

“Guaranteed Substantial Completion Date” shall mean the date of *** (as such
date may be adjusted by Change Order), provided that such date shall be extended
on a day-for-day basis to the extent Owner fails to issue a Full Notice to
Proceed on *** until such Day Owner issues such Full Notice to Proceed.

“Guaranteed Final Completion Date” shall mean the date of *** (as such date may
be adjusted by Change Order), provided that such date shall be extended on a
day-for-day basis to the extent Owner fails to issue a Full Notice to Proceed on
*** until such Day Owner issues such Full Notice to Proceed.

“Guarantor” shall mean ***

 

5

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

“Hazardous Materials” shall mean substances defined as “hazardous substances”
pursuant to Section 101(14) Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S.C. Sections 9601 et seq.); those substances
defined as “hazardous waste” pursuant to Section 1004(5) of the Resource,
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.); those substances
designated as a “hazardous substance” pursuant to Section 311 (b )(2)(A) or as a
“toxic pollutant” pursuant to Section 307(a)(1) of the Clean Water Act (33
U.S.C. Sections 1251 et seq.); those substances defined as “hazardous materials”
pursuant to Section 103 of the Hazardous Materials Transportation Act
(49) U.S.C. Sections 1801 et seq.); those substances regulated as a “chemical
substance or mixture” or as an “imminently hazardous chemical substance or
mixture” pursuant to Section 6 or 7 of the Toxic Substances Control Act (15
U.S.C. Sections 2601 et seq.); those substances defined as “contaminants”
pursuant to Section 1401 of the Safe Drinking Water Act (42 U.S.C. Sections 300f
et seq.), if present in excess of permissible levels; those substances regulated
pursuant to the Oil Pollution Act of 1990 (33 U.S.C. Sections 2701 et seq.);
those substances defined as a “pesticide” pursuant to Section 2(u) of the
Federal Insecticide, Fungicide, and Rodenticide Act as amended by the Federal
Environmental Pesticide Control Act of 1972 and by the Federal Pesticide Act of
1978 (7 U.S.C. Sections 136 et seq.); those substances defined as “toxic
materials” or “harmful physical agents” pursuant to Section 6 of the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.); those
substances defined as “hazardous air pollutants” pursuant to Section 112(a)(6),
or “regulated substance” pursuant to Section 112(a)(2)(B) of the Clean Air Act
(42 U.S.C. Sections 7401 et seq.); those substances defined as “extremely
hazardous substances” pursuant to Section 302(a)(2) of the Emergency Planning &
Community Right-to-Know Act of 1986 (42 U.S.C. Sections 11001 et seq.); and
those other hazardous substances, hazardous wastes, toxic pollutants, hazardous
materials, chemical substances or mixtures, imminently hazardous chemical
substances or mixtures, contaminants, pesticides, by-product materials, toxic
materials, harmful physical agents, air pollutants, regulated substances, or
extremely hazardous substances defined in any regulations promulgated pursuant
to any of the foregoing environmental Laws, and all other contaminants, toxins,
pollutants, hazardous substances, substances, materials and contaminants,
polluted, toxic and hazardous materials, the use, disposition, possession or
control of which is regulated by one or more Laws.

“Heat Rate” shall mean the test calculated net heat rate in BTU/kW-hr in HHV for
the Facility during the Performance Testing at the test specified operating
conditions and corrected to the base performance conditions set forth in Exhibit
A-2.

“Insolvent” shall mean, with respect to either Party, that such Party becomes
insolvent, or fails generally to pay its debts as they become due, or admits in
writing its inability to pay its debts as they become due, or makes a general
assignment for the benefit of creditors; commences any case, proceeding or other
action seeking reorganization, arrangement, adjustment, liquidation, dissolution
or composition of itself or its debts or assets, or adopts an arrangement with
creditors, under any bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar law of the United States or any state thereof for the
relief of creditors or affecting the rights or remedies of creditors generally.

“Key Contractor Schedule Milestone” shall mean a Milestone set forth in Exhibit
B that is identified as a “Key Contractor Schedule Milestone.”

“Laws” shall mean, at any date of determination, all statutes, laws, codes,
ordinances, orders, judgments, decrees, injunctions, licenses, rules, permits,
approvals, agreements, and regulations,

 

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including all applicable codes, standards, rules and regulations of the State,
in effect on such date, including all Government Approvals.

“Lien” shall mean any lien, mortgage, pledge, encumbrance, charge, security
interest, defect in title, or other claim filed or asserted in connection with
the Project by or through Contractor, a Subcontractor or any other third party
under the control or supervision of Contractor or any Subcontractor against the
Facility, the Site, the Equipment, the Owner Equipment or any other structure or
equipment at the Site.

***

“Limited Notice to Proceed” shall mean a written notice that Owner gives to
Contractor authorizing Contractor to proceed with the Work hereunder in a
limited manner.

“LNTP Report” shall mean a written report prepared by Contractor prior to the
issuance of the Full Notice to Proceed covering a specified reporting period,
which report shall be in form and substance consistent with the Buck LNTP
Reports.

“LOC Expiration Date” shall have the meaning set forth in Section 16.3(c).

“Major Subcontractor” shall mean any Subcontractor who is engaged by Contractor:
(i) to perform any Services or provide any Equipment that exceeds or is expected
to exceed, in the aggregate with all prior provision of Services or Equipment by
that Subcontractor, ***; or (ii) that, although not exceeding *** in the
aggregate for Equipment or Services, is performing Services or providing
Equipment that is expressly listed in the table attached hereto as Exhibit G-2.

“Make Right Performance Guarantees” shall mean those Performance Guarantees
designated as such in Exhibit A-2 for which the payment of a Performance
Liquidated damage as a remedy shall not be an option for Contractor, which shall
include the Permitted Emission Limits.

***

“Mechanical Completion” shall mean that the Facility shall have achieved all of
the conditions set forth in Section 10.2.

“Milestone” shall mean an event or series of events in the execution of the Work
as set forth in Exhibit B.

“Minimum Performance Guarantees” shall mean, the achievement by the *** under
the performance conditions set forth in Exhibit A-2 of (a) a *** not exceeding
*** of the applicable Performance Guarantees (or ***), and (b) an *** not less
than *** of the applicable Performance Guarantees (or ***) (both of which are
achieved while meeting the Permitted Emission Limits), as such values may be
modified as the Parties may mutually agree during the ***

“***” shall have the meaning set forth in Section 7.5(a).

“*** Payment Invoice” shall have the meaning set forth in Section 7.2(a).

 

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“Monthly Progress and Cost Report” shall have the meaning set forth in
Section 3.22(b)(iii).

“*** Limited Notice to Proceed” shall mean the limited notice to proceed, dated
as of ***, between Owner and Contractor authorizing Contractor to proceed with
the Work hereunder in a limited manner, further evidenced by that certain
purchase order number DPP01.0000017297.

“O&M Manuals” shall mean those manuals prepared by Subcontractors relating to
the operation or maintenance of the Equipment provided by such Subcontractor.

“OSHA” shall have the meaning set forth in Section 24.2.

“OSHA Standards” shall have the meaning set forth in Section 24.2(b).

“Owner” shall have the meaning set forth in the first paragraph above and shall
include its successors and assigns.

“***” shall mean the *** including specifically the following items:

(a)      ***

(b)      ***

(c)      ***

(d)      ***

“Owner Equipment Contracts” shall mean, collectively, *** and any other contract
executed between Owner and a third-party supplier of equipment, including the
Owner Equipment, for the Project, as each contract may be updated and amended
from time to time.

“Owner Permits” shall have the meaning set forth in Section 4.3.

“Owner’s Project Director” shall mean the Person that Owner designates in
writing to issue and receive communications on Owner’s behalf under this
Agreement.

“Performance Guarantees” shall mean the achievement by the *** under the
applicable performance conditions set forth in Exhibit A-2 of (a) a *** not
exceeding *** and (b) an *** not less than *** (both of which are achieved while
meeting the Permitted Emission Limits), ***

“***” shall mean (a) *** per each *** measured as *** over the applicable ***
for *** and (b) *** per each *** under the applicable *** for ***

“***” shall mean, as of any date of determination, an amount equal to the ***
and *** as of such date.

“Performance Testing” shall mean the tests, conducted in accordance with this
Agreement, including the Testing Procedures, by which Contractor demonstrates
that the Facility meets, for Substantial Completion, the Minimum Performance
Guarantees, or for Final Completion, the Performance Guarantees.

 

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“Permitted Emission Limits” shall mean those specific emission limits for each
regulated pollutant set forth in the Dan River Station Title V Permit
Modification dated August 24, 2009 issued by the North Carolina Department of
Environment and Natural Resources (NCDENR) Division of Air Quality authorizing
the construction and operation of the Facility and which specifies the methods
of measurement, recordation, and compliance and which are designated as such and
set forth in Exhibit A-2.

“Person” shall mean any individual, company, corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
estate, unincorporated organization, Government Authority or other entity having
legal capacity.

***

“Prime Interest Rate” shall mean, as of a particular date, the prime rate of
interest as published on that date in The Wall Street Journal, and generally
defined therein as “the base rate on corporate loans posted by at least 75% of
the nation’s 30 largest banks.” If The Wall Street Journal is not published on a
date for which the interest rate must be determined, the prime interest rate
shall be the prime rate published in The Wall Street Journal on the
nearest-preceding date on which The Wall Street Journal was published. If The
Wall Street Journal discontinues publishing a prime rate, the prime interest
rate shall be the prime rate announced publicly from time to time by Bank of
America, N.A. or its successor.

***

“Progress Meetings” shall have the meaning set forth in Section 3.22(c).

“Project” shall have the meaning set forth in the Recitals.

“Project Baseline” shall mean the anticipated costs to be incurred by Contractor
in order to complete the Project (or any portion of the Project), the schedule
upon which Contractor is projected to complete the Project (or any portion of
the Project), and the resources necessary to complete the Project (or any
portion of the Project), and the detailed components thereof, in each case, as
reflected in the Baseline Budget, *** and the Baseline Schedule.

“Project Management Review Package” shall mean a written report prepared by
Contractor covering a specified reporting period, which report shall include:
(a) a schedule report detailing the progress of the Work against the Baseline
Schedule through the end of the previous reporting period, depicting critical
path activities and a comparison of the Key Contractor Schedule Milestones set
forth in the Baseline Schedule to the Key Contractor Schedule Milestones set
forth in the up-to-date Schedule, together with a brief critical path analysis
with respect thereto, (b) a statement of any significant issues which remain
unresolved and Contractor’s recommendations for resolving the same, (c) all Key
Project Statistics, (d) a statement of any significant Project risks which
remain outstanding, (e) a description of the safety status of the Project,
together with a graphical depiction of such status, (f) a summary detailing the
status of open PARs and a running summary of all Change Orders issued or
requested under the Agreement, (g) a table describing the quantity used by
Contractor to complete the Work performed, (h) a summary detailing the status of
all major purchase orders and subcontracts issued or signed by Contractor with
respect to the Work, (i) a summary of any significant Project events which are
scheduled or expected to occur during the following ***, (j) an engineering
summary and composite performance graph, (k) a construction summary and

 

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composite performance graph, (l) turnover and commissioning status graph and
(n) such other information as Owner may reasonably request on an as-needed
basis. The Parties hereto hereby acknowledge and agree that Contractor shall not
be required to deliver the Project Management Review Package to Owner until such
time as the Full Notice to Proceed has been issued.

“Prudent Industry Practice” shall mean those practices, methods, equipment,
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used, or are generally accepted, in
construction or operations of electric power generation facilities similar to
the Facility, which in the exercise of reasonable judgment and in light of the
facts known at the time the decision was made, after due and diligent inquiry,
are considered good, safe and prudent practices in connection with the
engineering, design, construction, commissioning, testing, operation and
maintenance of facilities similar to the Facility with commensurate standards of
safety, performance, dependability, efficiency, and economy, and as are in
accordance with generally accepted standards of professional care, skill,
diligence, and competence applicable to engineering, design, construction,
commissioning, testing, operation, maintenance and construction practices in the
United States.

“Quality Assurance Plan” shall have the meaning as set forth in Section 3.7.

***

“Reporting Period” shall mean, with respect to any month, the period of time
commencing on the Effective Date and ending on the last day of Contractor’s
reporting period (as determined in the ordinary course of business consistent
with Contractor’s past practices) for such month.

“Sales Tax” shall mean any current or future sales, use or similar tax imposed
on Contractor, any Subcontractor or Owner with respect to the Work by the State
or any other Government Authority.

“Schedule” shall mean a network-based detailed Level II CPM schedule depicting
the critical path, including the Key Contractor Schedule Milestones, for
completion of the Work, as set forth in Exhibit B, as modified or updated from
time to time in accordance with the terms of this Agreement.

“Scope of Work” shall mean all Work on the Project as set forth in Exhibit A-1.

“Screening Measures” shall mean all applicable immigration checks (including
compliance with the Immigration Reform Control Act of 1986 and I-9
requirements), drug and alcohol tests in compliance with Owner’s Drug and
Alcohol Testing Policy attached hereto as Exhibit J, a terrorist watch database
search, a social security trace, criminal background checks (including but not
limited to checks for any felony convictions for the past seven years) and such
other screening measures as a reasonably prudent employer would deem
appropriate; provided that, nothing shall require Contractor to perform any
screening activities that violate the federal Fair Credit Reporting Act, Title
VII of the Civil Rights Act of 1964 or any other applicable Law.

“Services” shall mean all labor, transportation, packaging, storage, designing,
drawing, engineering, demolition, Site preparation, manufacturing, construction,
commissioning, installation, testing, equipping, verification, training,
procurement (whether procurement of Equipment, Documentation, licenses to
intellectual property granted herein or otherwise) and other work,

 

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services and actions (including pursuant to any warranty obligations) to be
performed by Contractor under this Agreement *** (whether at the Site or
otherwise) in connection with, or relating to, the Facility (or any component
thereof, including any Equipment and any Owner Equipment). “Services” includes
(a) all of the foregoing items that Contractor provides through a Subcontractor
and (b) the services that Contractor provides with respect to Owner Equipment
pursuant to Section 3.1(a)(ii).

“Services Warranty Period” shall have the meaning set forth in Section 13.1.

“Site” shall mean the physical location as described in Exhibit A-4 upon which
Contractor shall construct the Facility and perform related Work.

“Specifications” shall mean the Facility specifications in Exhibit A-1.

***

“State” shall mean the State of North Carolina.

“Subcontractor” shall mean a Person, including any vendor, materialman or
supplier, who has a contract (whether written or oral, a purchase order or
otherwise) with Contractor or a contract with any Person hired by Contractor or
with a Person of any lower tier to Contractor (e.g., a second- or third-tier
subcontractor) to perform any of the Services or to furnish any Equipment, at
the Site or elsewhere.

“Substantial Completion” shall mean that the Facility shall have achieved all of
the conditions set forth in Section 10.6.

“Substantial Completion Date” shall mean the date on which Substantial
Completion actually occurs.

“Substantial Completion Punch List” shall mean the written list of items of Work
(which Contractor prepares and with which Owner agrees prior to Substantial
Completion) that remain to be completed by Contractor after Substantial
Completion but prior to Final Completion and which shall not affect the safety,
reliability, operability or mechanical or electrical integrity of the Facility.

“*** Substantial Completion Date” shall mean the date of *** (as such date may
be adjusted by Change Order).

***

“Taxes” shall mean all present and future license, documentation, recording and
registration fees, all taxes (including income, gross receipts, unincorporated
business income, payroll, sales, use, privilege, personal property (tangible and
intangible), real estate, excise and stamp taxes), levies, imports, duties,
assessments, fees (customs or otherwise), charges and withholdings of any nature
whatsoever, and all penalties, fines, additions to tax, and interest imposed by
any Government Authority.

“Testing Procedures” shall mean those procedures prepared for the Performance
Testing by Contractor in accordance with Exhibit A-2 and reasonably acceptable
to Owner.

 

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“Third Party Claim” shall mean any claim, demand or cause of action of every
kind and character by any Person other than Owner or Contractor. For the
avoidance of doubt, a claim, demand or cause of action by an employee of Owner
or Contractor (unless made on behalf of Owner or Contractor) shall be considered
a Third Party Claim hereunder.

***

“Warranty Period” shall mean, as the context may require, the Services Warranty
Period or the Equipment Warranty Period, as each may be extended from time to
time with respect to any Service or Equipment as provided in Section 13.3.

“Work” shall mean, as the context may require, either (a) the Equipment and the
Services or (b) the Equipment or the Services.

 

2.

GENERAL PROVISIONS

2.1      Intent of Contract Documents.    It is the intent of the Parties that
Contractor provide the Equipment and perform the Services and all of its other
obligations under this Agreement for the Contract Price, *** which shall not be
increased, except in accordance with Article 7 or Article 8 or as otherwise
expressly set forth herein.

2.2      Independent Contractor.    Contractor shall perform and execute the
provisions of this Agreement as an independent contractor to Owner and shall not
in any respect be deemed or act, or hold itself out, as an agent of Owner for
any purpose or reason whatsoever, except as contemplated in Section 3.1(a)(ii).

 

2.3

Subcontracting; Approved Subcontractors.

(a)      The Parties have agreed upon the list of approved Subcontractors set
forth in Exhibit G-1 for the Services and Equipment listed in Exhibit G-1.
Contractor shall have the right to have that portion of the Services identified
in Exhibit G-1 performed by the approved Subcontractor for such Service, and the
right to purchase Equipment identified in Exhibit G-1 from the approved
Subcontractor for such Equipment. For all Major Subcontractors that are listed
in Exhibit G-1 and for the scope of Services and Equipment that are listed in
Exhibit G-2, Contractor shall provide Owner with an opportunity to participate
in Contractor’s bid process, including but not limited to, review of
Contractor’s bid proposals, participation in vendor presentations and meetings,
review of proposed subcontractor’s bid responses, review and participation in
Contractor’s technical and commercial evaluations of bid responses, and
participation in Contractor’s meetings to discuss bid selection. In addition,
not less than *** prior to such time as Contractor desires to award or execute a
subcontract with a proposed Major Subcontractor, Contractor shall provide notice
to Owner of such intention. If, prior to execution of a subcontract with such
Major Subcontractor, Owner desires that Contractor engage an alternative Major
Subcontractor in lieu of the Major Subcontractor that is preferred by
Contractor, Owner shall consult in good faith with Contractor on the difference
in value, if any, between the bid price of the Major Subcontractor desired by
Owner and the Major Subcontractor preferred by Contractor, plus any additional
impacts to Schedule or warranties attributable to selecting the alternative
Major Subcontractor in lieu of the preferred Major Subcontractor. If desired by
Owner, Contractor shall engage such alternative approved Major Subcontractor but
shall be entitled to a Change Order for the schedule, cost, warranty or other
impacts in selecting the alternative Major Subcontractor.

 

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(b)      If Contractor desires to engage a Subcontractor that is not identified
in Exhibit G-1 as an approved Subcontractor that will be providing Equipment or
Services, then Contractor shall provide Owner with an opportunity to participate
in Contractor’s bid process, including but not limited to, review of
Contractor’s bid proposals, participation in vendor presentations and meetings,
review of proposed subcontractor’s bid responses, review and participation in
Contractor’s technical and commercial evaluations of bid responses, and
participation in Contractor’s meetings to discuss bid selection. Before
Contractor enters into any contract with, or otherwise engages, such
Subcontractor to perform such Services, Contractor shall deliver to Owner for
Owner’s review and approval (w) the name of the Subcontractor that Contractor
proposes to use in the performance of such on-Site Services, (x) a statement in
reasonable detail of the reasons why the proposed Subcontractor is preferred
over any approved Subcontractor, (y) a description of any impacts to Schedule,
warranties, interconnection with other Equipment or otherwise attributable to
selecting the Subcontractor and (z) the information (and any additional
information as Owner may reasonably request) on which Contractor is basing its
desire to engage such Subcontractor. Owner shall have the right to reject any
such Subcontractor; provided that Owner’s rejection shall be reasonable and
shall occur within *** after Contractor submits to Owner all of the information
noted in clauses (w) through (z) above.

(c)      Contractor shall not allow any Subcontractor that Owner rejects to
perform any portion of the Services. Unless otherwise mutually agreed in
writing, no contractual relationship shall exist between Owner and any
Subcontractor with respect to any of the Services or the Equipment. Contractor
shall be fully responsible for all acts, omissions, failures and faults of all
Subcontractors as fully as if they were the acts, omissions, failures and faults
of Contractor. The exercise of this right by Contractor to subcontract shall not
in any way increase the costs, expenses or liabilities of Owner.

2.4    Assignment of Subcontracts.    All subcontracts between Contractor and
its Subcontractors shall be in writing and shall, to the extent commercially
reasonable, contain provisions, which Contractor shall not waive, release,
modify or impair (a) obligating each Subcontractor that may receive access to
any Owner Confidential Information, to protect such Owner Confidential
Information in accordance with the provisions of this Agreement; (b) as
applicable, sufficient to ensure that Contractor has the right to grant the
intellectual property licenses and assignments that are granted to Owner herein;
and (c) giving Contractor an unrestricted right to assign the subcontract and
all benefits, interests, rights and causes of action arising under it to Owner,
an Affiliate of Owner or an operator of the Facility, as designated by Owner. At
the request of Owner, Contractor shall provide Owner with copies of all
warranties of each Subcontractor relating to any of the Work, and Contractor
shall comply with any request by Owner upon the termination of this Agreement
pursuant to Article 23 or prior to the expiration of the Warranty Period to
assign the benefit of any Subcontractor warranty to Owner, an Affiliate of Owner
or an operator of the Facility, as designated by Owner; provided that, unless
otherwise agreed, Contractor shall not be required to assign any rights to
claims that Contractor may have against such Subcontractor at the time of the
assignment of such benefit.

 

2.5

Interpretation.

(a)      Headings.   The titles and headings in this Agreement are inserted for
convenience only and shall not be used for the purposes of construing or
interpreting this Agreement.

 

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(b)      References.   References to natural persons include Persons. References
to “Articles” and “Sections” are references to Articles and Sections of this
Agreement. References to “Exhibits” are references to the Exhibits attached to
this Agreement, including all attachments to and documents and information
incorporated therein, and all Exhibits are incorporated into this Agreement by
reference.

(c)      Gender.   Words importing one gender include the other gender.

(d)      Without Limitation.   The words “include” and “including” are not words
of limitation and shall be deemed to be followed by the words “without
limitation.”

(e)      Amendments.   All references in this Agreement to contracts, agreements
or other documents shall be deemed to mean those contracts, agreements or
documents as the same may be modified, supplemented or amended from time to
time.

(f)      Industry Meanings.     Words and abbreviations not otherwise defined in
this Agreement which have well-known technical or design, engineering or
construction industry meanings in the United States are used in this Agreement
in accordance with those recognized meanings.

(g)      Agreement.  Provisions including the word “agree”, “agreed” or
“agreement” require the agreement to be recorded in writing.

(h)      Written.  Provisions including the word “written” or “in writing” mean
hand-written, type-written, printed or electronically made and resulting in a
permanent record.

(i)      Drafting.    Neither Contractor nor Owner shall assert or claim a
presumption disfavoring the other by virtue of the fact that this Agreement was
drafted primarily by legal counsel for the other, and this Agreement shall be
construed as if drafted jointly by Owner and Contractor and no presumption or
burden of proof will arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.

(j)      ***

2.6      Inclusion; Order of Precedence.   This Agreement (excluding the
Exhibits) and the Exhibits shall be considered complementary, and what is
required by one shall be binding as if required by all. The Parties shall
attempt to give effect to all provisions. The failure to list a requirement
specifically in one document, once that requirement is specifically listed in
another, shall not imply the inapplicability of that requirement, and Contractor
shall provide as part of its obligations hereunder all items required to conform
the Work to the Specifications and the other standards in this Agreement. In the
event of a conflict between this Agreement (excluding the Exhibits) and the
Exhibits, this Agreement (excluding the Exhibits) shall control and the
conflicting provisions shall be interpreted so as to accord with the provisions
of this Agreement (excluding the Exhibits). Notwithstanding the foregoing,
conflicts regarding Scope of Work matters shall be governed by Exhibit A-1.
Later dated amendments, Exhibits or Change Orders shall take precedence over
earlier dated amendments, Exhibits or Change Orders.

2.7      Days.   If a payment obligation falls due on a Day other than a
Business Day, the obligation shall be deemed to be due on the next Business Day.

 

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3.

CONTRACTOR RESPONSIBILITIES

 

3.1

Performance of the Services; Commencement of Work.

 

(a)

Performance of the Services.

(i)      Scope of Services for Work.    With respect to all Work, Contractor
shall diligently, duly and properly perform and complete the Services in
accordance with this Agreement; procure, provide and pay for all items (other
than Owner Equipment) and services necessary for the proper execution and
completion of the Services, whether temporary or permanent and whether or not
incorporated or to be incorporated into the Facility, including all procurement,
design and engineering services (except for such services for the Owner
Equipment), all installation and construction services, administration,
management, training (consistent with Exhibit A-1, Attachment 1) and
coordination, all Commissioning and verification services, and all labor,
Equipment, construction aids, furnishings, equipment, supplies, insurance (other
than Owner insurance), permits (other than Owner Permits), licenses,
inspections, storage and transportation, O&M Manuals, and all other items,
facilities and services necessary to perform or provide the Work and complete
the Facility. Contractor shall design, construct and install the Equipment on an
engineering and construction basis pursuant to this Agreement, including
providing all necessary civil, structural, mechanical, and electrical
engineering services, all control equipment necessary for the design,
construction and operation of the Equipment, all interconnections set forth in
the Specifications, and all equipment not specifically described in the
Specifications (other than Owner Equipment) which is customary and necessary to
meet the requirements of the Specifications and the Performance Guarantees. Work
not specifically delineated in this Section or elsewhere shall be performed and
provided by Contractor to the extent customary and necessary to complete the
Facility (other than procurement, supply and provision of Owner Equipment) in
accordance with Prudent Industry Practices. *** Contractor shall execute the
entire Services in a manner that will enable Contractor to achieve Substantial
Completion by the Guaranteed Substantial Completion Date and Final Completion by
the Guaranteed Final Completion Date.

(ii)      Scope of Services Relating to Owner Equipment.   Owner shall be
responsible for procuring, supplying and providing the Owner Equipment by the
dates set forth in the Schedule. The Owner Equipment shall be provided pursuant
to contracts between Owner and the suppliers of such Owner Equipment
(collectively, the “Owner Equipment Contracts”). Owner shall provide Contractor
with the relevant portions of the Owner Equipment Contract in order for
Contractor to perform its obligations under this Section. With respect to such
Owner Equipment, the Parties hereby agree as follows:

(A)      Owner hereby authorizes Contractor to, and Contractor hereby agrees to,
act as Owner’s agent for the purpose of generally administering the Owner
Equipment Contracts on behalf of Owner and assuring compliance by Owner and
suppliers with the terms thereof. Contractor shall perform such services in the
manner that a reasonably prudent contractor experienced in the design and
construction of combined cycle electric-generating facilities would perform if
such contractor, instead of Owner, were a party to such Owner Equipment
Contracts. Such agency services shall include but shall not be limited to
reviewing design documents, obtaining design interface and delivery schedule
information, coordinating and

 

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expediting delivery of such Owner Equipment, diligently asserting Owner’s
rights, maintaining appropriate records, providing to Owner any notices
delivered to Contractor by the supplier of the Owner Equipment, regularly
updating Owner with respect to the status of the performance of the suppliers of
the Owner Equipment, assisting Owner in pursuing available remedies against the
suppliers of the Owner Equipment, including assistance to Owner in the
administration and coordination of warranty claims for such Owner Equipment and
enforcing the repair, replacement or refurbishment of such Owner Equipment as
necessary, consulting with Owner with respect to any material issues, attending
meetings and otherwise interfacing with the suppliers of the Owner Equipment,
and carrying out the directions of Owner, all as necessary in order to ensure
performance by the respective suppliers under the Owner Equipment Contracts in
accordance with the terms and condition set forth in such Owner Equipment
Contracts. Notwithstanding the foregoing, Contractor shall have no authority to,
and shall not, take any of the following actions under or with respect to the
Owner Equipment Contracts absent prior direction from Owner: (1) consent to any
change order; (2) agree to or permit any amendment, modification, or supplement;
(3) waive any of Owner’s rights or the obligations of the suppliers of the Owner
Equipment; (4) increase any of Owner’s obligations or the rights of the
suppliers of the Owner Equipment; (5) initiate or conduct any litigation or
other similar proceedings; (6) take any action that would cause a default or
breach by Owner of an Owner Equipment Contract; or (7) agree to or consent to
termination or suspension of work or activities thereunder. Owner shall consult
with Contractor on any performance or schedule concerns before making payments
to the suppliers of the Owner Equipment after the Effective Date.

(B)      In addition to the agency services set forth in Section 3.1(a)(ii)(A),
Contractor shall also provide timely review and response to all Owner Equipment
designs, specifications and drawings, provide all on-site storage and
transportation, provide on-site administration and coordination and reasonable
office space, provide installation and integration services with respect to the
Owner Equipment in accordance with the Schedule, perform inspections of such
Owner Equipment, perform all installation, commissioning and Performance Testing
(in accordance with Exhibit A-2) for all such Owner Equipment, conduct quality
surveillance and start-up of such Owner Equipment to the extent permitted under
the Owner Equipment Contracts, coordinate training, and provide other related
services reasonably necessary to install and interconnect such Owner Equipment
to the Equipment and the Facility as contemplated by Contractor’s Scope of Work.

(C)      For the avoidance of doubt, notwithstanding anything to the contrary,
Contractor shall have no liability to Owner for payment of any performance
liquidated damages specified within the Owner Equipment Contracts for any
shortfall in the performance of such Owner Equipment (including failure to meet
performance guarantees) or for the payment of any delay liquidated damages
specified within the Owner Equipment Contracts for the late delivery of such
Owner Equipment. Contractor shall be entitled to a Change Order granting
equitable relief from any impact on Contractor’s cost or schedule of performance
under this Agreement attributable to a breach by the suppliers of the Owner
Equipment of the terms of the Owner Equipment Contracts, except to the extent
that such breach is caused by Contractor failing to fulfill its obligations
under this Agreement.

 

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(D)      Owner and Contractor hereby acknowledge that the Work is only a portion
of the work required for the completion of the entire Project and that the
successful and timely completion of the Project will require the good faith,
prompt and courteous coordination and collaboration among many contractors,
subcontractors and other Persons, including Owner and the suppliers of Owner
Equipment. Owner and Contractor also acknowledge that both parties are entering
into this Agreement in material reliance on the agreement by each other to
provide such good faith, prompt and courteous coordination and collaboration and
to perform the Work in accordance with the terms and conditions set forth herein
in order to achieve the successful and timely completion of the Project.

(b)      Work Under Limited Notices to Proceed.    The Parties hereto hereby
acknowledge and agree that prior to the *** issuance of the Full Notice to
Proceed, this Agreement shall constitute a Limited Notice to Proceed. From the
Effective Date until such time as Owner issues a Full Notice to Proceed with
respect to the Facility, Owner may from time to time issue Change Orders
hereunder amending or modifying the limited scope of Work Contractor is
authorized to perform or authorizing Contractor to perform certain additional
portions of the Work with respect to the Facility. Each open Limited Notice to
Proceed shall expire upon the earlier of (i) issuance of the Full Notice to
Proceed or (ii) termination of this Agreement in accordance with Article 23.

(c)      Work After Full Notice to Proceed.    Upon the issuance by Owner of the
Full Notice to Proceed, such notice shall be deemed to be full authorization for
Contractor to commence the remainder of the Work relating to the Project on the
date set forth in such Full Notice to Proceed until such Work is completed
unless this Agreement is earlier terminated in accordance with Article 23. The
Parties acknowledge that this Agreement sets forth a specific date for the
anticipated delivery of the Full Notice to Proceed for the Facility. The failure
by Owner to issue the Full Notice to Proceed by the date set forth in this
Agreement will constitute a Change, with respect to which Article 8 shall apply.
Contractor shall perform its obligations under this Agreement in accordance with
the agreed upon Schedule, as such Schedule may be modified or updated from time
to time in accordance with the terms of this Agreement.

3.2      Professional Standards.    Contractor shall perform and complete the
Services and its other obligations under this Agreement, and all Equipment shall
be, in accordance with all applicable Laws, this Agreement and Prudent Industry
Practices. In the event of any conflict between any of the authorities in the
foregoing sentence, all applicable Laws shall control over the terms of this
Agreement and Prudent Industry Practices, and the terms of this Agreement shall
control over Prudent Industry Practices.

3.3      Sufficient Personnel.    At all times during the term of this
Agreement, Contractor shall employ a sufficient number of qualified Persons, who
shall be licensed if required by applicable Laws, so that Contractor may
complete the Services and Contractor’s other obligations under this Agreement in
an efficient, prompt, economical and professional manner and in accordance with
the Schedule. Without in any way limiting the foregoing, Contractor shall, for
example, employ a sufficient number of qualified buyers, inspectors, and
expediters necessary to provide all equipment, materials and supplies to be
provided by Contractor hereunder in a timely manner consistent with the
Schedule. Contractor shall provide all technical services and supervision for
Commissioning and verification. Contractor shall also provide all construction
services and craft personnel as required for system adjustments during
Commissioning and verification. Owner shall provide and pay for its own
operations and maintenance staff during Commissioning and verification.

 

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3.4      Supervision and Discipline.    Contractor shall supervise, coordinate
and direct the Services using Contractor’s best skill, judgment and attention.
Contractor shall enforce strict discipline and good order among Contractor’s
employees, Subcontractors’ employees and all other Persons carrying out the
Services. Contractor shall at all times take all necessary reasonable
precautions to prevent any unlawful or disorderly conduct by or among its
employees, employees of Subcontractors and other Persons performing the Services
and for the preservation of the peace and the protection of Persons and property
at, or in the immediate vicinity of, the Site. Contractor shall only permit the
employment of Persons who are fit at the time they are employed and on each Day
they perform the Services, who are skilled in the tasks assigned to them, and
who are qualified to perform the tasks assigned to them. Contractor shall be
responsible for labor peace on the Site and Contractor shall at all times
implement policies and practices designed to avoid work stoppages, slowdowns,
disputes and strikes where reasonably possible and practical under the
circumstances.

3.5      Contractor’s Key Personnel.    Exhibit F contains a list of
Contractor’s key personnel who shall be responsible for supervising the
performance of Contractor’s obligations under this Agreement. That list includes
the designation of Contractor’s Project Manager and Contractor’s Site
Representative. Any replacement of the key personnel listed in Exhibit F shall
be subject to the prior written approval of Owner, which consent Owner shall not
unreasonably withhold or delay. Contractor’s Project Manager shall act as
Contractor’s liaison with Owner and shall have the authority (a) to administer
this Agreement on behalf of Contractor, (b) to oversee, direct, and manage the
responsibilities of Contractor under this Agreement, and (c) to bind Contractor
as to the day-to-day project management operations under the Agreement.
Contractor’s Site Representative or other Contractor supervisory personnel shall
be present at the Site at all times when the Services are being performed at the
Site.

3.6      Design and Engineering.    Prior to the Effective Date, Contractor
shall have scrutinized, and satisfied itself as to the adequacy of, the
Specifications (including design criteria and calculations, if any) for
completion of the Facility. Contractor shall be responsible for the design of
the Facility and for the accuracy of the Specifications. Any data or information
received by Contractor, from Owner or otherwise, shall not relieve Contractor
from its responsibility for the design of the Facility and execution of the
Services. Contractor shall engage all supervisors, engineers, designers,
draftsmen and other Persons necessary for the preparation of all Documentation
required for the Work. In connection with the Documentation, Contractor shall
prepare working drawings and specifications setting forth in detail the
requirements for the construction of the Facility in accordance with this
Agreement (the “Design Documents”). Contractor shall submit those Design
Documents identified in Exhibit A-3 for Owner’s review, and Owner shall complete
its review of, and provide any comments to Contractor with respect to, the
Design Documents within *** of receiving such Design Documents from Contractor
(and such Design Documents shall be deemed reviewed without comment if
Contractor does not receive any comments from Owner within such time period). If
Owner notifies Contractor that the Design Documents fail to comply with this
Agreement, Contractor shall correct such Design Documents and shall resubmit
them for Owner’s prompt review within *** in accordance herewith. Owner shall be
entitled, but not obligated, to review and comment on all other Design Documents
not identified in Exhibit A-3. Any review by Owner of any Design Documents
pursuant to this Section shall not relieve Contractor from any obligation or
responsibility under this Agreement. If errors, omissions, ambiguities,
inconsistencies, inadequacies or other defects are found in the Design
Documents, they and the Work shall be corrected as part of the ***,
notwithstanding any prior consent or approval of Owner of any such Design
Documents or Work.

 

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3.7      Quality Assurance Plan. Contractor shall develop, implement and
maintain a written plan for quality assurance of the Services (the “Quality
Assurance Plan”), which shall include: work safety; security at the Site;
fitness for duty; management and control of the design, engineering, and
construction services; management and control of Subcontractors; and such other
matters as Owner may reasonably request. Such plan shall meet Owner’s corporate
and Site-specific policies and requirements and the requirements of all
applicable Laws. Contractor shall deliver the plan to Owner within *** after the
Effective Date for Owner’s review and comment, and Contractor shall thereafter
incorporate Owner’s reasonable comments therein. Following Owner’s review of and
comment to such plan, Contractor shall have the right to rely on such plan in
performing the Services. Contractor shall also require all Subcontractors to
establish, implement and maintain appropriate quality control and safety
programs with respect to their respective portions of the Services. Contractor
shall provide Owner and its employees, agents, representatives and invitees with
reasonable access to the Work wherever located for observation and inspection,
including but not limited to auditing of all activities for conformance with the
requirements of the plan and all requirements of the Agreement. Inspections and
audits of Contractor’s Subcontractors will be coordinated with Contractor.

3.8      Safety Management Plan.    Contractor shall develop, implement and
maintain a written safety management plan that complies with the requirements
set forth in Article 24. Contractor shall deliver such plan to Owner for its
review and approval (which approval shall not be unreasonably withheld or
delayed) at least *** after the Effective Date.

3.9      [Intentionally Omitted].

3.10    Utility Use.    Subject to Section 4.5, from the Effective Date until
Final Completion, Contractor shall be responsible in connection with its scope
of Work and as part of the *** to maintain and pay for all temporary
construction utilities required to perform the Services, including electricity
(from the designated Owner tie-in points), fuel (other than gas fuel used for
Commissioning, Performance Testing and operation), communication systems for
Contractor’s temporary office facilities (including telephones for Owner’s
staff), water (potable and raw), construction waste disposal and wastewater
disposal.

 

3.11

Spare Parts.

(a)      Erection, Start-up and Commissioning Spare Parts.    Owner and
Contractor shall consult in good faith on an ‘open book’ basis to determine the
nature and quantity of spare parts required for installation, erection,
start-up, commissioning and performance testing for the Equipment for the
Facility, including all gases, gaskets, fuses, instruments, etc. and other
consumable, expendable and engineered items that may be required during
construction, start-up, commissioning or performance testing of such Equipment.
Contractor shall recommend to Owner for approval the spare parts to be purchased
by Contractor for such installation, erection, start-up and commissioning, with
such Owner approval not to be unreasonably withheld or delayed. Owner shall own
all such spare parts for which it has made payment, and, prior to Substantial
Completion, Contractor shall provide Owner with a complete list of all such
spare parts (including manufacturer name and part number and other descriptive
information) that were not used during construction, start-up, commissioning or
performance testing of such Equipment.

(b)      Recommended Operation and Maintenance (O&M) Spare Parts. At least ***
prior to Substantial Completion, Contractor shall provide a list of spare parts
that Contractor (or its Subcontractors) recommends as necessary for Owner to
have on hand to maintain operability of the

 

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Equipment (taking into account the length of time required to obtain such spare
parts) to enable prompt repair of the Equipment for the Facility for a period of
*** following Substantial Completion. Summary and detailed information on each
spare part shall be listed by Contractor in a format as reasonably requested by
Owner. Each spare part listed shall include all items for which the spare part
is intended to support. All spare parts shall comply with the requirements of
the Specifications and shall be identical or equivalent to the original
specified, including documentation identical in kind and format to that required
for the original equipment or material. Pricing, delivery lead times and any
limitations on shelf life shall be included for each spare part. Owner shall
procure such spare parts as it determines in its sole discretion.

(c)      Owner Equipment Spare Parts.     Acting as Owner’s agent pursuant to
Section 3.1(a)(ii)(A), Contractor shall coordinate, expedite and manage delivery
from each supplier of Owner Equipment a recommended list of spare parts required
for Commissioning and start-up of such Owner Equipment at such times as shall be
necessary to permit Contractor to remain in compliance with the Schedule. Owner
shall timely acquire, pay and deliver all such spare parts. Owner shall make
available at no cost to Contractor to utilize for Owner Equipment during
start-up and testing, spare parts acquired by Owner for the Owner Equipment.

3.12    Subcontractor Presence.    Contractor shall be responsible for notifying
and paying any Subcontractor representative that it deems necessary to be
present for technical assistance at (a) erection supervision, (b) Commissioning,
or (c) the Performance Testing. Similarly, Owner, at its cost, shall ensure that
an adequate number of qualified representatives from those suppliers supplying
Owner Equipment are present for technical assistance at the above-listed events.

3.13    Current Records; Record Drawings. Contractor shall maintain in good
order and make available to Owner, for inspection at the Site at all times, at
least one record copy of the Documentation marked currently to record all
material changes made during construction. Before, and as a condition to, Final
Completion of the Facility, Contractor shall deliver to Owner the Documentation,
including one set of reproducible as-built drawings (in accordance with
Section 19.1) listed in Exhibit A-3, showing all material changes made during
construction with respect to the Facility.

3.14    Transportation Costs.    Contractor shall arrange and pay for all
transportation, storage and transfer costs incurred in connection with the Work,
except for the transportation and off-Site storage costs attributable to Owner
Equipment, which transportation and off-Site storage costs shall be paid by
Owner.

3.15    O&M Manuals.    Contractor shall deliver to Owner O&M Manuals for
Contractor-supplied Equipment within *** of delivery of such Equipment to the
Site such that Owner has sufficient time to prepare facility manuals utilizing
such O&M Manuals to support operator training.

3.16    Control of Work.    Contractor shall have care, custody and control over
that portion of the Site at which it performs construction Work and shall be
solely responsible for all construction means, methods, techniques, sequences,
procedures, safety and quality assurance, and quality control programs in
connection with the performance of the Services. Contractor shall, *** provide
all necessary security at that portion of the Site under Contractor’s care,
custody and control, including a suitable fence around such portion of the Site,
and the prohibition and prevention of access and entrance to such portion of the
Site by all unnecessary and unauthorized Persons. Contractor shall strictly
control the admission of Persons to such portion of the Site and no such Person
(other than

 

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the employees, officers or directors of the Parties or their Affiliates) who is
not required for the performance or supervision of the Services shall be
admitted without the prior approval of Owner (such approval not to be
unreasonably withheld or delayed). To the extent any damages to the Site or
property thereon, including the Facility, are covered by Owner’s Builder’s Risk
policy or other property insurance ***. To the extent any damages to the Site or
property thereon, including the Facility, are not covered by Owner’s Builder’s
Risk policy or other property insurance and if such damages arise from theft or
vandalism due to Contractor’s or its Subcontractor’s negligence, then Contractor
shall be liable for such damages up to the amount of the loss incurred, which
shall be included ***

3.17    Emergencies.    In the event of any emergency endangering life or
property, Contractor shall take all actions as may be reasonable and necessary
to prevent, avoid or mitigate injury, damage or loss and shall promptly report
each such emergency, and Contractor’s responses thereto, to Owner.

3.18    Local Conditions.    Contractor has reviewed the Site and the access to
the Site, all as described in Exhibit A-4, and acknowledges that they are
sufficient for the performance of the Services. Contractor warrants that it has
taken all steps necessary to ascertain the nature and location of the Services
and that it has investigated and satisfied itself as to the general and local
conditions that can affect the Facility, the Site or the performance of the
Services, including: (a) conditions bearing on access, egress, transportation,
waste disposal, handling, lay down, parking and storage of materials; (b) the
availability of labor, water, electric power, other utilities and roads needed
for construction; (c) uncertainties of normal weather or other observable
physical conditions at the Site; and (d) the character of equipment and
facilities needed before and during the performance of the Services.

3.19    Use of Site; Owner Access.    Contractor shall confine its operations at
the Site to areas permitted by applicable Laws, this Agreement and the Exhibits
hereto. Contractor shall prepare, implement and enforce written Site rules
necessary for the safe, efficient and proper prosecution of the Work. Those
rules shall, at a minimum, comply with Owner Environmental Health and Safety
manual and all applicable Laws. Contractor shall provide Owner, the suppliers of
the Owner Equipment, and their respective employees, agents, representatives and
invitees with reasonable access to the Work wherever located for observation and
inspection; provided, that Contractor may provide, and Owner, the suppliers of
the Owner Equipment and shall accept, an escort or other safety measures that
Contractor, in its reasonable discretion, deems necessary or advisable. As a ***
and as ***, Contractor shall provide Owner and its Owner Equipment vendors with
*** office spaces on the Site which shall be outfitted in a customary manner
(including a conference room) as more fully described in Exhibit A-1. Those
office facilities shall be connected to and serviced by the usual utilities,
subject to Sections 3.10 and 4.5.

3.20    Compliance with Laws.    Contractor shall comply, and shall cause all
Subcontractors to comply, with all applicable Laws and Change Orders that relate
to Changes in Law relating to the Work or the Facility, and Contractor shall
give all applicable notices with respect to, and in accordance with, any
applicable Laws. Contractor shall ensure that the Facility, as designed and
constructed, complies, and, when operated in accordance with Prudent Industry
Practices, shall comply with all applicable Laws. Notwithstanding the foregoing,
or anything else in this Agreement to the contrary, Contractor’s obligation with
respect to water, air and other emissions of the Facility shall be limited to
the requirements set forth in the Specifications. If not otherwise exempted by
Title 48 and to the extent applicable, Contractor will make a good faith effort
to comply with 48 CFR §52.219-8, Utilization of Small, Small Disadvantaged, and
Women-Owned Small Business

 

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Concerns, and 48 CFR §52.219-9, Small, Small Disadvantaged, and Women-Owned
Small Business Subcontracting Plan, as such sections may be amended, modified,
restated or renumbered.

3.21    Permits and Approvals.    Contractor shall be responsible for obtaining,
renewing and maintaining all permits, licenses, approvals and certifications
customary and necessary for Contractor to demolish, Site prepare, engineer,
detail, fabricate, furnish, deliver, unload, store, erect, install, commission
(but only those permits exclusively used for commissioning) and inspect the
Work, all as described in Exhibit D (collectively, the “Contractor Permits”).
Contractor shall provide reasonable assistance and documents to Owner in
connection with Owner’s efforts to obtain the Owner Permits. Contractor
represents that, to the best of its knowledge, the Contractor Permits listed in
Exhibit D are the customary permits, approvals and certifications required to be
obtained by Contractor for its performance of the Services. Upon Contractor’s
request, Owner shall provide Contractor reasonable cooperation and assistance in
obtaining and maintaining Contractor Permits.

 

3.22

Periodic Reports and Meetings; Delivery of Project Baseline Documentation.

(a)      Reports Prior to Full Notice to Proceed.    No later than *** after the
end of each month during the period of time commencing on the Effective Date and
ending on the date the Full Notice to Proceed is issued hereunder, Contractor
shall prepare and submit to owner a LNTP Report. Contractor shall provide copies
of such documentation and materials as Owner may reasonably request on an
as-needed basis to substantiate the information provided by Contractor in such
reports. Contractor shall provide the foregoing report in both hard copy (one)
and electronic version (all graphs and tables, if any, shall be provided in MS
Excel format).

(b)      Reports Following Full Notice to Proceed.    Following the issuance of
the Full Notice to Proceed hereunder, Contractor shall prepare and submit the
following documentation and reports to Owner.

(i)      Project Baseline Documentation. Within *** after the issuance of the
Full Notice to Proceed (the “Baseline Documentation Due Date”), Contractor shall
deliver to Owner a copy of (A) the Baseline Budget, (B) ***, and (C) the
Baseline Schedule, each of which shall be correct and true at the time of
submittal and in form and substance reasonably acceptable to Owner. The
foregoing documents shall be attached to the Agreement as Exhibits K-1, K-2 and
K-3, respectively, upon delivery thereof.

(ii)      Monthly ***    Contractor shall prepare and submit to Owner a (A) ***
covering all construction Work completed during the Reporting Period ending
during the immediately prior month and (B) *** covering all engineering and
design Work completed during the Reporting Period ending during the immediately
prior month. Owner may review source data at the Project Site or Contractor’s
home office located in Charlotte, North Carolina. Contractor shall provide
copies of such documentation and materials as Owner may reasonably request on an
as-needed basis to substantiate the information provided by Contractor in such
***. Contractor shall provide the foregoing *** in both hard copy (one) and
electronic versions (all graphs and tables shall be provided in MS Excel
format).

(iii)      Monthly Project Management Review Packages.   No later than *** after
the date each *** is due, Contractor shall prepare and submit to Owner a
(A) Project Management Review Package covering Contractor’s previous Reporting
Period and (B) a cost summary report covering Contractor’s previous Reporting
Period (collectively, the

 

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“Monthly Progress and Cost Report”). Contractor shall provide copies of such
documentation and materials as Owner may reasonably request on an as-needed
basis to substantiate the information provided by Contractor in such reports.
Contractor shall provide the foregoing reports in both hard copy (one) and
electronic versions (all graphs and tables shall be provided in MS Excel
format).

(c)      Attendance and Participation at Meetings.    From the Effective Date
until the Final Completion Date, Contractor shall attend and participate in
regular meetings with Owner which shall occur *** (or upon such other interval
as the Parties agree in writing) for the purpose of discussing the status of the
Work and anticipating and resolving any problems (“Progress Meetings”). The
Progress Meetings may also include, at the request of Owner, consultants and
other Persons. Contractor shall prepare and promptly deliver to Owner written
minutes of each meeting; provided, that the publication or distribution of such
minutes shall not constitute a permitted basis for providing notice, or
otherwise asserting claims, under this Agreement by any Party. No implication
whatsoever shall be drawn as consequence of a failure by any Party to comment on
or object to any minutes prepared or distributed by Contractor. Unless otherwise
mutually agreed, Contractor’s Site Representative shall attend all Progress
Meetings after Contractor mobilizes to the Site. In addition to the above
monthly Progress Meetings, Contractor shall hold regularly scheduled (but not
less frequently than weekly during construction) status or scheduling meetings
with its Subcontractors as appropriate, and Owner shall have the right but not
the obligation to attend and participate in such weekly status meetings;
provided, that, if Contractor determines in its reasonable discretion that
Owner’s attendance at the meeting would prohibit Contractor from effectively
addressing confidential or sensitive issues, Contractor shall have the right to
bar Owner from that portion of such meetings.

3.23    Signage.    Neither Contractor nor its Subcontractors shall display,
install, erect or maintain any advertising or other signage at the Site without
Owner’s prior written approval, other than signs and notices required by
applicable Laws, related safety or work rules, site identification, or used to
solicit employees for the performance of the Services.

3.24    Interference with Traffic.    Contractor shall carry out the Services so
as not to interfere unnecessarily or improperly with (a) Owner’s operations at
or in the vicinity of the Site, including the existing Dan River coal facility
located adjacent to the Site, or (b) access to, use of or occupation of public
or private roads, footpaths or properties in the possession of Owner or any
other Person. Contractor shall communicate with, and ascertain the requirements
of, all Government Authorities in relation to vehicular access to and egress
from the Site and shall comply with any such requirements. Contractor shall be
deemed to have satisfied itself as to, and shall be fully responsible for, the
routing for delivery of heavy or large loads to the Site so as to satisfy any
requirements of Government Authorities with respect thereto.

3.25    Supply of Water and Disposal of Sewage.    Contractor shall provide,
within the Site, an adequate supply of drinking and other water for the use of
those Persons working on the Site. Contractor shall dispose of, either off-Site
or through the Facility’s septic system or other approved method, all on-Site
sewage effluent during performance of the Services.

3.26    Housekeeping.    At all times during the term of this Agreement,
Contractor shall keep the Site and surrounding area adjacent to where the
Services are actually being performed, free from waste materials, equipment,
rubbish, debris and other garbage, and liquid and non-liquid materials whether
spilled, dropped, discharged, blown out or leaked. Contractor shall employ
adequate dust control

 

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measures. To the extent practicable, Contractor and all Subcontractors shall
utilize reasonable waste reduction and recycling techniques at the Site. Before
the Final Completion Date, Contractor shall remove from the Site all tools,
trailers, surplus and waste materials, and rubbish, and shall otherwise leave
the Facility and the Site in a neat and clean condition. If Contractor fails to
perform such housekeeping services, Owner, following notice and a reasonable
opportunity for Contractor to cure, may perform such services, and all
reasonable and necessary costs incurred in connection therewith shall be
assessed against ***

 

4.

OWNER RESPONSIBILITIES

Owner shall perform the responsibilities set forth in this Article at its own
expense and at those reasonable times as may be required by Contractor for the
successful completion of the Work in accordance with the Schedule.

4.1      Owner’s Representative.    Owner shall appoint Owner’s Project Director
with whom Contractor may consult at all reasonable times, and whose
instructions, requests and decisions shall be binding upon Owner as to all
matters pertaining to this Agreement and the performance of the Parties under
this Agreement; provided, that no amendment or modification of this Agreement
shall be effected except by an amendment, and no Change shall be effected except
as provided in Article 8.

4.2      Access.    Subject to Section 11.2, from the time of the issuance of
the Full Notice to Proceed hereunder until the Substantial Completion Date,
Owner shall provide Contractor, at no additional cost to Contractor,
unrestricted right of access to such portion of the Site as Contractor may
reasonably require for the construction of the Facility and for Contractor’s
office, warehouse, shop buildings, welding facilities, Contractor’s equipment
storage, lay down area, and employee parking. After the Substantial Completion
Date, Owner shall allow Contractor reasonable access to the applicable portion
of the Site in order to achieve Final Completion.

4.3      Permits.    Owner shall be responsible for obtaining, renewing and
maintaining the permits, licenses, approvals and certifications necessary for
the operation, maintenance, use and ownership of the Facility, including the
permits listed in Exhibit E (collectively, the “Owner Permits”). Contractor
shall provide Owner with all reasonably necessary information, documents, data,
criteria and performance characteristics of the Facility requested or required
by Owner to assist Owner in obtaining Owner Permits.

4.4      Owner Equipment.    Owner shall procure and provide Owner Equipment by
the dates set forth in the Schedule to prevent delay. Except to the extent that
the failure of any Owner Equipment to be provided by the dates set forth in the
Schedule or to perform in accordance with its manufacturer’s specifications is
caused by Contractor’s failure to perform its obligations in accordance with
this Agreement, any impact to Contractor from the delay (or re-sequence) in
delivery or performance of Owner Equipment shall give rise to a Change.

4.5      Fuel and Utilities.    Owner shall provide, at no cost to Contractor,
the electrical interconnect for power export from the Facility at the
interconnection points identified in Exhibit A-1, and all fuel necessary for
Commissioning and Performance Testing when requested by Contractor and as
required in accordance with the Schedule. Commencing on the Substantial
Completion Date, *** for the operation of the Facility.

 

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4.6      Operation and Maintenance Staff.    At the earlier of: (a) ***, or
(b) ***, Owner shall provide, under the direction of Contractor through
Substantial Completion, at no cost to Contractor, the complement of qualified
operation and maintenance personnel for applicable Commissioning, Performance
Testing and operation of the Facility. In addition, Owner, at its cost, shall
ensure that an adequate number of qualified representatives from those suppliers
supplying Owner Equipment are present at Commissioning or Performance Testing as
necessary for technical assistance.

4.7      Job Site Rules.    From the date on which Owner provides Contractor
access to the Site to perform the Work until the Substantial Completion Date,
Owner, its representatives and agents shall abide by all reasonable Site safety
rules promulgated by Contractor.

4.8      Payment.    In accordance with the terms and conditions of this
Agreement, Owner shall pay Contractor the Contract Price. Owner shall make all
payments promptly when due.

 

5.

EQUIPMENT AND WORKMANSHIP

5.1      Quality of Equipment and Workmanship.    All Equipment and workmanship
shall be subject to such tests as Owner may reasonably require at the place of
manufacture, fabrication or preparation, or at the Site or at such other place
or places as may be mutually agreed upon by the Parties, including any place of
an independent third party. Contractor shall provide such assistance, labor,
electricity, fuels, stores, apparatus and instruments as are reasonably required
for examining, measuring and testing any Equipment and Owner Equipment in
accordance with Exhibit A-2 (other than specialty tools as listed in Owner
Equipment Contracts) and workmanship, before incorporation into the Facility.

 

5.2

Cost of Tests.

(a)      Subject to the last sentence of Section 10.4, the cost of conducting
any test related to the Work shall be ***

(b)      If the results of any such test indicate that the applicable Equipment
or workmanship do not conform to the requirements of this Agreement (including
the Specifications and Prudent Industry Practices) and Owner has reasonable
grounds to suspect that any other similar Equipment or workmanship may not
conform to the requirements of this Agreement (including the Specifications and
Prudent Industry Practices), Owner may require Contractor to carry out further
tests, which in the reasonable opinion of Owner are necessary to verify that
such other similar Equipment or workmanship conforms to the requirements of this
Agreement (including the Specifications and Prudent Industry Practices). The
costs of any such tests shall be borne by *** and shall be borne by ***

5.3      Samples.    At the reasonable request of Owner ***, Contractor shall
supply Owner with samples of Equipment (for which samples can reasonably be
provided). The manufacturer’s standard samples (with relevant information) and
any additional samples shall be labeled as to origin and intended use in the
Facility.

5.4      Inspection of Operations.    Owner (and its representatives) shall at
all reasonable times have access to the Site and to all workshops and places
where Equipment or Owner Equipment is being manufactured, fabricated or prepared
for the Facility. Contractor shall provide Owner a reasonable opportunity to be
present for any tests of any Equipment or Owner Equipment.

 

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5.5      Examination of Work before Covering.    For certain agreed parts of the
Work as set forth in Exhibit A-1, Contractor shall give notice to Owner whenever
any such part of the Equipment or Owner Equipment, as applicable, or foundations
is or are ready or about to be ready for examination and Owner shall, without
unreasonable delay, attend (or inform Contractor that it is unnecessary for it
to attend) for the purpose of examining and measuring such part of the Equipment
or Owner Equipment, as applicable, or of examining such Work. No part of such
Equipment or Owner Equipment shall be covered up or put out of view without
affording Owner a reasonable opportunity to examine and measure any such part of
the Equipment or Owner Equipment.

5.6      Uncovering and Making Openings.    If, following discovery of defective
workmanship or materials in any part of the Work, Owner has reasonable grounds
to suspect that further parts of the Work may be similarly defective, Contractor
shall, upon the reasonable request of Owner, provide Owner clear evidence that
such other parts are not defective to the reasonable satisfaction of Owner or
shall uncover such further parts of the Work or make further openings, in or
through the same, and Contractor shall inspect and repair, if necessary, any
such parts. The costs of such work carried out by Contractor under this Section
shall be part of the ***, unless the parts of the Work so uncovered turn out to
be not defective, ***

 

6.

SCHEDULE

6.1      Commencement of Work.    Upon receipt of the Limited Notice to Proceed,
Contractor shall commence the performance of the Work described in such Limited
Notice to Proceed, or, if no Limited Notice to Proceed is given, Contractor
shall commence the performance of the Work upon its receipt of the Full Notice
to Proceed, and thereafter continuously and diligently fulfill its obligations
under this Agreement. Contractor shall perform its obligations under this
Agreement in accordance with the Schedule set forth in Exhibit B, as such may be
modified and updated from time to time in accordance with the terms of this
Agreement. ***

6.2      Schedule Requirements; Updates.    A copy of the Schedule (which shall
be true and correct as of the Effective Date), along with Key Contractor
Schedule Milestones, is attached hereto as Exhibit B. The Parties agree that the
Schedule and the Key Contractor Schedule Milestones within the Schedule reflect
dates for completion of Work activities by Contractor in order to meet the
Targeted Substantial Completion Date. In addition, Contractor shall prepare and
make available to Owner at all times at the Site, or such other location
mutually agreed upon by the Parties, a current, working copy of the Schedule.
Unless otherwise mutually agreed upon by the Parties, Contractor shall update
the working copy of the current Schedule monthly and shall provide a copy to
Owner as a component of each Monthly Progress and Cost Report; provided,
however, that no update of or revisions to the working copy of the Schedule
shall be deemed to alter, revise or otherwise change the date for any Key
Contractor Schedule Milestones, the Guaranteed Substantial Completion Date or
the Guaranteed Final Completion Date, all of which shall be amended only by a
duly executed Change Order or amendment hereto.

 

6.3

***

(a)      ***

(b)      ***

(c)      ***

 

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7.

CONTRACT PRICE; COMPENSATION AND PAYMENT

 

7.1

******

(b)      Limited Notice to Proceed Work.    Upon receipt of a Limited Notice to
Proceed from Owner, Contractor shall commence the performance of the Work as
agreed in such Limited Notice to Proceed and shall continuously and diligently
perform such Work pursuant to this Agreement as outlined in such Limited Notice
to Proceed until such time as Owner issues a Full Notice to Proceed. Contractor
hereby acknowledges and agrees that a portion of the Work includes Work
performed by Contractor under the ***, a certain portion of which has already
been paid by Owner thereunder and ***

(c)      Full Notice to Proceed Work.    Each Party shall, in good faith,
cooperate with the other and use all commercially reasonable efforts to
expeditiously update, in accordance with the ***. Upon issuance of the Full
Notice to Proceed by Owner, Contractor shall commence the performance of all
Services and shall continuously and diligently perform all Services and its
other obligations under this Agreement.

 

7.2

Determination of *** Payments of Contract Price.

(a)      *** Payment Invoice.    ***, Contractor shall submit to Owner *** for
payment of the amount set forth *** for such *** and any other additions or
deductions that may have become due, and subject to any limitations, under this
Agreement, including those under Sections 7.3(a), 7.3(b) and 7.5. Submittal of
each *** Payment Invoice shall constitute a representation by Contractor that
(x) Contractor has performed and completed all Work included in each Cost
Comparison Report previously provided hereunder, (y) *** previously provided
hereunder have been calculated and determined in accordance with the
requirements of this Agreement, and (z) the amounts included in such *** Payment
Invoice for the current month are the correct amounts due and owing to
Contractor in accordance with this Article 7 and ***

(b)      ***

(c)      ***

 

7.3

***

 

    

***

 

7.4

Deficient Invoices and Payments.

(a)      If any *** is deficient, Contractor shall be required to resubmit that
*** in proper form; provided, however, that Owner shall pay any portion of it
that is not deficient or subject to dispute. Owner shall review each *** and
shall endeavor to make exceptions, if any, by providing Contractor with written
notice by the earlier of (i) such date the *** is paid by Owner or (ii) ***
after Owner receives ***. Notwithstanding anything in this Article to the
contrary, the failure of Owner to raise an exception shall not preclude Owner
from subsequently seeking, and Contractor from paying, a refund of any amounts
to which Contractor was not entitled under this Agreement, and Owner may,

 

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by any payment pursuant to Section 7.2, make any correction or modification that
should properly be made to any amount previously considered due.

(b)      If Owner provides no exceptions within such time period, Owner shall
pay Contractor, within *** of its receipt of such *** and such substantiating
documentation and materials as Owner may have reasonably required, in U.S.
dollars the amounts designated in such ***, plus any additions and less any
deductions which may have become due under this Agreement, as reflected in such
***. Any amount of a *** that Owner disputes shall be resolved promptly in
accordance with Article 28. Once the dispute is resolved, Owner or Contractor,
as applicable, shall pay any amount owing promptly after the date of the final
resolution. If for any reason Owner fails to pay Contractor for all sums due and
owing (other than sums that are the subject of a good faith dispute or permitted
to be withheld pursuant to this Section 7.4(b)) within *** after receipt of a
substantiated *** which complies with the requirements of this Article, interest
shall thereafter accrue on such sums due and owing at *** until paid.

(c)      If any Services performed or Equipment supplied by Contractor for which
payment has been made hereunder is not in accordance with this Agreement, Owner
may withhold from any *** the cost of rectification or replacement until such
rectification or replacement has been completed, and, if Contractor is failing
to perform any Services or provide any Equipment in accordance with this
Agreement and Owner has so notified Contractor in writing, Owner may withhold
from any *** the estimated value of such Work until it has been performed or
provided in accordance with this Agreement.

 

7.5

***

(a)      ***

(b)      The Parties acknowledge that nothing in this Section limits, and the
Parties shall not construe this Section as limiting, Contractor’s ability to
accelerate Key Contractor Schedule Milestones, provided that Owner shall not be
obligated to pay more than the *** for any given month. The Parties also
acknowledge and agree that nothing in this Section limits, and the Parties shall
not construe this Section as limiting, Contractor’s ability to update the
Schedule, other than delaying the Key Contractor Schedule Milestones, in
accordance with Section 6.2. ***

7.6      Final Payment.    Upon achievement of Final Completion, Contractor
shall submit to Owner an invoice for the final payment and other payments due
under this Agreement (the “Final Payment Invoice”) which shall set forth all
remaining amounts due to it pursuant to this Agreement. When submitting the
Final Payment Invoice, Contractor shall submit a written notice, reasonably
satisfactory to Owner, confirming that the total of the applicable Final Payment
Invoice represents full and final settlement of all monies due to Contractor
under this Agreement. If requested by Owner, the Final Payment Invoice shall
also include a waiver (or a bond if a Lien exists to indemnify Owner against
such Lien) of any Liens; provided, that the waiver or bond may contain a
requirement that Owner pay such Final Payment Invoice. The procedures set forth
in Section 7.2(b) (including application of any late payment charge) shall be
followed for payment of the applicable Final Payment Invoice, and Owner shall be
entitled to offset against any *** or Final Payment Invoice any amounts owing by
Contractor to Owner under this Agreement, including any Liquidated Damages owed
after application of the cost sharing provisions in Section 7.3.

 

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7.7      Certification by Contractor.    In each *** and in the Final Payment
Invoice, Contractor shall certify as follows:

“There are no known Liens (or such Liens are bonded over) outstanding at the
date of this invoice, all amounts that are due and payable to any third party
(including Subcontractors) with respect to the Work as of the date of this
invoice have been paid or are included in the amount requested in this invoice,
and, except for those bills not paid but so included and amounts disputed
between Owner and Contractor, there is no known basis for the creation of any
Liens, except in respect to payments to any Subcontractor withheld for proper
reasons in accordance with the contract with such Subcontractor. Contractor
hereby waives and releases, to the extent of the receipt of payment requested in
this invoice, any right to any Lien with respect to payment for such portion of
the Work included in this invoice.”

7.8      No Acceptance by Payment.    Owner’s payment of any invoice, including
a Final Payment Invoice, does not constitute approval or acceptance of any item
or cost in that invoice nor shall be construed to relieve Contractor of any of
its obligations under this Agreement.

7.9      Revenue from Use of Facility.    Owner shall be entitled to all revenue
derived from or in connection with operation or use of the Facility before and
after the Substantial Completion Date.

 

8.

CHANGE ORDERS

8.1      Changes.    Without invalidating this Agreement, Owner may order
changes in the Specifications or the Work consisting of additions, deletions or
other revisions (each, a “Change”), provided, that Owner may not delete all Work
through this Article.

8.2      Change Proposals.    If Owner desires to make a Change, it shall submit
a written proposal to Contractor describing the Change requested. Contractor
shall promptly review Owner’s proposal and submit to Owner an estimate of the
cost to develop a Change Order for such Change, such development costs to be
estimated consistent with ***. If the estimated costs to develop the Change
Order are reasonably acceptable to Owner, Owner shall promptly provide notice
thereof to Contractor in writing. Upon receipt of such notice, Contractor’s
Project Manager shall promptly notify Owner in writing, as soon as practicable,
either by giving reasons why Contractor, either directly or indirectly through a
Subcontractor, could not effect such Change (if this is the case) or by
submitting a proposed Change Order, which shall include in reasonable detail:

(a)      the effect and impact, if any, that the Change would have, in
Contractor’s reasonable judgment, on the Work, ***, the Schedule, any warranties
herein and the operation or maintenance of the Facility,

(b)      Contractor’s proposal for any necessary modifications to Work, *** the
Schedule or any warranties herein, and

(c)      Contractor’s proposal for any necessary modifications to any other
provisions of this Agreement, including the Specifications, the Milestones, ***
or the Performance Guarantees.

Contractor shall provide Owner such supporting documentation for the foregoing
as Owner may reasonably request. Notwithstanding the foregoing, Contractor shall
not, as a result thereof, be

 

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entitled to any payment hereunder or any extension of the Schedule if such
Change was necessary as a result of the fault of Contractor, including any
breach by Contractor of this Agreement. For all proposed Change Orders to the
scope of Work, the Parties agree that the Contractor shall apply or deduct, as
applicable, *** to implement or remove such scope of Work, as applicable. Owner
shall, as soon as practicable after receipt of such submittal and supporting
documentation, respond with any comments or questions. Contractor shall not
delay any Work while awaiting a response. If Owner responds with comments or
questions, Contractor shall endeavor to address such comments or answer such
questions as soon as practicable. If Owner decides not to proceed with a Change,
it shall reimburse Contractor for its efforts in developing the estimates and
other information regarding the potential Change *** (such reimbursement to be
either outside the Contract Price or through a separate Change Order); provided,
that Owner shall only be required to reimburse Contractor if Contractor has
complied with the cost proposal requirements set forth above.

8.3      Change Orders.    If Owner wishes to proceed with the Change, Owner
shall issue a written order to Contractor authorizing the Change and setting
forth any revisions to this Agreement that it deems, in good faith, necessary or
appropriate to effect the Change (the “Change Order”). If Contractor refuses to
accept such revisions in the Change Order, Contractor shall provide Owner
written notice thereof within *** of its receipt of the Change Order, describing
in reasonable detail its objections to the Change Order. Owner shall be
entitled, despite such notice from Contractor, to require Contractor to continue
to perform its obligations hereunder as would be modified by the Change Order;
provided, that, if Owner requires Contractor to so perform and Contractor has
provided Owner timely notice objecting to such Change Order, (x) the Parties
shall resolve the Dispute over the necessary or appropriate revisions in
accordance with the dispute resolution procedures set forth in Article 28 and
(y) if the Change involves additional or disputed Work, Owner shall continue to
pay Contractor pursuant to the payment terms hereof, subject to resolution of
the Dispute pursuant to Article 28 (Owner may require any dispute over price to
be resolved pursuant to an “open book” process), consistent with the terms and
conditions set forth in Exhibit I. Once the Dispute is resolved, any amount
owing will be paid within thirty (30) Days after the date of resolution.
Contractor shall furnish to Owner such receipts or other vouchers as may be
necessary to prove the amounts paid and labor performed on a time and material
basis *** and, before ordering materials, shall submit to Owner quotations for
the same for Owner’s approval (such approval not to be unreasonably delayed or
withheld). Promptly after the end of each ***, Contractor shall deliver to Owner
a priced statement of the labor and materials used during such *** associated
with such Change performed on ***

8.4      Owner Caused Changes.    If Contractor experiences an increase in costs
or a delay in Contractor’s ability to perform the Work due to Owner or due to a
delay in the delivery of any Owner Equipment or a delay resulting from a defect
in any Owner Equipment or a breach of the Owner Equipment Contracts by the
suppliers of the Owner Equipment, and such delay or defect is not the result of
Contractor’s failure to comply with the requirements of this Agreement,
Contractor shall be entitled to a Change and an equitable adjustment in the ***
and/or the Schedule.

8.5      Contractor Proposed Changes.    Contractor shall have the right to
request a Change but shall have no right to require a Change which is not
contemplated by this Agreement without the prior written consent of Owner;
however, nothing herein shall be construed to restrict Contractor’s right to
request an equitable adjustment in the *** and Schedule to mitigate impacts
caused by events such as, but not limited to, Force Majeure and Change in Law.

 

9.

FORCE MAJEURE

 

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9.1      Event of Force Majeure.    The performance by Owner or Contractor under
this Agreement shall be excused to the extent that such Party’s performance is
delayed or prevented by reason of an event of Force Majeure. If a Party is or
will be reasonably prevented from performing its obligations under this
Agreement by an event of Force Majeure, such Party shall use all commercially
reasonable efforts to remove the cause affecting such non-performance and to
minimize and mitigate any delay in or impact upon the performance of this
Agreement or any damage to or other impact upon the Equipment or the Owner
Equipment. If an event of Force Majeure occurs, the Parties shall *** to:
(a) *** for a period of time reasonably necessary to overcome the effect of the
delay, and (b) the Contract Price ***; provided, that Contractor shall *** on
Change Orders which result from an event of Force Majeure.

9.2      Notice.    If a Party is or will be reasonably prevented from
performing its obligations under this Agreement by an event of Force Majeure,
then it shall notify the other Party of the obligations, the performance of
which is or will be prevented, and the nature and cause of the event in writing
within *** after the notifying Party or its Project Manager becomes aware,
through the exercise of reasonable diligence, of the event of Force Majeure. The
Party affected by an event of Force Majeure shall provide the other Party with
weekly updates (a) estimating its expected duration, the cost of any remedial
action, and the probable impact on the performance of its obligations hereunder,
(b) of the actions taken to remove or overcome the event of Force Majeure and
(c) of the efforts taken to mitigate or limit damages to the other Party. The
Party affected by an event of Force Majeure shall also provide written notice to
the other Party when it ceases to be so affected.

9.3      Suspension; Termination Due to Force Majeure.    If any event of Force
Majeure claimed by Contractor delays Contractor’s performance for an aggregate
time period greater than ***, then Owner, in its sole and absolute discretion,
shall have the right to terminate this Agreement (or the affected portion of the
Work) without penalty in accordance with Section 23.7. If any event of Force
Majeure claimed by Owner delays Contractor’s performance of substantially all of
the Work for an aggregate time period greater than *** then Contractor, in its
sole and absolute discretion, shall have the right to suspend performance and
demobilize under this Agreement without penalty in accordance with Section 23.7.
If any event of Force Majeure claimed by Owner delays Contractor’s performance
of substantially all of the Work in any *** time period for an aggregate time
period greater than ***, then Contractor, in its sole and absolute discretion,
shall have the right to terminate this Agreement without penalty in accordance
with Section 23.7.

 

10.

MECHANICAL COMPLETION; PERFORMANCE TESTING; SUBSTANTIAL COMPLETION; FINAL
COMPLETION

10.1    Mechanical Completion Inspection. At least *** prior to the date upon
which Contractor expects to achieve Mechanical Completion, Contractor shall
notify Owner in writing thereof and shall take necessary measures to allow a
preliminary inspection of the Facility to be conducted by Owner and its
representatives. Contractor shall include with such notice documents and
information prudent or convenient for Owner to determine whether Mechanical
Completion is achieved. If Owner notifies Contractor of any deficiencies in the
Work, Contractor shall immediately remedy such deficiencies as part of the ***
and provide Owner with the relevant documentary evidence of the correction.

10.2    Mechanical Completion. “Mechanical Completion” shall be deemed to have
occurred upon satisfaction of all of the following conditions:

 

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(a)      All materials, equipment and systems related to the safe start-up and
testing of the Facility shall have been constructed and installed in accordance
with this Agreement, including the Specifications and applicable Laws, and in a
manner that does not void any warranties, and the Equipment and Owner Equipment
for the Facility shall be mechanically and electrically sound, all required
pre-operational testing for the Facility shall have been satisfactorily
completed, and all systems for the Facility shall have been checked for
alignment, lubrication, rotation and hydrostatic and pneumatic pressure
integrity;

(b)      All systems and components for the Facility shall have been flushed and
cleaned out as necessary, and the Equipment and Owner Equipment for the Facility
shall be ready to support the commencement of Performance Testing for the
Facility;

(c)      The Parties shall have agreed upon the Testing Procedures for the
Facility;

(d)      The Equipment and Owner Equipment for the Facility shall be capable of
being tested in accordance with Exhibit A-2 without damage thereto or any other
portion of the Facility or to any property or injury to any Person and in
compliance with all applicable Laws and all permits and licenses required by
such Laws;

(e)      Contractor shall have provided the applicable Documentation that is
needed to start-up, operate and maintain the Facility (including the O&M
Manuals), which Documentation shall have been approved, in the reasonable
determination of Owner, as adequate for the start-up, operation and maintenance
of the Facility (such approval not to be unreasonably withheld or delayed);

(f)      Contractor shall have provided the training of Owner’s personnel and
representatives as required by Exhibit A-1 for operation of the Facility; and

(g)     Contractor shall have delivered to Owner a certificate signed by
Contractor certifying that all of the preceding conditions in this Section 10.2
have been satisfied.

Contractor shall not commence Performance Testing for the Facility until all of
the above conditions for Mechanical Completion have been satisfied and
Contractor shall have provided the required prior notice to Owner of the
applicable Performance Testing and given Owner an opportunity to attend.

If Contractor is unable to satisfy any of the foregoing conditions as a result
of any event or circumstance for which neither Contractor nor any Subcontractor
is responsible, the improper performance of any Owner Equipment or any other
fault of any supplier of any Owner Equipment, and Contractor has complied with
its obligations relating to such Owner Equipment in accordance with
Section 3.1(a)(ii), Contractor shall be entitled to a Change Order providing, at
Owner’s election, that such condition is deemed to have been satisfied (but only
to the extent Contractor is unable to satisfy such condition) or for *** and the
Schedule or otherwise as may be reasonable under the circumstances.

10.3    Performance Testing.    As soon as reasonably practicable following
Mechanical Completion and after providing Owner at least *** prior written
notice (unless Owner agrees to a shorter notice period or regulatory
requirements necessitate a longer notice period), Contractor shall commence
Performance Testing of the Facility, which Performance Testing shall be
completed in accordance with Exhibit A-2. Owner and its agents, representatives
and invitees, including any independent

 

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third party inspector and any of its other contractors for the Project or their
respective agents, representatives and invitees, shall have the right to attend
and witness the Performance Testing. After the completion of Performance Testing
for the Facility, Contractor shall determine and submit to Owner, in writing and
electronically, the raw data and completed results of such Performance Testing,
together with a comparison of such results to the applicable Performance
Guarantees and a statement whether such results satisfy the applicable
Performance Guarantees. By submitting such raw data and completed results,
Contractor represents that such raw data, and the conversion of such raw data
into the test results, is accurate.

10.4    Satisfaction of Performance Testing.    Within *** after it receives the
results for all of the Performance Testing for the Facility, including the
underlying raw data and other information required by Section 10.3, Owner shall
respond in writing to Contractor stating whether (a) such Performance Testing
was performed according to the Testing Procedures, and (b) the results of such
Performance Testing satisfied the applicable Performance Guarantees, or, if
Owner does not believe that is the case, Owner shall provide its reasons. Upon
its receipt of any such response from Owner that is not in the affirmative,
Contractor shall promptly take whatever action shall be necessary to cure the
defect in such Performance Testing, adjust or modify any of the Equipment, or
require adjustment or modification of Owner Equipment in accordance with
Section 3.1(a)(ii), or otherwise in order to satisfy the applicable Performance
Guarantees so noted by Owner and shall promptly repeat such Performance Testing
in accordance with Section 10.3 and this Section. If, following such Performance
Testing, either: (a) Owner agrees that the applicable Performance Guarantees
have been satisfied and that such Performance Testing was performed according to
the Testing Procedures, (b) the failure to meet any applicable Performance
Guarantee is attributable to the performance of Owner Equipment (other than due
to Contractor’s failure to fulfill its obligations set forth in Section 3.1(a)),
or (c) Owner fails to respond within the time period set forth above, then the
applicable Performance Guarantees shall be deemed to have been satisfied on the
date of completion of such Performance Testing ***. Notwithstanding anything in
this Article to the contrary, no agreement, confirmation, statement or otherwise
of, or the lack thereof from, Owner relating to whether such Performance Testing
was performed according to the Testing Procedures or whether the results of such
Performance Testing satisfied the applicable Performance Guarantees shall
relieve Contractor of any of its obligations under this Agreement. All costs
that Contractor incurs in satisfying its obligations under this Article are part
of the ***, except that Contractor shall be reimbursed through a Change Order
for additional costs it may incur due to defects in Owner Equipment that are not
the result of Contractor’s failure to comply with the requirements set forth in
this Agreement or damage to Equipment included in the Facility that was not the
fault of Contractor or any Subcontractor, including for any repeat Performance
Testing and the consumables and spare parts associated therewith.

10.5    Substantial Completion Punch List.    Prior to Substantial Completion,
Contractor shall submit to Owner, for Owner’s review and approval (not to be
unreasonably withheld or delayed), the Substantial Completion Punch List.
Following review and approval of such Substantial Completion Punch List,
Contractor shall work diligently to complete all items contained thereon in a
timely manner in accordance with this Agreement.

10.6    Substantial Completion.    “Substantial Completion” shall be deemed to
have occurred upon satisfaction of all of the following conditions:

(a)      Mechanical Completion shall have been achieved;

 

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(b)      The Facility shall be capable of being operated in accordance with the
Specifications without damage thereto or to any property or injury to any Person
and in compliance with all Owner Permits, Laws and orders of all Government
Authorities then in effect;

(c)      Contractor shall have performed Performance Testing for the Facility
and the results of such Performance Testing shall have satisfied the applicable
Minimum Performance Guarantees, all according to the applicable Testing
Procedures and the requirements of Article 10;

(d)      Contractor shall have completed the performance of the Services
according to all of the provisions of this Agreement, with the exception of
those items specified in the Substantial Completion Punch List, which Contractor
shall have prepared and for which Contractor shall have received approval from
Owner (such approval not to be unreasonably withheld or delayed);

(e)      Contractor shall have delivered to Owner all Documentation that
Contractor is required to deliver to Owner pursuant to Exhibit A-3; and

(f)       Contractor shall have delivered to Owner a certificate signed by
Contractor certifying that all of the preceding conditions in this Section have
been satisfied.

Upon satisfaction of all of the foregoing conditions for Substantial Completion,
Owner shall accept the Facility, subject to Final Completion according to this
Article 10, by delivering to Contractor notice of that acceptance promptly, and
Contractor shall turn over risk of loss and care, custody, control and operation
of the Facility to Owner. ***

If Contractor is unable to satisfy any of the foregoing conditions as a result
of any event or circumstance for which neither Contractor nor any Subcontractor
is responsible or as a result of the improper performance of any Owner Equipment
or any other fault of any supplier of any Owner Equipment and Contractor has
complied with its obligations relating to such Owner Equipment in accordance
with Section 3.1(a)(ii), Contractor shall be entitled to a Change Order
providing, at Owner’s election, that such condition is deemed to have been
satisfied (but only to the extent Contractor is unable to satisfy such
condition) or for *** and the Guaranteed Substantial Completion Date or
otherwise as may be reasonable under the circumstances.

10.7    Final Completion.    “Final Completion” shall be deemed to have occurred
upon satisfaction of all of the following conditions:

(a)      Contractor shall have achieved all conditions for Substantial
Completion;

(b)      Contractor shall have completed all Performance Testing and either
(i) all Performance Guarantees shall have been satisfied according to the
Testing Procedures, or (ii) Contractor shall have satisfied all of the Make
Right Performance Guarantees and shall have satisfied ***

(c)      The performance of the Services (except for Services relating to any
warranty Work) shall be one hundred percent (100%) complete, including the
completion (or buying down) by Contractor of all items on the Substantial
Completion Punch List in accordance with this Agreement;

(d)      Contractor shall have delivered to Owner the Documentation that
Contractor is required to deliver to Owner pursuant to Exhibit A-3 dated as of
the Final Completion Date;

 

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(e)      There shall exist no Contractor Default and no event which, with the
passage of time or the giving of notice or both, would be a Contractor Default;
and

(f)      Contractor shall have delivered to Owner a certificate signed by
Contractor certifying that all of the preceding conditions in this Section have
been satisfied.

 

11.

OWNER’S RIGHT TO OPERATE

 

11.1

Intentionally Omitted.

11.2    Owner’s Right to Operate Prior to Satisfaction of Performance
Guarantees.    If the Facility fails to satisfy the Performance Guarantees
during the Performance Testing or fails to achieve Substantial Completion by the
Guaranteed Substantial Completion Date and the Facility can be operated in
compliance with applicable Laws, Owner, in its sole discretion, shall have the
right nonetheless to operate the Facility and shall give Contractor written
notice of its decision. If Owner elects to operate the Facility and, during such
time, does not permit Contractor to cure the Defects necessary to satisfy the
Minimum Performance Guarantees, then the Guaranteed Substantial Completion Date
and Guaranteed Final Completion Date (if such dates have not passed) shall be
extended on an equitable basis until such time as Owner tenders the Facility to
Contractor for further Services and Performance Testing, and Contractor shall be
entitled to a Change Order for ***. Owner shall bear the risk of loss during
such time as it operates the Facility. Owner’s operation of the Facility under
this Section shall not reduce Contractor’s obligations under this Agreement,
including Contractor’s obligation to cause the Facility to satisfy the
Specifications and applicable Performance Guarantees, except for normal wear and
tear and operation not in accordance with the Specifications or Prudent Industry
Practices. Notwithstanding anything to the contrary, if Owner elects to operate
the Facility for more than *** as contemplated in this Section 11.2, and such
election to operate prevents Contractor from proceeding timely with curing any
Defects during such operating time, then the degradation curves set forth in
Exhibit A-2 shall apply.

 

12.

***

 

12.1

***

 

12.2

***

 

12.3

***

12.4    Payment.    The *** specified in Sections 12.1 and 12.2, if owing
following the application of the provision of Section 12.3, shall be due and
payable *** after written demand by Owner. *** that remain unpaid after the
expiration of such *** period shall bear interest at ***. Any unpaid ***
disputed by Contractor and determined to be payable pursuant to the resolution
of such dispute in accordance with this Agreement shall also bear interest from
the expiration of the *** period referred to above at ***. Notwithstanding the
assessment of interest, and in addition to its other rights and remedies, Owner
shall have the right to offset the amount of any *** plus interest against any
amounts due or that may become due to Contractor under this Agreement. ***
determined to be wrongfully assessed against Contractor by Owner shall bear
interest, from the time such amounts were paid by Contractor or offset by Owner,
***

 

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13.

WARRANTY

13.1    Services Warranty Period.    Contractor warrants that all Services will
be performed in a professional and workmanlike manner, will conform to the
requirements of this Agreement, including the requirements set forth in
Section 3.1(a)(ii), and will reflect competent professional knowledge and
judgment for a period commencing on the date such Service was performed and
ending *** after the Substantial Completion Date (the “Services Warranty
Period”), provided that the Services Warranty Period for each Service performed
with respect to the Substantial Completion Punch List shall commence upon
Contractor’s completion of, and Owner’s acceptance of, such Service and shall
continue for a period of ***

13.2    Equipment Warranty Period.    Contractor warrants that the Equipment
furnished to Owner will be free from Defects in workmanship and material and
will conform to this Agreement, including the Specifications, for a period of
*** from Substantial Completion (the “Equipment Warranty Period”), provided that
the Equipment Warranty Period for each item on the Substantial Completion Punch
List shall commence upon Contractor’s completion of, and Owner’s acceptance of,
the particular Substantial Completion Punch List item and shall continue for a
period of ***. In addition, to the extent the Owner and Contractor negotiate an
equipment warranty period with a Subcontractor that exceeds the time periods set
forth herein, Contractor shall assign for the benefit of the Owner any such
warranty period that exceeds the *** period.

13.3    Extension of Warranty Periods.    If a Defect (as defined in
Section 13.4) is discovered within the applicable Warranty Period and such
Defect is not cured to the reasonable satisfaction of Owner, then the applicable
Warranty Period shall be extended to the *** of the date such Defect was
corrected, but only with respect to the Equipment or Service that was the
subject of such Defect. In no event shall any Services Warranty Period or
Equipment Warranty Period extend beyond ***

13.4    Defects.    If, within the Services Warranty Period or Equipment
Warranty Period, as applicable, breaches or failures of the foregoing warranties
(“Defects”) are discovered by Owner or Contractor, Contractor shall commence,
within a timely manner upon being discovered or upon notice from Owner, to
correct, and diligently and continually prosecute measures which are reasonably
calculated to correct, such Defects, including re-performance or re-provision of
any affected portion of the Work and repair of any resulting damage, and shall
demonstrate to Owner’s reasonable satisfaction that such Defects have been
properly corrected. The Parties shall use commercially reasonable efforts to
coordinate performance of warranty Work at a time responsive to and consistent
with Owner’s interest in the efficient operation of its business and so as to
minimize revenue loss to Owner and to avoid disruption of Owner’s operations at
the Facility. Contractor shall be responsible for all inspection, removal,
packaging, transportation, installation, and consulting for the correction of
Defects. Owner shall provide Contractor with reasonable access at the Site to
correct Defects. All costs of correcting Warranty Defects shall be treated ***.
All such Warranty costs shall be ***

13.5    Responsibility for Warranty Work.    Contractor shall have primary
liability with respect to the warranties in this Agreement other than for the
Owner Equipment, whether or not any Defect or other matter is also covered by a
warranty of a Subcontractor, and Owner need only look to Contractor for
corrective action. In addition, Contractor’s warranties shall not be restricted
in any manner by any warranty of a Subcontractor, and the refusal of a
Subcontractor to provide or honor a warranty or to correct defective, deficient
or nonconforming Work shall not excuse Contractor from its liability on its
warranties to Owner. Contractor shall have no responsibility to perform any
warranty Work with

 

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respect to Owner Equipment unless any Defect with respect to such Owner
Equipment is attributable to Contractor’s failure to comply with the
requirements set forth in Section 3.1(a).

13.6    Title Warranty.    Contractor warrants that it shall provide to, and,
effective as of the applicable date set forth in Section 22.1, hereby assigns
and transfers to, Owner good, marketable and exclusive title to the paid-up
Equipment, free and clear of all Liens; provided, however, that Contractor shall
not be required to assign and transfer to Owner good, marketable and exclusive
title to certain intellectual property to be licensed to Owner as provided in
Article 19. Contractor represents and warrants that it has the right to grant
the license rights granted by Contractor herein. In the event of any
nonconformity with or breach of this Section, Contractor shall, at its own
expense, promptly, and in any event within *** thereof, remove any Lien on any
of such Equipment or otherwise provide Owner good, marketable and exclusive
title to such Equipment, free and clear of all Liens, or, as the case may be,
provide Owner the license rights purported to be granted by Contractor herein;
provided, that, if Contractor is unable within such *** period to remove such
Lien, Contractor may post a bond in an amount (and otherwise in form and
substance) reasonably acceptable to Owner so long as Contractor continues to use
all commercially reasonable efforts to remove such Lien as promptly as
practicable. This Section shall survive the expiration, cancellation or
termination of this Agreement.

13.7    Intellectual Property Warranty.    Contractor represents and warrants
that the Services performed by Contractor or its Subcontractors, the Equipment
and the Documentation, or any part of any of the foregoing, will not infringe or
constitute a misappropriation of any right of any third party, including any
copyrights, mask work rights, patent rights, trademark rights, trade secret
rights or confidentiality rights.

13.8    Warranty Assistance.    During the Warranty Periods, Owner shall,
without cost to Contractor: (a) provide Contractor reasonable working access
(subject to such restrictions and conditions as Owner may have instituted
generally for its contractors) to the Site to remove, disassemble, replace and
reinstall any Equipment with respect to which a Defect exists; (b) remove any
material or structures not provided or installed by Contractor; and (c) provide
Contractor reasonable access to Facility personnel as are reasonably necessary
to assist Contractor in the performance of its warranty obligations.

13.9    Conditions of Warranty.    To the extent that Contractor shows that any
failure by Contractor to meet the foregoing warranties is the result of
(a) Owner’s failure to maintain the Equipment furnished in a reasonable manner
or in accordance with any reasonable Contractor requirements conveyed to Owner,
(b) Owner’s failure to operate the Equipment within its rating or to operate and
maintain the Equipment in a reasonable manner consistent with equipment vendors’
instructions, (c) Owner subjecting the Equipment to abuse or misuse, or
(d) normal wear and tear or corrosion inherent in the operation of the Facility,
then, to that extent, Contractor shall be excused for said failure.

13.10  Exclusive Warranties.    THE WARRANTIES SET FORTH IN THIS AGREEMENT ARE
EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES WHETHER STATUTORY, EXPRESS, OR
IMPLIED (INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE
OF TRADE). Correction of Defects in the manner and within the period of time
provided herein shall constitute complete fulfillment of all of the liabilities
of

 

37

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Contractor with respect to such Defect, whether the claims by Owner are based in
contract, in tort (including negligence and strict liability), or otherwise.

 

14.

INDEMNIFICATION

14.1    Contractor’s Indemnity.    Contractor shall indemnify and hold harmless
Owner, its parents and Affiliates, and their respective partners, shareholders,
members, agents, employees, officers, directors and lenders (collectively, the
“Owner Indemnitees”) from and against:

(a)      any and all Third Party Claims and all damages, liabilities, losses,
costs and expenses associated therewith (including attorneys’ fees and other
professionals’ fees) for any injury of or death to persons, damage to or
destruction of third party property, contamination of the environment or injury
to natural resources, whether contractual, in tort, or as a matter of strict
liability or liability imposed by Law, to the extent any of the foregoing arise
out of the negligent or willful or wanton acts or omissions of Contractor, any
Subcontractor or any of their respective employees, agents or third parties over
which either has reasonable control during the performance of the Services, and

(b)      any and all claims, demands or causes of action of every kind and
character by any Person and all damages, liabilities, losses, costs and expenses
associated therewith (including attorneys’ fees and other professionals’ fees)
for:

(i)      any violation or alleged violation of Laws by Contractor, any
Subcontractor or any of their respective employees, agents or third parties over
which either has reasonable control (unless caused by Owner, any of Owner’s
Affiliates or subcontractors, or any of their respective employees or agents or
third parties over which any of them has control);

(ii)     any action taken by Contractor, any Subcontractor or any of their
respective employees, agents or third parties over which either has reasonable
control, which action results directly in Owner violating any Law; or

(iii)    any prohibited assignment by Contractor of this Agreement.

14.2    Owner’s Indemnity.    Owner shall indemnify and hold harmless
Contractor, its parents and Affiliates and their respective partners,
shareholders, members, agents, employees, officers, directors, and lenders
(collectively, the “Contractor Indemnitees” and, together with the Owner
Indemnitees, collectively the “Indemnified Parties” and individually an
“Indemnified Party”) from and against:

(a)      any and all Third Party Claims and all damages, liabilities, losses,
costs and expenses associated therewith (including attorneys’ fees and other
professionals’ fees) for any injury of or death to persons, damage to or
destruction of third party property, contamination of the environment or injury
to natural resources, whether contractual, in tort, or as a matter of strict
liability or liability imposed by Law, to the extent any of the foregoing arise
out of the negligent or willful or wanton acts or omissions of Owner or any of
its employees, agents or third parties over which it has reasonable control
during the performance of the Services; and

(b)      any and all claims, demands or causes of action of every kind and
character by any Person and all damages, liabilities, losses, costs and expenses
associated therewith (including attorneys’ fees and other professionals’ fees)
for:

 

38

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(i)      any violation or alleged violation of Laws by Owner, its employees or
agents or third parties over which it has control (unless directly caused by
Contractor, any of Contractor’s Affiliates, any Subcontractor, or any of their
respective employees or agents or third parties over which any of them has
control);

(ii)     any prohibited assignment of this Agreement by Owner; or

(iii)    any pre-existing Hazardous Materials.

14.3    Intellectual Property Indemnity.    Contractor shall, at its own
non-reimbursable expense, defend, indemnify and hold harmless Owner Indemnitees
against any and all damages, liabilities, losses, costs and expenses (including
attorneys’ fees and other professionals’ fees) associated with any claims, suits
or proceedings brought against any of the Owner Indemnitees based on an
allegation that any Services performed by Contractor or its Subcontractors, the
Facility, the Documentation or the Equipment, or any part thereof, or use
thereof, constitutes an infringement or misappropriation of any right of any
third party, including any copyrights, mask work rights, United States patent
rights, trademark rights, trade secret rights, confidentiality rights or other
property rights, if Contractor is notified promptly in writing and given
authority, information, and assistance for the defense or settlement of such
claim suit or proceeding. Contractor will not be responsible for any settlement
of such suit or proceeding made without its written consent. Contractor shall
obtain Owner’s written consent, which may be withheld in Owner’s sole
discretion, prior to entering into any settlement of any such claim suit or
proceeding that does not include a complete liability release for all Owner
Indemnitees or that would prohibit or restrict use of any part of the Facility,
the Documentation or the Equipment by any Owner Indemnitees. If the use of the
Facility, the Documentation or the Equipment, or any part thereof, as a result
of any such claim, suit or proceeding is held to constitute infringement, and
its use by any of the Owner Indemnitees is enjoined, Contractor shall, at its
option and its own non-reimbursable expense, either: (i) procure for such Owner
Indemnitees the right to continue using the Facility, the Documentation or the
Equipment, or any part thereof to the full extent provided herein; (ii) replace
same with substantially equivalent non-infringing Facility, Documentation or
Equipment or parts thereof acceptable to Owner; or (iii) modify same in a manner
acceptable to Owner and in conformance with the functional requirements of this
Agreement so it becomes non-infringing. Contractor shall flow down the
requirements of this Section 14.3 and make Owner direct beneficiary of the
indemnification obligation in its subcontracts with all Major Subcontractors.
Notwithstanding anything to the contrary, Contractor’s obligations under this
Section 14.3 shall not apply to the Owner Equipment or any manuals or other
documentation provided by the supplier of the Owner Equipment.

14.4    Indemnity Procedures for Third Party Claims.

(a)      In the event of a Third Party Claim with respect to which an
Indemnified Party has a claim for indemnification under this Article, then the
Indemnified Party must notify the indemnifying Party thereof in writing of the
existence of such Third Party Claim and must deliver copies of any documents
served on the Indemnified Party with respect to such Third Party Claim;
provided, however, that any failure to notify the indemnifying Party or deliver
such copies will not relieve the indemnifying Party from any obligation
hereunder unless (and then solely to the extent that) the indemnifying Party is
materially prejudiced by such failure.

(b)      The indemnifying Party shall have the right to conduct and control,
through counsel of its own choosing, reasonably acceptable to the Indemnified
Party, any Third Party Claim;

 

39

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provided, however, that (i) if requested by the Indemnified Party, the
indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (ii) the Indemnified Party may, at its
election, participate in the defense thereof at its sole cost and expense and
(iii) if (A) the indemnifying Party shall fail to defend any Third Party Claim,
(B) the Parties mutually agree in writing to allow the Indemnified Party to
assume the defense of such Third Party Claim and forego any indemnity claimed
under this Article, (C) in the reasonable opinion of legal counsel for the
Indemnified Party, such Third Party Claim involves the potential imposition of
criminal liability on the Indemnified Party, its directors, officers, employees
or agents, (D) in the reasonable opinion of legal counsel for the Indemnified
Party, the Third Party Claim involves, or is likely to involve, any claim by any
Government Authority or (E) in the reasonable opinion of legal counsel for the
Indemnified Party, an actual or potential conflict of interest exists where it
is advisable for such Indemnified Party to be represented by separate counsel,
then the Indemnified Party shall be entitled to control and assume
responsibility for the defense of such Third Party Claim, at the cost and
expense of the indemnified Party. The indemnifying Party may, in any event,
participate in such proceedings at its own cost and expense.

(c)      The indemnifying Party, in the defense of any such litigation, other
proceeding or other claim, shall have the right in its sole discretion to settle
such Third Party Claim only if (i) such settlement involves only the payment of
money and execution of appropriate releases of the Indemnified Party and its
Affiliates, (ii) there is no finding or admission of any violation of Law, and
(iii) the Indemnified Party or its Affiliates will have no liability with
respect to such compromise or settlement. Otherwise, no such Third Party Claim
shall be settled or agreed to without the prior written consent of the
Indemnified Party. The Indemnified Party and the indemnifying Party shall fully
cooperate in good faith in connection with such defense and shall cause their
legal counsel, accountants and affiliates to do so, and shall make available to
the other Party all relevant books, records, and information (in such Party’s
control) during normal business hours, and shall furnish to each other such
other assistance as the other Party may reasonably require in connection with
such defense, including making employees of the Indemnified Party available to
testify and assist others in testifying in any such proceedings.

 

15.

INSURANCE

 

15.1

***

(a)      ***

(b)      ***

(c)      *** shall be in the name of the Owner. Contractor, its Affiliates and
its Subcontractors *** shall be included as an additional insured.

(d)      ***, Contractor (and its Subcontractors) shall be responsible for
deductibles up to *** per occurrence for all other real property and tangible
personal property (except up to *** per occurrence for start-up and testing of
all Equipment) at the Site ***

(e)      *** shall, and shall cause its underwriters to, waive subrogation
against *** and its *** on such *** insurance policy except for any claims or
matters in which the Equipment warranty

 

40

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or the Services warranty provided by *** hereunder are involved. It is further
agreed that *** may elect to ***. In the event that *** elects to *** shall
waive its right to recover the cost to repair or replace such loss or damage
from *** in excess of the deductible and to the extent that coverage would have
been available had *** obtained the foregoing *** insurance policy. Should a
loss be sustained at the Site and in the course of construction to property that
is to be incorporated into the Project, *** shall replace or repair such loss or
damage in accordance with the terms of this Agreement, and *** shall be
reimbursed for all such costs plus the cost of extended overhead (including for
home office costs and procurement costs). *** shall act on behalf of *** for the
purpose of adjusting any loss to ***

 

15.2

***

(a)      ***.    Within *** of the Full Notice to Proceed, until Final
Completion, *** and without limiting its indemnity obligations under this
Agreement, *** shall establish a *** and shall, for all tiers who have enrolled
or shall enroll in the *** procure, maintain and pay the premiums for ***

 

Type

 

      

Coverage Amount

 

(a)     Workers’ Compensation including U.S. Longshoremen’s and Harbor Workers
Act Coverage or other required coverage as appropriate and including b) below

 

      

Statutory

(b)     Employers Liability

      

*** each accident; *** each employee disease;

*** policy limit disease

 

 

41

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Type

 

      

Coverage Amount

 

(c)     Commercial General Liability Insurance shall be written ISO occurrence
Form (CG 00 01 10 01) or equivalent and must include the following:

 

•  Products Liability/Completed Operations for *** beyond Final Completion

 

•  Coverage for all premises and operations. The policy shall be endorsed to
provide the Designated Construction Project(s) General Aggregate Limit
Endorsement (ISO CG 2503, Ed 03/97)

 

•  If Work to be performed includes construction or demolition operations within
50 feet of any railroad property and affecting any railroad bridge or trestle,
tracks, road-beds, tunnel, underpass or crossing, then such policy will include
a Railroad’s Contractual Liability Endorsement (ISO CG 2417, Ed 01/96);

 

•  Coverage for demolition and removal of any building or structure, collapse,
explosion, blasting, excavation and damage to property below the surface of the
ground (XCU coverage).

 

•  Hazard and Personal Injury, with Employee Exclusion and Contractual Exclusion
Deleted

 

      

*** per occurrence with *** aggregate project specific (with dedicated coverage
amounts fully available to any obligation under this Agreement)

(d)     Umbrella/Excess Liability Insurance following form and excess of
coverages in sections a, b and c above.

 

Hired and Non-Owned automobile coverage added via endorsement for *** and ***

 

      

*** project specific per occurrence and aggregate (with dedicated coverage
amounts that are fully available to any obligations under this Agreement)

(b)      ***

(i)      *** shall have authority to exclude any Subcontractor ***, such
decision not to be unreasonably delayed or withheld.

 

42

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(ii)     *** shall have the authority to exclude any *** subject to approval
from ***, such decision not to be unreasonably withheld. Subject to
Section 15.2(b)(i) above, *** pre-approval shall be waived for the subcontracts
dealing primarily with the following scopes of supply or types of services:
consultants, suppliers that do not perform or subcontract installation, vendors,
materials dealers, guard services, janitorial services, truckers (including
trucking to the Site where delivery is the only scope of Work performed) and
other temporary services.

(c)      Contractors Excluded from ***.    Until (A) ***, and (B) ***, for all
such Subcontractors who *** but who are engaged to perform any Service under
this Agreement, *** shall itself obtain and maintain and shall obtain and
maintain a certificate of insurance from such Subcontractor evidencing that its
Subcontractors have obtained and will maintain and keep in full force and
effect, as part of the ***, Workers Compensation, Employers Liability, General
Liability and Excess Liability insurance in the amounts and per the requirements
listed in Section 15.3 below and that meet the requirements of Section 15.2(d)
and Section 15.4 below. Such insurance will defend and indemnify Contractor,
such Subcontractor, and Owner and their respective trustees, directors,
officers, partners, agents, representatives, and employees from claims of the
type and minimum limits as set forth in Section 15.3 below.

(d)      ***.    All of the above-referenced insurance coverages in Sections
15.2(a) and 15.2(b) above and the additional insurance coverages as required
from time to time as noted in Section 15.3 below (which are for loss exposure
other than Workers Compensation, General Liability, Employers Liability and
Excess Liability) shall be in forms approved by *** (which approval evaluation
shall not be unreasonably withheld or delayed) and with insurance companies
approved to do business in the State that have (and shall maintain during the
applicable policy period) a minimum A.M. Best rating of A-VII. The insurance
shall be maintained until the ***, except for Products Liability/Completed
Operations coverage, which shall be maintained for *** beyond such date. ***
Liability insurance coverage limits set forth herein are minimums, and dedicated
to Services performed for Owner related to the Project.

15.3    Contractor’s and Subcontractor’s Standard Insurance Requirements.    ***
of any tier, and whether ***, shall comply with all insurance requirements in
subsections (a) through (h) below ***

 

Type

 

       

Coverage Amount

 

(a)     Automobile, Bodily Injury and Property Damage Liability insurance on ISO
form (CA 00 01 10 01) or equivalent. Must include coverage for the following:
(1) owned motor vehicles; (2) hired motor vehicles; (3) other non-owned
vehicles; and (4) coverage for certain railroad operations CA2070 10/01.

 

      

*** per occurrence

(b)     All Risk Contractor’s Equipment Insurance covering owned, used, and
leased equipment required to perform the Work. Contractors or Subcontractors may
elect to self insure such exposure if approved in writing by Owner, which
approval shall not be unreasonably withheld or delayed.

 

        

 

43

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Type

 

       

Coverage Amount

 

(c)     Workers Compensation and Employers Liability Insurance covering Off-Site
Activities Only (if enrolled in the ***, otherwise no site limitation), and
having North Carolina Statutory Limits with All States coverage including U.S.
Longshoremen’s and Harbor Workers Act Coverage as appropriate and Employer’s
Liability Limits.

 

      

*** Each Accident Bodily Injury by Disease

 

*** Policy Limit Bodily Injury by Disease.

 

*** Each Disease Bodily Injury by Disease.

(d)     Commercial General Liability Insurance covering Off-Site Activities Only
(if enrolled in the ***, otherwise no site limitation).

 

      

*** per occurrence, *** Annual Aggregate.

(e)     If aircraft are used in performance of the Services, Contractor shall
provide or cause the operators of Aircraft to provide Aircraft Liability
Insurance

 

      

*** combined single limit

(f)     If Ocean Cargo Shipments are made, Contractor shall provide Ocean Cargo
Insurance

 

      

The maximum value of shipment, including packing, freight duties, and fees

(g)     If performing any design, engineering or architectural Services,
Professional Liability Insurance (also known as errors and omissions insurance),
which shall insure Contractor’s/Subcontractor’s liability arising out of or
relating to any design, engineering or architectural Services.

 

      

*** project specific limit with reporting requirements for claims made forms of
*** after Final Completion.

(h)     Umbrella /Excess Liability Insurance following form and excess of
coverages in sections (c) and (d) above.

 

      

*** project specific per occurrence and aggregate.

Prior to beginning Work at the Site, Contractor shall obtain from each
Subcontractor of every tier industry standard ACORD (or other Owner approved
form) certificates evidencing the above coverages and shall make available such
certificates to Owner’s designated insurance administrator upon request. All
coverages and certificates further shall show Owner as an additional insured
(except Worker’s Compensation). All insurance coverage (except Professional
Liability, if any) shall include a waiver of subrogation rights by the insurer
against Owner.

15.4    General Insurance Requirements.

(a)      The provisions of Section 15.2 and Section 15.3 above do not modify or
change any responsibility of Contractor or its Subcontractors as stated
elsewhere in this Agreement. Owner assumes no responsibility for the solvency of
any insurer to settle any claim. The insurance requirements herein are separate
and apart from and in no way limit

 

44

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Contractor’s Indemnity as stated in Section 14 of this Agreement. Anything
herein to the contrary notwithstanding, the liabilities of Contractor under this
Agreement shall survive and not be terminated, reduced or otherwise limited by
any expiration or termination of insurance coverages. Neither approval nor
failure to disapprove insurance furnished by Contractor shall relieve Contractor
from responsibility to provide insurance as required by this Agreement. No
policy shall contain an exclusion that it would not respond to cover losses for
damages to any Owner pre-existing property. All policies of insurance required
in Section 15.2 and Section 15.3 above shall be endorsed or shall otherwise
provide that Contractor’s insurance shall be primary with respect to
Contractor’s acts or omissions and not be in excess of, or contributing with,
any insurance maintained by Owner (other than any Builders Risk as provided in
this Agreement). Owner and its successors and assigns shall be named as
additional insureds for their imputed liability as a result of Contractor’s
negligent operations hereunder, using ISO additional insured (CG 20 10) or
equivalent, under all policies of liability insurance to be maintained by
Contractor (except Worker’s Compensation Insurance and Professional Liability).
The liability policies of insurance shall be endorsed or shall otherwise include
a severability of interest. The policies set forth in this Article shall each
contain a provision that coverages afforded under the policies will not be
cancelled, renewed or materially modified unless at least *** prior written
notice via certified United States mail has been given to Contractor and Owner
or to any other entities as herein or hereinafter required, at the address so
provided to the insurance company. All insurance required by this Article shall
be provided by companies reasonably acceptable to Owner and that have (and shall
maintain during the applicable policy period) an AM Best Rating of A- VII or
higher. Certificates shall be provided to Owner on industry standard ACORD or
Owner approved form showing such coverage in full force and effect shall be
delivered to Owner within *** of the Effective Date, within *** of each policy
renewal or change and from time to time thereafter, as may be requested by
Owner. All policies shall include waivers of any right of subrogation of the
insurers there under against Owner and its successors and assigns using standard
ISO forms or equivalent. The existence of any self-insured retentions (SIRS)
over which the required policies apply must be disclosed to and approved by
Owner, such approval not to be unreasonably withheld or delayed. Contractor
shall provide copies of *** placement and renewal policies and all endorsements
to the Owner not later than *** following placement or renewal.

(b)      Contractor shall comply with the conditions stipulated in each of the
insurance policies. None of the insurance coverage required hereunder shall be
on “claims-made” forms, except Professional Liability. Coverage amounts must be
fully available to any obligations under this Agreement (not eroded by any other
project or agreement) and apply on an annual basis. *** provisions for excluding
Subcontractors must be disclosed and approved by Owner in writing prior to ***
effective date.

(c)      If any of the Project specific insurance required under this Article
shall be directly or indirectly depleted by *** or more (whether due to payment
of insurance proceeds, creation of a reserve or otherwise) prior to Final
Completion, Contractor shall obtain from the insurer a reinstatement option, if
commercially available at a cost comparable to the original policy cost, to each
such policy at least equal to the depleted amount. *** shall bear the cost of
such option (including the cost associated with the reinstatement). Contractor
shall cause such insurer to send to Owner a notice of such reinstatement and a
copy of the reinstated policy related thereto upon Owner exercising and payment
for the reinstatement.

 

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(d)      The insurance policies required by this Article shall allow for
occupancy and utilization of the Facility, the Equipment and the Site by Owner,
its Affiliates and any person reasonably permitted access thereto by Owner.

(e)      During the time any Subcontractor is engaged to perform any Service
under this Agreement, Contractor shall obtain a certificate of insurance from
such Subcontractor evidencing that such Subcontractor has obtained, and will
maintain and keep in full force and effect (required only for off-Site Work ***,
otherwise for all Work performed by any Subcontractor), Worker’s Compensation in
statutory amounts, Employer’s Liability, Commercial General Liability,
Automobile Insurance and all other policies reasonably necessary to perform such
Service with adequate coverages and in such amounts in accordance with
Contractor’s normal practices and consistent with Good Industry Practices, and
provide Owner with evidence acceptable to Owner of such coverage, or Contractor
shall maintain such coverage under its own insurance policies ***. Contractor
shall ensure that all Subcontractors obtain and maintain prudent insurance
coverages. All Subcontractor coverages shall waive subrogation rights against
Owner and Contractor. All Subcontractor coverages shall name Owner and
Contractor as additional insureds (except Workers Compensation and Professional
Liability).

(f)      Any certificates of renewal with respect to any insurance policy
required to be maintained by Contractor hereunder shall be delivered to Owner
promptly after renewal. Contractor shall insure that the insurer shall submit a
copy of all receipts for premiums paid to Contractor promptly after payment of
such premiums. Contractor shall be solely responsible for the timely payment in
full of premiums for all insurance required of it hereunder. Should Contractor
fail to provide or maintain any insurance required hereunder, Owner shall have
the right, but not the obligation, to provide or maintain any such insurance,
and to deduct the cost thereof from any amounts due and payable to Contractor,
or, in the event there are no such amounts due and payable, Contractor shall
reimburse Owner for such costs on demand. Contractor shall not unreasonably
refuse to cooperate or to take any actions requested or necessary to prosecute
any claims under any insurance policy required to be maintained by Contractor
hereunder.

(g)      With respect to ocean marine shipments, Contractor shall obtain at
least *** prior to any such shipment, cargo insurance covering “all risks” of
loss or damage to property shipped, components of property shipped, or items
contained in or shipped in or with the property shipped. This coverage is to be
written on a replacement cost basis and in the full insurable value of these
items, including packing and freight charges plus duties and fees. The coverage
required by this paragraph shall continue in effect until appropriate coverage
commences at the Site.

15.5    Insurance Pricing Assumptions.    The Parties hereto hereby acknowledge
and agree that the insurance requirements set forth herein are part of *** are
based upon the following base assumptions relating to such requirements:
(a) Contractor’s Site payroll and site Work hours provided are based upon the
terms and conditions set forth herein; (b) the total Site Work hours provided
includes all appropriate hours applicable to a “wrap-up” type insurance program,
including direct craft hours, subcontract hours (including F&E hours), field
non-manual hours, start up hours and all applicable indirect, productivity and
escalation adjustments; (c) total Site Work hours excludes hours not applicable
to a “wrap-up” type insurance program, including home office, overtime and
overtime related productivity, bonuses and per diem; (d) total Site payroll is
calculated using bare labor rates and contains no markups, including burdens and
benefits; (e) ***; (f) any additional costs to Owner associated with the
“wrap-up” program for any reason, including changes in market premiums, claims,
losses, deductibles or retentions shall be ***; (g) *** will remain in

 

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place until Final Completion of the project unless agreed to by Owner and
(h) allowance of Owner representative(s) to attend any appropriate *** including
claims status reviews.

 

16.

PROJECT CREDIT SUPPORT

16.1    Financial Information.    From the Effective Date until Final
Completion, the Guarantor shall deliver to Owner (a) within *** following the
end of each fiscal year, a copy of its annual report (or, if there is no such
report, a copy of such report for its parent company) containing audited,
consolidated financial statements for such fiscal year, and (b) within *** after
the end of each of its first three fiscal quarters of each fiscal year, a copy
of its quarterly report (or, if there is no such report, a copy of such report
for its parent company) containing unaudited consolidated financial statements
for such fiscal quarter. In all cases, the statements shall be prepared in
accordance with generally accepted accounting principles. To the extent such
quarterly reports are not available, upon the reasonable request of Owner in
response to a credit event in the marketplace, Guarantor shall provide unaudited
management financial information for such fiscal quarter.

 

16.2

***

 

16.3

***.

 

17.

LIMITATION OF LIABILITY

 

17.1

***.

 

17.2

***.

 

18.

LIENS

18.1    Liens.    Contractor shall keep the Facility, the Site, the Equipment,
the Owner Equipment and all other structures and equipment at the Site free from
all Liens (unless such Lien is due to the non-payment by Owner of a *** Payment
Invoice which is not the subject of a good faith dispute), and shall promptly
notify Owner of any such Liens.

18.2    Discharge or Bond.    Without limiting Contractor’s obligations under
Section 14.1(a), Contractor shall take prompt steps to discharge or bond any
Lien (unless such Lien is due to the non-payment by Owner of a *** Payment
Invoice which is not the subject of a good faith dispute). If Contractor fails
to so discharge or promptly bond any such Lien, Owner shall have the right, upon
notifying Contractor in writing and providing Contractor reasonable time to
discharge or bond the Lien, to take any and all reasonable actions and steps to
satisfy, defend, settle or otherwise remove the Lien and consider all associated
costs as ***. Contractor shall have the right to contest any Lien, provided that
it first must provide to the lienholder, a court or other third Person, as
applicable, a bond or other assurances of payment necessary to remove such Lien
in accordance with the Laws of the State.

 

19.

INTELLECTUAL PROPERTY

19.1    Delivery of Documentation.    Prior to Final Completion, Contractor
shall supply to Owner physical and electronic copies of all Documentation. All
such Documentation shall include any corrections, improvements, and enhancements
to such Documentation that were incorporated during the construction of the
Facility and shall be the then-current revision thereof or on an “as-built”
basis

 

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as of Final Completion. Except as otherwise set forth herein, Contractor shall
submit all Contractor developed drawings to Owner electronically in native CAD
format (dgn. or dwg. only), with signed hard copies of such drawings, which
shall be of the same revision and status as the electronically delivered
drawings. In lieu of such Contractor developed drawings being delivered in
native CAD format, Contractor may deliver such drawings electronically in “tiff”
format; provided, that such electronic file contains signatures and stamps and
maintains the same revision and status as the hard copies of such drawings. In
addition, any Subcontractor developed drawings, including, without limitation,
(a) piping and instrumentation diagrams (P&IDs) that are not reproduced on
Contractor’s P&IDs and (b) drawings of pre-fabricated buildings shall, in each
case, also be provided by Contractor electronically in native CAD format (dgn.
or dwg. only). On a case by case basis, Owner may permit such Subcontractor
developed drawings to be delivered electronically in “tiff” format in lieu of
such CAD format. Contractor shall provide Owner, during the Warranty Period and
at no additional cost, any corrections to errors discovered by Contractor or
Owner in the Documentation subsequent to Final Completion. Contractor shall
promptly notify Owner of the discovery of any such errors.

19.2    Ownership of Rights in Documentation.    All rights, title and interests
in and to the paid-up Documentation shall be owned by Owner; provided, that all
rights, title and interests in and to Contractor Confidential Information within
the Documentation shall remain with Contractor or its licensors. For such
Contractor Confidential Information, Contractor hereby grants to Owner a
non-transferable (except only as part of the sale or transfer of the Facility),
royalty-free, fully paid up, irrevocable, sub-licensable, nonexclusive license
to use and copy such Contractor Confidential Information, but only for the
purposes of Facility maintenance, operation, training, modification,
consultation, repair, decommissioning and compliance with Laws, and subject to
the restrictions on Contractor Confidential Information set forth in
Section 20.1.

19.3    Ownership of Invention Rights.    Contractor shall retain the ownership
rights in any and all discoveries and inventions (patentable or un-patentable)
that Contractor makes, creates, develops, discovers or produces in connection
with the performance of the Services; provided, however, that Contractor hereby
grants to Owner a non-transferable (except only as part of the sale or transfer
of the Facility), royalty-free, fully paid up, irrevocable, sub-licensable,
nonexclusive license to use and copy such discoveries and inventions for the
purposes of Facility maintenance, operation, training, modification,
consultation, repair, decommissioning and compliance with Laws.

19.4    Disclosure of Documentation.    Owner may disclose or otherwise make
available Documentation to a third party with whom Owner contracts for
maintenance, operation, training, modification, repair, consultation or
decommissioning or other activities relating to the Facility in order to comply
with applicable Laws; provided, that, if such Documentation contains
Contractor’s Confidential Information, the provisions of Section 20.1 shall
apply. In the event of a Contractor Default and Owner termination, in addition
to the rights above and notwithstanding anything in this Agreement to the
contrary, Owner shall have the right to disclose the Documentation to third
parties with whom Owner contracts for engineering, construction, commissioning
or testing of the Project, provided that, prior to such disclosure, such third
parties shall execute a confidentiality agreement at least as strict as the
requirements set forth herein.

19.5    Other Licenses.    To the extent that a license may be required under
any patent, trade secret right or other proprietary right of Contractor or any
Subcontractor to maintain, operate, conduct training, modify, repair, or
decommission the Facility or comply with applicable Laws, Contractor hereby
grants to Owner a non-transferable (except only as part of the sale or transfer
of the Facility),

 

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royalty-free, fully paid up, irrevocable, nonexclusive license under such
patent, trade secret and other proprietary right for such purposes.

 

20.

CONFIDENTIAL INFORMATION

20.1    Confidentiality Obligations.    Each Party agrees: (a) to treat the
other Party’s Confidential Information as confidential and to take reasonable
precautions to prevent unauthorized disclosure or use of the other Party’s
Confidential Information, such precautions taken being at least as great as the
precautions taken by such Party to protect its own Confidential Information (but
in no case less than reasonable care); (b) not to disclose the other Party’s
Confidential Information to any third party other than as provided in
Section 20.2 or with the other Party’s prior written authorization; and (c) not
to use the other Party’s Confidential Information except for performance of this
Agreement, compliance with applicable Laws, or maintenance, operation, training,
modification, repair, consultation or decommissioning of the Facility.

20.2    Permitted Disclosures.    A Party may disclose the other Party’s
Confidential Information to third parties as follows:

(a)      A Party may disclose the other Party’s Confidential Information to any
Government Authority if required to do so, in which case the Party from whom
such disclosure is required shall (i) give the other Party all reasonably
possible notice so as to facilitate such other Party being able, should it so
desire, to seek a protective order or similar protection, and (ii) fully
cooperate with the other Party’s efforts, at the other Party’s expense, to
obtain such protection.

(b)      Contractor may disclose Owner’s Confidential Information to a
Subcontractor if (i) such disclosure is necessary for Subcontractor’s
performance of its subcontract with Contractor and (ii) such Subcontractor first
executes a written confidentiality agreement with Contractor (unless a
confidentiality obligation is already included in the Subcontract) in substance
reasonably acceptable to Owner.

(c)      Subject to the requirements of Section 19.4, Owner may disclose
Contractor’s Confidential Information to (i) potential investors; (ii) third
parties engaged by Owner to provide consultation regarding the Facility;
(iii) third parties with which Owner contracts for engineering, construction,
commissioning, testing, maintenance, operation, training, modification, repair,
consultation or decommissioning of the Facility or other activities relating to
the Facility undertaken in order to comply with applicable Laws or request of
Governmental Authorities having jurisdiction over the Facility or Owner; and
(iv) purchasers and prospective purchasers of the Facility, provided, that in
any of the foregoing instances the third parties to which disclosure is made
first execute a written confidentiality agreement with Owner which provides
Contractor protections which are at least as strict as the requirements set
forth herein.

20.3    Publicity.    Unless required by law or securities practice and
regulations, Contractor shall not make any announcement, give any photographs,
or release any information concerning all or a portion of the Work, this
Agreement, or the Facility, to any member of the public, press, Person, or any
official body, without Owner’s prior written consent; provided, that Contractor
may, at any time after Owner’s first public announcement of the Project or this
Agreement, include the Project (but not the details of this Agreement) in its
regular experience lists.

 

21.

ENVIRONMENTAL; HAZARDOUS MATERIALS

 

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21.1    Material Safety Data Sheets.    Contractor shall provide to Owner all
Material Safety Data Sheets covering all Hazardous Materials and hazardous
chemicals to be furnished, used, applied, or stored by Contractor, or any of its
Subcontractors, at the Site in connection with the Services. Contractor shall
provide Owner’s Project Director with copies of any such Material Safety Data
Sheets prior to entry at the Site or with a document certifying that no
Hazardous Materials or hazardous chemicals will be brought onto the Site by
Contractor, or any of its Subcontractors, during the performance of the
Services. Contractor shall coordinate with Owner’s Project Director to provide a
listing of all of Contractor’s hazardous chemicals and their quantities at the
Site for purposes of chemical inventory reporting pursuant to 40 C.F.R. Part 370
and similar State regulations.

21.2    Facility Use, Storage Removal.    When the use or storage of explosives
or other Hazardous Materials or equipment is necessary for the performance of
the Services, Contractor shall exercise the utmost care and shall conduct its
activities under the supervision of properly qualified personnel in accordance
with all applicable Laws. Before the Substantial Completion Date, Contractor
shall collect (for removal by Owner from the Site) in accordance with all
applicable Laws all explosives and other Hazardous Materials that Contractor or
its Subcontractors brought onto the Site or hazardous chemicals and equipment
Contractor or its Subcontractors used, stored or located at the Site or any
neighboring property, unless the same have been permanently incorporated into
the Facility. All such equipment and materials shall be collected, containerized
and stored in accordance with all applicable Laws, and Contractor shall so
certify in writing to Owner.

21.3    Notice of Presence.    Prior to bringing any Hazardous Material or other
hazardous chemicals to the Site, Contractor shall provide written notice to
Owner identifying any such Hazardous Materials or hazardous chemicals that
Contractor, or its Subcontractors, proposes to bring onto the Site.

21.4    Labeling; Training.    Contractor shall label all Hazardous Materials
that Contractor or its Subcontractors bring to the Site and train all employees
and other Persons, as necessary, in the safe use of such Hazardous Materials as
required by all applicable Laws.

21.5    Handling, Collection, Removal Transportation and Disposal.

(a)      Unless otherwise agreed by the Parties, Contractor shall be responsible
for the proper handling, collection, and containerizing of all Hazardous
Materials generated or brought onto the Site by Contractor or any Subcontractor
or spilled or introduced into or at the Site by Contractor or any Subcontractor,
including any Hazardous Materials furnished, used, applied or stored at the Site
by Contractor, including, used oils, greases, and solvents from flushing and
cleaning processes performed under the Agreement. Such Hazardous Materials will
then be delivered to Owner for proper storage, transportation and disposal. All
activities performed by Contractor in connection with the handling, collection
and containerizing of such Hazardous Materials shall be performed in accordance
with the requirements of all Government Authorities and all applicable Laws. For
the avoidance of doubt, Contractor has no obligations with respect to the
handling, collection, removal, disposal or containerizing of any pre-existing
Hazardous Materials except to the extent the Gross Negligence or willful
misconduct or wanton acts of Contractor or its Subcontractors caused the release
of such pre-existing Hazardous Materials in which case Contractor shall
remediate the released contamination.

 

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(b)      Contractor has included time in the Schedule for satisfying its
obligations as to all Hazardous Materials that it is responsible for under this
Agreement by virtue of such Hazardous Materials being brought onto the Site by
Contractor or its Subcontractors. Contractor shall not seek, and shall not be
entitled to receive, any payment hereunder or extension of time in the Schedule
as a result of satisfying its obligations with respect as to any such Hazardous
Materials brought onto the Site by Contractor or its Subcontractors, including
the handling, collection, or containerizing of such Hazardous Materials.

21.6    Notice of Discovery.    Contractor shall provide prompt written notice
to Owner of all suspected Hazardous Materials that Contractor finds during
performance of the Services.

21.7    Policies and Procedures.    Contractor shall adhere to all Site policies
and procedures for environmental compliance, including Owner’s Environmental
Work Practices Manual and Hazardous Material safety programs. If no such Site
policies or procedures exist, Contractor shall develop, implement and enforce
effective written policies and procedures applicable to the Services, within the
framework of all applicable Laws, for general Site safety and the proper
labeling, handling, collection and containerizing of any Hazardous Materials at
the Site in order to ensure the highest standards of prudent practice at the
Site for the safety of all employees, agents and representatives of Contractor
and any of its Subcontractors.

21.8    Asbestos Containing Products.    Except as otherwise authorized by Owner
in writing, all Equipment or Owner Equipment furnished, delivered or installed
by Contractor and all materials and tools used by Contractor in the performance
of the Services at the Site shall contain zero percent asbestos or refractory
ceramic fibers. If Owner authorizes in writing such delivery or use, Contractor
shall clearly mark all containers or other materials containing asbestos or
refractory ceramic fibers, and such containers or materials shall be sealed to
prevent any leakage of asbestos or ceramic fibers. Contractor shall indemnify,
defend and hold harmless Owner from and against any and all claims, demands and
damages incurred from any unauthorized asbestos or refractory ceramic furnished
or delivered to or installed at the Site by Contractor or any Subcontractor.

21.9    Pre-Existing Hazardous Material.    Owner shall indemnify Contractor and
its Subcontractors from any liability in connection with any pre-existing
Hazardous Material, except to the extent such liability was caused by the Gross
Negligence or willful misconduct or wanton acts or omissions of Contractor or
its Subcontractors. Except as provided above, Owner shall at all times remain
the responsible Party for all pre-existing Hazardous Material and its
remediation. Any assistance provided by Contractor shall be pursuant to a
mutually agreed Change Order, and Contractor shall be entitled to a Change Order
***

 

22.

TITLE; RISK OF LOSS

22.1    Transfer of Title; Security Interest.    Except as otherwise expressly
provided in this Agreement, good, exclusive and marketable title, free and clear
of all Liens (other than Liens created by the non-payment by Owner of a ***
Payment Invoice which is not the subject of a good faith dispute), to the
Equipment and to each of the constituent parts thereof shall pass to Owner upon
the (i) delivery of such Equipment or constituent part thereof to the Site and
(ii) payment of the amount then due under a *** Payment Invoice covering such
Equipment or constituent part of such Equipment, notwithstanding any disputed
amounts withheld or offset by Owner against any payment sought by Contractor in
accordance with the terms of this Agreement. The passage of title to Owner shall
not be deemed an acceptance or approval of such Equipment (or any Service),
affect the

 

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allocation of risk of loss, affect any security interest in favor of Owner
therein or otherwise relieve Contractor of any obligation under this Agreement
to provide and pay for transportation and storage in connection with the
Equipment. Further, upon the passage of title, the Equipment, the constituent
parts thereof and the unused spare parts shall be specifically excluded from the
bankruptcy estate of Contractor in the event of any bankruptcy or insolvency
proceeding involving Contractor.

22.2    Risk of Loss.    Whether or not title has passed to Owner, the risk of
loss for all Equipment to be installed as a component of the Facility shall
remain with Contractor until, and shall pass to Owner upon, Substantial
Completion. Risk of loss for all Owner Equipment to be installed as a component
of the Facility shall pass to Contractor upon its arrival at the Site and shall
remain with Contractor until, and shall pass to Owner upon, Substantial
Completion. Contractor shall be obligated to replace, repair or reconstruct the
Equipment or the Owner Equipment that is lost, damaged, or destroyed during the
period in which Contractor has risk of loss. For Equipment or Materials that are
removed from the Site for repair, replacement or refurbishment under the
Warranty, the risk of loss to such Equipment or Materials shall pass to
Contractor once moved from the location at which it was installed. Owner will
resume the risk of loss of such Equipment or Materials upon completion of
re-installation of the repaired, replaced or refurbished Equipment at the
Facility.

22.3    Contractor Tools.    Risk of loss or damage to the equipment or tools of
Contractor, all Subcontractors, and their respective employees and agents shall
at all times remain with those parties, and Owner shall have no responsibility
for such equipment or tools.

 

23.

SUSPENSION; DEFAULT; TERMINATION

23.1    Suspension.

(a)      Owner may, in its sole discretion, order Contractor to suspend all or
any portion of the Work for a period of time as Owner may request. Contractor
shall comply with such order. The suspension shall commence on the Day specified
in Owner’s written notice to Contractor which shall be at least *** after Owner
gives Contractor such notice.

(b)      Contractor may suspend the Work without liability as if Owner had
ordered a suspension in accordance with Section 23.1(a) upon written notice to
Owner after the occurrence of any of the following:

(i)      Nonpayment.    Owner fails to pay or cause to be paid any amount that
that is not subject to a good faith dispute and has become due and payable by it
to Contractor under this Agreement within *** after receipt of written notice
that such amounts are past due;

(ii)     Insurance.    Owner fails to obtain and maintain insurance as required
by this Agreement; and

(iii)    Breach.    Owner breaches any of its material obligations under this
Agreement (other than those obligations relating to the matters set forth in
Section 23.1(b)(i) or (ii)) and for which no other remedy is specified in this
Agreement and, if such breach is capable of being cured, Owner fails to cure
such breach within *** after written notice of such breach, provided that such
cure period shall be extended to *** after written notice of such breach if such
breach is capable of being cured but not within ***, and Owner immediately

 

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commences to cure such breach and diligently and continually prosecutes measures
which are reasonably calculated to cure such breach within such *** period.

(c)      During any such suspension: (i) Contractor shall take reasonable
precautions to protect, store and secure the Equipment and Owner Equipment
against deterioration, loss or damage, and (ii) Owner shall reimburse Contractor
on a current time and material basis consistent with the terms and conditions
set forth in Exhibit I for all its costs, including those incurred in connection
with the foregoing and for its (including its Subcontractors’) stand-by charges
as well as demobilization and remobilization charges. Contractor shall resume
any suspended Services promptly, but in no event later than *** after Owner
gives Contractor written notice to do so, or, for other provisions of this
Agreement that allow Contractor to treat an action or inaction by Owner as a
suspension, promptly following the reason for such suspension ceasing and, in
each case, shall use its best efforts to fully resume the Services as soon as
reasonably possible. Upon any suspension of all or any portion of the Services
in accordance with this Section 23.1, Contractor shall be entitled to an
equitable adjustment in *** and the Schedule in accordance with Article 8.

23.2    Contractor Events of Default.    Contractor shall be in default of its
obligations pursuant to this Agreement upon the occurrence of any one or more of
the following circumstances (each, a “Contractor Default”):

(a)      Nonpayment.    Contractor fails to pay or cause to be paid any amount
that is not subject to a good faith dispute and has become due and payable by it
to Owner under this Agreement within *** after receipt of written notice that
such amounts are past due;

(b)      Insolvency.    Contractor or its Guarantor becomes Insolvent;

(c)      Assignment.    Contractor assigns or transfers, or attempts to assign
or transfer, this Agreement or any right or interest herein, except as expressly
permitted by this Agreement;

(d)      Insurance.    Contractor fails to obtain and maintain insurance as
required under this Agreement;

(e)      Performance Guarantees.    Contractor fails to satisfy the Minimum
Performance Guarantees by the Guaranteed Final Completion Date;

(f)      Breach.    Contractor breaches any of its material obligations under
this Agreement other than those obligations relating to the matters set forth in
Section 23.2(a) through (e) above and for which no other remedy is specified in
the Agreement and, if such breach is capable of being cured, Contractor fails to
***; and

(g)      Delay in Schedule.    It is forecasted that Contractor will fail to
meet Substantial Completion by the Guaranteed Final Completion Date as set forth
in Section 6.3(b) hereof and, if such forecasted delay is capable of being
cured, Contractor fails to cure such forecasted Schedule delay within *** after
written notice of such breach, provided that the above cure period shall be
extended to *** after written notice of such breach if such forecasted delay is
capable of being cured within such *** and Contractor is demonstrating
continuous and diligent efforts to cure such breach and the forecasted Schedule
is not slipping further behind.

 

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23.3    Owner Remedies.    In the event of a Contractor Default, Owner shall
have any or all of the following rights and remedies:

(a)      Termination.    Subject to the limitations on Contractor’s liability,
Owner, without prejudice to any of its other rights or remedies under this
Agreement, may terminate this Agreement or remove any portion of the Work from
Contractor’s scope hereunder immediately by delivery of a notice of termination
to Contractor;

(b)      Equitable Remedies.    Subject to the limitations on liability set
forth in this Agreement, Owner may seek equitable relief, including injunctive
relief, to cause Contractor to take action, or to refrain from taking action,
pursuant to this Agreement, or to make restitution of amounts improperly
retained or received under this Agreement; and

(c)      Damages.    Subject to Article 17, Section 7.3 and the other exclusive
remedies set forth in this Agreement, Owner shall be entitled to seek all other
remedies at law or in equity.

23.4    Owner Event of Default.    Owner shall be in default of its obligations
pursuant to this Agreement upon the occurrence of any one or more of the
following circumstances (each, an “Owner Default”):

(a)      Nonpayment.    Owner fails to pay or cause to be paid any amount that
is not subject to a good faith dispute and has become due and payable by it to
Contractor under this Agreement within *** after receipt of written notice that
such amounts are past due; and

(b)      Insolvency.    Owner becomes Insolvent.

23.5    Contractor Remedies.    In the event of an Owner Default, Contractor
shall have any or all of the following rights and remedies:

(a)      Termination/Suspension.    Contractor, without prejudice to any of its
other rights or remedies under this Agreement, may terminate this Agreement or
suspend performance of the Work immediately by delivery of written notice
thereof to Owner, and such termination/suspension shall be deemed as if done for
convenience of Owner under Section 23.6(a) or 23.1 (as applicable);

(b)      Equitable Remedies.    Subject to the limitations on liability set
forth in this Agreement, Contractor may seek equitable relief, including
injunctive relief or specific performance, to cause Owner to take action, or to
refrain from taking action, pursuant to this Agreement, or to make restitution
of amounts improperly retained or received under this Agreement; and

(c)      Damages.    Subject to Article 17, Contractor shall be entitled to seek
all other remedies or damages available in equity or at law.

23.6    Termination for Convenience.

(a)      Termination Rights.    Owner may terminate this Agreement at its
convenience and in its entirety upon prior written notice to Contractor, in
which event Owner shall pay the cancellation charges set forth in
Section 23.6(b).

(b)      Cancellation Charges.

 

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(i)      ***

(ii)     If Owner terminates this Agreement under Section 23.6(a) at any time
after the Effective Date, Owner shall pay termination charges to Contractor, as
Contractor’s exclusive remedy, which termination charges shall consist of ***

23.7    Termination for Force Majeure.    Owner or Contractor may terminate this
Agreement in its entirety, and without liability, due to Force Majeure in
accordance with the terms of Article 9.

23.8    Effect of Termination.    Upon termination of this Agreement or removal
of any portion of the Work pursuant to this Article, Contractor shall
immediately:

(a)      stop the performance of all Services (or the Services included in the
removed portion of the Work) except as may be necessary to preserve the
Equipment and Owner Equipment as requested by Owner;

(b)      issue no further purchase orders and enter into no further contracts
relating to the Work (or the removed portion of the Work) except with the prior
written consent of Owner;

(c)      assign to Owner, upon Owner’s request, all rights of Contractor under
contracts or purchase orders entered into by Contractor in connection with this
Agreement (or the removed portion of the Work);

(d)      to the extent possible, upon Owner’s request, terminate existing
contracts and purchase orders entered into by Contractor in connection with this
Agreement (or the removed portion of the Work);

(e)      deliver all then existing Documentation (or the Documentation relating
to the removed portion of the Work), including drafts thereof (subject to
Article 19), to Owner in hard copy and electronic formats reasonably requested
by Owner; and

(f)      turn over care, custody and control at the Site of all Equipment (to
the extent that Owner does not refuse to accept any such Equipment) and Owner
Equipment (or to the extent relating to the removed portion of the Work).

 

24.

SAFETY; INCIDENT REPORTING.

24.1    Environmental, Health and Safety Programs.    Contractor shall be
responsible for initiating, maintaining and supervising all safety precautions
and programs in connection with its performance of the Agreement, including
appropriate precautions and programs for areas in and around the Site. Without
limiting the generality of the foregoing, Contractor shall comply with all
applicable Laws and meet the requirements of all of Owner’s environmental,
health, safety, and security policies and manuals as amended from time to time,
including the Duke Energy Safe Work Practices Manual, the Duke Energy Scaffold
Manual, the Duke Energy Lifting Program, the Duke Energy Environment, Health,
and Safety Manual and the Duke Energy Contractor EHS Compliance Program. A copy
of any policies and manuals of Owner shall be provided to Contractor upon
request. Contractor shall designate a responsible, qualified full-time member of
Contractor’s organization at the Site whose duty shall be the prevention of
incidents and injuries and addressing unsafe and undesirable behavior for each
of the following three (3) areas: environmental matters (U.S. Environmental
Protection Agency and any applicable State agency), health matters (industrial
hygiene and employee health

 

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hazard prevention/mitigation) and safety matters, as each area relates to
construction activities generally and the Work specifically. One individual may
be designated for more than one of these three areas if the individual is
qualified in all such areas.

24.2    OSHA and Other Laws.    Contractor shall give notices and comply with
all applicable Laws bearing on the safety of Persons or property or their
protection from damage, injury or loss, including the Occupational Safety and
Health Act (“OSHA”) and the Americans with Disabilities Act.

(a)      Contractor represents that it is familiar with the Site, the Services
to be performed, the Equipment to be provided, the Facility to which the
Equipment will be a part, the hazards of the Work, and, if applicable, the
Material Safety Data Sheets for, and the hazards of, the Hazardous Materials or
hazardous chemicals that Contractor is expected to provide. Contractor
acknowledges that Material Safety Data Sheets of all chemicals located at the
Site are available to Contractor’s employees upon a request made to Owner’s
Project Director, or other safety representative of Owner at the Site.
Contractor also represents that it is familiar with the labeling system used in
the workplace.

(b)      Contractor acknowledges that OSHA and regulatory standards or State
plan equivalent (collectively, the “OSHA Standards”) require that its employees
be trained in various subjects, such as, but not limited to, the hazards of, and
standards applicable to, the Work (29 C.F.R. § 1926.21(b)(2)) (applicable to
construction work), lockout/tagout (29 C.F.R. § 1910.147), confined space entry
(29 C.F.R. §§ 1926.21(b)(6) or 1910.146), and asbestos (29 C.F.R. §§ 1910.1001
or 1926.1101). Contractor warrants that its employees and their supervisors have
been trained in accordance with all applicable OSHA Standards, and that they
have been trained to recognize and avoid any hazards related to the Work, and to
perform the Services safely and without danger to any employee or to any
property.

(c)      Contractor represents that its employees are or will be equipped with
the personal protective equipment required by applicable OSHA Standards in 29
C.F.R. Parts 1926 and 1910, and with the personal protective equipment required
to protect its employees against other serious health or safety hazards.
Contractor agrees that it shall discipline its employees who violate any OSHA
Standards or applicable Laws in accordance with its own policies and procedures.

(d)      Contractor represents that it will comply with all OSHA Standards
applicable to the Work, including those requiring pre-employment testing of
employees, such as but not limited to, pulmonary testing, blood testing, urine
testing, hearing testing, respirator fit testing, drug screening, and/or
applicable medical surveillance testing.

(e)      Contractor shall fully comply with its safety programs and/or any Site
specific safety plans which Owner has reviewed and accepted.

(f)      Within *** of a request, or as soon as possible, and to the extent
permitted by applicable Law, Contractor shall provide copies of any and all
training for its employees concerning any safety and health standard, any
substantive or technical training requirement of the job or the results of any
occupational testing to Owner.

24.3    Worksite Safety.

 

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(a)      Contractor shall take all reasonable precautions for the safety of, and
shall provide reasonable protection to prevent damage, injury or loss to Persons
and property resulting from the Work, including:

    (i)      Contractor employees, Subcontractors and other Persons performing
the Services and all Persons who may be affected by the performance of the
Services;

    (ii)     the Equipment and Owner Equipment to be incorporated into the
Facility, whether in storage on or off the Site or under the care, custody or
control of Contractor or Subcontractors; and

    (iii)    other property at or adjacent to the Site, including trees, shrubs,
lawns, walks, pavements, roadways, structures and utilities.

(b)      Contractor shall give notices and shall comply with applicable Laws
bearing on safety of persons or property or their protection from damage, injury
or loss.

(c)      Contractor shall be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection with the Work.
Contractor shall erect, maintain or undertake, as required by existing
conditions and the performance of the Agreement, all reasonable safeguards for
the safety and protection of Persons and property, including posting danger
signs and other warnings against hazards, promulgating safety regulations, and
notifying owners and users of adjacent sites and utilities. Those precautions
may include providing security guards.

(d)      Contractor agrees to provide to Owner the name, title, and phone number
of its emergency contact person prior to the commencement of the Services.

(e)      Within *** of its occurrence and in addition to reporting to Government
Authorities as required by applicable Law, Contractor shall notify Owner in
writing of any incident, injury or illness experienced by a Contractor employee
in the performance of any of the Services or on any part of Owner’s premises or
lands, and shall provide copies of the OSHA 101 and OSHA 200 or 300 log entry
for such incident, injury or illness. Within one week of the incident, injury or
illness, Contractor shall provide a preliminary written report of the incident,
injury or illness and the measures to prevent a similar occurrence in the
future. Owner has the right to request a final report, which Contractor shall
provide within one week of Owner’s request. All such reports shall be in
accordance with Owner’s policies and procedures. For all accidents which cause,
or nearly cause, death, serious bodily injury or property damage, Contractor
shall immediately notify Owner’s Project Director and Owner’s health and safety
representative by telephone or messenger, giving full details and statements of
any witnesses.

(f)      Upon request from Owner, Contractor shall provide an OSHA log listing
injuries or illnesses sustained by Contractor employees during the *** preceding
the request in any of Owner’s process areas subject to Owner’s process safety
management standard, 29 C.F.R. § 1910.119, as provided to Contractor.

24.4    Dangerous Materials.    When the use or storage of explosives or other
dangerous materials or equipment or unusual methods are necessary for the Work,
Contractor shall exercise utmost care and carryon its activities only under the
supervision of properly qualified personnel. Contractor shall notify Owner’s
Project Director prior to bringing any explosives onto the Site.

 

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24.5    Loading.    Contractor shall not load or permit any part of the
Equipment or Owner Equipment to be loaded at the Site so as to endanger the
safety of Persons or property.

24.6    Cooperation in Governmental Investigation.    Contractor and its
Subcontractors of whatever tier shall assist Owner in responding to requests by
any Government Authority for information in connection with inspections or
investigations of Owner relating to the Work involving Contractor or its
Subcontractors of whatever tier performed for Owner, on Owner’s property,
involving Owner’s employees, equipment or processes. Within *** of the request,
or upon such other reasonable time as agreed by the Parties, Contractor shall
make its employees available at the Site for interviews and shall produce copies
of any documents relevant to the investigation to Owner. Except as prohibited by
Law, Contractor shall promptly inform Owner of inspections and investigations on
Contractor’s property, and of subpoenas, document requests, requests for
information, deposition notices, discovery requests, or similar requests by any
Government Authority, concerning Owner, the Work, or any accidents, injuries,
illnesses or claims resulting from the Work.

24.7    Audit.    To the extent permitted by applicable Law, Owner shall have
the right to review and copy all of Contractor’s documents that relate to safety
and health at the Site, including Contractor’s safety and health programs,
safety and health training records, OSHA recordkeeping forms (such as 101, 200,
300 and 301), any incident report or first report of injuries form and any
industrial hygiene monitoring test results.

 

25.

QUALIFICATIONS AND PROTECTION OF ASSIGNED PERSONNEL

25.1    Contractor’s Personnel.    Contractor shall comply in all respects with
all applicable labor and immigration Laws that may impact Contractor’s Work
under this Agreement, including the Immigration Reform and Control Act of 1986
and Form I-9 requirements. Without limiting the generality of the foregoing,
Contractor shall perform all required employment eligibility and verification
checks and maintain all required employment records. Contractor acknowledges and
agrees that it is responsible for conducting adequate screening of its employees
and agents prior to starting the Work. By providing an employee or Subcontractor
under this Agreement, Contractor warrants and represents that it has completed
the Screening Measures with respect to such employee or Subcontractor and that
such Screening Measures did not reveal any information that could adversely
affect such employee’s or Subcontractor’s suitability for employment or
engagement by Contractor or competence or ability to perform duties under this
Agreement. If in doubt whether a suitability, competence or ability concern
exists, Contractor shall discuss with Owner the relevant facts and Owner will
determine, in its sole discretion, whether such Person should be allowed to
perform the Work. Owner, in its sole discretion, shall have the option of
barring from the Site any person whom Owner determines does not meet the
qualification requirements set forth above. In all circumstances, Contractor
shall ensure that the substance and manner of any and all Screening Measures
performed by Contractor pursuant to this Section conform fully to applicable
Law. Contractor shall supervise, coordinate and direct the Work using
Contractor’s best skill, judgment and attention. Owner shall have the right to
bar from the Site any Person employed or engaged by Contractor or Subcontractor
who engages in misconduct or is incompetent or negligent while on the Site or
while performing the Services, or whom Owner has previously terminated for cause
or otherwise dismissed or barred from the Site. Upon request of Owner,
Contractor shall immediately remove those Persons to whom Owner objects from the
Site and shall not allow the further performance of the Services by those
Persons. In addition, if Contractor learns of any such misconduct, incompetence
or negligence independent of Owner’s objection, Contractor shall remove such
Persons from the Site, shall not allow any further performance of the Services
by such Persons

 

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and shall promptly notify Owner of such misconduct, incompetence or negligence
and the actions taken by Contractor as a result thereof. In either such event,
any cost for replacement of such Persons shall be at Contractor’s expense.

25.2      Drug and Alcohol Testing.    Neither Contractor nor its Subcontractors
shall in any way use, possess, or be under the influence of illegal drugs or
controlled substances or consume or be under the influence of alcoholic
beverages during the performance of the Services. Any person (whether employed
or retained by Contractor or any Subcontractor or otherwise) under the
influence, or in possession of, alcohol, any illegal drug, or any controlled
substance, will be removed from the Site and, subject to Owner’s fitness for
duty program requirements, shall be prevented from performing any future
Services at the Site or elsewhere related to the Project. Contractor shall have
in place a drug testing program meeting the requirements of all applicable Laws
and Owner’s Drug and Alcohol Testing Policy (MICCS Substance Abuse Program,
dated as of July, 2007) attached hereto as Exhibit J, as such policy may be
updated by Owner from time to time generally for its contractors, and shall
furnish to Owner proof of compliance with such regulations and policies,
including a copy of Contractor’s drug and alcohol testing plan and an affidavit
stating that Contractor is in compliance, and will remain in compliance, with
such regulations and policies for the duration of this Agreement. Upon request,
and to the extent permitted by law, Contractor will furnish Owner copies of the
records of employee drug and alcohol test results required to be kept by Law.
Contractor will indemnify and hold harmless Owner from any and all liability for
(a) Contractor’s or any Subcontractor’s personnel who fail a drug or alcohol
test given under any Government Authority regulations, and (b) any claims made
by a Contractor’s or Subcontractor’s employee resulting from removal from the
Site as provided in this Article. If Contractor fails to comply with these
regulations while performing under this Agreement, such noncompliance will be
deemed a breach of this Agreement, and Contractor shall be liable for such
breach, as well as for all direct damages arising out of such noncompliance.

25.3      Training of Employees.      Contractor represents that all Contractor
and Subcontractor personnel have received all necessary training regarding
environmental, OSHA and any other matters required by applicable Laws and
relevant to the Work. Training on implementation of any additional environmental
mitigation measures appropriate for the Work will be specified by Owner before
commencement of the Services.

25.4       Compliance with Employment Laws; Policies.       All Services shall
be performed in accordance with all applicable Laws, including worker’s
compensation Laws, minimum and maximum salary and wage statutes and regulations,
and licensing Laws and regulations. Contractor shall fully reimburse Owner for
any and all fines or penalties of whatever kind or type that Owner may incur as
the result of and to the extent caused by Contractor’s failure to fully comply
with and fulfill any of the provisions of this Article. Contractor shall adopt
and utilize a subcontracting plan with its first-tier Subcontractors that
complies with 48 C.F.R. 52-219-9 for Small Diverse Suppliers (“SDS”). In
addition, Contractor shall (a) utilize SDS as required by law; (b) provide Owner
with a quarterly status report in the format set forth on Owner’s website at
www.duke-energy.com, or in such other format as is reasonably acceptable to
Owner; (c) enter the SDS data in any report on Owner’s website at
www.duke-energy.com and (d) provide Owner, its designated auditors and any
applicable government agency the right of access during normal business hours to
inspect any records related to SDS and compliance with this section.

25.5      Substitution.      Contractor reserves the right to change any of its
personnel performing Services. In such event, Contractor shall provide
replacement personnel meeting the requisite

 

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qualifications and who have equal or better capabilities and shall bear any
additional travel and living expenses associated with providing such replacement
personnel.

 

26.

RECORDS AND AUDIT

26.1      Technical Documentation.    Except to the extent applicable Laws
require a longer retention, Contractor shall maintain and shall cause its
Subcontractors to maintain all technical documentation relative to the Equipment
and the Owner Equipment for a period of *** after the Final Completion Date.
Contractor shall give Owner *** prior written notice before destroying or
disposing of any such documentation or records and a reasonable opportunity for
Owner during such period to make copies of any such documentation.

26.2      Accounting Records.    Except to the extent applicable Laws require a
longer retention, Contractor shall maintain and shall cause its Subcontractors
to maintain complete accounting records relating to all Work performed or
provided under this Agreement (which records shall include an estimate of
installed costs per component in accordance with FERC accounting requirements)
on a time and material, or reimbursement, basis in accordance with generally
accepted accounting principles in the United States, as set forth in
pronouncements of the Financial Accounting Standards Board (and its
predecessors) and the American Institute of Certified Public Accountants, for a
period of *** after the Final Completion Date, except that records relating to
Sales Taxes for such items must be retained for *** as specified in
Section 26.4. Contractor shall give Owner *** prior written notice before
destroying or disposing of any such accounting records and a reasonable
opportunity for Owner during such period to make copies of any such
documentation.

26.3      Owner’s Right to Audit.    For verification of *** claimed by
Contractor *** or for any Work performed or provided on a *** basis or for any
suspended, terminated, delayed or accelerated Services, Owner or a third party
auditor selected by Owner and reasonably acceptable to Contractor (which
acceptance shall not be unreasonably withheld or delayed) shall have the right
and access at reasonable times during normal business hours to examine and audit
Contractor’s records and books related to all those costs as is reasonably
necessary for Owner to verify such costs. As part of any such audit, Contractor
shall provide data in the appropriate electronic native file format (i.e.
Microsoft Word, Excel, Primavera, etc.) such that the data may be effectively
sorted, summed, and evaluated. However, Owner or Owner’s representative shall
have no right to audit records or books concerning the make-up of any agreed
upon lump sum amounts or fixed rates or multipliers. If any audit by the auditor
reveals charges or costs charged to or paid by Owner as costs or fees which are
not proper or exceed the rates or amounts permitted hereunder for any such
matters, then Owner shall be entitled upon demand for a refund from Contractor
of all such amounts, plus interest thereon from the date of payment by Owner
until the date of refund by Contractor at a rate of ***. Likewise, if any audit
or if any examination by any state or local taxing agency reveals additional
Sales Tax to be imposed upon Contractor for under collection of tax from Owner
on a taxable sale to Owner, then Contractor shall be entitled, upon demand, for
a refund from Owner of all such amounts, plus interest at the foregoing rate.

26.4      Sales Tax and Privilege Tax Records.    Contractor shall provide to
Owner all information and data Owner may from time to time reasonably request
and otherwise fully cooperate with Owner in connection with the reporting of
(a) any Sales Taxes and Privilege Taxes payable with respect to the Work and
(b) any assessment, refund claim or proceeding relating to Taxes payable with
respect to the Work. Contractor shall require its Subcontractors to provide to
Contractor all information and data Contractor may reasonably request for
purposes of complying with the preceding sentence and

 

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otherwise fully cooperate with Owner. Contractor shall retain, and shall require
Subcontractors to retain, copies of such documentation and all documentation
relating to purchases relating to the Work or the payment of Sales Taxes and
Privilege Taxes, if any, for a period of not less than *** from the Final
Completion Date. Contractor shall ensure that its contracts with all
Subcontractors effectuate the provision of this Section. Contractor’s and
Owner’s obligations under this Section shall survive the termination,
cancellation or expiration of this Agreement for any reason and shall last so
long as is necessary to resolve any and all matters regarding Taxes attributable
to the Work; provided, that if Owner requires Contractor to take action under
this Section at any time after the later of (i) *** after delivery of the piece
of Equipment or (ii) *** after completion of the particular item of Work, Owner
shall reimburse Contractor for all actual and reasonable expenses Contractor
incurs in taking those actions.

 

27.

TAXES

27.1      Employment Taxes.    Neither Owner nor its officers, employees,
agents, consultants or other representatives shall have any liability for any
payroll or employment compensation taxes, for Social Security taxes, or for
labor-related withholding taxes, for Contractor and its Subcontractors
(including manufacturers); or any of their employees; and Contractor agrees to
hold Owner, his Consultants, and his other contractors harmless against any
claim or liability therefore.

27.2      Sales and Use Taxes on Contractor Tools.    Contractor shall pay all
taxes on Contractor’s purchases of goods, tools, equipment, supplies and other
consumables which are not permanently incorporated into the Facility and which
remain the property of Contractor. Contractor shall also pay all taxes
attributable to Contractor’s construction equipment, temporary buildings and
other property used by Contractor in its performance of this Agreement.
Contractor shall pay those taxes when assessed, without claim against Owner for
reimbursement. Contractor shall impose a similar obligation on all
Subcontractors and shall ensure that no Subcontractor shall have any claim
against Owner for reimbursement of those taxes.

27.3      Sales and Use Tax on Equipment; Privilege Tax.   Notwithstanding the
above, the *** does not include monies for the payment of any sales and use
taxes on Equipment incorporated into the Facility. Contractor, on behalf of
itself and all of its Subcontractors (including manufacturers), is therefore
responsible for consulting with Owner on Equipment purchases and working with
Owner to obtain the best sales and use tax and privilege tax benefits for Owner.
Owner is currently authorized under the North Carolina General Statutes to
purchase certain Equipment exempt from the sales and use tax, but subject to the
privilege tax at a rate of ***. Owner will specifically identify property which
will be subject to the privilege tax. Owner will issue Form E-595E to Contractor
to support the exemption from the sales and use tax. Contractor shall register
with the state of North Carolina for payment of the privilege tax. Contractor
will issue Form E-595E to its suppliers to facilitate exempt purchases of
property subject to the privilege tax. As required by law, Contractor will
accrue the privilege tax on these purchases and remit the appropriate amount to
the state. Sales tax should be billed by the supplier on Contractor’s purchases
of property subject to the North Carolina sales tax. Owner shall reimburse
Contractor, *** for Contractor’s actual costs incurred in paying any sales and
use tax for which Contractor may become obligated to pay in connection with the
Equipment incorporated into the Facility.

(a)        Contractor, its Subcontractors, manufacturers and suppliers shall
make reasonable commercial efforts to purchase Equipment to minimize the tax,
but shall not be restricted from making out-of-state purchases of such
Equipment. Contractor shall use its commercially reasonable

 

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efforts to ensure that Owner is afforded the best sales/use and privilege tax
treatment by the State. Contractor shall use all reasonable efforts to ensure
that all out-of-state purchases made by Contractor and its Subcontractors
(including manufacturers) are shipped FOB the Facility (North Carolina) free of
Sales Taxes. Owner shall reimburse Contractor for all sales and use taxes and
privilege taxes paid by Contractor and its Subcontractors (including
manufacturers) upon written confirmation from Contractor that the items
purchased could not reasonably be purchased free of Sales Taxes.

(b)        Contractor agrees that it and its Subcontractors, suppliers, and
manufacturers will clearly identify on each original invoice covering the
purchase of Equipment, the amount of sales and use tax. Should additional
information and detail be required by Owner and the North Carolina Department of
Revenue to verify amounts paid for purchases of Equipment under this Agreement,
Contractor and its Subcontractors, suppliers, and manufacturers shall supply
such additional information and invoices in sufficient detail to verify:

(i)        That such Equipment was purchased free of State sales and use taxes;
or that for out-of-state purchases, the invoices indicate the amount of foreign
sales and use tax separately stated and paid;

(ii)       The privilege tax was accrued and remitted to the State of North
Carolina for such Equipment;

(iii)      The actual purchase prices of such Equipment;

(iv)      The date of delivery to the Site of such Equipment;

(v)       A description of the function of such Equipment; and

(vi)      The Federal Energy Regulatory Commission (FERC) Code identification
for such Equipment.

(c)        As a condition to Final Completion, Contractor shall provide Owner
with an affidavit that all invoices which include sales and use taxes or
privilege tax have been paid and that Contractor and all its Subcontractors,
suppliers, and manufacturers have no outstanding claims or expenses relating to
sales and use tax or privilege tax.

(d)        Both Parties shall provide to the other any documentation or
information requested in order to submit and obtain a refund of any taxes
erroneously paid as part of this Agreement. The Parties agree that any refunds
received shall belong to the Party which bore the economic burden of paying the
tax. The Parties’ obligations under this Section shall survive termination or
expiration of the Agreement.

27.4    State Property Taxes.    Contractor and Owner agree that Owner shall be
responsible for the filing requirements and payment obligations for all state
and local taxes on the Site and the Equipment incorporated into the Facility;
provided, that Contractor shall be responsible for the filing of property tax
returns and the payment of state and local property taxes on construction
equipment, tools and material which is not incorporated into the Facility and
which is owned, used or leased by Contractor to perform the Services. Owner and
Contractor acknowledge that construction equipment property tax costs are
included in the leasing costs included in the Contract Price. If Contractor owns

 

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construction equipment and leases such construction equipment to Owner,
Contractor shall remain responsible for the filing and payment of all property
taxes due on such construction equipment.

 

27.5

Tax Indemnification.

(a)      Except in cases where such tax assessment is the result of the Gross
Negligence or willful or wanton misconduct by Contractor, Owner shall defend,
reimburse, indemnify and hold Contractor harmless for all costs and expenses
incurred by Contractor as a result of Owner’s formal protest of any sales and
use taxes paid or assessed and property taxes paid or assessed on the Site or
the Equipment, or any other similar tax, whether local, state or federal,
including any litigation expenses in the event Owner decides to protest a sales
or use tax assessment. Owner shall not be responsible for any costs incurred by
Contractor necessary to substantiate or verify information for any tax audit
conducted in the normal course of business.

(b)      Except in the cased of Gross Negligence or willful or wanton misconduct
by Owner, Contractor shall defend, reimburse, indemnify and hold Owner harmless
for all costs and expenses incurred by Owner as a result of Contractor’s formal
protest of any employment Taxes, or any sales and use taxes and property taxes
paid or assessed on Contractor’s equipment or tools, or of any payroll or
employment compensation taxes, or Social Security taxes, or for labor-related
withholding taxes, or any other similar tax, whether local, state or federal for
Contractor; its Subcontractors (including manufacturers); or any of their
employees, paid or assessed, including any litigation expenses in the event
Contractor decides to protest the said employment, withholding, and similar
taxes.

27.6    Pollution Control Equipment Information.  Contractor shall supply Owner
with all reasonable information and cost analyses requested by Owner for
qualifying air, water or noise pollution control equipment for exemption from
sales and use taxes, property taxes and any other tax credits, refunds or
exemptions available to Owner. Contractor shall supply any further information
as requested by Owner to apply for a certificate from the North Carolina
Department of Environment and Natural Resources (DNHR) or other appropriate
Government Authority to qualify for the above exemptions.

 

28.

  DISPUTE RESOLUTION

28.1      Resolution by the Parties.  The Parties shall attempt to resolve any
claims, disputes and other controversies arising out of or relating to this
Agreement (collectively, “Disputes”) promptly by negotiation and mediation
between executives who have authority to settle the Dispute and who are at a
higher level of management than the persons with direct responsibility for
administration of this Agreement.

 

28.2

Arbitration Proceedings.

(a)      Demand for Arbitration.    If the Dispute has not been resolved by
negotiation within *** of the disputing Party’s initial notice (or such longer
period as the Parties may agree), the Parties shall fully and finally settle the
Dispute by binding arbitration. All arbitration proceedings shall take place in
Charlotte, North Carolina under the auspices of the American Arbitration
Association (“AAA”) in accordance with the AAA Construction Industry Arbitration
Rules then in effect (the “Rules”), and shall be governed by the Federal
Arbitration Act, 9 U.S.C. §§ 1-16. For all Disputes where the amount in
controversy is less than ***, the arbitration proceedings shall be conducted by
a single arbitrator selected in accordance with the Rules. For all Disputes
where the amount in

 

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controversy is at least ***, the arbitration proceedings shall be conducted by
*** selected in accordance with the Rules. No demand for arbitration shall be
made or permitted after the date when the institution of a civil action based on
the Dispute would be barred by the applicable statute of limitations or repose
of the State.

(b)      Equitable Remedies.    The procedures specified in this Article shall
be the sole and exclusive procedures for the resolution of Disputes between the
Parties arising out of or relating to this Agreement; provided, however, that a
Party may file a complaint in a court of competent jurisdiction on issues of
statute of limitations or repose or to seek injunctive relief, specific
performance, sequestration, garnishment, attachment, or an appointment of a
receiver. Preservation of these remedies does not limit the power of the
arbitrator(s) to grant similar remedies, and despite such actions, the Parties
will continue to participate in good faith in and be bound by the dispute
resolution procedures specified in this Article.

(c)      Award; Binding Nature.    The arbitrator(s)’ decision shall be by
majority vote and shall be issued in a writing and shall be final and binding
upon the Parties, and judgment may be entered on the award in any court of
competent jurisdiction. The cost of all arbitrators shall be borne equally by
the Parties.

(d)      Discovery.     Either Party may apply to the arbitrators for the
privilege of conducting discovery. The right to conduct discovery shall be
granted by the arbitrators in their sole discretion with a view to avoiding
surprise and providing reasonable access to necessary information or to
information likely to be presented during the course of the arbitration,
provided that, where the amount in controversy is at least ***, the Parties
shall have the rights to discovery set forth in Rules 26 through 36 of the
Federal Rules of Civil Procedure.

28.3      Continuation of Work.    Pending the final resolution of any Dispute,
Contractor shall proceed diligently with the performance or provision of the
Work and its other duties and obligations without diminution of effort and Owner
shall continue to compensate Contractor as set forth under this Agreement,
including payment to Contractor provisionally ***

28.4      Confidentiality.    Except as may be required by applicable Law, each
Party shall treat the existence, content or results of any settlement discussion
pursuant to this Article 28 or arbitration as Confidential Information of the
other Party in accordance with Section 20.1 and shall use commercially
reasonable efforts to cause any arbitrator(s) to keep such information
confidential.

29.        MISCELLANEOUS PROVISIONS

29.1      Governing Laws.    This Agreement shall be governed by and construed
in accordance with the laws of the State, without reference to its conflict of
laws principles.

29.2      Entire Agreement.    This Agreement represents the entire agreement
between Owner and Contractor with respect to the subject matter hereof, and
supersedes all prior negotiations, binding documents, representations and
agreements, whether written or oral, with respect to the subject matter hereof.
This Agreement may be amended or modified only by a written instrument duly
executed by each of the Parties.

29.3      Successors and Assigns.    Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by Contactor without the prior
written consent of Owner, and any attempt

 

64

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to do so shall be void, except that the whole of this Agreement may be assigned
by Contractor upon prior written notice to Owner (a) to a parent company or a
wholly-owned Affiliate, provided that Contractor shall not be relieved of any of
its obligations hereunder, or (b) to a transferee who acquires all or
substantially all of the assets of Contractor and whose market capitalization
exceeds *** and whose long term senior unsecured, uninsured debt is rated at
least Baa3 by Moody’s or BBB- by Standard & Poor’s at the time of the transfer,
or whose creditworthiness is otherwise reasonably satisfactory to Owner,
provided that, in each such case, such assignee demonstrates to the reasonable
satisfaction of Owner that it is capable of fulfilling all of the obligations of
Contractor hereunder, including the grant of the licenses provided herein.
Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the Parties and their respective successors and
assigns. Owner, including any Party constituting Owner, may assign this
Agreement or any benefit, interest, right or cause of action arising under this
Agreement to any Person with notice to, but without the consent of, Contractor
under the following circumstances: (a) the assignee is an Affiliate or
subsidiary of the Owner and the assignee has a credit rating that is at least
S&P BBB-, Moody’s Baa3 or whose creditworthiness is otherwise reasonably
satisfactory to Contractor, (b) the assignee has acquired ownership of, or the
right to operate, the Facility for which an assignment is being made and the
assignee’s senior unsecured debt has a credit rating of S&P BBB-, Moody’s Baa3,
or (c) such assignee is otherwise reasonably acceptable to Contractor. Owner (or
the assigning Party that constitutes a part of Owner, as applicable) shall
obtain written assurances from the assignee of limitation of and protection
against liability following the proposed transfer at least equivalent to that
afforded Contractor and Subcontractors hereunder. Any transfer contrary to this
Section shall make the assigning Party constituting Owner the indemnitor of
Contractor against any liabilities incurred in excess of those that would have
been incurred had no such transfer taken place.

29.4      No Third Party Beneficiaries.    Except as expressly set forth in this
Agreement, the provisions of this Agreement are intended for the sole benefit of
Owner and Contractor, and there are no third party beneficiaries. No reference
herein to any other Person shall restrict in any way the ability of the Parties
to amend or modify this Agreement from time to time in their sole and absolute
discretion.

29.5      Rights Exclusive.    The rights and remedies of Owner and the
liabilities of Contractor as set forth in this Agreement shall be the exclusive
rights, remedies and liabilities of the Parties.

29.6      No Waiver.    No course of dealing or failure of Owner or Contractor
to enforce strictly any term, right or condition of this Agreement shall be
construed as a waiver of that term, right or condition. No express waiver of any
term, right or condition of this Agreement shall operate as a waiver of any
other term, right or condition.

29.7      Crisis Response.    Notwithstanding anything to the contrary herein,
any actions taken or authorized by Owner in a good faith belief that such
actions are necessary to ensure safe operation of the Facility or respond to an
emergency or abnormal condition at the Facility shall not constitute a breach
hereof or absolve Contractor of any of its obligations hereunder.

29.8      Survival.    Article 14 (Indemnification), Article 17 (Limitation of
Liability), Article 19 (Intellectual Property), Article 20 (Confidential
Information), Article 27 (Taxes), Article 28 (Dispute Resolution), Article 29
(Miscellaneous Provisions) and all other Sections providing for

 

65

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

indemnification or limitation of or protection against liability of either Party
shall survive the termination, cancellation, or expiration of this Agreement.

29.9      Severability.    If any provision of this Agreement or the application
of this Agreement to any Person or circumstance shall to any extent be held
invalid or unenforceable by a court of competent jurisdiction or arbitrators
under Article 28, then (i) the remainder of this Agreement and the application
of that provision to Persons or circumstances other than those as to which it is
specifically held invalid or unenforceable shall not be affected, and every
remaining provision of this Agreement shall be valid and binding to the fullest
extent permitted by Laws, and (ii) a suitable and equitable provision shall be
substituted for such invalid or unenforceable provision in order to carry out,
so far as may be valid and enforceable, the intent and purpose of such invalid
or unenforceable provision.

29.10    Notices.    Any notices, demands or other communication to be sent or
given hereunder by either Party shall in every case be in writing and shall be
deemed properly served if (a) delivered personally to the recipient, (b) sent to
the recipient by reputable express courier service (charges paid) or (c) mailed
to the recipient by registered or certified mail, return receipt requested and
postage paid. Date of service of such notice shall be (i) the date such notice
is personally delivered, (ii) three (3) days after the date of mailing if sent
by certified or registered mail, or (iii) one (1) day after date of delivery to
the overnight courier if sent by overnight courier. Such notices, demands and
other communications shall be sent to the addresses indicated below or such
other address or to the attention of such other person as the recipient has
indicated by prior written notice to the sending party in accordance with this
Section:

 

If to Owner:

 

Duke Energy Carolinas, LLC

  Mail Code EC11T   P.  O.  Box 1006   Charlotte, NC 28201-1006   Attn:    ***  
Facsimile No: ***

with a copy to:

  Duke Energy Carolinas, LLC   Mail Code EC11X   P.O.  Box 1006   Charlotte, NC
28201-1006   Attn:    ***   Facsimile No: ***   Duke Energy Carolinas, LLC  
Mail Code EC03T   526 South Church Street   Charlotte, NC 28202   Attn:    ***  
Facsimile No: ***

 

66

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If to Contractor:

 

Shaw North Carolina, Inc.

Attn: ***

100 Technology Center Drive

Stoughton, MA 02072

Facsimile No.: ***

Telephone No.: ***

 

Shaw North Carolina, Inc.

Attn: ***

128 South Tryon Street, Suite 600

Charlotte, NC 28202

Facsimile No.: ***

Telephone No.: ***

29.11    Vienna Convention.      The Parties hereby expressly agree to exclude
and disclaim the application of the provisions of the United Nations Convention
on Contracts for the International Sale of Goods (also referred to as the Vienna
Convention), and any successor convention or legislation, to this Agreement.

29.12    Counterparts.    This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank]

 

67

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
by its duly authorized representative as of the date first above written.

 

DUKE ENERGY CAROLINAS, LLC

   

SHAW NORTH CAROLINA, INC.

By:

 

/s/ James L. Turner

   

By:

 

/s/ Fred Buckman

Name:

 

James L. Turner

   

Name:

 

Fred Buckman

Title:

 

President & COO, U.S. Franchised Electric & Gas

   

Title:

 

President Power

 

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

EXHIBIT A-1

SCOPE OF WORK

***

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

EXHIBIT A-1

Attachment 1

***

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

EXHIBIT A-1

Attachment 2 – Division of Responsibility (DOR)

***

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

EXHIBIT A-1

Attachment 3

***

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

EXHIBIT A-1

Attachment 4

***

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

EXHIBIT A-1

Attachment 5 – List of P&ID

***

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

EXHIBIT A-1

Attachment 6 – Equipment List

***

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

EXHIBIT A-1

Attachment 7 – Electrical One Lines

***

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

EXHIBIT A-1

Attachment 8 – Raw Water Analysis

***

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

EXHIBIT A-1

Attachment 9 – Gas Analysis

***

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

EXHIBIT A-1

Attachment 10 – Basis of Design - Mechanical

***

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

EXHIBIT A-1

Attachment 11 – General Electrical Requirements

***

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

EXHIBIT A-1

Attachment 12 – General Instrumentation & Control Requirements

***

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

EXHIBIT A-1

Attachment 13 – General Civil/Structural Requirements

***

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

EXHIBIT A-1

Attachment 14 – Assumptions and Clarifications

Dan River Project

***

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

EXHIBIT A-2

***

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

EXHIBIT A-3

SCHEDULE OF DRAWINGS

***

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

EXHIBIT A-4

EXHIBIT A-4

Site Description

Project Number: 133291

Dan River CTCC Project

 

Page 1

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

Exhibit A-4

REV 0

February 17, 2010

 

LOCATION:

The station is located in Rockingham County, in North Carolina, on S Edgewood
Road, approximately 135 miles northeast of Charlotte.

DIRECTIONS:

From Charlotte, NC: Take S EdgewoodI-85 N to Hwy 29 N (US 70) in Greensboro; Hwy
29N (US 70) to Eden Exit 153 (Hwy 14). Turn left on Hwy 14; Turn right onto
Stadium Drive; Turn right on S Edgewood Road. Dan River CTCC project is on S
Edgewood Road at the entrance gate to Dan River Steam Station.

ADDRESS:

Dan River Steam Station

900S Edgewood Road

Eden, NC 27288

Phone: (704)-623-0100

Dan River CTCC Project

864 S Edgewood Road

Eden, NC 27288

EXISTING SITE CONDITIONS

 

•  

The existing condition of paved plant roads and the main plant entrance road
shall be considered deteriorated.

 

•  

The Contractor may use all plant roadways to move materials as required. Any
material transports required that will involve the use of roads within the
existing station fenceline will require prior approval from station management
and such approval shall not to be unreasonably withheld.

 

•  

The grounds around the Station are currently partially bounded by a chain link
fence.

 

•  

Contractor to provide temporary fencing associated with the Project that will
isolate the Project from the existing plant, as identified on Attachment A-3 in
Exhibit A-1 Site Plan of the Agreement.

 

•  

The Contractor shall not at any time block traffic flow in or out of the main
entrance to the Station via S Edgewood Road without prior written approval from
the Owner’s Project Director.

 

•  

Construction laydown and contractor parking locations for use by the Contractor
are identified on Attachment A-3 in Exhibit A-1 of the Agreement. Contractor is
allowed to modify roadway leading to construction warehouse and laydown areas to
provide egress.

 

•  

Contractor to assure the existing ash sluice lines operations are not impacted
by construction activities for the duration of the Project.

 

•  

Existing street lights along the Project Gate entrance to the existing facility
will have to be removed for construction of the project. Contractor to assure
lighting at the Project Gate will be adequate for traffic flow through the
Project Gate entrance.

 

•  

Access to the Site for the Contractor will be via a gated entrance on S Edgewood
Road, established by the Contractor. The Contractor will provide a guard to
monitor and operate the Project gate during normal construction hours as defined
by the Contractor. Staffing of the gate outside of the normally defined
construction hours will require approval of the Owner’s Project Director with
prior notification of extended hours and such approval not be unreasonably
withheld. If required, the established gate along S Edgewood Road may be
modified by the Contractor to account for access of both union and non-union
employees. Union and non-union parking shall be segregated by the Contractor.

 

•  

Requests for special deliveries to the Contractor through the Station’s main
entrance gate are required in advance and are subject to the Owner’s approval
and such approval shall not be unreasonably withheld.

 

•  

The Contractor understands that other contractors executing work at the Station
not related to the CTCC Project will also use S Edgewood Road during the
Project.

 

•  

Attachment A-3 in Exhibit A-1 of the Agreement illustrates areas that will be
made available to the Contractor for parking, office space, laydown, and
construction activities. The Contractor may request additional areas to use in
addition to those illustrated on this attachment. Access to these areas is
subject to the approval of the Owner’s Project Director. Denial of access by the
Owner to the additional areas requested shall not provide grounds for issuance
of a Change Order by the Contractor.

 

Page 2

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

Exhibit A-4

REV 0

February 17, 2010

 

•  

Digital pictures to document the existing conditions of the site at the start of
the LNTP November 2009 construction activities are located in Citadon under the
following path: Dan River CTCC/Document Management/Project
Management/Photographs/Aerial photographs/Jan2010.

 

•  

A city of Eden pumping station is located at the end of the road running
adjacent to laydown area #1 (old ball field). The Contractor must allow the city
of Eden access to the pumping station.

STATION ACTIVITIES POTENTIALLY INTERACTING WITH THE CTCC PROJECT:

Table A4-1 provides a summary of other Station activities that may potentially
impact the CTCC Project during the implementation phase. Both the Owner and the
Contractor will demonstrate cooperative efforts to minimize the impact of these
activities with respect to the Contractor’s Site construction or commissioning
activities.

SECURITY THREAT LEVELS

The Contractor shall be aware of the Security Threat Level system that is
employed by the Owner at Dan River Steam Station.

SECURITY PLAN DURING CONSTRUCTION

Attachment A-3 in Exhibit A-1 of the Agreement illustrates temporary fencing to
be installed during the construction phase. The intent is to isolate the
Contractor’s site activities as much as possible from the day to day operations
of the Station and other Owner contractor activities. The Contractor will be
permitted to work inside the construction fence as required. The Contractor
shall be held accountable for controlling access through the Project Gates while
they are being used for either employee or material movement. The Contractor
shall be held accountable for closing and locking the Project Gates after each
use. Project Gates mean those gates under the control of the Contractor for the
ingress and egress of personnel, construction equipment or material to the
Project site. Temporary relocation of the construction fencing by the Contractor
is acceptable to provide access for specific construction activities. The
Contractor shall permit Station employees access into the construction areas to
commission, operate, and maintain equipment as necessary.

 

Page 3

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

Exhibit A-4

REV 0

February 17, 2010

 

Table A4-1

Other Station Activities Potentially Interacting with the Dan River CTCC Project

 

Innage/Outage    Unit    Approximate Length of
Outage    Remarks

***

          

No Interacting Activities

***

  

Unit 1

  

1 Week

  

General Maintenance Outage/Boiler Inspection

    

Unit 2

  

1 Week

  

General Maintenance Outage/Boiler Inspection

            

Unit 3

  

1 Week

  

General Maintenance Outage/Boiler Inspection

***

          

No Interacting Activities

***

  

Unit 3

       

General Maintenance Outage/Boiler Inspection

     

***

          

No Interacting Activities

***

  

Unit 1

       

Retirement

    

Unit 2

       

Retirement

    

Unit 3

       

Retirement

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

EXHIBIT B

Schedule (including Key Contractor Schedule Milestones)

***

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

EXHIBIT C

***

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

EXHIBIT D

EXHIBIT D

Contractor Permits and Utilities

Job Number: 133291

Dan River CTCC Project

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

Exhibit D

REV 0

February 11, 2010

 

Type of Contractor Permit    Comments

Construction Permits

  

Potential permits include demolition, burning, blasting, and fueling. Contractor
to check with Rockingham County for building permit requirements.

 

Temporary Construction Power Supply Inspection

  

Contractor to verify inspection requirements with Rockingham County.

Over the road hauling permits for Station/Dan River CC plant material

  

 

Required for material delivered to the station. (Contractor to plan for two week
minimum for notification and approval from DOT.)

 

Over the road hauling permits for Contractor equipment

  

 

Contractor construction equipment will be permitted by Contractor. Contractor to
plan for *** minimum for notification and approval from DOT.

 

Access Road Issues (such as repairs mailboxes, the like, if required

  

The scope of this item may not require a permit. Planning and scoping during and
after construction is needed to determine responsible party for repair and cost
estimating.

FAA Notification for Temporary Structures or Equipment

  

Permit required for any crane exceeding a height of *** above ground level NOTE:
FAA permitting for the stack to be by Owner, if required.

Erosion Control

  

 

Any necessary revisions should be filed a minimum of *** before permit need
date.

 

 

Stormwater Management Plan

 

    

Boiler Inspections; Required for Aux Boiler

 

  

 

Permit/certification required prior to startup of boiler.

 

Elevators

  

Contractor to obtain necessary permits for installation and inspection of all
elevators installed by Contractor Elevator Subcontractor

Temporary Buildings

  

Define layout and building and discuss permitting requirements with the County.
Contractor to obtain any permits necessary for installation and occupancy of
temporary buildings.

Administrative Building - Permanent Structure for Duke

  

Define layout and building and discuss permitting needs with the County.
Contractor to obtain any permits necessary for installation and occupancy of
buildings.

 

City Water Connections

  

Contractor must meet applicable State and local plumbing codes for tie in of the
drinking water system and its ancillary parts and any potable water lines
installed by the Contractor. Contractor is not responsible for any existing
potable water lines beyond the Contractor tie in points.

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

Type of Contractor

Utilities and Equipments

   Description

Potable Water

  

Drinking water and ice will be provided by Contractor for all construction
personnel working on the Project including all Subcontractors. This will begin
with site mobilization and continue throughout construction. Contractor may use
bottled water in office complex, all field water kegs may be filled from the
station potable water supply. Contractor will consider a tank with pump for
construction facilities. Contractor to check with county to determine permit
needs, if any.

Toilet Facilities

  

 

Toilet Facilities will be leased-portable units and will be provided by the
Contractor. Port-a-jons may be provided by either the Contractor or
Subcontractor as required for their own personnel. Contractor facilities will be
in place during mobilization, the number and placement of units will be adjusted
to suit staffing levels as the project progresses. Currently there are no plans
to tie the Construction facilities into the station sanitary sewer system. Pump
and haul permit is not required.

 

Fuel for Contractor equipment.

  

 

Fuel for equipment will be the responsibility of the equipment owner/leaser. For
Contractor equipment, a double walled gasoline fuel tank (no more than 500
gallons), located within a temporary berm, will be maintained for small
equipment fueling. Larger equipment will be fueled directly from a fuel delivery
truck. Oil spill cleanup material (oil dry, absorbent pads, etc.) will be
available for spill cleanups resulting from refueling activities.

 

Construction Power Distribution (From Owner – furnished points of service).

  

 

Contractor is responsible for distribution of temporary construction power
including hook-up of Contractor distribution system to secondary side of Owner’s
transformer. Owner will provide electric power, supply transformer and provide
hook-up of primary side of transformer. Temporary power permit will be discussed
with the county.

 

Telephone and Data Communications

  

 

Contractor will provide voice data communication equipment.

 

Scrap Metal Disposal

  

 

Contractor shall dispose of all scrap metal as a result of the erection of the
Facility.

 

Waste Disposal

  

 

Contractor and Subcontractors will provide for their own general trash removal
(excludes Hazardous Wastes).

 

Railroad Tie Disposal

  

 

Contractor shall remove all railroad ties it brings onto the Project site.

 

Compressed Air

  

 

Contractor compressed air will be provided by portable gas, diesel or electric
compressors starting with a single compressor as needed with additional units
added as required. All Subcontractors will be responsible for supplying their
own compressed air. Gas or diesel generators will require the Contractor or
Subcontractors as the case may be to notify the State as insignificant sources
listed in the air permit.

 

Construction (Service) Water

  

 

Contractor will provide haulage of water received from designated location
provided by the Owner (fire hydrants) Contractor will provide piping, storage
and pumping for temporary service water needs.

 

“Raising” utilities on primary access roads

  

 

Contractor will work with Rockingham County and local utility companies to
minimize the need for raising utilities crossing or alongside access roads.

 

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

EXHIBIT E

EXHIBIT E

Owner Permits and Utilities

Dan River CTCC

Job Number: 133291

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

Exhibit E

Rev 0

 

Type of Owner Permit    Comments

Minor Source Air Permit Modification

  

 

Permit received

 

FAA Notification For New Stacks

  

 

Not applicable- stacks shorter than required height for FAA notification (200’).

 

Stormwater Management Plan

  

 

Permit received

 

Isolated Wetlands Permit

  

 

Permit received

 

NPDES Permit Modification

  

Permit received. Revision required changing waste water from discharge into
existing primary ash basin to discharge into existing plant circulating cooling
water outfall.

ATC (Authorization To Construct) (Wastewater Treatment)

  

ATC required for: 1) Neutralization tank (from demin system, 2) Main Yard Sump,
and 3) Septic Tank (assuming routing to ash basin). Design requirements for
these systems must be supplied by Contractor in sufficient time to secure the
necessary permits to support construction.

Conditional Use Permit

  

 

Permit received

 

Lighting Requirements for Stack and HRSG

  

 

Aviation lighting not required for stack or HRSG.

 

      

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

Type of Owner

Utilities or Equipment

   Description

Power for Contractor Equipment and Tools (Construction Electrical Power)

  

Owner will provide power tap. Contractor to cover the costs of auxiliary power
used during construction, provided power feed does not come from retail service
line. Contractor to provide construction power requirements (KVA and voltage).
Tap location and transformer location to be mutually agreed upon by Shaw and
Duke. All distribution from provided taps to be provided by Shaw.

Construction (Service) Water

  

Initially Owner will provide a source for Shaw to fill tanker truck with service
water. Tap into existing service water may be provided later.

Spoil Disposal Areas

  

Shaw will place soil and rock spoils on-Site in areas identified by Owner. Shaw
will dispose of concrete and asphalt off- Site.

Asbestos and Lead Paint Abatement/Disposal

  

Owner is responsible for all asbestos and lead paint abatement and disposal.

Fuel Oil Contaminated Soil/Rock/Concrete

  

Owner is responsible for removal and disposal of contaminated
soil/rock/concrete.

Railroad Ties Disposal

  

Owner is responsible for disposal of all railroad ties removed if rail upgrade
work is required. Contractor is responsible for stockpiling any railroad ties
used during construction at an on-Site location to be determined by Owner (if
necessary). Contractor provided railroad ties will be handled by Contractor and
will be removed after construction is complete.

Parking, Laydown, Construction Trailer Areas

  

Owner will provide space onsite for use by the Contractor for construction
services including parking, laydown, and construction trailers. Contractor is
responsible for preparing and maintaining (grading, paving, etc.) these areas.

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

EXHIBIT F

 

LOGO [g58915g06g09.jpg]  

J.O./W.O. NO.: 133291

 

PAGE: 1 of 1

  REVISION: 0  

CLIENT

  Duke Energy Carolinas, LLC       CONTRACTOR’S KEY PERSONNEL  

PROJECT

  Dan River Combined Cycle Project       Exhibit F  

LOCATION:

  Rockingham County North Carolina

Contractor’s Key Personnel will be responsible for supervising the performance
of Contractor’s obligations under this Agreement. Any replacement of the key
personnel listed below shall be subject to the prior written approval of Owner
which the Owner shall not unreasonably withhold or delay. Contractor’s Project
Manager shall act as Contractor’s liaison with Owner and shall have the
authority (a) to administer this Agreement on behalf of Contractor, (b) to
oversee and direct the execution of the responsibilities of Contractor under
this Agreement, and (c) to bind Contractor as to the day-to-day project
management operations under the Agreement.

 

Project Position   Dan River Lead   Buck Lead Project Manager  

***

 

***

Assistant Project Manager  

***

 

***

Construction Manager  

***

 

***

Project Engineering Manager  

***

 

***

Lead Engineer Electrical  

***

 

***

Lead Engineer Piping  

***

 

***

Lead Engineer Mechanical  

***

 

***

Lead Engineer I&C  

***

 

***

Lead CSA Engineer  

***

 

***

Subcontracts Manager – Field  

***

 

***

Procurement Manager  

***

 

***

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

EXHIBIT G-1

List of Approved Subcontractors

***

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

EXHIBIT G-2

List of Subcontractors Under ***

***

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

EXHIBIT H-1

***

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

EXHIBIT H-2

***

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

EXHIBIT I

***

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

EXHIBIT I

Attachment 1

***

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

EXHIBIT J

EXHIBIT J

Owner’s Drug and Alcohol Testing Policy

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

LOGO [g58915g15z37.jpg]

     

526 South Church Street

     

Charlotte, NC 28202

           

Mailing Address:

     

EC11T / P.O. Box 1006

     

Charlotte, NC 28201-1006

     

 

***

May 7, 2009

 

To:

   All Duke Energy Suppliers participating in the Duke Energy Contractor Fitness
for Duty Program

Subject:

   Revision to Duke Energy Contractor Fitness for Duty Program

For the purpose of continually enhancing our safety culture and aligning
employee and contractor approaches, Duke Energy is making the following changes
to our Contractor Fitness for Duty Program:

Violations (invalid status) *** resulting from Duke Energy’s random drug/alcohol
testing program will result in a *** removal from Duke Energy property. A drug
violation includes a positive drug test or having two consecutive diluted test
results without a valid medical explanation. An alcohol violation includes any
alcohol confirmation test of *** or greater. An individual so impacted may
return to work on Duke property after the one year period and completion of the
required SAP process.

A subsequent violation, at any time, will result in a permanent ban from Duke
Energy property.

A refusal or adulteration/sample substitution or alcohol consumption/illegal
drug use during work time will result in a permanent ban from Duke Energy
property.

Please do not hesitate to contact *** you have any questions or concerns about
this program.

Sincerely,

***

Generation Strategic Sourcing

Duke Energy Corporation

***

www.duke-energy.com

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

Exhibit J

 

Duke Energy Regulated Generation

Contractor Substance Abuse Prevention and Drug Testing Policy

 

I.

Objective

To provide a safe and healthful work environment, Duke Energy is committed to
maintaining drug and alcohol free work places. Therefore, all contractors and
their subcontractors must adhere to the following “Duke Energy -- Regulated
Generation, Contractor Substance Abuse Prevention and Drug Testing Policy”.

Duke Energy Regulated Generation has developed this program to provide the
following benefits:

 

q

Set minimum standards for contractor substance abuse programs.

 

q

Improve construction safety performance.

 

q

Provide a safe work environment for Duke Energy employees and their contractors.

 

II.

Overview

A number of existing and proposed programs both nationally and regionally have
been consulted in the development of this policy. The result is a core program,
which can be supplemented if desired, but forms a common basis for establishing
substance abuse programs. The Metropolitan Indianapolis Coalition for
Construction Safety (MICCS) and the Construction Owners Association of the
Tri-State (COATS) programs have been determined to meet Duke Energy’s minimum
requirements. All contractors working for Duke Energy - Regulated Generation in
the Midwest (Indiana, Ohio & Kentucky) must participate in either the MICCS or
COATS Substance Abuse Prevention and Drug Testing Program. All contractors
working for Duke Energy Regulated Generation in the Carolinas (North and South
Carolina) must participate in the MICCS program. (Attachment I -- MICCS).
(Attachment II -- COATS). This includes:

 

q

Contractors must maintain a substance abuse program consistent with the MICCS
and/or COATS requirements and submit it for review and approval to verify it
meets their minimum requirements.

 

q

Contractors must register their employees and subcontractors with MICCS/COATS.
Substance abuse testing completed as part of a contractor’s substance abuse
program must be submitted to MICCS/COATS to obtain employee and subcontractor
registration.

 

q

MICCS/COATS will issue a Substance Abuse Prevention Card to all contractors and
their subcontractors once registered. Contractors and subcontractors must carry
the Substance Abuse Prevention Card with them when on Duke property.

 

q

New contractors and their subcontractors will be allowed a grace period of ***
be registered in MICCS/COATS.

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

Exhibit J

 

q

Duke Energy will contract with a third party administrator, Midwest Toxicology
Services, to assist contractors in registering with the MICCS and COATS
programs.

Exceptions: Those contractors already required to participate in drug programs
such as DOT, Coast Guard or carry a CDL in relationship with work being
preformed at Duke Energy (e.g. package delivery) shall be exempt from
participating in MICCS/COATS provided their participation this program is up to
date and can be verified.

Additionally, visitors are not required to participate in this program. Visitors
are defined as persons temporarily on site for a meeting, tour, or other
non-employment activity and are typically escorted by station personnel.

 

III.

Policy

The use, possession, distribution, sale, and/or manufacture of substances of
abuse, alcohol, drug paraphernalia, or legal drugs being used for illegal
purposes while performing work for Duke Energy and/or while on Duke property is
prohibited.

The off the job use, possession, distribution, sale and/or manufacture of
substances of abuse including alcohol which may adversely affect an employee’s
job performance and has an adverse effect on safety will not be tolerated.

Testing of contractors’ employees will be conducted in accordance with the drug
and alcohol testing requirements specified by MICCS and COATS programs as
referenced in Section IV and Attachments I & II. Testing will be conducted under
conditions of strict confidentiality and with the utmost regard for the dignity
of individual employees.

Violation of this policy is grounds for disciplinary action up to and including
being bared from Duke Energy facilities.

Any contractor performing work for Duke Energy Regulated Generation shall
maintain in a substance abuse program consistent with the MICCS and/or COATS
requirements and register their employees and subcontractors in these programs.
For new contractors and their subcontractors a grace period of *** is allowed
for registration in MICCS/COATS.

Station managers retain the right to use their discretion for emergency work;
allowing contractors on site based on business needs, without a MICCS or COATS
card.

All bid documents, as well as contract documents, will include contractor
substance abuse testing requirements in accordance with this policy.
Contractors, by signing the contract agreement, will thereby certify that their
employees and subcontractors comply with this substance abuse policy.

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

Exhibit J

 

IV.

Drug and Alcohol Testing Requirements

All contractors must develop, implement, publish, maintain and enforce a
contractor substance abuse policy consistent with the requirements specified in
MICCS and/or COATS. (Reference the specific requirements outlined in Attachments
I & II). In summary, these requirements include:

 

  A.

Pre-employment Testing:

Required to assure contractors and their subcontractors are substance free upon
employment; are registered with MICCS/COATS; and are issued a substance abuse
prevention card. The substance abuse prevention card must be available at all
times when on Duke Energy property.

For new contractors and subcontractors a *** grace period will be allowed for
MICCS/COATS registration and issuance of the substance abuse prevention card.

Annual Testing:

All contractors and subcontractors must pass at minimum an annual drug screen in
order to maintain their substance abuse prevention card.

Random Testing:

In addition to requiring the performing of annual testing, Duke will conduct
periodic random tests of contractors and subcontractors on site, as required, to
assure a safe work place.

Reasonable Cause:

As established in the contractor’s substance abuse prevention program,
additional testing may be conducted where there is reasonable cause to test.
Duke Energy shall be notified of these circumstances and informed of the
results.

Post Incident:

Testing shall be performed after an incident/accident, unless it is determined
that the incident/accident was not the result of the actions of an
employee/worker who was involved in the incident.

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

Exhibit J

 

Test Failure or Refusal to Test:

Failure to pass a substance test is grounds for immediate action; disciplinary
action is always conducted by the contractor, and severity may be up to and
including being barred from Duke Energy facilities. Refusal to submit to a
substance test is considered positive and is grounds for disciplinary action up
to and including being barred from Duke Energy facilities until a valid
Substance Abuse Prevention card can be provided.

***,    Senior Vice President

Regulated Generation

Attachment 1 -- MICCS Program    MICCS - Substance Abuse Program

Attachment 2 -- COATS Program    COATS Program -

Substance Abuse Program

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS) METRO INDIANAPOLIS
COALITION FOR CONSTRUCTION SAFETY (MICCS) Substance Abuse Program Revision Date:
July 24, 2007 Revision 2.0 Page-2 of 21

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

Exhibit J

 

Table of Contents

 

Part 1. Introduction

   3

1.1 Purpose

   3

1.2 Benefits

   3

1.3 MICCS ID Card and Database Protocol

   3

Part 2. Revision History

   4

Part 3. Definitions

   5

Part 4. Tests: Procedures and Supporting Information

   7

4.1 Reasons for Testing

   7

4.1.1 Annual/Pre-employment Test

   7

4.1.2 Follow-up Test

   7

4.1.3 Post Accident Test

   7

4.1.4 Probable Cause/Reasonable Suspicion Test

   7

4.1.5 Random Test

   8

4.1.6 Returning to Duty Test

   8

4.2 Drug Testing Procedures

   8

4.2.1 Specimen Collection

   8

4.2.2 Laboratory Testing Procedures

   9

4.2.3 MRO Procedures

   9

4.2.4 Specimen Retest Protocol

   9

4.3 Alcohol Testing Procedures

   10

4.4 Test results

   10

4.4.1 Adulterated Test

   10

4.4.2 Diluted Test

   10

4.4.3 Negative Test Result

   10

4.4.4 Positive Alcohol Test

   11

4.4.5 Positive Drug Test Result

   11

4.4.6 Refusal to Test

   11

4.5 Sanctions and Consequences for Failing a Drug Test

   11

Part 5. Employee Responsibilities

   13

Part 6. Auditing Information

   14

Part 7. Contractor/employer responsibilities

   15

APPENDIX A: SAMHSA Drug Screen

   16

APPENDIX B: Diluted Specimen Processing

   17

Instructions for Diluted Specimen Retest

   17

Employee Instruction Prior to Retesting

   17

APPENDIX C: Evaluation Form for Inability to Provide an Adequate Urine Specimen

   18

APPENDIX D: Documentation When a Breath Test Cannot Be Conducted

   20

APPENDIX E: Guidelines for Post-accident Testing

   21

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS) Substance Abuse
Program Revision Date: July 24, 2007 Revision 2.0 Page-3 of 21

  

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

Exhibit J

 

Part 1. Introduction

1.1 Purpose

The use of alcohol and other drugs leads to unsafe working conditions for
workers, since the impaired worker is a potential hazard to himself and to those
working with him. The purpose of this document is to outline a substance abuse
program which establishes and maintains a safe and healthy work environment,
free from drugs and alcohol, in Central Indiana. Although this document provides
essential information, it cannot address all situations that may arise.
Therefore, it is recommended that MICCS owners implement, publish, maintain, and
enforce a contractor substance abuse policy which includes prohibiting the
unlawful use, possession, consumption, manufacture, distribution, and sale of
controlled substances in the work place that meets or exceeds the guidelines
presented in this document. All bid and contract documents should contain and
adhere to the same stringent guidelines.

1.2 Benefits

MICCS has developed this program to provide the following benefits to the local
construction industry:

Minimize the duplication of effort created by multiple substance abuse programs
that would be necessary were it not for this industry-wide program.

Establish minimum standards for substance abuse programs for contractors and
building trade unions.

Assist owners and contractors in developing substance abuse policies that result
in increased safety for all on-site workers.

1.3 MICCS ID Card and Database Protocol

Test results from all MICCS required testing will be entered into the MICCS
database. The employee’s annual test date is automatically updated with any
negative drug result entry.

A MICCS ID Card will be issued to employees with a negative test result.

A new card will not be issued each time a test is taken. A new card will be
issued as needed to update an employee’s photo and/or replace a worn unreadable
card.

A MICCS ID Card displays the employee’s photo, name, and a computer generated
identification number. A card cannot be issued without a photo.

The MICCS ID Card is the property of MICCS. Employers are to return invalid
cards to MICCS.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS) Substance Abuse
Program Revision Date: July 24, 2007 Revision 2.0 Page-4 of 21

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

Part 2. Revision History

 

Revision

  

Revision Date

  

Reason for Revision/Change Request

  

Revised By

  

1.0

  

OCT 2004

  

2.0

  

JUL 2007

  

Reformatted document in MS Word. Modified content and organization.

  

Alan L. Slaff

  

Substance Abuse Program METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY
(MICCS)

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-2 of 21

Table of Contents

 

Part 1. Introduction

   3

1.1 Purpose

   3

1.2 Benefits

   3

1.3 MICCS ID Card and Database Protocol

   3

Part 2. Revision History

   4

Part 3. Definitions

   5

Part 4. Tests: Procedures and Supporting Information

   7

4.1 Reasons for Testing

   7

4.1.1 Annual/Pre-employment Test

   7

4.1.2 Follow-up Test

   7

4.1.3 Post Accident Test

   7

4.1.4 Probable Cause/Reasonable Suspicion Test

   7

4.1.5 Random Test

   8

4.1.6 Returning to Duty Test

   8

4.2 Drug Testing Procedures

   8

4.2.1 Specimen Collection

   8

4.2.2 Laboratory Testing Procedures

   9

4.2.3 MRO Procedures

   9

4.2.4 Specimen Retest Protocol

   9

4.3 Alcohol Testing Procedures

   10

4.4 Test results

   10

4.4.1 Adulterated Test

   10

4.4.2 Diluted Test

   10

4.4.3 Negative Test Result

   10

4.4.4 Positive Alcohol Test

   11

4.4.5 Positive Drug Test Result

   11

4.4.6 Refusal to Test

   11

4.5 Sanctions and Consequences for Failing a Drug Test

   11

Part 5. Employee Responsibilities

   13

Part 6. Auditing Information

   14

Part 7. Contractor/employer responsibilities

   15

APPENDIX A: SAMHSA Drug Screen

   16

APPENDIX B: Diluted Specimen Processing

   17

Instructions for Diluted Specimen Retest

   17

Employee Instruction Prior to Retesting

   17

 

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

Exhibit J

 

APPENDIX C: Evaluation Form for Inability to Provide an Adequate Urine Specimen
   18 APPENDIX D: Documentation When a Breath Test Cannot Be Conducted    20

APPENDIX E: Guidelines for Post-accident Testing

   21

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-3 of 21

Part 1. Introduction

1.1 Purpose

The use of alcohol and other drugs leads to unsafe working conditions for
workers, since the impaired worker is a potential hazard to himself and to those
working with him. The purpose of this document is to outline a substance abuse
program which establishes and maintains a safe and healthy work environment,
free from drugs and alcohol, in Central Indiana. Although this document provides
essential information, it cannot address all situations that may arise.
Therefore, it is recommended that MICCS owners implement, publish, maintain, and
enforce a contractor substance abuse policy which includes prohibiting the
unlawful use, possession, consumption, manufacture, distribution, and sale of
controlled substances in the work place that meets or exceeds the guidelines
presented in this document. All bid and contract documents should contain and
adhere to the same stringent guidelines.

1.2 Benefits

MICCS has developed this program to provide the following benefits to the local
construction industry: Minimize the duplication of effort created by multiple
substance abuse programs that would be necessary were it not for this
industry-wide program. Establish minimum standards for substance abuse programs
for contractors and building trade unions. Assist owners and contractors in
developing substance abuse policies that result in increased safety for all
on-site workers.

1.3 MICCS ID Card and Database Protocol Test results from all MICCS required
testing will be entered into the MICCS database. The employee’s annual test date
is automatically updated with any negative drug result entry. A MICCS ID Card
will be issued to employees with a negative test result. A new card will not be
issued each time a test is taken. A new card will be issued as needed to update
an employee’s photo and/or replace a worn unreadable card. A MICCS ID Card
displays the employee’s photo, name, and a computer generated identification
number. A card cannot be issued without a photo. The MICCS ID Card is the
property of MICCS. Employers are to return invalid cards to MICCS.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-4 of 21

Part 2. Revision History

Revision Revision Date Reason for Revision/Change Request Revised By

1.0

OCT 2004

2.0

JUL 2007

Reformatted document in MS Word. Modified content and organization.

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

Exhibit J

 

Alan L. Slaff

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-5 of 21

Part 3. Definitions

The following terms and definitions are provided to ensure a common
understanding of terms and consistency of use: Accredited Laboratory (SAMHSA). A
federally certified laboratory approved by the Department of Health and Human
Services (DHHS) for testing of prohibited items and substances.
Accident/Incident. Any event caused by an employee, either directly or
indirectly, that results in treatment by a health care provider, or that
resulted in damage to property. This would also include any serious near miss
incidents. Adulteration. Tampering with a test sample by the substitution or
addition of other ingredients to mask the presence or use of illegal drugs,
resulting in a specimen that contains a substance that is not expected to be
present in human urine, or contains a substance expected to be present but is at
a concentration that it is not consistent with human urine. Annual. Each
employee’s obligation to be tested at least every 12 months. Controlled
Substances. Includes all illegal drugs listed in this document with the
Department of Transportation (DOT) limits and includes: Controlled substances,
“look alike” and “designer” drugs Prescription drugs, used by a person other
than the intended user Drug paraphernalia Alcoholic beverages, in the possession
of or used by an employee on the premises, or while assigned to work off
premises

Contractor. Employees or subcontractors of a corporation, company, or entity
that performs construction or maintenance work. Medical Review Officer (MRO).
The licensed physician responsible for receiving laboratory results generated by
a substance abuse testing program. An MRO has: knowledge of substance abuse
disorders received appropriate medical training to interpret and evaluate an
individual’s medical history been certified by either the American Association
of Medical Review Officers (AAMRO) or the American College of Occupational and
Environmental Medicine (ACOEM).

MICCS ID Card. A MICCS card is one that states that it meets the requirements of
the MICCS substance abuse program, and/or reciprocity with the MICCS program,
and is verifiable through the Construction Safesite ©
(www.constructionsafesite.org) site database. MICCS ID Card (Counterfeit). A
MICCS Identification (ID) Card modified in any manner without authorization from
MICCS. Owner. The corporation, company, agency, or other entity, that hires
contractors to perform construction work and/or maintenance work on their
premises. Pre-employment Site Entry. Screening of prospective employees to
determine if an applicant is capable of safely performing required tasks and
meeting the prerequisites for employment.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-6 of 21

Probable Cause/Reasonable Suspicion. Circumstances based on the objective
evidence about the employee’s conduct in the work place which would cause a
reasonable person to believe that the employee is demonstrating signs of
impairment due to alcohol or other drugs. Note: See sections 4.1.4 and 4.3.

Construction SafeSite©: Construction Safesite© (www.constructionsafesite.org) is
a verification database that gives MICCS the ability to track the availability
of workers

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

Exhibit J

 

who have current drug tests, and who are available to work on MICCS jobsites.
All third party administrators (TPAs) use this database. The worker can only be
“available” for duty if all TPAs show him as “available”. If one TPA lists the
employee as “not available”, his status in Construction Safesite© will be “not
available”, and he will not be “available” until he becomes compliant with the
program that is causing him to be “not available” and his status is changed.
Substance Abuse Professional (SAP). An SAP can be a: licensed physician (Medical
Doctor or Doctor of Osteopathy) licensed or certified psychologist licensed or
certified social worker licensed or certified employee assistance professional
state-licensed or certified marriage and family therapist drug and alcohol
counselor certified by the National Association of Alcoholism and Drug Abuse
Counselors Certification Commission (NAADAC); or by the International
Certification Reciprocity Consortium/Alcohol and Other Drug Abuse (ICRC); or by
the National Board for Certified Counselors, Inc. and Affiliates/Master
Addictions Counselor (NBCC). licensed or certified mental health counselor Or
any additional licensed or certified professional as approved by the federal
government for compliance with the Department of Transportation’s substance
abuse program.

An SAP must have knowledge of and clinical experience in the diagnosis and
treatment of substance abuse-related disorders. Test(s). (Note: All types of
tests applicable to the MICCS program are defined in Part 4)

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-7 of 21

Part 4. Tests: Procedures and Supporting Information

4.1 Reasons for Testing

Contractors are required to send all drug test results, regardless of the reason
for testing, to MICCS to be entered in the MICCS database. The types of testing,
associated information, guidelines, and time constraints, if applicable, as
required by MICCS are shown below in alphabetical order.

4.1.1 Annual/Pre-employment Test Each onsite employee is to participate in
annual testing, or provide documentation of having been tested within the past
12 months. The latest test date will become the employee’s new annual test date
for participation in the MICCS program. An employer is prohibited from giving
any more than 14 days notice of testing to an employee. Employers are
responsible for notifying employees when their annual test is due.

4.1.2 Follow-up Test Follow-up testing is required after an employee has taken a
return to duty test. The number of follow-up tests will be set by the SAP. A
minimum of three is required. The test results must be negative. The employee
will be notified by telephone or letter to report for testing the day after
receiving notification. If the employee fails to complete follow-up testing,
their MICCS ID Card will be marked non-compliant in the MICCS database until the
employee reports for the follow-up test. Even though failure to complete the
test may be due to the fact that the employee was laid off or out of the local
area (i.e., for vacation), the employee is responsible to contact the third
party administrator as soon as possible upon notification of receipt after the
fact. The length of time that was designated by the SAP to complete their
follow-up tests will be extended by the length of time they are non-compliant
for not reporting for the test. The employee is responsible for payment.

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

Exhibit J

 

4.1.3 Post Accident Test This test is required: When the employee is involved in
any accident, incident, or event caused directly or indirectly by the employee.
Results in treatment by a health care provider, or Results in damage to
property. Including any serious near-miss incident The employee is to proceed
directly for testing, or as soon as possible, and before the employee returns to
the job site. It is the contractor/subcontractor’s responsibility to see that
testing is done within the time frame described above. The employee shall be
tested for both drugs and alcohol.

4.1.4 Probable Cause/Reasonable Suspicion Test This test is required at the time
of observable probable cause circumstances based on objective evidence about the
employee’s conduct in the workplace that would cause a reasonable person to
believe that the employee is demonstrating signs of impairment due to alcohol or
other drugs. Examples of objective evidence include an employee showing signs of
impairment such as, difficulty in maintaining balance, slurred speech, or
erratic behavior, etc.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-8 of 21

These observations must be documented and a copy provided to the employee. Only
supervisors who have had training on determining reasonable suspicion are
qualified to require a reasonable suspicion test.

4.1.5 Random Test MICCS owners are required to have contractor employees working
on their premises submit to immediate random drug and alcohol tests. It is the
owner’s responsibility to see that their selection is truly random without
discrimination or arbitrary selection. MICCS owner random testing is to be an
unannounced, unscheduled drug and alcohol test. Upon notification, the employee
must report immediately to the testing facility. Owners shall give notification
of testing to the employee before the end of a shift to take the possibility of
a 2 hour wait into consideration.

4.1.6 Returning to Duty Test After a positive test result, in order for an
employee to return to work, the employee is required to take a return to duty
test. The test result must be negative. The employee is responsible for payment.

4.2 Drug Testing Procedures

4.2.1 Specimen Collection Specimen collection will be conducted in accordance
with 49 CFR Part 40 “Procedures for Transportation Workplace Drug and Alcohol
Testing Programs”, and applicable state and federal law. Testing must be
performed by a DHHS-approved laboratory. MICCS does not follow the complete
regulatory testing requirements of the DOT, only the general guidelines. The
MICCS procedures are designed to:

o ensure the security and integrity of the specimen according to accepted
federal DOT chain-of-custody guidelines.

o make every reasonable effort to maintain the dignity of anyone submitting a
specimen for this program. If an employee is unable to provide a specimen at the
time of testing, the employee could be required to wait up to two hours without
leaving the test facility. Failure to remain and complete the test is the same
as a refusal to test with the same sanctions as a positive test result. Make
sure that notification of random testing is given in ample time before the end
of a shift. Types of specimens: The employee will provide a urine specimen for
the drug test. In the event that an employee is physically unable to produce a
proper urine sample, a test may be done by a different method, such as hair,

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

Exhibit J

 

saliva, etc., and must be approved by the third party administrator or the MICCS
substance abuse committee. The employee must present written documentation (see
Appendix C) from a medical doctor that supports his inability to provide a urine
specimen to the MRO. The employee or company must contact the third party
administrator for instructions on how to test using an alternate method. A photo
ID must be presented at the time of collection to verify the employee’s
identity. The employee will be asked to empty all pockets and display the
contents to the collector. The employee will have up to two hours to provide a
specimen. If the employee leaves before the two hours having not provided a
specimen, this test will be processed the same as a refusal to test. The
employee will be afforded privacy to provide the specimen unless The collector
observes evidence of an employee’s attempt to tamper with a specimen, or The
temperature range of the original specimen was out of normal range, or

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-9 of 21

It appears that the specimen was tampered with, or The specimen was determined
invalid by the laboratory Upon completion of testing the employee will be given
a copy of the Custody and Control Form (CCF).

4.2.2 Laboratory Testing Procedures

All substance analysis will be done in SAMHSA laboratories certified by DHHS.
Laboratory procedures will include: Initial screen on each specimen. In the
event that the initial test is positive a confirmation test will automatically
be performed using the GCMS method. A test is considered positive if the
detected level of the drug is at or above the cutoff level shown in Appendix A.
MICCS recommends that no adverse action or discipline be taken against any
worker or applicant for employment on the basis of any positive test that has
not been confirmed. Validity testing is required for each specimen. Each
specimen is measured for creatinine level, specific gravity, and pH to determine
if any of the following occurred: Adulterants or foreign substance were added to
the urine, The specimen was substituted, or The urine was diluted. The
laboratory will report all results to the MRO. The MRO will make a final
determination of the verified results. The results will be reported to the
designated employee representative.

4.2.3 MRO Procedures

All drug testing shall come under the control and supervision of a physician
with confidentiality protected in accordance with state law and the “AMA Code of
Ethical Conduct for Physicians Providing Occupational Medical Services” or the
Medical Review Officer Manual developed by the National Institute on Drug Abuse
(NIDA). All testing results shall be verified by an MRO. The MRO provides a
medical review on all test results issued by the laboratory as follows: If the
laboratory result is negative, the review is completed and a negative result is
mailed. If the laboratory result is positive, adulterated, substituted, or
invalid, the MRO will: Make one attempt to contact the donor by telephone to
inform him of the results and complete an interview to determine whether a
legitimate medical explanation exists for the result reported by the laboratory.
If the MRO left a message, but did not talk to the employee by 10:00 AM of the
following workday, the MRO will call the employer to report the results. In any
case, the employee always has the opportunity to discuss the test results with
the MRO. If the laboratory reports an invalid result to the MRO, the MRO will
contact the employee and ask if the

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

Exhibit J

 

employee may have taken any medication that may interfere with some immunoassay
tests. If the employee provides an acceptable explanation, the test will be
canceled and no further testing will be required unless a negative result is
required to obtain a valid MICCS ID Card. If the employee is unable to provide
an acceptable explanation and denies having adulterated the specimen, the test
will be canceled, and a second collection must take place immediately under
direct observation

4.2.4 Specimen Retest Protocol When the MRO has informed the employee of a
verified “positive drug test” or “refusal to test” because of adulteration or
substitution, the employee/worker has 72 hours from the time of notification to
request a retest of the specimen at a different SAMHSA laboratory. The employee
may make the request verbally or in writing and make arrangements for payment
with the MRO service, as the cost of the test is the responsibility of the
employee. If the result of the retest is different from the original result, the
test will be cancelled, and a recollection will be needed.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-10 of 21

4.3 Alcohol Testing Procedures

Alcohol testing is required for probable cause, post accident/incident, and for
immediate random testing situations. Tests for alcohol shall be performed using
the breath or blood to determine a Blood Alcohol Content (BAC). If possible, a
breathalyzer type instrument conforming to DOT standards should be used. If not
available, then a blood sample may be used. If blood testing is necessary, the
contractor/owner is responsible to provide a documented reason as to the reasons
why a breath test could not be performed (see Appendix D). Failure to provide a
sufficient breath sample to complete a breath test or refusing to provide a
blood sample will be considered a “refusal to test” and have the same
consequences as a positive test. All alcohol test results with a confirmed BAC
test level of .04 or higher will be considered positive and will require the
employee to be removed from the owner’s property immediately. This result will
also invalidate the employee’s MICCS ID Card. In order for the employee to
become eligible for a MICCS ID Card again, the employee will have to complete
the required program of rehabilitation outlined in this document. All alcohol
test results with a confirmed BAC test level of .020 through .039 will require
the employee to be removed from the owner’s property for 24 hours or until the
employee’s next scheduled work time, whichever is longer. Any initial test that
indicates a BAC level of .02 or greater must be confirmed by an Evidential
Breath Testing Device (EBT) operated by the Breath Alcohol Technician (BAT). The
confirmation test will be performed no sooner than 15 minutes and no later than
30 minutes following the completion of the initial test in accordance with
current DOT guidelines.

4.4 Test results

4.4.1 Adulterated Test If a test was tampered with by the substitution or
addition of other ingredients, the test result will be processed the same as a
positive test result. When a recollection is required, i.e., due to adulteration
or temperature, etc., the recollection will be observed according to DOT
procedures.

4.4.2 Diluted Test A test result that produces a diluted specimen requires a
retest. Refer to Appendix B for detailed instructions on how to process a
diluted specimen. If the retest

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

Exhibit J

 

also produces a diluted specimen, it will carry the same consequences as a
positive test result unless a valid medical reason exists.

4.4.3 Negative Test Result A drug result is considered negative if:

o the laboratory finds no drug metabolite levels over the confirmed cutoff
values, or

o the screen test and confirmation test indicated the presence of a legal or
illegal substance(s) in excess of the limits but the donor (employee) had a
valid medical reason for the substance being detected in the specimen. An
alcohol result is considered negative if the BAC is below 0.02. The employee’s
MICCS ID Card will be updated in the MICCS database.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-11 of 21

4.4.4 Positive Alcohol Test

A positive alcohol test occurs if the breathalyzer test, or its equivalent test,
indicates the presence of alcohol that meets or exceeds the cut-off limits of
the DOT and the Commercial Drivers License (CDL) as shown in this document.

4.4.5 Positive Drug Test Result A result is considered positive if the presence
of the drug meets or exceeds both the screening and confirmation levels listed
in Appendix A. The test must be verified by the MRO. The MRO must determine that
the test results are not from the use of prescription or over the counter
medications, food, or any reason other than the illegal use of unlawful
substances or controlled substances.

4.4.6 Refusal to Test

Refusal to submit to a test will carry the same consequences as a positive test.
A refusal to test occurs if an employee: Adulterated, substituted, or refused to
provide a urine specimen Failed to appear for testing within a reasonable period
of time Failed to remain at the testing site until the testing process was
completed Failed to provide a sufficient amount of urine within 2 hours without
a medical reason and/or failed to undergo an MRO directed medical evaluation for
such a reason Failed to cooperate with any part of the testing process, which
includes the use of abusive/threatening language or behavior Disrupted the
testing process

4.5 Sanctions and Consequences for Failing a Test

MICCS requires employees, who test positive (including a refusal to test), to
surrender their MICCS ID Card. The MICCS employer is required to refer employees
with positive test results to a SAP for evaluation and treatment. The MICCS
website has a listing of SAP’s located in the Indianapolis area who support and
are knowledgable about the MICCS substance abuse program requirements. The
employee must start a program of rehabilitation prior to returning to a MICCS
owner’s site, and must continue and complete the rehabilitation in order to be
eligible to work on a MICCS site. The rehabilitation must include the following
steps:

1. The employee must arrange for an evaluation with a Substance Abuse
Professional (SAP).

2. The SAP evaluation must specify that the employee: Must attend education
classes and/or treatment. Must perform the actions recommended by the SAP or
assigned rehabilitation specialists. Is subject to random follow-up testing not
less than 3 times within the next 12 month from the employee’s return to work
test. In cases where the employee was unable to complete the follow-up test due
to being laid off or out of town,

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Exhibit J

 

etc., the length of time that was designated by the SAP to complete their
follow-up test will be extended by the length of time the employee was not
available for testing. Will not be allowed to take another MICCS drug test for
at least 14 days from the date of the first positive test.

3. The employee is required to submit a letter from the SAP to MICCS concerning
their fitness for return to work including that the employee is eligible for a
return to duty test.

4. The employee must take a return to duty test with negative results. These
results must be submitted to MICCS for MICCS database entry.

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Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-12 of 21

5. The employee must actively complete any ongoing rehabilitation and follow-up
testing required by the SAP to keep the MICCS ID Card valid.

6. Arrangements for all costs are the responsibility of the employee.

7. If an employee tests positive 3 times within a 12 month period, the employee
will not be eligible to retest or obtain an MICCS ID Card for a period of one
year and will not be permitted to work on MICCS owner property during that
period.

8. Failure to comply with any of the above sanctions shall result in the
employee surrendering their MICCS ID Card. The status of the employee’s card
will be changed to “not available” in the MICCS database.

9. The result of a person using a counterfeit drug card will be the same as a
positive drug test.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-13 of 21

Part 5. Employee Responsibilities

Employee responsibilities are as follows: Report to work fit for duty. Be in the
appropriate mental and physical condition necessary to work in a safe and
competent manner, free of the influence of drugs and alcohol. Report to the
employer any medications that may impair job performance or safety. Consent to
and participate in owner/employer required tests Consent to the release of the
drug test results to the employer, for the MICCS database, or for specific
purposes required by law.

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Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-14 of 21

Part 6. Auditing Information

The owner reserves the right, under conditions of strict confidentiality, to
inspect the employer’s substance abuse testing program records within 24 hours
of the owner’s notification of intent to audit. Owners are required to audit the
validity of on-site employees at the time of entry to the job site and may audit
them at any time thereafter. (See www.constructionsafesite.org).

MICCS employers are required to check the validity of all MICCS ID Cards through
Construction Safesite© (www.constructionsafesite.org) upon hire and/or job site
entry. Construction Safesite© will state that an employee’s MICCS ID card is
either “available”, “not available”, or “no record with that ID”. Any problems
and/or questions about a card status will be addressed by the third party
administrator who holds the employee’s testing

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Exhibit J

 

record. Third party administrators have the ability to make appropriate updates
to the employee’s testing record so that his/her status is changed at
Construction Safesite©.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-15 of 21

Part 7. Contractor/employer responsibilities

Contractor’s employees working on or visiting a participating owner’s job site,
including workers, new hires, replacements, and supervisory personnel, are
subject to annual testing, testing for probable cause/reasonable suspicion,
post-accident/incident testing, random testing and return to duty/follow up
testing as a condition of contract between the contractor and the owner. The
contractor shall comply with owner requirements, when the owner requirements are
more stringent than the contractor’s. The contractor should provide training to
employees, including new hires, to help them understand the contractor’s
substance abuse testing policy, the effects of substance abuse on personal
health and the work environment. Recognizing the behaviors common to substance
abuse and the procedures for conducting substance abuse testing should also be
included as a part of this training for supervisor personnel who could be
required to initiate a reasonable suspicion/probable cause test. Contractors are
required to maintain a record keeping system that would allow an owner or
another contractor with whom the contractor has entered into agreement, to
effectively conduct a compliance audit. To protect everyone’s legal interest
contractors should obtain a written consent from each employee that allows the
release of otherwise confidential testing information to an owner.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: July 24, 2007 Revision 2.0 Page-16 of 21

APPENDIX A: Testing Panel

Drugs of abuse are tested in a routine SAMHSA 5-panel screen. The MICCS
Substance Abuse Program uses the drug screen components and cut-off levels
listed below. In addition to these levels and substances, the creatinine level
and specific gravity of the specimen will be measured. If the creatinine level
is less than 20 ml/dl and the specific gravity is less than 1.003, the sample
will be considered dilute and another collection will be required. The second
sample will be collected the morning after notification of a diluted specimen.
Adulterated specimens will be processed the same as a positive test. The minimum
requirement for a positive test result for alcohol will be a BAC of 0.04%
w/vol., a level consistent with the DOT and CDL guidelines. New drugs,
preliminary cut off and confirmation levels may be modified periodically in
order to parallel the DOT and CDL guidelines. The MICCS Substance Abuse Program
does not follow the complete regulatory testing requirements of the DOT, only
the general guidelines. Type Preliminary Cut-off Levels (ng/ml) Confirmation
Levels

Amphetamines

1000

500

Cocaine

300

150

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Exhibit J

 

PCP – Phencylidine

25

25

Opiates

2000

2000

THC – Cannabinoids

50

15

Ethanol (Alcohol)

.04% w/vol. (enzyme assay)

.04% w/vol. (GC/FD)

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: DD MMM YYYY Revision 4.0 Page I-17 of 21

APPENDIX B: Diluted Specimen Processing

Instructions for Diluted Specimen Retest

A diluted specimen result requires a retest. If this is a second diluted result
without a medical reason, it will be processed the same as a positive test
result. The MICCS database manager will report the dilute result to the
employer’s representative. The employer must provide specific instructions on
fluid intake (see below) to the employee prior to retesting to prevent another
diluted specimen. The collection for another test must be done the morning after
the employee has been notified. The employee may provide reasons for not being
able to test which can be approved by the database manager. The database manager
may reject the explanation. If the employee disputes the decision of the
database manager, the employee can contact the MICCS office to submit a plea to
the Substance Abuse Committee to consider further.

Employee Instruction Prior to Retesting

Here are instructions for the employee to be followed prior to retesting:
Consume no fluids after 9:00 PM the night before the test. Limit fluid intake to
a minimum the day of the test. The supervisor will inform the employee of the
test time and location. It is the employee’s responsibility to monitor intake of
fluids to prevent another dilute specimen. If the employee has a medical
condition that will cause a dilute specimen, the employee’s physician must
provide medical information in writing to the MRO for evaluation. After
reviewing the submitted information, the MRO will issue a final report to the
employer.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: DD MMM YYYY Revision 4.0 Page I-18 of 21

APPENDIX C: Evaluation Form for Inability to Provide an Adequate Urine Specimen

Purpose of Form: This physician referral form is to be used for an individual
who was unable to provide a sufficient urine specimen within the time allowance
stated in the MICCS Substance Abuse Policy. The MICCS policy states that a
“refusal to test” will be issued if an individual is required to take a MICCS
drug test and is unable to provide a sufficient specimen within the required
time, unless the individual can provide a valid medical explanation. This form
provides information to the employee, employer and the evaluation physician on
the steps to be followed for the evaluation. This form should be

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

Exhibit J

 

filled out and given to the physician who will be doing the medical evaluation.
The MICCS substance abuse program will follow the same general protocol used by
DOT for handling these types of evaluation. The specific DOT protocol taken from
49 CFR Part 40.193 is summarized below and will be used as a guide for MICCS
evaluations. Background Information from 49 CFR Part 40.193: When the collector
informs the designated employee representative that an employee has not provided
a sufficient amount of urine, they must, after consulting with the MRO (Medical
Review Officer), direct the employee to obtain, within five working days, an
evaluation from a licensed physician, acceptable to the MRO, who has expertise
in the medical issues raised by the employee’s failure to provide a sufficient
specimen. The referral physician must recommend that the MRO make one of the
following determinations:

(1) A medical condition has, or with a high degree of probability, could have,
precluded the employee from providing an adequate amount of urine.

(2) There is not an adequate basis for determining that a medical condition has,
or with a high degree of probability, could have, precluded the employee from
providing an adequate amount of urine. (For the purposes of this paragraph, a
medical condition includes an ascertainable physiological condition (e.g., a
urinary system dysfunction) or a documented pre-existing psychological disorder,
but does not include unsupported assertions of “situational anxiety” or
dehydration.)

After the referral physician completes the evaluation, they must provide a
written statement of their recommendations and the basis for them to the MRO. Do
not include in this statement detailed information on the employee’s medical
condition beyond what is necessary to explain your conclusion. Employee/Employer
information:

1. Employee must have an evaluation done by a physician as soon as possible. The
employee must present this form to the evaluating physician The evaluation
should be done within five working days or else the MRO will be required to
issue a refusal to test. Time extensions beyond the five working days must be
approved by the MRO.

2. Employee should sign this consent allowing the physician to release their
findings to you and the MRO.

3. Failure to provide an acceptable statement from a physician will result in a
refusal to test, which carries the same consequences as a positive test result.

Consent to Release Information (Employee needs to sign) I, , SSN , authorize the
evaluating physician to release the findings of my evaluation to: Employer’s
MRO: Physician’s Name Phone Fax Employer Employer Name Phone Fax Signature of
employee Date of signature

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: DD MMM YYYY Revision 4.0 Page I-19 of 21

APPENDIX C - Continued Physician Information and Instructions: You have been
requested to evaluate the individual indicated below because he/she was unable
to provide an adequate amount of urine to complete a MICCS required drug test.
Make sure you have read and understand the background information of 49 CFR Part
40.193 on the previous page. Your findings will assist the MRO in determining
this individual’s final test status. Please make sure item #1. or #2. below has
been completed and attach any additional information you feel is pertinent to
this evaluation. If you have any questions regarding this evaluation, please
call the MICCS database administrator, Midwest

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

Exhibit J

 

Toxicology at 317/262-2200 or 800/358-8450 (Ext. 203-Sharon Allen or Ext.
205-Tiffany Ellefson). Name & SSN (ID #) of employee: Employer Name/Address:
Date employee was unable to complete required drug test: Name (printed) of
physician performing evaluation: Physician Phone: Fax:

I have determined, in my reasonable medical judgment, that:             1. the
employee does have a medical condition* that has, or with a high degree of
probability, could have, precluded the employee from providing an adequate
amount of urine.             2. there is not an adequate basis for determining
that a medical condition* that has, or with a high degree of probability, could
have, precluded the employee from providing an adequate amount of urine. *For
purposes of this paragraph, a medical condition includes an ascertainable
physiological condition (e.g., a urinary system dysfunction) or a documented
pre-existing psychological disorder, but does not include unsupported assertions
of “situational anxiety” or dehydration. Explanation of
finding:                            Printed Name of Physician Signature of
Physician Date of Conclusion Please fax this completed form to the MRO and
Employer listed in the consent area of this form.

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

Substance Abuse Program

Revision Date: DD MMM YYYY Revision 4.0 Page I-20 of 21

APPENDIX D: Documentation When a Breath Test Cannot Be Conducted

MICCS requires a breath alcohol test for qualifying post-accident situations and
reasonable suspicion. MICCS has patterned their alcohol testing requirements
after the regulatory testing requirements of DOT (Department of Transportation).
DOT does not allow the use of blood for alcohol tests except in a few rare
circumstances. The FMCSA (Federal Motor Carrier Safety Administration) division
of DOT does allow employers to accept the results of breath or blood tests
conducted by Federal, State, or local officials having independent authority in
post-accident situations as long as the results of the tests can be obtained by
the employer. The MICCS program’s policy will allow alcohol testing done by
breath or blood. However, breath testing is the preferred method. Blood testing
is only authorized when a breath test is impossible to obtain. The employer is
responsible to provide a documented reason to the third party administrator as
to why this alternative method (blood testing) was used. The form below can be
used for such documentation and should be forwarded to the third party
administrator. Name of Employee Date                                         
Complete explanation of why breath testing was not done:

¨ Employee had medical treatment that prevented a breath alcohol test from being
done within the allowed time frame.

¨ There is no testing facility open that was capable of performing a breath
alcohol test within the allowed time frame. Provide time and location
information

¨ There was no testing facility capable of performing a breath alcohol test
within the geographical area of where the testing needed to occur. Provide time
and location information

¨ Other, please describe:

Company name and signature of Employer authorizing agent: Date

 

METRO INDIANAPOLIS COALITION FOR CONSTRUCTION SAFETY (MICCS)

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Exhibit J

 

Substance Abuse Program

Revision Date: DD MMM YYYY Revision 4.0 Page I-21 of 21

APPENDIX E: Guidelines for Post-accident Testing

MICCS policy requirement for Post-Accident Testing: A substance abuse drug and
alcohol test of an onsite contractor employee is required when they are involved
in any accident/incident or event, caused by them either directly or indirectly,
that results in treatment by a health care provider, or that results in damage
to property, including any serious near-miss incident. The employee should
proceed directly for testing or as soon as possible. Recommended Steps for
Post-Accident Testing:

1. Contractors are responsible to insure that a drug and alcohol test is
completed for any accident or incident as defined above.

2. Needed medical treatment will take precedence over completing a drug and
alcohol test. However, a drug and alcohol test should be done as soon as
possible. The alcohol test should be administered within 2-hours of the
accident/incident. If there is a delay of more than 2-hours, an explanation of
why the testing was delayed or couldn’t be completed should be documented.

3. The contractor must insure that the facility who will be doing the
post-accident test meets the following requirements.

a. Drug test requirement:

i. Use of a standard custody and control form

ii. Testing of specimen by a SAMHSA certified laboratory using the drug panel
cut-off level set by MICCS

iii. Test result reviewed by a certified MRO (Medical Review Officer)

b. Alcohol Test requirements:

i. A breath test should always be administered unless breath testing is not an
option.

ii A breath test should be done as soon as possible (within 2 hours). If it
can’t be completed within 8 hours, testing should cease and documentation
explaining the inability to complete testing within 8 hours should be forwarded
to the third party administrator. iii The breath test should be administered by
a certified BAT (Breath Alcohol Technician) using a breath testing device that
meets the same requirement as DOT. iv If breath testing is not available, a
blood draw may be used.

4. The results of all post-accident tests are required to be reported to the
third party database administrator as soon as possible following any
post-accident testing so the results may be entered into the database.

5. If any post-accident test result is positive the contractor must immediately
remove the employee from the MICCS owner site and follow their company policy’s
discipline for testing positive. Any positive test will render the employee’s
MICCS card invalid.