EXHIBIT 10.1

PORTIONS OF THIS EXHIBIT MARKED BY (“***”) HAVE BEEN OMITTED PURSUANT

TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION

FINAL EXECUTION VERSION

FIRST AMENDED AND RESTATED

ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

by and between

DUKE ENERGY CAROLINAS, LLC, as Owner

and

SHAW NORTH CAROLINA, INC., as Contractor

for the

CONSTRUCTION OF A SUPERCRITICAL COAL-FIRED

GENERATION FACILITY IN CLIFFSIDE, NORTH CAROLINA

Dated February 20, 2008

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Table of Contents

 

              Page 1.   DEFINITIONS    2 2.   GENERAL PROVISIONS    18   2.1   
Intent of Contract Documents    18   2.2    Independent Contractor    18   2.3
   Subcontracting; Approved Subcontractors    18   2.4    Assignment of
Subcontracts    19   2.5    Interpretation    19   2.6    Inclusion; Order of
Precedence    20   2.7    Days    21 3.   CONTRACTOR RESPONSIBILITIES    21  
3.1    Performance of the Services; Commencement of Work    21   3.2   
Professional Standards    23   3.3    Sufficient Personnel    24   3.4   
Supervision and Discipline    24   3.5    Contractor’s Key Personnel    24   3.6
   Design and Engineering    24   3.7    Quality Assurance Plan    25   3.8   
Training    25   3.9    Utility Use    25   3.10    Spare Parts    26   3.11   
Subcontractor Presence    26   3.12    Current Records; Record Drawings    26  
3.13    Transportation Costs    26   3.14    Project Manuals    27   3.15   
Control of Work    27   3.16    Emergencies    27   3.17    Local Conditions;
Inspection of Interface Points    27   3.18    Use of Site: Owner Access    28  
3.19    Compliance With Laws    28   3.20    Permits and Approvals    28   3.21
   Periodic Reports and Meetings.    29   3.22    Signage    30   3.23   
Interference with Traffic    30   3.24    Supply of Water and Disposal of Sewage
   30   3.25    Housekeeping    30 4.   OWNER RESPONSIBILITIES    30   4.1   
Owner’s Representative    31   4.2    Access    31

 

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  4.3    Permits    31   4.4    Owner Equipment    31   4.5    Fuel and
Utilities    31   4.6    Operation and Maintenance Staff    31   4.7    Job Site
Rules    31   4.8    Payment    32 5.   EQUIPMENT AND WORKMANSHIP    32   5.1   
Quality of Equipment and Workmanship    32   5.2    Cost of Tests    32   5.3   
Samples    32   5.4    Inspection of Operations    32   5.5    Examination of
Work before Covering    32   5.6    Uncovering and Making Openings    33 6.  
SCHEDULE & CONTRACT PRICE    33   6.1    ***    33   6.2    Commencement of Work
for Unit 6 and the Unit 5 Scrubber    33   6.3    ***    33   6.4    Schedule
Requirements; Updates    33   6.5    Enhanced Project Management Process    34  
6.6    Unit 5 Scrubber Tie-In    34 7.   COMPENSATION AND PAYMENT    34   7.1   
Cash Flow Plan.    34   7.2    Payments of the Contract Price    35   7.3   
Invoicing    35   7.4    Cash Flow    36   7.5    Final Payment    36   7.6   
Certification by Contractor    37   7.7    No Acceptance by Payment    37   7.8
   Revenue from Use of Unit 6 and Facility    37 8.   CHANGE ORDERS &
PROVISIONAL SUMS    37   8.1    Change Requests    37 9.   FORCE MAJEURE    39  
9.1    Event of Force Majeure    39   9.2    Notice    39   9.3    Suspension;
Termination Due to Force Majeure    40

 

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10.   INSPECTION: PERFORMANCE TESTING: PERFORMANCE GUARANTEES    40   10.1   
Mechanical Completion Inspection    40   10.2    Performance Testing    40  
10.3    Satisfaction of Performance Testing    40   10.4    Owner’s Right to
Operate Prior to Satisfaction of Performance Guarantees    41   10.5    Failure
of Component to Meet Performance Criteria    42 11.   MECHANICAL COMPLETION;
SUBSTANTIAL COMPLETION; FINAL COMPLETION    42   11.1    Mechanical Completion
   42   11.2    Substantial Completion    43   11.3    Final Completion    44
12.   DELAY AND PERFORMANCE LIQUIDATED DAMAGES; EARLY COMPLETION BONUS    44  
12.1    Delay Liquidated Damages    44   12.2    Performance Liquidated Damages
   45   12.3    Early Completion Bonus.    46   12.4    Payment    46 13.  
WARRANTY    46   13.1    Services Warranty Period    46   13.2    Equipment
Warranty Period    47   13.3    Extension of Warranty Periods    47   13.4   
Defects    47   13.5    Responsibility for Warranty Work    48   13.6   
Conditions of Warranty    48   13.7    Title Warranty    48   13.8   
Intellectual Property Warranty    48   13.9    Warranty Assistance    48   13.10
   Exclusive Warranties    49 14.   INDEMNIFICATION    49   14.1    Contractor’s
Indemnity    49   14.2    Owner’s Indemnity    50   14.3    Intellectual
Property Indemnity    50   14.4    Indemnity Procedures for Third Party Claims.
   51 15.   INSURANCE    52   15.1    Owner Provided Builder’s Risk.    52  
15.2    Contractor Controlled Insurance Program (CCIP), Contractor’s Insurance
and Subcontractor’s Insurance    53

 

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  15.3    General Requirements    55   15.4    Insurance Costs and Assumptions
   57 16.   PROJECT CREDIT SUPPORT    57   16.1    Parental Guarantee    57  
16.2    Standby Letter of Credit    57   16.3    Cooperation with Owner
Financing    58 17.   LIMITATION OF LIABILITY    59   17.1    No Consequential
Damages    59   17.2    Maximum Total Liability    59   17.3    Protected
Parties    60   17.4    Precedence    60   17.5    ***    60 18.   LIENS    60  
18.1    Liens    60   18.2    Discharge or Bond    60 19.   INTELLECTUAL
PROPERTY    61   19.1    Delivery of Documentation    61   19.2    Ownership of
Rights in Documentation    61   19.3    Ownership of Invention Rights    61  
19.4    Disclosure of Documentation    61   19.5    Other Licenses    62 20.  
CONFIDENTIAL INFORMATION    62   20.1    Confidentiality Obligations    62  
20.2    Permitted Disclosures    62   20.3    Publicity    62 21.  
ENVIRONMENTAL; HAZARDOUS MATERIALS    63   21.1    Material Safety Data Sheets
   63   21.2    Facility Use, Storage Removal    63   21.3    Notice of Presence
   63   21.4    Labeling; Training    63   21.5    Handling, Collection, Removal
Transportation and Disposal    63   21.6    Notice of Discovery    64   21.7   
Policies and Procedures    64   21.8    Asbestos Containing Products    64  
21.9    Pre-Existing Hazardous Material    64

 

iv

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22.   TITLE: RISK OF LOSS    65   22.1    Transfer of Title: Security Interest
   65   22.2    Risk of Loss    65   22.3    Contractor Tools    66 23.  
DEFAULT; TERMINATION AND SUSPENSION    66   23.1    Events of Default    66  
23.2    Owner Remedies    67   23.3    Contractor Remedies    67   23.4   
Termination for Convenience    68   23.5    Termination for Force Majeure    69
  23.6    Effect of Termination    69   23.7    Suspension    69 24.   SAFETY;
INCIDENT REPORTING    70   24.1    Environmental, Health and Safety Programs   
70   24.2    OSHA and Other Laws    70   24.3    Worksite Safety    71   24.4   
Dangerous Materials    72   24.5    Loading    72   24.6    Cooperation in
Governmental Investigation    72   24.7    Audit    72 25.   QUALIFICATIONS AND
PROTECTION OF ASSIGNED PERSONNEL    73   25.1    Contractor’s Personnel    73  
25.2    Drug and Alcohol Testing    73   25.3    Training of Employees    74  
25.4    Compliance with Employment Laws; Policies    74   25.5    Substitution
   74 26.   RECORDS AND AUDIT    74   26.1    Technical Documentation    74  
26.2    Accounting Records    75   26.3    Owner’s Right to Audit    75   26.4
   Sales Tax and Privilege Tax Records    75 27.   TAXES    76   27.1   
Employment Taxes    76   27.2    Sales and Use Taxes on Contractor Tools    76  
27.3    Sales and Use Tax on Equipment; Privilege Tax    76   27.4    State
Property Taxes    77   27.5    Tax Indemnification    78

 

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  27.6    Pollution Control Equipment Information    78 28.   DISPUTE RESOLUTION
   78   28.1    Resolution by the Parties: Mediation    78   28.2    Arbitration
Proceedings    79   28.3    Continuation of Work    80 29.   MISCELLANEOUS
PROVISIONS    80   29.1    Governing Laws    80   29.2    Entire Agreement    80
  29.3    Successors and Assigns    80   29.4    No Third Party Beneficiaries   
81   29.5    Rights Exclusive    81   29.6    No Waiver    81   29.7    Survival
   81   29.8    Severability    81   29.9    Notices    81   29.10    Vienna
Convention    83   29.11    Counterparts    83

 

vi

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EXHIBITS

 

Exhibit A    Specifications, including the Scope of Work, Drawings, and Training
Procedures Exhibit B    Site Description Exhibit C    Key Schedule Milestones
Exhibit D    List of Contractor Supplied Permits Exhibit E    List of Owner
Supplied Permits Exhibit F    Cash Flow Plan (F-1)    ***    (F-2)    ***      
F-2a        ***    F-2b        *** (F-3)    ***       F-3a        *** (F-4)   
***       F-4a        ***    F-4b        ***    F-4c        ***    F-4d   
    ***    F-4e        *** (F-5)    ***       F-5a        ***    F-5b        ***
   F-5c        ***    F-5d        ***

 

vii

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   F-5e        *** Exhibit G    List of Contractor’s Key Management and
Construction Personnel Exhibit H    List of Approved Subcontractors Exhibit I   
*** (Table I-1)        *** (Table I-2)        ***    I-2a        ***    I-2b   
    *** (Table I-3)        ***    I-3a        *** (Table I-4)        ***    I-4a
       ***    I-4b        ***    I-4c        ***    I-4d        ***    I-4e   
    *** (Table I-5)        ***    I-5a        ***    I-5b        ***    I-5c   
    ***    I-5d        ***    I-5e        *** (Table I-6)        Owner Equipment
components    I-6a        ***    I-6b        ***

 

viii

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   I-6c        *** Exhibit J    Credit Support (J-1)    Parent Guarantee
(Executed) (J-2)    Letter of Credit (Executed) (J-3)    *** Exhibit K    Time
and Materials Rates Exhibit L    Performance Guarantees (L-1)    Unit 5 Scrubber
Performance Guarantees (L-2)    Unit 6 Performance Guarantees (L-3)    Unit 6
Reliability Testing Exhibit M    Permitted and Guaranteed Emission Limits
Exhibit N    Owner’s Drug and Alcohol Testing Policy

 

vix

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FIRST AMENDED AND RESTATED

ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

This FIRST AMENDED AND RESTATED ENGINEERING, PROCUREMENT AND CONSTRUCTION
AGREEMENT (the “Agreement”) is entered into as of the 20th day of February, 2008
(the “Amendment Date”), by and between DUKE ENERGY CAROLINAS, LLC, a North
Carolina limited liability company having a place of business in Charlotte,
North Carolina (“Owner”), and SHAW NORTH CAROLINA, INC., a Shaw Group Company, a
North Carolina corporation having a place of business in Charlotte, North
Carolina (“Contractor”). Owner and Contractor may be referred to individually as
a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS, Owner and Stone and Webster National Engineering, P.C. (“SWNE”) are
parties to that certain Engineering, Procurement and Construction Agreement,
dated as of July 11, 2007 (the “Original EPC Agreement”), pursuant to which
Owner engaged SWNE to perform the engineering, procurement, construction and
commissioning of the following systems:

 

  (i) a new nominally-rated 820 MW supercritical pulverized coal
electric-generation unit to be located adjacent to the Owner’s existing
coal-fired steam station in Cliffside, North Carolina (“Cliffside Unit 6”); and

 

  (ii) a new flue gas desulfurization system for Owner’s existing Unit 5 at the
Owner’s coal-fired steam station in Cliffside, North Carolina (“Unit 5
Scrubber”)

(collectively, Cliffside Unit 6 and the Unit 5 Scrubber shall hereinafter be
referred to as the “Project”);

WHEREAS, pursuant to that certain Assignment and Assumption Agreement, dated as
of the date hereof and entered into immediately prior to the execution of this
Agreement, (i) SWNE has assigned to Contractor all of its right, title, interest
and obligations in, to and under the Original EPC Agreement and all of its
right, title and interest in the Documentation (as defined in the Original EPC
Agreement), including all intellectual property rights relating thereto, and
(ii) Contractor accepted such assignment and assumed and agreed to pay and
otherwise undertake, observe, perform and discharge in accordance with its terms
all of SWNE’s obligations and other liabilities under, arising out of or
relating to the Original EPC Agreement;

WHEREAS, the Original EPC Agreement provided *** process whereby the Parties
agreed to ***;

WHEREAS, the Parties agreed to *** and, as a result, the Parties have *** set
forth herein; and

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WHEREAS, the Parties hereto desire to amend and restate the Original EPC
Agreement in the manner set forth herein in order to reflect ***, determine the
process pursuant to which *** and make the other changes set forth herein.

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:

“AAA” shall have the meaning set forth in Section 28.2.

“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.

“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, Change Orders).

***

“*** Work” shall mean the scope of Work performed by Contractor hereunder for
which the *** Costs apply.

“Alstom Contract” shall mean the Engineering, Fabrication and Delivery Agreement
for the Cliffside Steam Station, dated as of ***, by and between Owner and
Alstom Power Inc. for the purchase of one (1) wet flue gas desulfurization
system for the Unit 5 Scrubber and one (1) Air Quality Control System for Unit
6.

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

*** shall mean ***.

“Bulk Materials” shall mean those items of material and Equipment described in
Table I-5e of Exhibit I.

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

“Cash Flow Plan” shall have the meaning set forth in Section 7.1.

*** shall mean ***.

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

 

2

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“Change in Law” shall mean (a) any binding change after the Effective Date in
the judicial or administrative interpretation of, or adoption after the
Effective Date of, any Laws (excluding any Laws relating to net income Taxes and
excluding any Laws relating to the organization, existence, good standing,
qualification, or licensing of Contractor or their Affiliates or Subcontractors
in any jurisdiction), which is inconsistent or at variance with any Laws in
effect on the Effective Date or (b) the imposition after the Effective Date of
any condition or requirement (except for any conditions or requirements which
result from the acts or omissions of Contractor or any Subcontractor) not
required as of the Effective Date affecting the issuance, renewal or extension
of any Government Approval (excluding any Government Approval relating to the
organization, existence, good standing, qualification, or licensing of
Contractor or its Subcontractors in any jurisdiction). Notwithstanding the
foregoing, the issuance of the Facility Air Permit subsequent to the Effective
Date shall not be considered a Change in Law for any purpose hereunder.

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

“Clarifier Refurbishment” shall have the meaning set forth in Table I-4c of
Exhibit I.

“Collateral” shall have the meaning set forth in Section 22.1.

“Commissioning” shall mean the activities required to be conducted by Contractor
pursuant to the terms of this Agreement in order to bring Unit 6 or the Unit 5
Scrubber from an inactive condition, when construction is essentially complete,
to a state where Unit 6 or Unit 5 Scrubber is ready for the commencement of
operation, including pre-commissioning, start-up, individual system and
integrated, functional verification and synchronization of Unit 6 or Unit 5
Scrubber with other tie-in Facility equipment.

“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 such Party within seven (7) Days after such verbal disclosure.
“Confidential 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.

“Construction Services Agreement” shall mean Owner Purchase Order FHP01564
issued pursuant to the ***.

“Construction Services Payments” shall mean, with respect to each of Unit 6 and
the Unit 5 Scrubber, those payments which have been made or are due and payable
by Owner to Contractor prior to the Effective Date for those on-site services,
including erosion control, fire protection modifications and other miscellaneous
site preparation services, as are more fully described in Owner purchase order
FHP01564.

 

3

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*** shall mean ***.

“Contract Price” shall mean ***.

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

“Contractor Indemnitees” shall have the meaning set forth in Section 14.2.

“Contractor Permits” shall have the meaning set forth in Section 3.20.

“Contractor’s Project Manager” shall mean the Person whom Contractor designates
in Exhibit G 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 G to represent Contractor at the Site.

“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.

*** shall mean for any month, a comparison of the total *** incurred by
Contractor during such month in the performance of each type of ***, as
described in each of *** (which shall include reasonable detail showing the
build-up of such total ***) against the applicable *** for such type of *** for
such month as set forth in ***, as applicable.

*** shall mean, for any month, a comparison of the total *** and which are
incurred in the performance of that *** during such month against the *** during
such month as set forth in ***.

*** shall mean, for any month, a comparison of the total *** incurred by
Contractor during such month in the performance of each type of ***, as
described in each of *** (which shall include reasonable detail showing the
build-up of such total ***), against the applicable *** for such type of *** for
such month as set forth in ***, as applicable, and shall contain a certification
as to whether any such *** has exceeded ***.

*** shall mean ***.

*** shall mean ***.

“*** Comparison” shall mean, as the context may require, the Cost Comparison —
***, the Cost Comparison — ***, the Cost Comparison — *** the Cost Comparison —
*** or the Cost Comparison — ***.

*** shall mean ***.

*** shall mean ***.

 

4

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*** shall mean ***.

*** shall have the meaning set forth in Section 3.2 of Exhibit I.

*** shall mean ***.

*** shall mean ***.

*** shall mean ***.

*** shall have the meaning set forth in Section 3.2 of Exhibit I.

“Craft Labor” shall mean, with respect to each of Unit 6 and the Unit 5
Scrubber, respectively, those items of Contractor craft labor as set forth in
more detail in Table I-5c of Exhibit I.

“Craft Labor Costs” shall mean for each of Unit 6 and the Unit 5 Scrubber,
respectively, those amounts that are incurred by Contractor in providing *** for
Unit 6 or the Unit 5 Scrubber, as applicable.

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

“Default” shall have the meaning set forth in Section 23.1.

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

“Delay Liquidated Damages” shall mean:

(a) With respect to Unit 6:

(i) *** per Day (or any portion of a Day) for the first *** Days that Contractor
fails to achieve Substantial Completion of Unit 6 by the Guaranteed Substantial
Completion Date for Unit 6;

(ii) *** per Day (or any portion of a Day) for each Day in excess of the first
*** Days but less than or equal to *** Days that Contractor fails to achieve
Substantial Completion of Unit 6 by the Guaranteed Substantial Completion Date
for Unit 6; and

(iii) *** per Day (or any portion of a Day) for each Day in excess of *** Days
that Contractor fails to achieve Substantial Completion of Unit 6 by the
Guaranteed Substantial Completion Date for Unit 6.

(b) With respect to the Unit 5 Scrubber:

(i) With respect to Unit 5 Scrubber Tie-In:

(A) *** per Day (or any portion of a Day) for each Day on or after the
Guaranteed Unit 5 Tie-In Commencement Date until the *** Day after the
Guaranteed Unit 5 Tie-In Commencement Date that Unit 5 Scrubber Tie-In has not
commenced;

 

5

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(B) *** per Day (or any portion of a Day) for each Day after the *** Day but
prior to the *** Day on or after the Guaranteed Unit 5 Tie-In Commencement Date
that Unit 5 Scrubber Tie-In has not commenced; and

(C) *** per Day (or any portion of a Day) for each Day after the *** Day on or
after the Guaranteed Unit 5 Tie-In Commencement Date that Unit 5 Scrubber Tie-In
has not commenced;

(ii) After commencement of Unit 5 Scrubber Tie-In, *** per Day (or any portion
of a Day) for each Day after the Guaranteed Tie-in Completion Date that the
successful tie-in of the Unit 5 Scrubber has not been achieved; and

(iii) After the successful tie-in of the Unit 5 Scrubber has been achieved, ***
per Day (or any portion of a Day) for each Day after the Guaranteed Substantial
Completion Date of the Unit 5 Scrubber that Contractor fails to achieve
Substantial Completion of the Unit 5 Scrubber.

“Delay Liquidated Damages Cap” for Unit 6 or for the Unit 5 Scrubber shall mean
*** of the respective Contract Price for Unit 6 or the Unit 5 Scrubber, as may
be amended by Change Order.

“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 agreed, or are required hereunder, to be delivered by Contractor to Owner,
including, without limitation, Design Documents, specifications (including the
Specifications), schedules (including the Schedule), schematics, drawings
(including Final Completion agreed “as built” drawings as specified in Exhibit
A), 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, plans, empirical
and other correlations, models, manuals (including software manuals and Project
Manuals) and training materials, that are necessary for the design,
Commissioning, operation, maintenance, modification or decommissioning of the
Project.

“Duke Coal Facility” or the “Facility” shall mean the Owner’s entire physical
coal facility known as the Cliffside Steam Station, including the Project and
all other generating units and ancillary structures thereto.

“Early Completion Bonus” shall mean, with respect to Unit 6:

(a) *** per Day for each Day earlier than *** Days but less than or equal to ***
Days that Contractor achieves Substantial Completion of Unit 6 prior to the
Guaranteed Substantial Completion Date for Unit 6; and

 

6

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(b) *** per Day for each Day earlier than *** Days that Contractor achieves
Substantial Completion of Unit 6 prior to the Guaranteed Substantial Completion
Date for Unit 6.

“Effective Date” shall mean July 11, 2007, which is the date of execution by the
Owner and SWNE of the Original EPC Agreement.

“Electrical Output” shall mean the net electrical power, as measured at the high
side of the main step-up transformer, which is produced by Unit 6 in kilowatts
(kW) during the Performance Testing, at the test specified operating conditions,
and corrected to the base performance conditions set forth in Exhibit L-2.

“*** Equipment” shall mean those items of material, Equipment and associated
Subcontractor services (e.g., transportation, technical assistance, warranty
services, etc.) as defined in *** of ***.

“Equipment” shall mean any and all material, structure, buildings, apparatus,
equipment, spare parts, hardware, Documentation, goods, tools, supplies, and
other personal property, all as intended to become a permanent part of the
Project, that Contractor furnishes, or is required to furnish, hereunder in
accordance with the Specifications or otherwise for the Project. “Equipment”
includes (a) all of the foregoing items that Contractor furnishes through a
Subcontractor and (b) all of the foregoing items that Contractor has purchased
or provided or has committed to purchase or provide, directly or indirectly
through a Subcontractor, pursuant to the JPDA. 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.

*** shall mean ***.

*** shall mean ***:

(a) ***

(b) ***

“Facility Air Permit” shall mean Permit No. 04044T28 issued by the North
Carolina Department of Environmental and Natural Resources (NCDENR) Division of
Air Quality to Owner, effective as of January 29, 2008.

*** shall mean ***.

“FERC” shall mean the Federal Energy Regulatory Commission, and its successors.

*** shall mean ***.

 

7

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*** shall mean those costs for each of the Unit 5 Scrubber and Unit 6,
respectively, incurred by Contractor in performance of *** for the Unit 5
Scrubber and Unit 6, as applicable, ***.

“Final Completion” shall mean, with respect to each of Unit 6 or the Unit 5
Scrubber, the achievement by Contractor of all the conditions set forth in
Section 11.3.

“Final Completion Date” shall mean, with respect to each of Unit 6 or the Unit 5
Scrubber, the date on which Final Completion of Unit 6 or the Unit 5 Scrubber
occurs.

“Final Payment Invoice” shall have the meaning set forth in Section 7.5.

“Financial Institutions” shall mean any party entering into a loan agreement,
guarantee, note, indenture or security agreement with Owner or its Affiliates in
relation to the Duke Coal Facility, including arrangements relating to interest
rate or currency hedging and arrangements relating to the construction or
permanent financing or refinancing of the Project or the Facility.

“Fixed Prices” shall mean ***.

“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) acts or inaction of any Government Authority;

(c) explosions or fires;

(d) strikes, lockouts, or other labor disputes, but excluding legal strikes,
lockouts or work stoppages involving only employees of Contractor and that are
directed solely at a Contractor facility;

(e) delay in the performance of the Services or delivery of Equipment or Owner
Equipment to the extent any such delay is not attributable to an act or omission
of Contractor, or its employees, officers, agents, Subcontractors or other
Persons under Contractor’s control and supervision, unless such acts or
omissions are themselves a result of Force Majeure;

(f) 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 (excluding payment obligations); and

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

provided, however, that an event or cause shall not be an event of Force Majeure
unless it: (i) negatively impacts the Work under this Agreement, (ii) is not the
result of the willful misconduct or negligent act or omission of, or breach of
this Agreement by, such Party (or any Person over whom that Party has control),
and (iii) cannot be cured, remedied, avoided, offset, or otherwise overcome by
the prompt exercise of reasonable diligence by the Party (or any Person over
whom

 

8

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that Party has control). For the avoidance of doubt, except as otherwise
expressly provided in Exhibit I, the definition of “Force Majeure” shall not
include, and Contractor shall not be entitled to equitable relief for, changes
such as inflation and interest rates.

“Full Notice to Proceed” with respect to Unit 6 or the Unit 5 Scrubber shall
mean the written notice that Owner gives to Contractor fully authorizing
Contractor to proceed with the respective Work for Unit 6 or the Unit 5
Scrubber.

*** shall mean, with respect to each of Unit 6 or the Unit 5 Scrubber,
respectively, the Work as set forth in more detail in *** of ***.

*** or *** shall mean:

(a) ***

(b) ***

“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 Project in accordance
with this Agreement, including the Certificate of Public Convenience and
Necessity (CPCN), the Facility Air Permit 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.

*** shall mean the ***, dated as of ***, which has been executed and delivered
by *** to Owner ***, and as attached hereto as ***.

“Guaranteed Emission Limits” shall mean, with respect to Unit 6 and the Unit 5
Scrubber, those specific emission limits and requirements identified as such and
set forth in Exhibit M which must be met in order to achieve Final Completion of
Unit 6 or the Unit 5 Scrubber.

“Guaranteed Final Completion Date” shall mean:

(a) With respect to the Unit 5 Scrubber, ***; and

(b) With respect to Unit 6, ***;

as such dates may be adjusted by Change Order.

“Guaranteed Substantial Completion Date” shall mean:

(a) With respect to the Unit 5 Scrubber, ***; and

 

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(b) With respect to Unit 6, ***;

as such dates may be adjusted by Change Order.

“Guaranteed Unit 5 Tie-In Commencement Date” shall mean ***, as such date may be
adjusted by Change Order.

“Guaranteed Unit 5 Tie-In Completion Date” shall mean ***, as such date may be
adjusted by Change Order.

“Guarantor” shall mean ***.

“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, 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
Unit 6 during the Performance Testing at the test specified operating conditions
and corrected to the base performance conditions set forth in Exhibit L-2.

 

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“Hitachi Contract” shall mean the Engineering, Fabrication and Delivery
Agreement for the ***, dated as of ***, by and between Owner and Hitachi Power
Systems America, Ltd. for the purchase of one new single-reheat boiler.

*** shall mean, with respect to each of Unit 6 or the Unit 5 Scrubber, those
items as set forth in more detail in Table I-5a of Exhibit I.

*** shall mean ***.

“Indemnified Party” shall mean the Owner Indemnitees or Contractor Indemnitees,
as applicable.

*** shall mean those amounts for each of the Unit 5 Scrubber and Unit 6,
respectively, that are incurred by Contractor in performance of the *** at the
Site for the Unit 5 Scrubber or Unit 6, as applicable.

*** shall mean, with respect to Unit 6 and the Unit 5 Scrubber, respectively,
those items identified as such costs in more detail in Table I-2a of Exhibit I,
examples of which include***.

“Invoice” shall have the meaning set forth in Section 7.3(a).

*** shall mean ***.

“*** Payments” shall mean those amounts paid by Owner to Contractor under the
*** for Unit 6 or the Unit 5 Scrubber, as applicable, but excluding the
Construction Services Payments.

“Key Schedule Milestone” shall mean each Key Schedule Milestone identified on
Exhibit C.

“Laws” shall mean, at any date of determination, all statutes, laws, codes,
ordinances, orders, judgments, decrees, injunctions, licenses, rules, permits,
approvals, agreements, and regulations, 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 of Contractor or any Subcontractor against the Facility, the
Site, the Equipment or the Owner Equipment.

“Liquidated Damages” shall mean the Delay Liquidated Damages and the Performance
Liquidated Damages.

“Limited Notice to Proceed” or “LNTP” with respect to Unit 6 or the Unit 5
Scrubber shall mean a written notice that Owner gives to Contractor authorizing
Contractor to proceed with the respective Work for Unit 6 or the Unit 5 Scrubber
in a limited manner.

“Make Right Performance Guarantees” shall mean those Performance Guarantees
designated as such in Exhibit L for which the payment of a Performance
Liquidated Damage as a remedy shall not be an option for Contractor, which shall
include the Guaranteed Emission

 

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Limits, but only to the extent that the failure to meet any such limits are
attributable to Contractor’s scope of Work (with respect to Owner Equipment,
only the Work as expressly set forth in Section 3.1(a)(ii)(B)).

“Major Subcontractor” shall mean any Subcontractor who is engaged by Contractor:
(i) to perform any off-Site Services or provide any Equipment that exceeds or is
expected to exceed, in the aggregate with all prior provision of Equipment, ***;
or (ii) that will be providing Services at the Site (other than the delivery of
material or Equipment) that exceeds or is expected to exceed, in the aggregate
with all prior performance of Services or provision of Equipment, ***.

“Maximum Liability Amount” shall have the meaning set forth in Section 17.2.

“Mechanical Completion” for Unit 6 or the Unit 5 Scrubber shall mean that Unit 6
or the Unit 5 Scrubber shall have achieved all the conditions set forth in
Section 11.1.

“Minimum Performance Guarantees” shall mean, to the extent that the failure to
meet any such limit is attributable to Contractor’s scope of Work (but with
respect to Owner Equipment, only the Work as expressly set forth in
Section 3.1(a)(ii)(B)):

(a) With respect to the operation of the Unit 5 Scrubber, those minimum
performance guarantees which must be met in accordance with Exhibit L-1 in order
for Contractor to achieve Substantial Completion of the Unit 5 Scrubber and
which allows the Unit 5 Scrubber to operate in compliance with applicable Laws;
and

(b) With respect to the operation of Unit 6 in accordance with the performance
conditions set forth in Exhibit L-2, the achievement by Unit 6 of net Heat Rate
for Unit 6 not exceeding *** of the Performance Guarantees (or *** BTU/kW-hr
HHV) and a net Electrical Output for Unit 6 not less than *** of the Performance
Guarantees (or *** kW), both of which are achieved while meeting the Permitted
Emission Limits of Unit 6;

as such performance guarantees may be adjusted by Change Order.

“Monthly Progress Report” shall mean the written report Contractor delivers to
Owner each month describing the total amount of progress in the Work achieved
during the prior month, as provided in Section 3.21(a).

*** shall have the meaning set forth in the Recitals.

“Original EPC Agreement” shall have the meaning set forth in the Recitals.

“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 their respective successors and permitted assigns.

“Owner Equipment” shall mean the equipment that Owner has agreed to purchase and
supply pursuant to the Owner Equipment Contracts, including specifically the
following items:

(a) one wet flue gas desulfurization (FGD) system for the Unit 5 Scrubber and
one air quality control system (AQCS) for Unit 6 from Alstom Power, Inc.;

 

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(b) one 904,500 kW TCAF-40” Super-Critical Steam Turbine and associated 1070MVA
generator from Toshiba International Corporation; and

(c) one new single-reheat boiler from Hitachi Power Systems America, Ltd.

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

“Owner Indemnitees” shall have the meaning set forth in Section 14.1.

“Owner Permits” shall mean the permits and approvals that Owner is required to
obtain as set forth in Section 4.3 and Exhibit E.

“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.

“Party” shall have the meaning set forth in the first paragraph.

“Performance Guarantees” shall mean, to the extent that the failure to meet any
such limit is attributable to Contractor’s scope of Work (but with respect to
***, only the Work as expressly set forth in Section 3.1(a)(ii)(B)):

(a) With respect to the operation of the Unit 5 Scrubber, those specific
guarantees set forth in Exhibit L-1 under the performance conditions set forth
in Exhibit L-1, which must be met in order for Contractor to achieve Final
Completion of the Unit 5 Scrubber; and

(b) With respect to the operation of Unit 6 in accordance with the performance
conditions set forth in Exhibit L-2, the achievement by Unit 6 of a Heat Rate
for Unit 6 not exceeding *** BTU/kW-hr HHV, an Electrical Output for Unit 6 not
less than *** kW and Unit 6 Main Steam Flow Capacity of not less than *** lbm/hr
(all of which are achieved while meeting the Guaranteed Emission Limits of Unit
6);

as such may be adjusted by Change Order.

“Performance Liquidated Damages” shall mean, to the extent that the failure to
meet any such limit is attributable to Contractor’s scope of Work (but with
respect to Owner Equipment, only the Work as expressly set forth in
Section 3.1(a)(ii)(B)):

(a) With respect to the operation of Unit 6, *** per each BTU/kWhr measured as
HHV over the Performance Guarantee for Unit 6 Heat Rate, *** per each kW under
the Performance Guarantee for Unit 6 Electrical Output and *** for each lbm/hr
under the Performance Guarantee for Unit 6 Main Steam Flow Capacity in
accordance with Exhibit L-2; and

 

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(b) With respect to the performance of the Air Quality Control System for Unit
6, the liquidated damages as expressly set forth in Section 9.0 of Exhibit L-2;
and

(c) With respect to the performance of the Unit 5 Scrubber, the liquidated
damages as expressly set forth in Table 5.1 of Exhibit L-1.

“Performance Liquidated Damages Cap” for Unit 6 or the Unit 5 Scrubber shall
mean *** of the respective Contract Price for Unit 6 or the Unit 5 Scrubber, as
may be amended by Change Order.

“Performance Testing” shall mean the tests, conducted in accordance with the
Testing Procedures, by which Contractor demonstrates that Unit 6 and the Unit 5
Scrubber meets, for Substantial Completion, the Minimum Performance Guarantees,
or for Final Completion, the Performance Guarantees.

“Permitted Emission Limits” shall mean:

(a) With respect to Unit 6, those specific emission limits for each regulated
pollutant set forth in the Facility Air Permit authorizing the construction and
operation of Unit 6 and which specifies the methods of measurement, recordation,
and compliance and which are designated as such and set forth in Exhibit M.

(b) With respect to the Unit 5 Scrubber, those emission limits designated as
such and set forth in Exhibit M.

“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.

“Project” shall mean collectively Unit 6 and the Unit 5 Scrubber as set forth in
the Recitals.

“Project Manuals” shall mean those manuals prepared by Contractor for use by
Owner or its designated operator in connection with the operation, maintenance
of and training on the Project that conform to the requirements of Exhibit A.

“Progress Meeting” shall have the meaning set forth in Section 3.21(b).

“Prudent Industry Practice” shall mean those practices, methods, equipment,
specifications and standards of safety and performance, as the same may change
from time to

 

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time, as are commonly used, or are generally accepted, in construction or
operations of electric power generation facilities similar to the Project, 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 operation and maintenance of
facilities similar to the Project 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 operation, maintenance and construction practices in
the United States.

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

*** shall have the meaning set forth in Table I-4d of Exhibit I.

“Real Property” shall mean all structures, buildings, improvements and permanent
fixtures annexed or attached to Unit 6 and Unit 5 Scrubber and constructed for
Owner, buildings of all kinds and descriptions including structural and other
improvements to buildings, foundations, walls, floors, roofs, insulation,
stairways, partitions, loading and unloading platforms and canopies, areaways,
systems for heating and air conditioning, ventilating, sanitation, fixed fire
protection, lighting, plumbing, and drinking water, building elevators and
escalators, retaining walls, piling and mats for general improvements of Site,
private roads, walks, paved areas, culverts, bridges, viaducts, fencing,
reservoirs, dykes, dams, ditches, canals, drainage, storm and sanitary sewers,
water lines for drinking, sanitary and fire protection and all building
materials which become an integral part of Unit 6 or the Unit 5 Scrubber.

“Reliability Testing” shall have the meaning set forth in Exhibit L-3.

“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 the critical schedule of key dates and milestones,
including the Key Schedule Milestones, for completion of the Work, as set forth
in Exhibit C, as modified or updated from time to time in accordance with the
terms of this Agreement.

“SDS” or “Small Diverse Suppliers” shall have the meaning set forth in
Section 25.4.

“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 or otherwise) and other work,
services and actions (including pursuant to any warranty obligations) to be
performed by Contractor hereunder (whether at the Site or otherwise) in
connection with, or relating to, the Project (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, (b) all of
the foregoing items that Contractor has provided or has committed to provide
directly, or indirectly through a Subcontractor, pursuant to the JPDA and the
Construction Services Agreement and (c) 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.

 

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“Scope of Work” shall mean the scope of work as set forth in Exhibit A.

“Site” shall mean the physical location at the Cliffside Steam Station under the
care, custody and control of Contractor upon which Contractor shall perform the
construction portion of the Work as described in Exhibit B.

“Specifications” shall mean the Project specifications in Exhibit A.

“Standby Letter of Credit” shall mean *** dated ***, executed and delivered by
*** to Owner in the *** in support of ***.

“State” shall mean the State of North Carolina and its Government Authorities.

“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 (e.g., a second- or third-tier subcontractor) to
perform any of the Services or to furnish any Equipment, at the Site or
elsewhere.

*** shall mean those amounts for each of the Unit 6 and the Unit 5 Scrubber,
respectively, that are incurred by *** in performance of the Work in connection
with the items identified in *** of Exhibit I.

*** shall mean, with respect to Unit 6 and the Unit 5 Scrubber, respectively,
those items of Work provided by the furnish and erect Subcontractors as
identified in *** of Exhibit I for Unit 6 or the Unit 5 Scrubber, as applicable.

*** shall mean, as the context may require, *** for, each of the Unit 6 and the
Unit 5 Scrubber, respectively, that are incurred by the *** in performance of
the *** for Unit 6 or the Unit 5 Scrubber, as applicable.

“Substantial Completion” shall mean that Unit 6 or the Unit 5 Scrubber shall
have achieved all the conditions set forth in Section 11.2.

“Substantial Completion Date” shall mean the date on which Substantial
Completion of Unit 6 or the Unit 5 Scrubber actually occurs.

“Substantial Completion Punch List” shall mean the written list of items of Work
with respect to Unit 6 or the Unit 5 Scrubber (which Contractor prepares and
with which Owner agrees prior to Substantial Completion) that remain to be
completed by Contractor after Substantial Completion of Unit 6 or the Unit 5
Scrubber but prior to Final Completion of Unit 6 or the Unit 5 Scrubber and
which shall not affect the safety, reliability or operability of the Facility.

“Tangible Personal Property” shall mean all property, other than Real Property,
that has physical substance and monetary value; all property not permanently
attached to or in the form of Real Property when purchased; such as power plant
machinery, air, water and noise pollution abatement equipment to be incorporated
into the Project (Tangible Personal Property shall be interpreted consistently
with the Laws of the State).

 

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“Targeted Substantial Completion Date” shall mean:

(a) With respect to the Unit 5 Scrubber, ***; and

(b) With respect to Unit 6, ***;

as such dates may be adjusted by Change Order.

*** shall mean ***:

(a)***

(b)***

as such amounts may be amended by Change Order in accordance with this Agreement
and Exhibit I. ***.

“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 L and reasonably acceptable to
Owner.

“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.

“Toshiba Contract” shall mean the Engineering, Fabrication and Delivery
Agreement, dated as of ***, by and between Owner and Toshiba International
Corporation for the purchase of the steam turbine generator for Unit 6.

“Unit 6” shall mean the Cliffside Unit 6 described in the Recitals, and shall
include the boiler, turbine and generator set and all associated auxiliary and
environmental components (including the flue gas desulfurization system for Unit
6) necessary to generate and place power therefrom on the transmission grid in
compliance with all applicable Laws.

“Unit 5 Scrubber” shall mean the new flue gas desulfurization system for Owner’s
existing Unit 5 at the Owner’s coal-fired steam station in Cliffside, North
Carolina.

“Unit 5 Scrubber Tie-In” shall mean the process required to connect the Unit 5
Scrubber to the interface points of Owner’s existing Unit 5 at Owner’s
coal-fired steam station in Cliffside, North Carolina in order that operation of
Unit 5, through the Unit 5 Scrubber, shall meet the Permitted Emissions Limits.

 

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“Unit 6 Main Steam Flow Capacity” shall mean the test calculated turbine
throttle steam flow rate in lbm/hr for Unit 6 during the Performance Testing at
the test specified operating conditions and corrected to the base performance
conditions set forth in Exhibit L-2.

“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” with respect to Unit 6 or the Unit 5 Scrubber shall mean, as the context
may require, either (a) the Equipment and the Services or (b) the Equipment or
the Services, for Unit 6 or the Unit 5 Scrubber.

 

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 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 H for the Services and Equipment listed in Exhibit H. Contractor
shall have the right to have that portion of the Services identified in Exhibit
H performed by the approved Subcontractor for such Service, and the right to
purchase Equipment identified in Exhibit H from the approved Subcontractor for
such Equipment. For all Major Subcontractors listed on Exhibit H, Contractor
shall provide not less than *** prior notice to Owner prior to execution of such
subcontracts. If, prior to execution of a subcontract with such Major
Subcontractor listed on Exhibit H, Owner desires that Contractor engage an
alternative approved 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.

(b) If Contractor desires to engage a Subcontractor that is not identified in
Exhibit H as an approved Subcontractor, then, before Contractor enters into any
contract with, or otherwise engages, such Subcontractor to perform such Services
or provide such Equipment, Contractor shall deliver to Owner for Owner’s review
and approval (such approval not to be unreasonably withheld or delayed) (x) the
name of the Subcontractor

 

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that Contractor proposes to use in the performance of such Services or purchase
of such Equipment, (y) a statement in reasonable detail of the reasons why the
proposed Subcontractor is preferred over any approved 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 (i) Owner’s
rejection shall be reasonable and shall occur within ten (10) Business Days
after Contractor submits to Owner all of the information described in clauses
(x), (y) and (z) above and (ii) Contractor shall have an alternative
Subcontractor available to perform such Services or provide such Equipment.

(c) Contractor shall not allow any Subcontractor that Owner rejects to perform
any portion of the Services or provide any of the Equipment. 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.

2.4 Assignment of Subcontracts. All subcontracts between Contractor and its
Subcontractors shall be in writing and, to the extent commercially reasonable,
all subcontracts with Major Subcontractors shall 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; (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, a Financial Institution, or an
operator of the Facility, as designated by Owner and (d) providing that,
following a Default by Contractor and a termination of this Agreement by Owner,
upon receipt by Contractor and Subcontractor of written notice from Owner
electing same, such subcontract, together with all benefits, interests,
obligations, rights and causes of action arising thereunder, shall be deemed to
have been assigned from Contractor to Owner effective immediately upon receipt
of such notice from Owner without any further action required by any party. At
the request of Owner, Contractor shall provide Owner with copies of all
warranties of each Major 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, a Financial Institution, 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.

(b) Plural/Singular. Words importing the singular also include the plural and
vice versa.

 

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(c) 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.

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

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

(f) 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;
provided, however, that, unless Contractor was a party to such modification,
supplement or amendment, Contractor shall not be bound by such modification,
supplement or amendment in its performance of the Services or provision of the
Equipment until Contractor is notified of and agrees to it.

(g) 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.

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

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

(j) 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.

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. Later dated amendments,
Exhibits or Change Orders shall take precedence over earlier dated amendments,
Exhibits or Change Orders.

 

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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.

 

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 other than Owner
Equipment, Contractor shall procure, provide and pay for all items 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 Work, including all procurement, design and engineering services, all
installation and construction services, administration, management, training 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, Project Manuals, and all other items,
facilities and services. 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 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 Project in accordance with
Prudent Industry Practices. *** Contractor shall execute the entire Services in
a manner that will enable Unit 6 and the Unit 5 Scrubber to achieve Substantial
Completion by the Guaranteed Substantial Completion Date for Unit 6 or the Unit
5 Scrubber and Final Completion of Unit 6 and the Unit 5 Scrubber by the
Guaranteed Final Completion Date for Unit 6 or the Unit 5 Scrubber.

(ii) Scope of Services for 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 the Owner
Equipment Contracts. 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 in the pulverized-coal

 

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construction industry 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 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, and attending meetings and otherwise interfacing
with the suppliers of the Owner Equipment, all as necessary in order to ensure
performance by the respective suppliers under the Owner Equipment Contracts in
accordance with the terms and conditions 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 without the prior approval of 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) initiate or conduct any litigation or other similar
proceedings; (5) take any action that would cause a default or breach by Owner
of an Owner Equipment Contract; or (6) agree to or consent to termination or
suspension of work or activities thereunder. Owner shall provide notice to and
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) above,
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, 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 testing and Performance Testing 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, incorporate Owner Equipment manuals into the Project
Manual, and provide other services reasonably necessary to install and
interconnect such Owner Equipment to the Facility as contemplated by
Contractor’s Scope of Work.

(C) 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. Except to

 

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the extent that Contractor’s failure to perform its obligations in accordance
with this Agreement hereof is the cause of such non-performance or schedule
delay, 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.

(b) Work Under Limited Notices to Proceed for Unit 6.

(i) Until such time that Owner issues a Full Notice to Proceed with respect to
Unit 6, Owner shall from time to time issue Limited Notices to Proceed for
Contractor to perform certain portions of the Work with respect to Unit 6 as set
forth in each such Limited Notice to Proceed. Such portions of the Work shall be
performed for the price and in the manner set forth in such Limited Notice to
Proceed. Each Limited Notice to Proceed for Unit 6 shall expire upon the earlier
of (A) the date set forth in such Limited Notice to Proceed, (B) issuance of the
Full Notice to Proceed for Unit 6 or (C) termination of this Agreement with
respect to Unit 6 in accordance with Section 23.4(a).

(ii) The Parties hereto acknowledge and agree that the Owner has entered into
Owner Equipment Contracts for the Owner Equipment prior to the Amendment Date.
In connection with the execution of this Agreement, the Owner hereby retains all
of Owner’s obligations, rights, and remedies under each Owner Equipment Contract
and with respect to the Owner Equipment obtained pursuant thereto.

(c) Work After Full Notice to Proceed. The Parties hereto acknowledge and agree
that Owner issued a Full Notice to Proceed to Contractor with respect to the
Unit 5 Scrubber on ***. Therefore, Contractor has received authorization to
provide the full scope of Work relating to the Unit 5 Scrubber until such Work
is completed unless this Agreement is earlier terminated with respect to the
Unit 5 Scrubber in accordance with Section 23.4(a). Upon the issuance by Owner
of the Full Notice to Proceed with respect to Unit 6, such notice shall be
deemed to be authorization for Contractor to commence the remainder of the Work
relating to Unit 6 on the date set forth in such Full Notice to Proceed, and
thereafter, Contractor shall perform the full scope of Work relating to Unit 6
until such Work is completed unless this Agreement is earlier terminated with
respect to Unit 6 in accordance with Section 23.4(a). Owner shall issue the Full
Notice to Proceed with respect to Unit 6 no later than ***. If Owner fails to
issue such Full Notice to Proceed by such time, such failure shall constitute,
as Contractor’s sole and exclusive remedy, 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.

 

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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 operations and
maintenance staff during Commissioning and verification.

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 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 G 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 G 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 perform 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
Project. Contractor shall be responsible for the design of the Project 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 Project and execution of the Services.
Contractor shall

 

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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 Project in accordance with this Agreement (the “Design Documents”).
Contractor shall submit those Design Documents identified in Exhibit A for
Owner’s review, and Owner shall complete its review of, and provide any comments
to Contractor with respect to, the Design Documents within ten (10) Days 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
five (5) Business Days in accordance herewith. Owner shall be entitled, but not
obligated, to review and comment on all other Design Documents not identified in
Exhibit A. 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 Designs Documents, they shall be corrected,
notwithstanding any prior consent or approval of Owner of any such Design
Documents.

3.7 Quality Assurance Plan. Contractor shall develop, implement and maintain a
written plan for quality assurance of the Services (the “Quality Assurance
Plan”). Such plan shall meet the Owner’s corporate and Site-specific policies
and requirements and the requirements of all applicable Laws. Contractor
delivered the plan to Owner on October 9, 2007 for Owner’s review and comment,
and Contractor has incorporated Owner’s reasonable comments therein. Contractor
has the right to rely on such approved October 9, 2007 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 Training. Contractor shall develop and implement a program to instruct and
train Owner’s personnel adequately in accordance with the provisions of Exhibit
A. Contractor shall deliver to Owner no less than six (6) months prior to
Substantial Completion of each of Unit 6 and the Unit 5 Scrubber, substantially
complete versions of the Project Manuals for Unit 6 or the Unit 5 Scrubber (as
applicable) that are sufficient for Contractor’s use in training Owner’s
maintenance and operating personnel in respect thereof, and Contractor shall
thereafter use such Project Manuals to train such Owner personnel.

3.9 Utility Use. Subject to Section 4.5, from the Effective Date until the
latest of Final Completion of either Unit 5 Scrubber and Unit 6, Contractor
shall be responsible in connection with Contractor’s scope of Work for the
temporary power distribution grid within the Site (from the Owner designated
tie-in points), fuel (other than coal and fuel oil used for Commissioning,
Performance Testing and operation), communication systems for Contractor’s
temporary office facilities (including telephones for Owner’s staff),
construction waste disposal, and wastewater disposal.

 

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3.10 Spare Parts.

(a) Contractor shall provide the spare parts required for Commissioning and
start-up of the Equipment and the cost of such spare parts shall be contained
within the Contract Price. Acting as Owner’s agent pursuant to
Section 3.1(a)(ii)(A), Contractor shall obtain from each supplier of Owner
Equipment a recommended list of spare parts required for Commissioning and
start-up of such Owner Equipment, and Owner shall procure and provide such spare
parts to Contractor approximately sixty (60) Days prior to start-up of any such
Owner Equipment. Upon Owner’s request and acting as Owner’s agent pursuant to
Section 3.1(a)(ii)(A), Contractor shall use its commercially reasonable efforts
to obtain from each supplier of Equipment and Owner Equipment at least two
hundred and seventy (270) Days prior to Substantial Completion a list of
recommended spare parts for such Equipment and Owner Equipment for the ongoing
operation and maintenance of the Project. Contractor shall request such spare
parts list to include: (1) name of manufacturer, (2) manufacturer’s description
of spare part, (3) The manufacturer’s part number, (4) required quantities,
(5) lead time, and (6) price. *** cost for procurement of such recommended ***
spare parts *** not included in the Contract Price. The parties shall mutually
determine the process for procuring and providing such additional spare parts.
Owner shall make available for Contractor at no cost to utilize during start-up
and testing, all spare parts acquired by Owner for the Equipment and Owner
Equipment. ***.

(b) As of the Amendment Date and as part of the *** within the Contract Price,
Contractor has agreed to procure two recommended operations and maintenance
spare parts, which spare parts *** and the ***, as noted in more detail in Table
I-4a of Exhibit I.

3.11 Subcontractor Presence. Within the Contract Price component for which the
technical assistance is provided as set forth in more detail in Exhibit I,
Contractor shall be responsible for notifying and paying any Subcontractor
representative that it deems necessary to be present for technical assistance at
(a) any training session, (b) erection supervision, (c) Commissioning, or
(d) 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 same events.

3.12 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 material changes
made during construction. Before, and as a condition to, Final Completion of
Unit 6 and the Unit 5 Scrubber, Contractor shall deliver to Owner all of the
preceding items and a set of reproducible of those as-built drawings listed in
Exhibit A (in hard copy and electronic formats (non-native files) reasonably
requested by Owner), showing all Changes made during construction with respect
to Unit 6 and the Unit 5 Scrubber.

3.13 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 storage costs attributable to Owner Equipment,
which transportation and storage costs shall be paid by Owner.

 

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3.14 Project Manuals. Contractor shall deliver to Owner the first draft of the
Project Manuals for each of Unit 6 and the Unit 5 Scrubber no less than one
hundred and eighty (180) Days prior to Substantial Completion of Unit 6 or the
Unit 5 Scrubber (as applicable) in accordance with the requirements of this
Agreement, with such first draft containing sufficient operational and technical
information to allow Owner to develop related Facility operating and maintenance
procedures in order for Contractor to provide operator training. Contractor
shall deliver to Owner the final draft of such Project Manuals, in both hard
copy and electronic format, prior to Final Completion of Unit 6 or the Unit 5
Scrubber (as applicable).

3.15 Control of Work. Contractor shall control and 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, as part of the *** construction
Indirects in Exhibit I shall provide all necessary security at that portion of
the Site under Contractor’s care, custody and control for the construction Work,
including, without limitation, 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 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). From Substantial Completion through
Final Completion of Unit 6 and the Unit 5 Scrubber, ***.

3.16 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. Such steps shall
include the incident reporting to Owner station management as required by
Article 24 herein.

3.17 Local Conditions; Inspection of Interface Points.

(a) Contractor has reviewed the Site and the access to the Site, all as
described in Exhibit B, and acknowledges that they are sufficient for the
performance of the Services. Contractor represents and 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 Project, the Site or the performance of the
Services, including: (i) conditions bearing on access, egress, transportation,
waste disposal, handling, lay down, parking and storage of materials; (ii) the
availability of labor, water, electric power, other utilities and roads needed
for construction; (iii) uncertainties of normal weather or other observable
physical conditions at the Site; and (iv) the character of equipment and
facilities needed before and during the performance of the Services. If
Contractor has taken all reasonable steps as described in this Section, then,
notwithstanding Article 9, Contractor shall be entitled to an adjustment in the
Contract Price or Schedule for any differing Site conditions.

(b) Contractor has inspected the various interface points on the Owner’s
existing systems, each of which is identified on Exhibit A, and has satisfied
itself that such interface points are sufficient and adequate for the
performance and completion of

 

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the Services. Contractor represents that it has taken all prudent and
commercially reasonable steps necessary to ascertain the nature and location of
the interface points and has satisfied itself as to their sufficiency and
adequacy, except for the tie-in ducts which are scheduled for inspection during
the outage for Unit 5 Scrubber Tie-In. In the event that Contractor discovers a
differing interface point condition that affects the Services during the
performance of the Services, Contractor shall not be entitled to a Change in
accordance with Article 8 to the extent such differing condition could have been
observed or discovered in a visual inspection of the applicable interface
points; otherwise Contractor shall be entitled to a Change Order.

3.18 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 the Owner Environmental Health and Safety
manual and all applicable Laws. Contractor shall provide Owner, the Financial
Institutions 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 and the Financial
Institutions shall accept, an escort or other safety measures that Contractor,
in its sole discretion acting reasonably, deems necessary or advisable.
Contractor shall provide Owner with office facilities on the Site which shall be
outfitted in a customary manner (including a conference room) as more fully
described in Exhibit A. Those office facilities shall be connected to and
serviced by the usual utilities, subject to Sections 3.9 and 4.5. Owner shall
have the right to assign a maximum of five dedicated representatives to
Contractor’s facility on a full time basis.

3.19 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 Project, and Contractor shall give
all applicable notices with respect to, and in accordance with, any applicable
Laws. Contractor shall ensure that the Project, 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 Project 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 C.F.R. § 52.219-8, Utilization of Small, Small Disadvantaged, and
Women-Owned Small Business Concerns, and 48 C.F.R. § 52.219-9, Small, Small
Disadvantaged, and Women-Owned Small Business Subcontracting plan.

3.20 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”). At
least three (3) Days prior to application for any of those items that are
Site-specific and relate to Site activities, Contractor shall give to Owner a
copy of such application. If Owner objects to such application, Contractor shall
not proceed with such application and the Parties shall discuss and agree upon a
mutually acceptable method to achieve compliance with such requirements;
provided, that Contractor shall be entitled to a Change to the extent such delay
in submitting the

 

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application impacts the Contract Price or the Schedule. 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.

3.21 Periodic Reports and Meetings.

(a) Status Report. Within ten (10) Business Days after the end of each calendar
month, Contractor shall prepare and submit to Owner a written status report
covering the previous calendar month, which report shall be prepared in a manner
and format (hard copy and electronic) reasonably acceptable to Owner and shall
include (i) a detailed description of the progress of the Work, including an
up-to-date Work Schedule depicting all critical path activities and Key Schedule
Milestones and illustrating the progress which has been made against such
activities and Key Schedule Milestones, (ii) if the description of the progress
of the Work indicates that the Work does not comply with the Schedule, a brief
description of the steps and actions that Contractor proposes to take in order
to comply with the Schedule, (iii) a comparison of the actual amounts paid or
payable by Owner through the previous calendar month for the Work completed by
Contractor compared to the forecasted amounts payable for such Work as set forth
in the Cash Flow Plan (including in each of the ***), (iv) ***, (v) ***,
(vi) ***, (vii) a statement of any significant issues which remain unresolved
and Contractor’s recommendations for resolving the same, (viii) a summary of any
significant Project events which are scheduled or expected to occur during the
following thirty (30) Days, and (ix) all additional information reasonably
requested by Owner (the “Monthly Progress Report”).

(b) Attendance and Participation. From the Effective Date until the latest of
the Final Completion Dates of Unit 6 and the Unit 5 Scrubber, Contractor shall
attend and participate in regular meetings with Owner which shall occur monthly
(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, the Financial Institutions, 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 all or a portion of such meetings.

 

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3.22 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.

3.23 Interference with Traffic. Contractor shall carry out the Services so as
not to interfere unnecessarily or improperly with (a) Owner’s operations on the
Site (after Owner has assumed custody and control of the Project) 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.

3.24 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.

3.25 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
measures. To the extent practicable, Contractor and all Subcontractors shall
utilize reasonable waste reduction and recycling techniques at the Site. Before
the latest of the Final Completion Dates of Unit 6 and the Unit 5 Scrubber,
Contractor shall remove from the Site all tools, trailers, surplus and waste
materials, and rubbish, and shall otherwise leave the Project and the Site in a
neat and clean condition. With respect to all buildings on the Site, Contractor
shall clean all glass (inside and out), remove all paint spots and other smears,
stains or scuff marks, clean all plumbing and lighting fixtures, and clean all
concrete, tile and finished floors. If Contractor fails to perform such
housekeeping services, Owner, following notice and a reasonable opportunity for
Contractor to cure, may perform such services, and the cost of such services
shall be allocated to the Contract Price in accordance with the pricing
component for which the Services are being performed. For example, if the
housekeeping services are performed to remedy a problem with a ***, the Owner
shall be entitled to ***. If the housekeeping services are performed to remedy a
problem that would have been a ***, the costs for Owner to perform such services
shall be counted towards the*** solely for the purpose of calculating ***.

 

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.

 

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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. From the Effective Date until the latest of the Substantial
Completion Dates of Unit 6 and the Unit 5 Scrubber, 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 Project and for Contractor’s office, warehouse, shop
buildings, welding facilities, Contractor’s equipment storage, lay down area,
and employee parking. Owner shall cooperate with Contractor so as to minimize
disruption by Owner of Contractor’s performance of the Services. After
Substantial Completion of Unit 6 or the Unit 5 Scrubber and Owner takes over
care, custody and control of Unit 6 or the Unit 5 Scrubber, Owner shall allow
Contractor reasonable access to the applicable portion of the Site in order to
achieve Final Completion of Unit 6 or the Unit 5 Scrubber.

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 Project 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 in order to prevent delay. Except to the extent
that Contractor’s failure to perform its obligations in accordance with this
Agreement hereof is the cause of such non-performance or schedule delay, 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, all electrical power necessary
for construction of the Project (including back feed power) and such other fuel,
***.

4.6 Operation and Maintenance Staff. At least one year prior to Substantial
Completion of Unit 6 and at least six months prior to Substantial Completion of
the Unit 5 Scrubber, Owner shall provide, under the direction of Contractor
through Substantial Completion of Unit 6 or the Unit 5 Scrubber but at no cost
to Contractor, the complement of qualified operation and maintenance personnel
for Commissioning, Performance Testing and operation of Unit 6 or the Unit 5
Scrubber; provided, that such action by Owner in connection with Commissioning,
Performance Testing and operation of the Project shall not, in any way, modify
or relieve Contractor from its obligations or void any warranties under this
Agreement.

4.7 Job Site Rules. From the Effective Date until the latest of the Substantial
Completion Dates of Unit 6 and the Unit 5 Scrubber, Owner, its representatives
and agents shall abide by all reasonable Site safety rules promulgated by
Contractor.

 

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4.8 Payment. Owner shall pay Contractor the Contract Price, as such price may be
adjusted from time to time pursuant to the provisions of this Agreement. 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
of the respective kinds required by this Agreement, including those required by
the Specifications and Prudent Industry Practices and shall be subjected from
time to time 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,
stores, apparatus and instruments as are normally required for examining,
measuring and testing any Equipment and Owner Equipment (other than specialty
tools as listed in Owner Equipment Contracts) and workmanship, before
incorporation into the Project, for testing as may be reasonably selected and
required by Owner. Contractor shall remove from the Site any Equipment that is
not in accordance with this Agreement.

5.2 Cost of Tests. The cost of conducting any test related to the Work shall be
allocated to the Contract Price in accordance with the price component for which
the Work is performed unless such test is clearly intended by or provided for in
this Agreement as being the responsibility of Owner. 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 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), 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). The costs of any such ***.

5.3 Samples. At the reasonable request of Owner and at Owner’s cost, 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
Project.

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 Project. Contractor shall provide Owner a reasonable opportunity to be
present for any tests of any Equipment or Owner Equipment.

5.5 Examination of Work before Covering. No part of the Equipment or Owner
Equipment, as applicable, shall be permanently covered up at the Site or put out
of view without affording Owner a reasonable opportunity to examine and measure
any such part of the Equipment or Owner Equipment, as applicable, which is about
to be covered up or put out of view, including examining foundations before any
part of the Equipment or Owner Equipment, as applicable, is placed thereon. For
certain agreed parts of the Work as set forth in Exhibit A, Contractor shall
give notice to Owner whenever any such part of the Equipment or Owner

 

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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 foundations.

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. Unless the cause of such defective workmanship is shown to be the
result of Gross Negligence or willful misconduct, the costs of such work carried
out by Contractor under this Section shall be added to the Craft Labor Costs and
shall be applied against the existing Cost Target — Craft Labor without a
Change. If the cause of such defective workmanship is shown to be the result of
Gross Negligence or willful misconduct of Contractor, Contractor shall bear the
full costs of repair.

 

6. SCHEDULE & CONTRACT PRICE

6.1 ***

6.2 Commencement of Work for Unit 6 and the Unit 5 Scrubber. Owner has issued
the Full Notice to Proceed with respect to the Unit 5 Scrubber, and Contractor
has commenced the performance of the Services with respect thereto and shall
continuously and diligently fulfill its obligations under this Agreement with
respect to the Unit 5 Scrubber through the Warranty Period. Owner has issued a
Limited Notice to Proceed with respect to Unit 6, and Contractor has commenced
the performance of the Services with respect thereto in a limited fashion. Upon
issuance of the Full Notice to Proceed with respect to Unit 6, Contractor shall
continuously and diligently fulfill its obligations under this Agreement through
the Warranty Period. For Unit 6 and the Unit 5 Scrubber, Contractor shall
perform its obligations under this Agreement in accordance with the Contract
Price for Unit 6 and the Unit 5 Scrubber as set forth on Exhibit I and with the
Key Schedule Milestones set forth in Exhibit C, as such may be modified and
updated from time to time in accordance with the terms of this Agreement.
Contractor hereby acknowledges and agrees that a portion of the Work for the
Unit 5 Scrubber and Unit 6 includes: (a) Work performed under the *** and the
Original EPC Agreement, which Work has already been paid by Owner under the ***
and the Original EPC Agreement, and (b) Work performed under Duke purchase order
FHP01564, which Work has already been paid by Owner under such purchase order
(but is included as part of the Contract Price).

6.3 ***. Each Party shall, in good faith, cooperate with the other and use all
commercially reasonable efforts to ***, in each case, in accordance with ***
described in Exhibit I. ***.

6.4 Schedule Requirements; Updates. *** 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 detailed Schedule
depicting all critical path activities and illustrating the progress which has
been made on the Work against the Schedule (in hard copy and electronic format),
including critical path activities interconnected by schedule logics, for

 

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Owner’s review and comment. On a monthly basis, Contractor shall provide Owner
with any and all updates to the working Schedule, including any forecasted
changes in the Schedule and the resulting effects on achieving the Key Schedule
Milestones; 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 Owner obligation, any Key Schedule Milestones, the Guaranteed
Tie-In Date, 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. Owner shall be entitled to have access to the
Schedule in order to input, track and update Owner’s and its subcontractors’
activities within the Schedule (including logic ties) and to review and generate
reports related to the Schedule in accordance with the terms of this Agreement.
*** The Key Schedule Milestones shall be provided in the Schedule in such a way
as to support the achievement of Substantial Completion by the ***.

6.5 Enhanced Project Management Process.

(a) ***.

(b) ***.

(c) ***.

(d) ***.

(e) ***.

6.6 Unit 5 Scrubber Tie-In. Contractor shall perform Unit 5 Scrubber Tie-In in
accordance with the Guaranteed Unit 5 Tie-In Commencement Date and Guaranteed
Unit 5 Tie-In Completion Date, both as may be adjusted pursuant to a Change
Order. Owner shall have the right to make adjustments to such outage schedule,
including delaying or accelerating the Guaranteed Unit 5 Tie-In Commencement
Date or the Guaranteed Unit 5 Tie-In Completion Date; provided, that as a result
of any such adjustment, Contractor shall be entitled to an equitable adjustment
in the Contract Price and the Schedule in accordance with Article 8. *** to such
portion of the Site as Contractor may reasonably require to perform the
following Work during the outage for the Unit 5 Scrubber Tie-In: (1) removal of
blanking plates and (2) activation of the previously installed *** quick acting
relief dampers, as set forth in more detail in Exhibit A.

 

7. COMPENSATION AND PAYMENT

7.1 Cash Flow Plan. ***:

 

  (i) ***;

 

  (ii) ***;

 

  (iii) ***; and

 

  (iv) ***.

(collectively, the ***).

 

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(b) Revisions to Cash Flow Plan. If any Monthly Progress Report shows that the
amount actually paid or payable by Owner for *** incurred by Contractor in
performing the Work through the *** for which such Monthly Progress Report
relates varies or is reasonably forecasted to vary by more than *** in each of
*** from the aggregate amounts scheduled to be paid during such two-month period
as reflected in *** or *** actually incurred by Contractor in performing the
Work through the end of the month for which such Monthly Progress Report relates
varies substantially (as determined by Owner in its reasonable discretion) from
the amounts scheduled to be paid as reflected in the ***, prior to the issuance
of the next Invoice, Contractor shall create a revised forecast of future
payments to be made by Owner for the *** to be incurred by Contractor in
performing the Work for the Project (it being understood that the intent of such
revised forecast shall be to make adjustments necessary to eliminate any such
forecasted variance), which revised forecast shall be reasonably acceptable to
Owner, and Owner shall issue a Change Order to amend the *** to reflect such
revised forecast; provided, that such revised forecast shall not result in any
adjustment to the Contract Price except by Change Order. *** shall be equitably
adjusted as a result of any delay in the Work, whether caused by an event of
Force Majeure or breach of this Agreement by Contractor.

7.2 Payments of the Contract Price. In consideration of Contractor’s performance
and provision of the Work and subject to this Article 7, Owner shall pay to
Contractor the Contract Price as provided in ***.

7.3 Invoicing.

(a)***, submit to Owner a ***, broken out by Unit 6 and the Unit 5 Scrubber, in
accordance with*** for the aggregate amount that is due for such calendar month
pursuant to the Cash Flow Plan and for which Contractor has not been paid (the
“Invoice”). Each Invoice shall include:

***.

***. Contractor shall make available such documentation and materials as Owner
may reasonably require to substantiate Contractor’s right to payment of such
Invoice.

(b) If any Invoice is deficient in any material respect, Contractor shall be
required to resubmit that Invoice 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 Invoice and shall make exceptions, if any, by providing
Contractor with written notice within fifteen (15) Days after Owner receives the
Invoice and such substantiating documentation and materials as Owner may have
reasonably required. 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, by any
payment pursuant to Section 7.3(c) below, make any correction or modification
that should properly be made to any amount previously considered due.

(c) If Owner provides no exceptions within such time period set forth in
Section 7.3(b), Owner shall pay Contractor, within thirty (30) Days of receipt
of such

 

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Invoice and such substantiating documentation and materials as Owner may have
reasonably required, in U.S. dollars the amounts designated in such Invoice,
plus any additions and less any deductions which may have become due under this
Agreement, as reflected in the Invoice. Any amount of an Invoice 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 7.3(c)) within thirty (30) Days of receipt of a substantiated Invoice
which complies with the requirements of this Article, a late payment charge
shall accrue that is based on an annual percentage rate (APR) equal to the Prime
Interest Rate plus one percentage point (1%), payable each month or portion
thereof that payment is delayed beyond such 30th Day.

(d) If any Services performed or Equipment supplied by Contractor is not in
accordance with this Agreement, Owner may withhold from any Invoice 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 the estimated value of such Work until it has
been performed or provided in accordance with this Agreement.

(e) Each monthly Invoice shall include ***.

7.4 Cash Flow. The Parties acknowledge and agree that, in managing its cash
flow, Owner is relying on all payments to be made *** in accordance with the
Cash Flow Plan in Exhibit F and that any significant excess over the amounts set
forth in the Cash Flow Plan would adversely affect Owner’s ability to manage its
cash flow. ***, and the Parties shall not construe this Section as limiting,
Contractor’s ability to accelerate or substitute *** updated Schedule forecast
*** revise the Cash Flow Plan to match as closely as possible the updated *** to
the extent that doing so will not adversely impact the ability of Owner to
manage its cash flow as contemplated by this Section.

7.5 Final Payment. Upon achievement of Final Completion of Unit 6 or the Unit 5
Scrubber, Contractor shall submit to Owner an Invoice for the final Cash Flow
payment and other payments due under this Agreement with respect to Unit 6 or
the Unit 5 Scrubber (the “Final Payment Invoice”) which shall set forth all
remaining amounts due to it pursuant to this Agreement with respect to Unit 6 or
the Unit 5 Scrubber. When submitting the applicable Final Payment Invoice,
Contractor shall submit a written discharge, in form and substance 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 with respect to Unit 6 or the Unit 5 Scrubber. If requested
by Owner, the applicable 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 shall be conditioned on Contractor receiving
payment pursuant to such Final Payment Invoice. The procedures set forth in
Section 7.3 above (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 Invoice or Final Payment Invoice any undisputed
amounts owing by Contractor to Owner under this Agreement with respect to Unit 6
or the Unit 5 Scrubber, including any undisputed Liquidated Damages as may be
applicable.

 

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7.6 Certification by Contractor. In each 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 Subcontractors withheld for proper
reasons. 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.”

7.7 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.

7.8 Revenue from Use of Unit 6 and Facility. Owner shall be entitled to all
revenue derived from or in connection with operation or use of Unit 6 and the
Facility before (as contemplated in Section 10.4) and after the Substantial
Completion Date for Unit 6.

 

8. CHANGE ORDERS & PROVISIONAL SUMS

8.1 Change Requests. Without invalidating this Agreement, Owner may order
changes in the Specifications or the Work consisting of additions, deletions or
other revisions (each, a “Change”), including deletion of Unit 6 or the Unit 5
Scrubber (such deletion being only in the event: (x) the DENR permit for Unit 6
is reversed or stayed on appeal, or (y) Owner has cancelled the Work associated
with Unit 6 or the Unit 5 Scrubber and does not intend to proceed with another
contractor for such Work); provided, that Owner may not delete all Work through
this Article. Without limiting the generality of the foregoing, Owner may order:

(a) an increase or decrease in the quantity of any Work,

(b) any Work omitted,

(c) a Change in the character or quality or kind of any such Work,

(d) a Change in the levels, lines, position and dimensions of any part of the
Project,

(e) execution of additional Services of any kind prudent for the completion of
the Work, or

(f) a Change in any specified sequence or timing of the Services.

 

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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 determined on a time and
materials basis utilizing the rates set forth in Exhibit K. 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:

 

  (i) the effect and impact, if any, that the Change would have, in Contractor’s
reasonable judgment, on the Work, the Contract Price or the Schedule,

 

  (ii) Contractor’s proposal for any necessary modifications to the Work, the
Contract Price or the Schedule, and

 

  (iii) Contractor’s proposal for any necessary modifications to any other
provisions of this Agreement, including the Specifications, the Key Schedule
Milestones, the Cash Flow Payments 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 be entitled to any increase in the Contract Price or any extension of the
Schedule if such Change was necessary as a result of a breach by Contractor of
this Agreement. 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, on a time and
material basis utilizing the rates set forth in Exhibit K (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. 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 necessary to effect the Change (the “Change Order”). If Contractor
refuses to accept such necessary revisions in the Change Order, Owner shall be
entitled 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, (x) the Parties shall resolve the Dispute over the
necessary revisions in accordance with the dispute resolution procedures set
forth in Article 28 and (y) if the Change requires additional or disputed Work,
Owner shall continue to pay Contractor pursuant to the payment terms hereof
based, subject to resolution of the Dispute pursuant to Article 28, on the time
and materials rates set forth in Exhibit K. Once the Dispute is resolved, any
amount owing will be paid within thirty (30) Days after the date of resolution.

 

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If Contractor experiences an increase in costs or a delay in Contractor’s
ability to perform the Work 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 Contract Price and/or the Schedule.

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. If Contractor determines that a Change is necessary or
advisable for any reason, including a Change in Law, Contractor shall give Owner
written notice within twenty-one (21) Days thereof.

8.2. Change Order Pricing. All Change Orders will be developed on an open book
basis, and the Owner shall have the right to review the detailed cost estimates
and assumptions for the Work to be included in the Change Order. For each Change
Order, the Parties may agree to have Contractor perform the Work under such
Change Order in accordance with any of the pricing categories set forth in this
Agreement, or a combination thereof, and, if the Parties are unable to agree on
a pricing category under which such Work shall be performed, such Work shall be
performed ***. All Contingency will be negotiated on a case by case basis,
depending upon the risks associated with the Change Order Work.

8.3 Change Order Billing. All Change Orders shall be Invoiced and paid in
accordance with the payment terms set forth in the Change Order.

 

9. FORCE MAJEURE

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 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 negotiate an equitable adjustment to:
***, 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 thirty
(30) Days 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.

 

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9.3 Suspension; Termination Due to Force Majeure. If any event of Force Majeure
by Contractor delays Contractor’s performance for an aggregate time period
greater than *** consecutive Days, then Owner, in its sole and absolute
discretion, shall have the right to terminate this Agreement without penalty
upon payment of all due and owing payments in accordance with Section 23.5. If
any event of Force Majeure by Owner delays Contractor’s performance for an
aggregate time period greater than *** consecutive Days, 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 delays Contractor’s performance in any three year
time period for an aggregate time period greater than *** Days, then Contractor,
in its sole and absolute discretion, shall have the right to terminate
performance and demobilize under this Agreement without penalty, and such
termination shall be deemed and treated as a termination under Section 23.4.

 

10. INSPECTION: PERFORMANCE TESTING: PERFORMANCE GUARANTEES

10.1 Mechanical Completion Inspection. At least thirty (30) Days prior to the
date upon which Contractor expects that Unit 6 or the Unit 5 Scrubber will
satisfy the conditions for Mechanical Completion set forth in Section 11.1,
Contractor shall notify Owner in writing thereof and shall take necessary
measures to allow a preliminary Mechanical Completion inspection of the relevant
Unit 6 or the Unit 5 Scrubber 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 Unit 6 or the Unit 5 Scrubber will
satisfy the conditions for Mechanical Completion set forth in Section 11.1. If
Owner notifies Contractor of any deficiencies in the Work, Contractor shall
immediately remedy such deficiencies as part of the Contract Price and provide
Owner with the relevant documentary evidence of the correction.

10.2 Performance Testing. As soon as reasonably practicable following Mechanical
Completion of Unit 6 or the Unit 5 Scrubber as set forth in Article 11 below,
and after providing Owner at least five (5) Days 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 Unit 6
or the Unit 5 Scrubber. All Performance Testing shall be conducted in accordance
with the Testing Procedures developed in accordance with the requirements of
Exhibit L-1 or Exhibit L-2, as applicable, and approved by Owner (such approval
not to be unreasonably withheld or delayed). Owner and its agents,
representatives and invitees, including any independent third party inspector,
shall have the right to attend and witness the Performance Testing. After the
completion of each successful Performance Test, Contractor shall determine and
submit to Owner, in writing and electronically, the raw data and completed
results of such Performance Test, 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. All Performance Testing
shall be conducted in conformance with the applicable requirements of this
Agreement and the Testing Procedures and with the required prior notification to
Owner.

10.3 Satisfaction of Performance Testing. Within ten (10) Days after it receives
the results for all of the Performance Testing, the underlying raw data and
other information required by Section 10.2, Owner shall respond in writing to
Contractor stating whether (a) such

 

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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 therefore. 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 the Performance Testing, adjust or modify any of
the Equipment, or request 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
the Performance Testing in accordance with Section 10.2 and this Section. If,
following the Performance Testing, either: (a) Owner agrees that the Performance
Guarantees have been satisfied and that the Performance Testing was performed
according to the Testing Procedures, (b) the failure to meet any Performance
Guarantees is attributable to the performance of Owner Equipment (other than due
to Contractor’s obligations set forth in Section 3.1(a)(ii)(B)), 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 for the purposes of calculating Delay
Liquidated Damages or Early Completion Bonus. Notwithstanding anything in this
Article to the contrary, no agreement, confirmation, statement or otherwise of
Owner relating to whether the 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 the sole responsibility of Contractor and
included in the Contract Price, except that Contractor shall be reimbursed
through a Change Order for additional costs it may incur due to problems with
Owner Equipment that are not the result of Contractor’s failure to comply with
the requirements set forth in this Agreement (other than Section 3.1(a)(ii)(A)),
including for any repeat Performance Testing and the consumables and spare parts
associated therewith.

10.4 Owner’s Right to Operate Prior to Satisfaction of Performance Guarantees.
If Unit 6 or the Unit 5 Scrubber fails to satisfy the Performance Guarantees
during the Performance Testing for Unit 6 or the Unit 5 Scrubber or fails to
achieve Substantial Completion by the Guaranteed Substantial Completion Date for
Unit 6 or the Unit 5 Scrubber and Unit 6 or the Unit 5 Scrubber can be operated
in compliance with applicable Laws, Owner, in its sole discretion, shall have
the right nonetheless to operate Unit 6 or the Unit 5 Scrubber and shall give
Contractor written notice of its decision; provided; that if by doing so Owner
would cause material damage or deterioration to Unit 6 or the Unit 5 Scrubber,
Contractor shall not be responsible for such material damage or deterioration to
Unit 6 or the Unit 5 Scrubber to the extent caused by Owner’s election to
operate prior to Contractor having an opportunity to cure any Defects. If Owner
elects to operate Unit 6 or the Unit 5 Scrubber and, during such time, does not
permit Contractor to cure the Defects necessary for Unit 6 or the Unit 5
Scrubber to satisfy the Minimum Performance Guarantees of Unit 6 or the Unit 5
Scrubber, then the Guaranteed Substantial Completion Date and Guaranteed Final
Completion Date (if such dates have not passed) for Unit 6 or the Unit 5
Scrubber shall be extended on an equitable basis until such time as Owner
tenders Unit 6 or the Unit 5 Scrubber to Contractor for further Services and
Performance Testing, and Contractor shall be entitled to a Change Order for
equitable schedule and/or price adjustment. Owner shall bear the risk of loss
during such time as it operates Unit 6 or the Unit 5 Scrubber. Owner’s operation
of Unit 6 or the Unit 5 Scrubber under this Section shall not reduce
Contractor’s obligations under this Agreement, including Contractor’s obligation
to cause Unit 6 or the Unit 5 Scrubber to satisfy the Specifications and
Performance

 

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Guarantees for Unit 6 or the Unit 5 Scrubber, except for normal wear and tear,
degradation, and operation not in accordance with Contractor’s instructions. In
any event, if Owner elects to operate any Unit 6 or the Unit 5 Scrubber as
contemplated in this Section 10.4 for more than *** Days, then Substantial
Completion of Unit 6 or Unit 5 Scrubber shall be deemed to have been achieved on
the Day Owner made such election, and ***.

10.5 Failure of Component to Meet Performance Criteria. If Unit 6 or the Unit 5
Scrubber satisfies the Performance Guarantees of Unit 6 or the Unit 5 Scrubber
under this Agreement but an item of Equipment within Unit 6 or the Unit 5
Scrubber does not meet its specific performance criteria as set forth in the
Specifications, Contractor shall, in addition to its warranty obligations
hereunder, provide Owner with all commercially reasonably paid assistance in
pursuing the available remedies against the Subcontractor which provided such
Equipment. This assistance may include but shall not be limited to assistance in
enforcing the repair, replacement or refurbishment of the Equipment by
Subcontractor or the collection of monetary remedies from the Subcontractor for
failure to meet its guarantees. The Owner shall be entitled to the benefits of
any recovery from such Subcontractor.

 

11. MECHANICAL COMPLETION; SUBSTANTIAL COMPLETION; FINAL COMPLETION

11.1 Mechanical Completion. “Mechanical Completion” shall be deemed to have
occurred with respect to Unit 6 or the Unit 5 Scrubber upon the satisfaction of
all of the following conditions:

(a) All materials, equipment and systems related to the safe start-up and
testing of Unit 6 or the Unit 5 Scrubber 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 shall be mechanically and electrically sound, all
required pre-operational testing shall have been satisfactorily completed, and
all systems shall have been checked for alignment, lubrication, rotation and
hydrostatic and pneumatic pressure integrity.

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

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

(d) For Unit 6, Contractor shall have synchronized Unit 6 to the transmission
grid as described in Exhibit A;

(e) The Equipment and Owner Equipment shall be capable of being tested in
accordance with Exhibit L without damage thereto (including any 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;

(f) Contractor shall have provided the applicable Documentation that is needed
to start-up, operate and maintain Unit 6 and the Project (including the Project
Manuals), which Documentation shall have been approved, in the reasonable
determination of Owner, as adequate for the start-up, operation and maintenance
of Unit 6 and the Project (such approval not to be unreasonably withheld or
delayed);

 

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(g) Contractor shall have provided the training of Owner’s personnel and
representatives as required by Exhibit A; and

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

Contractor shall not commence Performance Testing of Unit 6 or the Unit 5
Scrubber until all of the above conditions have been satisfied with respect to
Unit 6 or the Unit 5 Scrubber and Contractor shall have provided the required
prior notice to Owner of the Performance Testing and given Owner an opportunity
to attend.

11.2 Substantial Completion. “Substantial Completion” shall be deemed to have
occurred with respect to Unit 6 or the Unit 5 Scrubber upon the satisfaction of
all of the following conditions:

(a) Mechanical Completion of Unit 6 or the Unit 5 Scrubber shall have been
achieved;

(b) Unit 6 or Unit 5 Scrubber shall be capable of being operated in accordance
with the Specifications without damage to Unit 6 or the Unit 5 Scrubber, the
Facility 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 completed the initial Performance Testing of Unit 6 or
Unit 5 Scrubber and the results of such initial Performance Testing shall have
satisfied the Minimum Performance Guarantees of Unit 6 or Unit 5 Scrubber, all
according to the Testing Procedures and the requirements of Article 10;

(d) Contractor shall have completed the performance of the Services with respect
to Unit 6 or the Unit 5 Scrubber according to all of the provisions of this
Agreement, with the exception of those items specified in the Substantial
Completion Punch List with respect to Unit 6 or the Unit 5 Scrubber, 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 the Documentation relating to Unit
6 or the Unit 5 Scrubber that Contractor is required to deliver to Owner
pursuant to Exhibit A; 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 the satisfaction of all of the foregoing conditions, Owner shall accept
Unit 6 or the Unit 5 Scrubber, subject to Final Completion of Unit 6 or the Unit
5 Scrubber according to Article 11,

 

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by delivering to Contractor notice of that acceptance within a reasonable time,
and Contractor shall turn over risk of loss and care, custody, control and
operation of Unit 6 or the Unit 5 Scrubber to Owner. For the purposes of
calculating Delay Liquidated Damages ***, the date upon which Contractor submits
the certifying notice required by this Section 11.2 (if such notice is accurate)
shall be deemed the Substantial Completion Date with respect to Unit 6 or the
Unit 5 Scrubber.

11.3 Final Completion. “Final Completion” shall be deemed to have occurred for
Unit 6 or for the Unit 5 Scrubber upon the satisfaction of all of the following
conditions for Unit 6 or the Unit 5 Scrubber:

(a) for Unit 6 or the Unit 5 Scrubber, Contractor shall have achieved all
conditions for Substantial Completion of Unit 6 or the Unit 5 Scrubber;

(b) Contractor shall have completed the Performance Testing of Unit 6 or Unit 5
Scrubber and either (i) all Performance Guarantees of Unit 6 or the Unit 5
Scrubber shall have been satisfied according to the Testing Procedures, or
(ii) Contractor shall have satisfied all of the Make Right Performance
Guarantees of Unit 6 or the Unit 5 Scrubber and shall have paid to Owner
Performance Liquidated Damages as required by Article 12 for those guarantees
that allow a performance buy-down;

(c) The performance of the Services (except for Services relating to any
warranty Work) shall be one hundred percent (100%) complete, including the
Reliability Testing and the completion (or buying down) by Contractor of all
items on the Substantial Completion Punch List with respect to Unit 6 or the
Unit 5 Scrubber in accordance with this Agreement;

(d) Contractor shall have delivered to Owner the Documentation Contractor is
required to deliver to Owner pursuant to Exhibit A as of the Final Completion
Date for Unit 6 or the Unit 5 Scrubber;

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

 

12. DELAY AND PERFORMANCE LIQUIDATED DAMAGES; EARLY COMPLETION BONUS

12.1 Delay Liquidated Damages.

(a) The Parties agree that it would be extremely difficult and impracticable
under presently known and anticipated facts and circumstances to ascertain and
fix the actual damages Owner would incur if Contractor does not achieve
Substantial Completion of Unit 6 by the Guaranteed Substantial Completion Date
for Unit 6 (as the Guaranteed Substantial Completion Date for Unit 6 may be
extended due to Force Majeure, Owner caused delays, differing site conditions,
discovery of Hazardous

 

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Materials, Changes in Law, or as otherwise contemplated in this Agreement), and,
accordingly, if Contractor does not achieve Substantial Completion of Unit 6 by
that date, subject to Section 12.1(c) below, Owner’s sole and exclusive remedy
for such delay shall be to recover from Contractor as liquidated damages, and
not as a penalty, the Delay Liquidated Damages for each Day that Substantial
Completion of Unit 6 is delayed beyond the Guaranteed Substantial Completion
Date for Unit 6; provided, that in no event shall the aggregate Delay Liquidated
Damages for Unit 6 exceed its Delay Liquidated Damages Cap.

(b) The Parties agree that it would be extremely difficult and impracticable
under presently known and anticipated facts and circumstances to ascertain and
fix the actual damages Owner would incur if (i) Unit 5 Scrubber Tie-In does not
commence by the Guaranteed Unit 5 Tie-In Commencement Date, (ii) Contractor does
not complete the successful Tie-In of the Unit 5 Scrubber by the Guaranteed Unit
5 Tie-In Completion Date or (iii) after the successful Tie-In of the Unit 5
Scrubber, Contractor does not achieve Substantial Completion of the Unit 5
Scrubber by the Guaranteed Substantial Completion Date (in each case, as the
Guaranteed Unit 5 Tie-In Commencement Date, the Guaranteed Tie-in Completion
Date or the Guaranteed Substantial Completion Date of the Unit 5 Scrubber, as
applicable, may be extended due to Force Majeure, Owner caused delays, differing
site conditions, discovery of Hazardous Materials, Changes in Law, or as
otherwise contemplated in this Agreement), and, accordingly, upon the occurrence
of either event, subject to Section 12.1(c) below, Owner’s sole and exclusive
remedy therefore shall be to recover from Contractor as liquidated damages, and
not as a penalty, the Delay Liquidated Damages for each Day after the Guaranteed
Unit 5 Tie-In Commencement Date that Unit 5 Scrubber Tie-In does not commence,
each Day after the Guaranteed Unit 5 Tie-In Completion Date that the successful
Tie-In of the Unit 5 Scrubber has not been achieved, and, after the successful
Tie-In of the Unit 5 Scrubber has been achieved, each Day after the Guaranteed
Substantial Completion of the Unit 5 Scrubber that Substantial Completion of the
Unit 5 Scrubber is not achieved, as applicable; provided, that in no event shall
the aggregate Delay Liquidated Damages for the Unit 5 Scrubber exceed its Delay
Liquidated Damages Cap. The Parties hereby agree that the Delay Liquidated
Damages payable pursuant to this Section 12.1(b) shall not be duplicative. By
way of example, if Contractor is assessed Delay Liquidated Damages due to the
commencement of Unit 5 Scrubber Tie-In on a date that is two (2) Days after the
Guaranteed Unit 5 Tie-In Commencement Date, Contractor shall not be liable for
Delay Liquidated Damages for the same two (2) Day delay in completing Unit 5
Scrubber Tie-In or in achieving Substantial Completion of the Unit 5 Scrubber.

(c) Contractor shall have no liability or obligation to pay Delay Liquidated
Damages to Owner hereunder for any delay in Contractor’s performance of the Work
to the extent attributable to the performance of any Owner Equipment, unless
such delay is the result of Contractor’s failure to comply with the requirements
set forth in this Agreement.

12.2 Performance Liquidated Damages.

(a) The Parties agree that it would be extremely difficult and impracticable
under presently known and anticipated facts and circumstances to ascertain and
fix the

 

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actual damages Owner would incur if Unit 6 or the Unit 5 Scrubber does not meet
the corresponding Performance Guarantees on or before the Guaranteed Final
Completion Date for Unit 6 or the Unit 5 Scrubber, and, accordingly, and subject
to Section 12.2(c) below, Owner’s sole and exclusive remedy for such failure
shall be to recover from Contractor as liquidated damages, and not as a penalty,
the applicable Performance Liquidated Damages; provided, however, that in no
event shall the aggregate Performance Liquidated Damages for Unit 6 or the Unit
5 Scrubber exceed the respective Performance Liquidated Damages Cap.

(b) Notwithstanding anything set forth in Section 12.2(a) to the contrary,
Contractor shall have the right, exercisable by written notice to Owner, to
delay the payment of Performance Liquidated Damages by Contractor with respect
to Unit 6 or the Unit 5 Scrubber and to continue to use all commercially
reasonable efforts to achieve the Performance Guarantees of Unit 6 or the Unit 5
Scrubber for a period of up to *** after the Guaranteed Final Completion Date
for Unit 6 or the Unit 5 Scrubber.

(c) Contractor shall have no liability or obligation to pay any Performance
Liquidated Damages to Owner hereunder for the failure to meet any Performance
Guarantee to the extent that such failure is attributable to the performance of
any Owner Equipment, unless such failure is the result of Contractor’s failure
to comply with the requirements set forth in Section 3.1(a)(ii)(B).

12.3 Early Completion Bonus. Owner shall pay Contractor the Early Completion
Bonus for Unit 6 for Contractor’s early achievement of Substantial Completion of
the Work for Unit 6 as compared to the Guaranteed Substantial Completion Date
for Unit 6. Contractor shall only be entitled to such Early Completion Bonus if
the Work meets the Minimum Performance Guarantees for Unit 6 at the time of
Substantial Completion of Unit 6.

12.4 Payment. Unless disputed in good faith, the Liquidated Damages specified in
Section 12.1, Section 12.2 and the Bonus specified in Section 12.3 shall be due
and payable within thirty (30) Days after written demand by Owner or Contractor,
as the case may be. Any undisputed Liquidated Damages or Bonus that remain
unpaid after the expiration of such thirty-Day period shall bear interest at the
Prime Interest Rate plus 1% per annum or the highest rate allowed by Law,
whichever is less. If any Liquidated Damages or Bonus are disputed by either
Party, any Liquidated Damages or Bonus that are 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 thirty-Day period referred
to above at the Prime Interest Rate plus 1% per annum or the highest rate
allowed by Law, whichever is less. Notwithstanding the assessment of interest,
and in addition to its other rights and remedies, Owner and Contractor shall
have the right to offset the amount of any unpaid Liquidated Damages or Bonus
plus interest against any amounts due or that may become due to Contractor or
Owner (as the case may be) under this Agreement.

 

13. WARRANTY

13.1 Services Warranty Period. Contractor warrants that the 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

 

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professional knowledge and judgment. For Unit 6 and the Unit 5 Scrubber, if any
portion of the Services fails to comply with this warranty obligation and
Contractor is so notified in writing prior to *** after the respective
Substantial Completion Date (the “Services Warranty Period”), Contractor will
promptly re-perform such portion of the Services without additional compensation
from Owner or, if re-performance is impossible or commercially impracticable,
Owner and Contractor shall meet and discuss in good faith an equitable way to
resolve such matter in order to place Owner in as good a position as Owner would
have been in had there been no such breach of the warranty obligation. If the
Parties are unable to resolve such matter in a manner reasonably acceptable to
both Parties, either Party may initiate the Dispute resolution procedures set
forth in Article 28.

13.2 Equipment Warranty Period. Unless otherwise mutually agreed in writing for
a particular piece of Equipment, Contractor warrants that all 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 that
is the earlier of: (a) *** from the date Substantial Completion of Unit 6 or the
Unit 5 Scrubber is achieved or (b) for items of Engineered Equipment provided by
a Subcontractor, the expiration of such Engineered Equipment Subcontractor
warranty; provided that, ***. If Contractor fails to so notify Owner, Contractor
shall be responsible for the full *** warranty obligation on such ***. Except
for Equipment noted in Section 13.2(b) above, the Equipment Warranty Period for
each item on a Substantial Completion Punch List shall commence upon
Contractor’s completion (or buying down) of, and Owner’s acceptance of, the
particular Punch List item and shall continue until the *** thereof (the
warranty periods set forth in this Section are, collectively, referred to as the
“Equipment Warranty Period”).

13.3 Extension of Warranty Periods. If a Defect (as defined in Section 13.4) is
discovered within the Services Warranty Period or Equipment Warranty Period, as
applicable, and such Defect is not cured to the reasonable satisfaction of
Owner, then the Services Warranty Period or Equipment Warranty Period, as
applicable, 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 for Unit 6 or the Unit 5 Scrubber extend beyond *** from the Substantial
Completion Date for Unit 6 or Unit 5 Scrubber, respectively.

13.4 Defects. If, within the Services Warranty Period or Equipment Warranty
Period, as applicable, deviations from, breaches of, or failures of the
foregoing warranties (“Defects”) in the Equipment or Services are discovered by
Owner or Contractor, Contractor shall at no additional cost to Owner, commence
within a timely manner upon being discovered or upon notice from Owner to
correct those 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 the Defects have been properly corrected.
Warranty Work critical to the operation of the Facility shall be performed at
such time and in such manner as to take into consideration Owner’s requirements
to avoid disruption of Owner’s operations at the Facility. Contractor shall be
responsible for, and shall pay as and when due for, all inspection, removal,
packaging, transportation, installation, consulting and other costs for the
correction of Defects. Owner shall provide Contractor with reasonable access at
the Site to correct Defects; provided, that any such access shall be restricted,
and subject to such conditions, as Owner may have instituted generally for its
contractors.

 

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13.5 Responsibility for Warranty Work. Contractor shall have primary liability
with respect to the warranties in this Agreement, whether or not any Defect or
other matter is also covered by a warranty of a Subcontractor or other third
party, 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 or other third party (except as delineated in
Section 13.2), and the refusal of a Subcontractor or other third party 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
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)(ii)(B).

13.6 Conditions of Warranty. To the extent that any failure by Contractor to
meet the foregoing warranties is the result of (a) Owner’s failure to receive,
handle, store, maintain, or install 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
operated and maintained in a reasonable manner consistent with Contractor’s or
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.

13.7 Title Warranty. Contractor represents and 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
Equipment, free and clear of all Liens (other than Liens created solely by the
actions of Owner); 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, but
Contractor shall, and hereby does, grant, effective upon the date on which Owner
takes over care, custody and control of the Facility, to Owner the licenses to
such intellectual property as described in Article 19. In the event of any
nonconformity with or breach of this warranty, Contractor shall, as part of the
Fixed Prices, promptly, and in any event within thirty (30) Days 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; provided,
that if Contractor is unable within such thirty (30) Day 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.

13.8 Intellectual Property Warranty. Contactor warrants that the Services
performed by Contractor or its Subcontractors, the Equipment and the
Documentation, or any part of any of the foregoing, shall not infringe or
constitute a misappropriation of any right of any third party, including,
without limitation, any copyrights, mask work rights, patent rights, trademark
rights, trade secret rights or confidentiality rights.

13.9 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,

 

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to the extent erected by Owner or a third party and not included in, or required
by, the Specifications and to the extent necessary to permit Contractor to
perform its warranty obligations, any material or structures; and (c) provide
Contractor reasonable access to Facility personnel as are reasonably necessary
to the extent consistent with personnel job classifications and subject to
availability to assist Contractor in the performance of its warranty
obligations.

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 the liabilities of
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 and Financial
Institutions (collectively, the “Owner Indemnitees”) from and against:

(i) 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 negligence or willful misconduct 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, including any Services during any Warranty Period, and

(ii) 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:

 

  (a) 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;

 

  (b) 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

 

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

 

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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”) from and against:

(i) 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, in whole or in part, the negligence or willful misconduct 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,
including any Services during any Warranty Period; and

(ii) 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:

 

  (a) 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 Subcontractor, or any of their respective employees or agents or
third parties over which either of them has control), or

 

  (b) any prohibited assignment of this Agreement by Owner, or

 

  (c) any pre-existing Hazardous Materials.

14.3 Intellectual Property Indemnity. Contractor shall, as part of the Fixed
Prices, 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 Documentation or the
Equipment, or any part thereof, or use thereof, constitutes an infringement or
misappropriation of any right of any third party, including, without limitation,
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 use
of any part of the Project, the Documentation or the Equipment by any Owner
Indemnitees. If the use of the Project, 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, either: (i) procure for such Owner
Indemnitees the right to continue using the Project, the Documentation

 

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or the Equipment, or any part thereof; (ii) replace same with substantially
equivalent non-infringing 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. Except to the extent that Contractor is a contributory
infringer, Contractor shall have no indemnity duty or obligation hereunder to
the extent that the Facility, the Documentation or the Equipment furnished
hereunder is (A) modified by Owner after acceptance thereof to make it
infringing, or (B) combined by Owner with items not furnished hereunder or
recommended or approved by Contractor and solely as a result of said
modification or combination a claim, suit or proceeding is brought against
Owner. 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. If Contractor is unable to flow down such
provision to a Major Subcontractor, Contractor shall notify Owner in writing of
such failure prior to entering into a subcontract with such Person and Owner and
Contractor shall consult in good faith concerning the options to select an
alternative Subcontractor. Notwithstanding anything to the contrary,
Contractor’s obligations under this Section 14.3 shall not apply to 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; 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.

 

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(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 Owner Provided Builder’s Risk.

(a) The Owner shall procure and maintain Builders Risk Insurance Coverage ***
which provides for “All Risk” coverage for physical loss or damage to the Work
from the date the Full Notice to Proceed *** issued until the latest of the
Substantial Completion Dates of Unit 6 and the Unit 5 Scrubber, including
physical loss or damage resulting from earthquake, flood and hot testing. Such
coverage shall encompass the buildings, structure of work, materials and
property associated with the Work in the care, custody or control of Contractor
and the Subcontractors at the Site. Such coverage shall include coverage for
earthquake, subsidence and sinkhole, water damage (including flood), windstorms,
boiler, machinery, inland transit and temporary off-Site storage exposure,
start-up and testing coverage, vandalism, malicious mischief, collapse,
falsework, temporary buildings, debris removal including demolition occasioned
by enforcement of applicable legal requirements.

(b) The Builder’s Risk coverage provided by Owner shall in no way be construed
to provide coverage for the tools, materials, and equipment of Contractor or any
Subcontractor. The Builder’s Risk policy does not provide coverage for
Contractor’s or any Subcontractor’s equipment, including owned, used and leased
equipment required to perform the Work. Furthermore, the Builder’s Risk policy
does not provide business interruption or delay in completion coverage for
Contractor or any Subcontractor.

(c) The Builder’s Risk Policy 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 *** for all other real property and tangible personal property (except up
to *** for start-up and testing of all Equipment) at the Site ***.

 

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(e) Owner shall, and shall cause its underwriters to, waive subrogation against
Contractor (including its Affiliates) and its Subcontractors on such Builder’s
Risk insurance policy except for any claims or matters in which the Equipment
warranty or the Services warranty provided by Contractor or any Subcontractor
hereunder are involved. It is further agreed that Owner may elect to self-insure
this risk. In the event that Owner elects to self-insure the Builder’s Risk,
Owner shall waive its right to recover the cost to repair or replace such loss
or damage from Contractor (including its Affiliates) and its Subcontractors in
excess of the deductible and to the extent that coverage would have been
available had Owner obtained the foregoing Builder’s Risk 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, Contractor shall replace
or repair such loss or damage in accordance with the terms of this Agreement,
and Contractor shall be reimbursed for all such costs plus the cost of extended
overhead (including for home office costs and Field Non-Manual and procurement
costs). Contractor shall act on behalf of Owner, at Owner’s request, for the
purpose of adjusting any loss to Owner’s Equipment. ***.

15.2 Contractor Controlled Insurance Program (CCIP), Contractor’s Insurance and
Subcontractor’s Insurance.

(a)*** the *** Date until the latest of the Final Completion Dates of Unit 6 and
the Unit 5 Scrubber, and without limiting its indemnity obligations under this
Agreement, Contractor shall, *** in forms approved by Owner (which approval
evaluation shall not be unreasonably withheld or delayed) and with insurance
companies approved to do business in the State of North Carolina 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 latest of the Final
Completion Dates of Unit 6 and the Unit 5 Scrubber, except for Products
Liability/Completed Operations coverage, which shall be maintained for five
(5) years beyond such date. Liability insurance coverage limits set forth below
are minimums and dedicated to Services performed for Owner related to the
Project.

 

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

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 the latest of the
Final Completion Dates of Unit 6 and the Unit 5 Scrubber

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

 

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Type

    

Coverage Amount

•     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

    

d)      Business Automobile Insurance on ISO form (CA 00 01 10 01) or
equivalent. Must include coverage for the following:

     $*** per occurrence

(1)    owned motor vehicles;

(2)    hired motor vehicles; and

(3)    other non-owned vehicles

(4)    coverage for certain railroad operations CA2070 10/01

 

e)      If aircraft are used in performance of the Services, Contractor shall
provide or cause the operators of Aircraft to provide Aircraft Liability
Insurance (except that aircraft for aerial photography shall be excluded from
this requirement)

     $*** combined single limit

 

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Type

    

Coverage Amount

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

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

g)      Umbrella/Excess Liability Insurance following form and excess of
coverages in sections b, c and d (not required excess of d if CCIP) above.

 

Hired and Non-Owned automobile coverage endorsed for Owner and Contractor.

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

h)      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 three year’s after completion of the Work
reporting requirement for claims made forms.

15.3 General Requirements:

(a) The provisions of this Article 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 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
hereunder 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 (including the Financial Institutions) 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

 

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severability of interest or cross liability clause. 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
sixty (60) Days 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 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
forms showing such coverage in full force and effect shall be delivered to Owner
within thirty (30) Days of the *** Date, *** within ten (10) Days 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 (including the
Financial Institutions) 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. Contractor shall provide copies of CCIP
placement and renewal policies and all endorsements *** to the Owner not later
than sixty (60) Days 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. CCIP provisions for
excluding Subcontractors must be disclosed and approved by Owner in writing
prior to CCIP effective date.

(c) If any of the insurance required under this Article (other than
project-specific insurance) shall be directly or indirectly depleted by *** or
more (whether due to payment of insurance proceeds, creation of a reserve or
otherwise), 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.

(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,
including any representatives of the Financial Institutions.

(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 if covered by
CCIP, otherwise for all Subcontractor Work), 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

 

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Industry Practices, and provide Owner with evidence acceptable to Owner of such
coverage, or Contractor shall maintain such coverage under its own insurance
policies or CCIP. Contractor shall ensure that all Subcontractors obtain and
maintain prudent insurance coverages. All Subcontractor coverages shall waive
subrogation rights against Owner and Contractor, and shall name Owner and
Contractor as additional insured (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 Owner 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
fifteen (15) Days 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.

15.4 Insurance Costs and Assumptions. ***. For any Change Orders, additional
CCIP costs, if any, shall be allocated to such Change Orders in proportion and
as part of the same pricing components as set forth in (i) through (iv) above.

 

16. PROJECT CREDIT SUPPORT

16.1 Parental Guarantee. *** obligations under this Agreement *** as Exhibit
J-1. *** Date until Final Completion of each Unit 6 and the Unit 5 Scrubber,
Contractor shall, upon request of Owner, cause Guarantor to deliver to Owner
(a) within *** Days following the end of each fiscal year, a copy of Guarantor’s
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 *** Days after the end of each of its first three
fiscal quarters of each fiscal year, a copy of Guarantor’s 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.

 

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16.2 Standby Letter of Credit.

(a) Contractor has obtained and *** attached *** as Exhibit J-2. The Standby
Letter of Credit *** be issued by a U.S. commercial bank or a foreign bank with
a U.S. branch with total assets of at least $5 billion having a general
long-term senior unsecured debt rating of A - or higher (as rated by Standard &
Poor’s Rating Group) or A3 or higher (as rated by Moody’s Investor Services,
Inc.) and permits presentation at a bank located in Charlotte, NC, Atlanta, GA,
or New York, NY. If at any time the Standby Letter of Credit fails to meet the
foregoing conditions, Contractor shall replace the outstanding Standby Letter of
Credit with a Standby Letter of Credit that meets the foregoing conditions.
Contractor shall ensure that the Standby Letter of Credit shall be renewed or
replaced on an annual basis and shall remain in full force and outstanding until
the expiration of the Warranty Period, as such period may be extended pursuant
to Section 13.3. If Contractor fails to renew or replace the Standby Letter of
Credit at least thirty (30) Days prior to the expiration thereof, then, in the
sole and absolute discretion of Owner, Owner shall be entitled to draw and
retain until the end of the Warranty Period the full amount of such Standby
Letter of Credit. Such retained amount, less any amount offset against such
retained amount for claims, shall be returned to Contractor promptly upon
expiration of the Warranty Period.

(b) Contractor shall cause the Standby Letter of Credit to be amended or
replaced *** set forth in the Letter of Credit Value Chart attached as Exhibit
J-3 (the “Letter of Credit Value Chart”) so that the amount of such amended or
replacement Standby Letter of Credit is revised to be equal to the amount set
forth in the Letter of Credit Value Chart attached as Exhibit J-3; *** results
in a revision to the Cash Flow Plan or any component thereof, or in the event of
a *** Change Order (or series of Change Orders) that increases or decreases,
cumulatively, the *** Contract Price by more than ***, Owner, in its reasonable
discretion, shall be entitled to make an equitable adjustment to the Letter of
Credit Value Chart to take into account such event, in which case Contractor,
*** shall amend, replace or supplement the then-outstanding Standby Letter of
Credit to reflect the adjustment made to the Letter of Credit Value Chart. ***,
Owner shall not be obligated to make further Invoice payments, approve any such
Change Order or modify the Schedule until Contractor shall have provided Owner
with such amended, replacement or supplemental Standby Letter of Credit.

(c) Contractor shall Invoice Owner on a quarterly basis for the fees charged by
the issuing financial institution for the issuance of the Standby Letter of
Credit (including any amendment or replacement thereto) from the Effective Date
through the Warranty Period, but without any administrative charges or
Contractor profit added to such financial institution fees. For any equitable
increase to the Letter of Credit Value Chart after the Effective Date, Owner
shall pay the then-current fees charged by the issuing institution for such
amendment, replacement or supplement. Contractor shall provide such
documentation and materials as Owner may reasonably require to substantiate the
*** Letter of Credit (including the fees *** for any amendment, replacement or
supplement thereto).

16.3 Cooperation with Owner Financing.

(a) Contractor shall promptly provide to Owner (i) all cooperation that Owner
reasonably requests to make presentations to potential Financial Institutions
and their

 

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consultants and representatives and to respond to any questions or requirements
asked or imposed by any Financial Institutions, including any requests for
financial information relating to Contractor, and (ii) all cooperation that
Owner reasonably requests with respect to the Financial Institutions and their
consultants and representatives, including developing and providing information
regarding the Project (if available to Contractor) and this Agreement.
Contractor shall provide the Financial Institutions with reasonable access to,
and will permit them to review, the Documentation. In addition, Contractor shall
provide the Financial Institutions with (A) the right to receive and render
performance and to give reasonable time to cure defaults by Owner, on behalf of
Owner, under this Agreement, (B) reasonable access to the Site and any other
location where Services, including testing, are performed for the purposes of
inspecting the Equipment and the Owner Equipment, provided that any such
inspection does not unreasonably interfere with or delay Contractor’s
performance of the Services and (C) such access to documentation in relation to
this Agreement or the Work at such times as Owner shall reasonably request. For
any additional time required by any Financial Institution to cure any defaults
of Owner hereunder, which defaults interfere in Contractor’s ability to perform
the Services, Contractor shall be entitled to an equitable adjustment in the
Schedule in accordance with Article 8.

(b) Contractor hereby consents to the collateral assignment of this Agreement to
the Financial Institutions. Contractor also shall enter into a consent to
assignment with the Financial Institutions regarding this Agreement which shall
contain provisions that are typically provided to financial institutions in
similar project financing, including the right to render and receive performance
under this Agreement, and giving the Financial Institutions copies of notices
delivered to Owner under this Agreement. Owner will be entitled to assign, and
Contractor shall ensure that the relevant instruments permit the assignment of,
the benefit of any parental guarantee, Standby Letter of Credit or other
financial instrument at any time to the Financial Institutions without the
consent of Contractor or the issuer of such parental guarantee, Standby Letter
of Credit or other financial instrument being required.

 

17. LIMITATION OF LIABILITY

17.1 No Consequential Damages. *** THEREOF, LOSS OF PROFITS OR REVENUES OR THE
LOSS OF USE THEREOF, OR COST OF PURCHASED OR REPLACEMENT POWER (INCLUDING
ADDITIONAL EXPENSES INCURRED IN USING EXISTING POWER FACILITIES) OR FROM CLAIMS
OF CUSTOMERS OF CONTRACTOR OR OWNER.

17.2 Maximum Total Liability. FOR UNIT 6 OR THE UNIT 5 SCRUBBER, CONTRACTOR’S
AND ITS SUBCONTRACTORS’ TOTAL AGGREGATE LIABILITY TO OWNER UNDER THIS AGREEMENT,
WHETHER BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE, STRICT LIABILITY OR
OTHERWISE), GUARANTEE, WARRANTY OR OTHERWISE, SHALL NOT EXCEED FORTY PERCENT
(40%) OF THE RESPECTIVE CONTRACT PRICE FOR UNIT 6 OR THE UNIT 5 SCRUBBER, AS MAY
BE ADJUSTED BY CHANGE ORDER (THE “MAXIMUM LIABILITY AMOUNT”); PROVIDED, HOWEVER,
THE MAXIMUM LIABILITY AMOUNT SHALL NOT APPLY TO, AND NO CREDIT SHALL BE ISSUED
AGAINST THAT LIMITATION FOR (A) A

 

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PARTY’S INDEMNITY OBLIGATIONS HEREUNDER FOR THIRD PARTY CLAIMS FOR PERSONAL
INJURY OR PROPERTY DAMAGE, (B) THE PROCEEDS FROM PROPERTY OR BUILDER’S RISK
INSURANCE THAT A PARTY IS REQUIRED TO MAINTAIN IN ACCORDANCE WITH THIS
AGREEMENT, (C) CLAIMS WHICH ARISE FROM A BREACH OF OBLIGATIONS UNDER ARTICLE 18
OR ARTICLE 19 OR (D) ANY PROCEEDS COLLECTED BY OWNER FROM THE VENDORS THAT ARE
PARTY TO THE *** WITH RESPECT TO THE EQUIPMENT PROCURED PURSUANT THERETO.

17.3 Protected Parties. ALL THE PROVISIONS OF THIS ARTICLE SHALL ALSO PROTECT
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS OF EACH PARTY AND THEIR RESPECTIVE
AFFILIATES AND SHALL APPLY REGARDLESS OF THE NEGLIGENCE OR STRICT LIABILITY OF
EITHER PARTY, ITS AFFILIATES OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES
OR AGENTS.

17.4 Precedence. THE PROVISIONS OF THIS ARTICLE SHALL APPLY NOTWITHSTANDING ANY
OTHER PROVISION OF THIS AGREEMENT AND SHALL NOT BE AMENDED BY ANY PRE-PRINTED
TERMS ON ANY PURCHASE ORDER, BILL OF LADING OR OTHER COMMERCIAL DOCUMENT BETWEEN
THE PARTIES.

17.5 ***. For Unit 6 or the Unit 5 Scrubber, *** for which Contractor may be
liable to the Owner under this Agreement shall in no event exceed *** of the
respective Contract Price for Unit 6 or the Unit 5 Scrubber, as may be amended
by Change Order; provided, that such *** shall not limit Owner’s remedies under
this Agreement for other breaches, actions, or omissions of Contractor
hereunder.

 

18. LIENS

18.1 Liens. Contractor shall keep the Facility, the Site, the Equipment and the
Owner Equipment free from all Liens (other than Liens arising from non-payment
and other acts of Owner), and shall promptly notify Owner of any Liens. If Owner
seeks Contractor’s indemnification for any Lien, Owner shall:

(a) give Contractor prompt notice of any Lien of which it has knowledge;

(b) cooperate in the defense of the Lien at Contractor’s expense; and

(c) give Contractor sole control of the defense and settlement, to the extent of
Contractor’s liability, for the Lien; provided, that Contractor shall promptly
confirm in writing its obligation to indemnify Owner with respect to all costs
and expenses with respect to the Lien.

18.2 Discharge or Bond. Contractor shall take prompt steps to discharge or bond
any Lien filed by any Subcontractor based on a claim for payment by Contractor
in connection with the Work (unless such Lien is due to the non-payment by Owner
of an Invoice amount 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 at
Contractor’s expense, including reasonable attorneys’ fees, costs and expenses.
Owner shall have the right to deduct

 

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and offset any expenses so incurred from any payment due, or which may become
due, to Contractor under this Agreement or to recover those expenses from
Contractor. Contractor shall have the right to contest any Lien, provided 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 the Lien
and all other encumbrances related to the Work from the Site and the Facility in
accordance with the Laws of the State.

 

19. INTELLECTUAL PROPERTY

19.1 Delivery of Documentation. Prior to Final Completion of Unit 6 or the Unit
5 Scrubber, Contractor shall supply to Owner physical and electronic copies of
all Documentation with respect to Unit 6 or the Unit 5 Scrubber. All such
Documentation shall include any corrections, improvements, and enhancements to
such Documentation that were incorporated during the construction of the Project
and shall be of an “as-built” status (for certain agreed systems and documents)
upon Final Completion of Unit 6 or the Unit 5 Scrubber. Contractor shall provide
Owner during the Warranty Period at no additional cost, any corrections to
errors discovered by Contractor or Owner in the Documentation subsequent to
Final Completion of Unit 6 or the Unit 5 Scrubber. 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, nonexclusive license to use and copy
such Contractor Confidential Information, but only for the purposes of Facility
maintenance, operation, training, modification, consultation, repair and
compliance with Laws, and subject to the restrictions on Contractor Confidential
Information set forth in Article 20.

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 design, manufacture, testing, analysis, maintenance or construction of the
Project or performance of the Services; provided, however, that Contractor
hereby grants to Owner a transferable (but only as part of the sale or transfer
of the Facility), royalty-free, fully paid up, irrevocable, nonexclusive license
to use 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
paid-up Documentation to a third party with whom Owner contracts for
maintenance, operation, training, modification, repair, consultation or
decommissioning; provided, that, if such Documentation contains Contractor’s
Confidential Information, the provisions of Article 20 shall apply. In the event
of a Contractor Default and Owner termination, in addition to the rights above,
Owner shall have the right to disclose the Documentation to third parties with
whom Owner contracts for engineering, construction, commissioning or testing of
the Facility, provided that, prior to such disclosure, such third parties shall
execute a confidentiality agreement at least as strict as the requirements set
forth herein.

 

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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
Subcontractor to maintain, operate, conduct training, modify, repair, or
decommission the Facility in connection with the Project, 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, 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 below or with other Party’s prior written authorization; and
(c) not to use the other Party’s Confidential Information except for the
performance of this Agreement, the compliance with Laws, or the 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 a format reasonably acceptable to
Owner.

(c) Owner may disclose Contractor’s Confidential Information to (i) Financial
Institutions; (ii) third parties engaged by Owner to provide consultation
regarding the Duke Coal Facility; (iii) third parties with which Owner contracts
for maintenance, operation, training, modification, repair, consultation or
decommissioning of the Facility; 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 the 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

 

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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

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 or his designee 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 Substantial Completion of Unit 6 and the Unit 5
Scrubber, 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, or
stored at the Site or any neighboring property, unless the same have been
permanently incorporated into the Facility. All such equipment and materials
shall be removed 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

 

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accordance with the requirements of all Government Authorities and all
applicable Laws. For the avoidance of doubt, Contractor has no obligations
and/or liability with respect to the handling, collection or containerizing of
any pre-existing Hazardous Materials except to the extent the Gross Negligence
or the willful misconduct or wanton acts of Contractor or its Subcontractors
caused the release of such pre-existing Hazardous Materials.

(b) Contractor has included time in the Schedule and costs in the Contract Price
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, a Change 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 the 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 for equitable
price and/or schedule adjustment if its cost or performance is impacted by the
discovery of any pre-existing Hazardous Materials.

 

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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 an Invoice
amount 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 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 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, 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. Regardless of whether title has passed to
Owner, Contractor hereby grants Owner a continuing security interest in all of
the Equipment to the extent of the payments made in connection therewith,
whether now owned or hereafter acquired, wherever located and all attachments
and accessions thereto and all replacements thereof, all drawings, plans and
general intangibles related thereto, all warranties and contract rights related
thereto and all proceeds of the foregoing (collectively, the “Collateral”), to
secure all past, present and future indebtedness and obligations which
Contractor owes Owner under this Agreement. Contractor shall cause such security
interest to constitute, at all times, a valid, enforceable, duly perfected,
first priority security interest in the Collateral superior to all other claims
to and interests in the Collateral, including the claims of any lender, vendor
or Subcontractor to Contractor, it being understood that Owner shall be
responsible for initial perfection of such security interest. Contractor hereby
authorizes Owner to file financing statements naming Contractor as debtor with
respect to the Collateral in such jurisdictions as Owner believes are necessary
to perfect the foregoing security interest. Contractor shall execute and deliver
at all times requested by Owner all other instruments and documents necessary or
desirable to establish, perfect or maintain this security interest. At the
request of Owner, Contractor shall clearly label the Collateral with Owner’s
name for the purpose of proper identification of the Collateral.

22.2 Risk of Loss. Contractor shall have care, custody and control of the Work
and the Owner Equipment (but only after its arrival at the Site) until
Substantial Completion. Notwithstanding the above fact, the Owner is providing
the Builder’s Risk policy for the Work, the Equipment and the Owner Equipment,
which shall commence upon the earlier of (a) delivery of such items to the
Owner’s Site or (b) such time as Owner’s inland transit coverage commences. To
the extent of the proceeds of Builder’s Risk insurance paid to Contractor under
this Agreement, Contractor shall be obligated to replace, repair or reconstruct
the Equipment that is lost, damaged, or destroyed before the transfer of care,
custody and control of the Equipment to Owner. For Equipment or materials that
are removed from the Site for repair, replacement or refurbishment under the
warranty herein, the risk of loss to such Equipment or Materials shall pass to
Contractor at the time of the loading of such Equipment or Materials on the
carrier at the Owner’s Facility. Owner will resume the risk of loss of such
Equipment or Materials upon completion of the unloading of the repaired,
replaced or refurbished Equipment from the carrier

 

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at Owner’s Facility. Notwithstanding the foregoing, to the extent the loss or
damage is covered by Owner’s Builder’s Risk policy or Owner’s property
insurance, Contractor shall only be responsible for any loss or resulting damage
that it or its Subcontractors cause to any Work, Equipment or Owner Equipment up
to *** during construction and *** during start-up and Performance Testing. ***.
In addition, to the extent the loss or damage is covered by Owner’s Builder’s
Risk policy or Owner’s property insurance, Contractor shall only be responsible
for up to *** in the event such loss is caused by the Gross Negligence or the
willful misconduct of Contractor or its Subcontractors. Contractor shall be
responsible for such deductible, which shall not be applied against the Contract
Price.

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. DEFAULT; TERMINATION AND SUSPENSION

23.1 Events of Default. A Party shall be in default of its obligations pursuant
to this Agreement upon the occurrence of anyone or more of the following
circumstances (each, a “Default”):

(a) Nonpayment. Such Party fails to pay or cause to be paid any amount that has
become due and payable by it to the other Party under this Agreement within ten
(10) Business Days after receipt of written notice that such amounts are past
due;

(b) Insolvency. 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 United States or any state thereof for the relief of creditors or affecting
the rights or remedies of creditors generally;

(c) Assignment. Such Party 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) Abandonment. Such Party, if it is Contractor, abandons the Work and fails,
except as otherwise addressed in Section 23.7, to recommence performance of the
Services within five (5) Days after written notice from Owner;

(e) Insurance. Such Party fails to obtain and maintain insurance as required by
this Agreement;

(f) Repudiation. Such Party expressly repudiates this Agreement;

(g) Performance Guarantees. Such Party fails to satisfy the Minimum Performance
Guarantees of Unit 6 or the Unit 5 Scrubber within *** after the Guaranteed
Final Completion Date for Unit 6 or the Unit 5 Scrubber;

 

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(h) Breach. Such Party breaches any of its material obligations under this
Agreement other than those obligations relating to the matters set forth in
Section 23.1(a) through (g) above and for which no other remedy is specified in
the Agreement and, if such breach is capable of being cured, such Party fails to
cure such breach within *** Days after written notice of such breach, provided
that such cure period shall be extended to *** Days after written notice of such
breach if such breach is capable of being cured but not within *** Days, and
such breaching Party immediately commences to cure such breach and diligently
and continually prosecutes measures which are reasonably calculated to cure such
breach within such *** Day period; and

(i) 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 Error! Reference source not found. hereof and, if such forecasted delay
is capable of being cured, Contractor fails to ***.

23.2 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 limitation on liability, Owner, without
prejudice to any of its other rights or remedies under this Agreement, may
terminate this Agreement immediately by delivery of a notice of termination to
such Party;

(b) Equitable Remedies. Subject to the limitations on liability set forth in
this Agreement, Owner may seek equitable relief, including injunctive relief or
specific performance, 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 the limitations on liability set forth in this
Agreement, Owner shall be entitled to seek all other damages available in equity
or at law.

23.3 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) immediately by delivery of a notice of
termination/suspension to Owner, and such termination/suspension shall be deemed
as if done for convenience of Owner under Section 23.4(a) and 23.7;

(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

 

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(c) Damages. Subject to the limitations on liability set forth in this
Agreement, Contractor shall be entitled to seek all other remedies or damages
available in equity or at law.

23.4 Termination for Convenience.

(a) Termination Rights.

Owner may terminate this Agreement at its convenience and in its entirety, or
only with respect to Unit 6 or the Unit 5 Scrubber, upon prior written notice to
Contractor, in which event Owner shall pay the cancellation charges set forth in
Section 23.4(b) below.

(b) Cancellation Charges.

If Owner terminates this Agreement, or Unit 6 or Unit 5 Scrubber, under
Section 23.4(a) above, Owner shall pay termination charges to Contractor, as
Contractor’s exclusive remedy, which termination charges shall consist of all
amounts billed or currently billable by Contractor and due and owing under this
Agreement, including for Equipment delivered (or being fabricated for delivery)
and Services performed prior to such termination (including in-progress work)
and all unavoidable and reasonably incurred termination charges, such as those
incurred through demobilization and storage or through cancellation charges paid
to Subcontractors. The total amount payable by Owner as a termination charge
shall be reduced by (A) any rebates, credits or refunds obtained, (B) the
reasonable salvage value for undelivered and unpaid for Equipment, or (C) the
sale of such Equipment to a third party, with the understanding that Owner, at
its exclusive preference, may accept delivery of complete or incomplete
Equipment included in the termination charges.

For the period from the Amendment Date until the Full Notice to Proceed on Unit
6, Contractor has provided to Owner a reasonable estimate of the anticipated
total termination costs to be paid by Owner to Contractor, by month, based upon
current cash flow forecasts, equipment cancellation charges, and other
demobilization costs, which such forecasted amounts being:

(i) If prior to ***, an estimated amount, including amounts paid to date, for
the Unit 5 Scrubber of *** and for Unit 6 of ***, and

(ii) If prior to ***, an estimated amount, including amounts paid to date, for
the Unit 5 Scrubber of *** and for Unit 6 of ***.

The above termination amounts include all previously paid and all actual and
anticipated payments of Invoices by Owner during such time period pursuant to
the Cash Flow Plan.

 

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(c) In the event of termination under this Section 23.4, the limitations of
liability (if there remains any liability) expressed as a percentage of the
Contract Price with respect to the terminated Unit 6 or the Unit 5 Scrubber
shall be deemed instead to be expressed as a percentage of the respective
payments received to the date of termination.

23.5 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 and Section 23.4(a) above.

23.6 Effect of Termination. Upon termination of this Agreement, Contractor shall
immediately:

(a) stop the performance of all Services 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 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;

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

(e) deliver all then existing paid-up Documentation, 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 and Owner
Equipment.

23.7 Suspension. Owner may, in its sole discretion, order Contractor to suspend
all or any portion of the Services 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
five (5) Days after Owner gives Contractor that notice. During any such
suspension: (a) Contractor shall take reasonable precautions to protect, store
and secure the Equipment and Owner Equipment against deterioration, loss or
damage, and (b) Owner shall reimburse Contractor on a current time and material
basis for all its costs, including those incurred in connection with the
foregoing and for its (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 ten (10) Days after Owner gives
Contractor written notice to do so, and shall use its best efforts to fully
resume the Services as soon as reasonably possible. If Owner orders a suspension
of all or any portion of the Services, Contractor shall be entitled to an
equitable adjustment in the Contract Price and the Schedule in accordance with
Article 8. If Owner orders a suspension of all of the Services, which suspension
continues for three hundred sixty (360) or more consecutive Days, either Party
may thereafter terminate this Agreement by giving the other Party written
notice, and the rights and remedies of Contractor shall be the same as those to
which Contractor would have been entitled if this Agreement had been terminated
under Section 23.4.

 

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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 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 Project 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 Owner has
Material Safety Data Sheets for all Owner chemicals located at the Site and
shall make such MSDS available to Contractor or its Subcontractors 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.

 

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(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 twenty four (24) hours of a request, or as soon as possible, and to
the extent permitted by applicable Law, Contractor shall provide copies of any
and a11 training for its employees concerning any safety and health standard,
any substantive or technical training requirement of the Work or the results of
any occupational testing to Owner.

24.3 Worksite Safety.

(a) Contractor shall take all reasonable precautions at the Work Site 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 Project,
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.

 

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(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 twenty four (24) hours 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
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 five
(5) years 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 appropriate 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.

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 one (1) Day 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.

 

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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, in the event that 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 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 considered part of the Contract Price and shall be allocated to
the pricing component for which the Work is being performed.

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 the Owner’s Drug and Alcohol Testing Policy (MICCS Substance Abuse Program,
dated as of July, 2007) attached hereto as Exhibit N, 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

 

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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. To the extent commercially reasonably
practical, Contractor shall use reasonable efforts to 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 qualifications and who have equal or better
capabilities.

 

26. RECORDS AND AUDIT

26.1 Technical Documentation. Except to the extent applicable Laws require a
longer retention, Contractor shall maintain its own, and shall cause its
Subcontractors to maintain their own, technical documentation relative to the
Equipment and the Owner Equipment for a period of three (3) years after the
latest of the Final Completion Dates of Unit 6 and the Unit 5 Scrubber.
Contractor shall give Owner thirty (30) Days 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.

 

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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 three (3) years after
the latest of the Final Completion Dates of Unit 6 and the Unit 5 Scrubber,
except that records relating to Sales Taxes for such items must be retained for
four (4) years as specified in Section 26.4. Contractor shall give Owner thirty
(30) Days 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 for
reimbursement or for any Work performed or provided by Contractor or its
Subcontractors on a time and material basis or for any suspended, terminated,
delayed or accelerated Services, *** third party auditor 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 such costs as
is reasonably necessary for Owner to verify such costs. However, Owner or its
third party auditor shall have no right to audit records or books concerning the
make-up of any agreed upon *** or fixed rates or multipliers. 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. 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 the lesser of (a) the Prime
Interest Rate plus 1% or (b) the maximum rate allowed by applicable
law. 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 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 four (4) years from the latest of the Final Completion Dates of
Unit 6 and the Unit 5 Scrubber. 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,
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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) two (2) years after delivery of the piece of Equipment or
(ii) two (2) years 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 have the
responsibility to pay all taxes on Contractor’s purchases of goods, tools,
equipment, supplies and other consumables which are not permanently incorporated
into the Project 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. Allowance for such taxes is included in the Contract Price, and
Contractor shall pay those taxes when assessed. 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 Contract Price 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 appropriate 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 1% with a maximum tax of eighty dollars ($80) per
article. 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.

(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 best efforts to ensure that Owner is afforded the
appropriate sales/use and privilege tax treatment by the State of North
Carolina. Contractor shall use all reasonable efforts to ensure that all
out-of-state purchases made by Contractor and its Subcontractors

 

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(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 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 of Unit 6 or the Unit 5 Scrubber,
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 Project 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

 

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leasing costs included in the Fixed Prices. If Contractor owns 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) 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: Mediation. 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. A Party may give the other Party written
notice of a Dispute which has not been resolved in the normal course of
business. Such notice shall include: (a) a statement of that Party’s position
and a summary of arguments supporting such position, and (b) the name and title
of the executive who will be representing that Party and of any other person who
will accompany the executive. Within five (5) Days after delivery of the notice,
the receiving Party shall respond with (i) a statement of that Party’s position
and a summary of arguments supporting such position, and (ii) the name and title
of the executive who will represent that Party and of any other person who will
accompany the executive. Within ten (10) Days after delivery of the summary
positions, the Parties shall select a mutually agreeable

 

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neutral mediator and the executives of both Parties shall meet with the mediator
at a mutually acceptable time and place, and shall meet thereafter as often as
they reasonably deem necessary, to attempt to resolve the Dispute. All
negotiations pursuant to this clause are to be deemed confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence.

28.2 Arbitration Proceedings.

(a) Demand for Arbitration. If the Dispute has not been resolved by negotiation
within *** Days of the disputing Party’s initial notice (or such longer period
as the Parties may reasonably agree), or if the Parties failed to meet for the
first time within *** Days of the initial notice, 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, 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 *** selected by the Parties (or by the AAA, if the Parties cannot agree on an
arbitrator within *** Days following the delivery of a demand for arbitration to
the other Party). For all Disputes where the amount in controversy is equal to
or more than ***, the arbitration proceedings shall be conducted by a ***. If
the Parties have not agreed on the selection of *** on or before *** Days
following the delivery of a demand for arbitration to the other Party, then each
Party, by notice to the other Party, may designate *** (who shall not be a
current or former officer, director, employee or agent of such Party or any of
its Affiliates). The *** designated by the Parties shall endeavor to designate
promptly a ***. If either Party fails to designate an initial *** on or before
*** Days following the delivery of an arbitration notice to the other Party, or
if the *** initially designated *** have not designated *** within *** Days of
the date for designation of the *** initially designated, either Party may
request that the AAA designate the remaining *** pursuant to its Construction
Industry Arbitration Rules. If any arbitrator resigns, becomes incapacitated, or
otherwise refuses or fails to serve or to continue to serve as an arbitrator,
then the Party entitled to designate that arbitrator shall designate a
successor. The demand for arbitration shall be served on the other Party to this
Agreement. 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) Consolidation. No arbitration arising under this Agreement shall include, by
consolidation, joinder or any other manner, any Person not a Party to this
Agreement unless (i) such Person is substantially involved in a common question
of fact or Laws, (ii) the presence of the Person is required if complete relief
is to be accorded in the arbitration, and (iii) the Person has consented to be
included.

(c) 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, sequestration,
garnishment, attachment, or an appointment of a receiver.

 

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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.

(d) Award; Binding Nature. The arbitrator(s)’ decision shall be by majority vote
and shall be issued in a writing that sets forth in separately numbered
paragraphs all of the findings of fact and conclusions of law necessary for the
decision. Findings of fact and conclusions of law shall be separately designated
as such. The arbitrator(s) shall not be entitled to deviate from the construct,
procedures or requirements of this Agreement. In the absence of bias, fraud, or
willful misconduct by an arbitrator, any decision rendered by the arbitrator(s)
in any arbitration 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.

(e) 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.

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 and Owner shall continue to compensate
Contractor as set forth under this Agreement without diminution of effort,
including payment to Contractor provisionally on a time and material basis for
all disputed work.

 

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, including
the JPDA and the Original EPC Agreement. 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 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. 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. Nothing herein shall be
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any way Contractor from assigning the performance of any Services to an
affiliate properly licensed to perform engineering work in the State of North
Carolina but without relieving Contractor from its obligations hereunder. 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.

29.5 Rights Exclusive. The rights and remedies of Owner or Contractor as set
forth in this Agreement shall be the exclusive rights or remedies 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 Survival. Article 14 (Indemnification), Article 17 (Limitations of
Liability), Article 19 (Intellectual Property), Article 20 (Confidential
Information), Article 26 (Records and Audit, Article 27 (Taxes), Article 28
(Dispute Resolution), Article 29 (Miscellaneous Provisions) and all other
Sections providing for indemnification or limitation of or protection against
liability of either Party shall survive the termination, cancellation, or
expiration of this Agreement.

29.8 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.

29.9 Notices. All notices permitted or required under this Agreement shall be
deemed given if hand delivered, sent by certified mail, return receipt
requested, sent by Federal Express or another recognized overnight delivery
service, or sent by facsimile (with transmission confirmed) and confirmed by
first class mail, to the addresses listed below or the subsequent addresses of
which the Parties give each other notice:

 

If to Owner:    Duke Energy Carolinas, LLC    Mail Code EC11T    P. O. Box 1006
   Charlotte, NC 28201-1006    Attn: Gary Moore    Facsimile No: 704-382-5275

 

81

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with a copy to:    Duke Energy Carolinas, LLC    Mail Code EC11X    P.O. Box
1006    Charlotte, NC 28201-1006    Attn: ***    Facsimile No.: 704-382-5715   
Duke Energy Carolinas, LLC    Mail Code EC03T    526 South Church Street   
Charlotte, NC 28202    Attn: ***    Facsimile No.: *** If to Contractor:    Shaw
North Carolina, Inc.    Attn: ***    Vice President – Fossil Power    128 South
Tryon Street, Suite 600    Charlotte, NC 28202    Facsimile No.:    704-331-1310
   Telephone No.:    704-331-*** With a copy to:    Shaw North Carolina, Inc.   
Attn: Richard Obadiah    Assistant General Counsel    100 Technology Center
Drive    Stoughton, MA 02072    Facsimile No.:    617-589-7575    Telephone No.:
   617-589-1829    Shaw North Carolina, Inc.    Attn: Bobby Smith    Project
Manager    128 South Tryon Street, Suite 600    Charlotte, NC 28202    Facsimile
No.:    704-331-***    Telephone No.:    704-331-6474

 

82

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or to such other address, attention or facsimile number as such Party to whom
such notice is to be addressed shall have hereafter furnished to the other Party
in writing as provided in this Article.

29.10 Vienna Convention. The Parties hereby expressly agree to exclude and
disclaim the application of the provisions of 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.

29.11 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]

 

83

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date
first above written.

 

DUKE ENERGY CAROLINAS, LLC       SHAW NORTH CAROLINA, INC. By:  

/s/ James L. Turner

    By:  

/s/ Richard F. Gill

Name:   James L. Turner     Name:   Richard F. Gill Title:   President & COO,
U.S. Franchised Electric & Gas     Title:   President, Shaw Power

 

84

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EXHIBIT A

Specifications, including the Scope of Work, Drawings, and Training Procedures

***

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EXHIBIT B

Site Description

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EXHIBIT B

Site Description

LOGO [g23445ex10_2bpg3.jpg]

LOCATION:

The station is located in Rutherford and Cleveland counties of North Carolina,

DIRECTIONS:

I-85 S, take exit 95 (Road 150) just before reaching Gaffney; Road 150 will
parallel I-85 for two miles. At stop sign, turn right still staying on Road 150.

Cross over NC-SC state line into North Carolina. At the crossroads, turn left on
McCraw Rd, go 5.5 miles, Cliffside steam station on right.

ADDRESS:

Street Address: 573 Duke Power Road, Cliffside, NC 28024

Mailing Address: 573 Duke Power Road, Mooresboro, NC 28114

PHONE:

(828) 657-2000

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MAJOR EQUIPMENT LIST:

 

  •  

Unit 1, 2 & 4 Turbines - General Electric

 

  •  

Unit 3 Turbine - Westinghouse

 

  •  

Unit 5 Turbine - General Electric

 

  •  

Unit 1 - 5 Boilers - Combustion Engineering

GENERAL INFORMATION:

 

  •  

Unit 1 Commercial Operation date - 07/09/1940

 

  •  

Unit 2 Commercial Operation date - 08/11/1940

 

  •  

Unit 3 Commercial Operation date - 05/19/1948

 

  •  

Unit 4 Commercial Operation date - 10/31/1948

 

  •  

Unit 5 Commercial Operation date - 06/20/1972

 

  •  

The nameplate rating (MW) is:

 

•     Unit 1 & 2

          - 38 MW each

•     Unit 3 & 4

          - 61 MW each

•     Unit 5

          - 562 MW

EXISTING SITE CONDITIONS

 

  •  

The existing condition of the paved plant roads (main entrance and around
powerhouse) shall be considered deteriorated.

 

  •  

The Contractor may use all plant roadways to move materials as required.
Movement of material inside the main gate access will require station
coordination.

 

  •  

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

 

  •  

The Station does not have adequate lighting to support nighttime operations and
maintenance activities.

 

  •  

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

 

  •  

No activities are to be conducted East of Suck Creek.

 

  •  

Jersey barriers will be placed around the Anhydrous Ammonia storage tanks.
Entrance into this area is strictly forbidden without written authorization from
Station Management. Violation of this requirement will result in dismissal from
the project.

 

  •  

The Station Main Gate is staffed 7 days per week and 24 hours a day. Proper
identification will be required to enter this gate.

 

  •  

Requests for special deliveries to the Contractor through the Main Gate are
required in advance and are subject to the Owner’s approval.

 

  •  

The Contractor shall be aware that other contractors executing work at the
Station not related to New Generation or FGD work may use the Main Entrance
road. Areas designated for employee parking by the Owner for use by the
Contractor may also be used by other contractors for employee parking. The
Contractor will be provided adequate parking space and will not be displaced by
other projects. Union and non-union parking shall be segregated by the
Contractor.

 

  •  

The Contractor shall be aware of contract flyash disposal trucks using the Main
Entrance road. Truck traffic for this operation could range from 10-20 trucks
per day.

 

  •  

Access to the Flyash silos and scales on the North side of the Station is to
remain open and free of interference at all times.

 

  •  

At grade crossing of the railroad tracks shall conform to approved procedure
currently in force.

STATION ACTIVITIES POTENTIALLY INTERACTING WITH THE UNIT 5 SCRUBBER PROJECT:

Table B-1 provides a summary of other Station activities that may potentially
interact with the FGD and New Gen projects. The Owner and Contractor will
demonstrate cooperative efforts to minimize the impact of these activities with
respect to the Contractor’s Site construction and commissioning activities.

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

SECURITY THREAT LEVELS

The Contractor shall be aware of the Security Threat Level System employed by
the Owner at the Cliffside Steam Station.

SECURITY PLAN DURING CONSTRUCTION

Temporary fencing will be installed during the construction phase. The intent is
to isolate the Contractor’s site activities and protect material and equipment
which the Contractor will have on site to execute the project work. The
Contractor will be permitted to work inside the Station fencing for construction
activities as required. Access will be granted on an as needed basis. The
Contractor shall be held accountable for controlling access through the
project’s gates while they are being used for either employee or material
movement. The Contractor shall permit Station employees access into the
construction areas to commission, operate, and maintain equipment as necessary.

Specific examples for Contractor access inside the Station security fence
include, but are not limited to, the following:

 

  •  

Rail modifications around the coal yard and the North and East side of the
Station

 

  •  

Fire water tank and pumping station construction

 

  •  

Ash line modification

 

  •  

Relocation of the Club House

 

  •  

Duct ties to ID fans

 

  •  

Balance of plant process system ties

 

  •  

Ties to existing plant controls systems

 

  •  

Ties to Station provided construction power

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LOGO [g23445ex10_2bpg6.jpg]

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Table B-1

Other Station Activities Potentially Interacting with the FGD Project

 

Innage/Outage

  

Activity

  

Location (s) of

Activities

in Station

  

Remarks

Spring 2008   

Catalyst Layer

Installation

   Northeast and Southwest of Unit 5 SCR   

Large cranes will be located on NE and SW

side of Unit 5 SCR for installation of another catalyst layer.

Spring 2009    Turbine Overhaul and Preheater Replacement   

Work will be inside the Unit 5 facility. Workforce increase and material laydown

will be needed.

   Work will be accomplished inside the Unit 5 Powerhouse. Increased workforce
traffic and material receipt will impact space around the Station. Spring 2009
   Replace Final Reheat    Unit 5 Boiler   

Work will be accomplished inside the Unit 5

Boiler. Increased workforce traffic and

material receipt will impact space around the

Station.

Spring 2009    ESP Upgrade (Possible)    Northeast and Southwest of Unit 5 SCR
  

Large cranes will be located on NE and SW

side of Unit 5 SCR for installation of another catalyst layer.

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

EXHIBIT C – Unit 5 Key Milestones

 

Activity ID

  

Activity Description

  

Start/Finish

  

Date

***    ***    ***    ***

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

EXHIBIT C – Unit 6 Key Milestones

 

Activity ID

  

Activity Description

  

Start/Finish

  

Date

***    ***    ***    ***

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EXHIBIT D

List of Contractor Supplied Permits and Approvals

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

Type of Permit

  

Date to be
Obtained

  

Responsible Party

  

Comments

Construction Permits    Rock crushing and blasting permits received.    EPC
Contractor    To include demolition, burning, blasting, and fueling (if
required) permits. No building permits are required. Temporary Construction
Power Supply Inspection    N/A    EPC Contractor    Contractor will verify with
Rutherford County and Cleveland County inspections are not required Over the
road hauling permits for Station Material    As needed    EPC Contractor   
Required for material delivered to the station. Over the road hauling permits
for Contractor eqpt.    As needed    EPC Contractor    Contractor construction
equipment will be permitted by Contractor. NC DOT Permit for temporary
construction entrance    As needed       If new driveway required, Contractor to
prepare documents for submittal to NC DOT. NC DOT requires at least 1 month to
review submittals. FAA Notification for Temporary Structures or Equipment    As
required    EPC Contractor    Permit required for any crane exceeding the height
of the existing chimney. NOTE: FAA permitting for the stack to be by Owner. Air
Quality Permit for FRP Composite Liner Fabrication    In progress    EPC
Contractor   

Allows FRP contractor to use resins, styrene and other solvents in FRP
fabrication facility.

Submit application to Duke for review and approval two weeks prior to submitting
to NC DENR

Air Quality Permit for Ready-Mix Concrete Batch Plant    Permit received.    EPC
Contractor   

Permit will be obtained by concrete supplier.

Duke to review and approve permit application prior to application.

Erosion Control    Permit received.    EPC Contractor    Required prior to start
of site clearing activities Boiler Inspections; Required for Aux Boiler    Prior
to start up of boiler    EPC Contractor    Permit/certification required prior
to startup of boiler, NOTE: Duke to obtain for main Hitachi boiler Elevators   
As required    EPC Contractor    Inspection/permits for all elevators installed
by EPC Contractor

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

EXHIBIT E

List of Owner Supplied Permits

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

Owner Supplied Permits

  

Comments

Title V Air Permit Modification    Permit is required prior to construction of
any permanent foundation for the Work. Contractor will provide drawing and data
for each emission source. Unit 5 PSD permit is final. Unit 6 PSD permit granted
***. Certification to DENR-Air    Owner will submit notifications as required by
air permit. Owner will provide schedule of notifications to Contractor.
Contractor will ensure required notification events are included in the
Schedule. NPDES Permit Modification    Permit modification will incorporate
additional waste streams generated by operation of the Unit 5 FGD System. NPDES
permit received in ***, 2007. FAA Notification for Stack    Owner will be
responsible for obtaining permit for new stack. NC DOT    Permits, as required,
for state road modifications, crossings or bridge. CSX    Permits, as required,
for rail track modifications, under borings, etc. Building Permits    State,
county or municipal building permits. EPC Contractor will coordinate any
required inspections by issuing authority. Septic Field Permit and Zoning Permit
   Contractor to provide design and drawings to support permit application.
County to perform perk tests.

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

Owner Supplied Utilities and Equipment

  

Description

Commissioning Consumables for Start-up and Testing    Owner will provide all
fuel, limestone, CEMS calibration gases for start-up and testing. Construction
Electrical Power    Owner will supply electrical power. Cost of power will be
paid by Owner. Contractor will provide all on-Site power distribution for
construction purposes. Construction (Service) Water    Owner will provide a
source for Contractor to fill tanker truck with service water. Plant makeup
water system will be used for construction service water upon installation of
permanent service water tap. Potable Water    Owner will supply potable water
via tie-in to Grassy Pond Water System on site. Contractor will provide any
materials and equipment necessary for its capacity and distribution
requirements. Spoil Disposal Area    Areas for placement of soil and rock spoil
will be provided by Owner within the limits of clearing identified in Exhibit A.
Contractor will place soil and rock spoils in identified areas. Contractor 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. EPC Contractor is responsible for identifying all areas
requiring asbestos and lead paint abatement. Railroad Ties Disposal    Owner is
responsible for disposal of all railroad ties removed as part of rail upgrade
work. Contractor is responsible for providing number of ties expected to Owner
and stockpiling ties at an on-Site location to be determined by Owner. Stockpile
will be maintained in orderly manner by Contractor at the designated location.
Parking, Laydown, Construction Trailer Areas    Owner will provide space onsite
for parking, laydown, construction trailers, etc. EPC Contractor is responsible
for preparation and maintenance (grading, paving, etc.) of these areas.

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

Exhibit F-1

***

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

Exhibit F-2

*** Cash Flow Plan

Including:

F-2a ***

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

Exhibit F-3

*** Cash Flow Plan

Including:

F-3a ***

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

Exhibit F-4

*** Cash Flow Plan

Including:

F-4a ***

F-4b ***

F-4c ***

F-4d ***

F-4e ***

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

Exhibit F-5

*** Cash Flow Plan

Including:

F-5a ***

F-5b ***

F-5c ***

F-5d ***

F-5e ***

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LOGO [g23445shaw_img.jpg]

 

   J.O./W.O. NO

PAGE

  

120631

Page 20 of 1

   REVISION:

DATE

   1

02/20/08

               CLIENT    Duke Energy Carolinas, LLC EPC CONTRACT    PROJECT   
Cliffside Modernization Exhibit G    TITLE    Exhibit G – Contractor’s Key
Personnel

Exhibit G

Contractor’s Key Personnel

 

Project Management Leadership Responsibility    Name    Roll-off Date Project
Manager    Bobby Smith    3rd Qtr 2011 Project Manager AQCS    Tom Hinrichs   
3rd Qtr 2011 Project Manager Power Island    Andy Lefin    3rd Qtr 2011 Project
Controls Manager    Randy Hudson    3rd Qtr 2012 Procurement Manager    Leon
Talley    3rd Qtr 2010 Subcontracts Manager    Burns Elkes    1st Qtr 2012 Home
Office Engineering Responsibility    Name    Roll-off Date Project Engineering
Manager - Coal    Charles Worthington    1st Qtr 2011 Project Engineering
Manager - AQCS    Curtis Jacobs    3rd Qtr 2010 CSA Material Handling Lead
Engineer    Wade Byrum    3rd Qtr 2009 Mechanical Systems Lead Engineer    Brent
Pressley    2nd Qtr 2011 Mechanical Equipment Lead Engineer    Randy Peacock   
2nd Qtr 2011 Layout & Piping Lead Engineer    Lowell Nelson    2nd Qtr 2011 I&C
Lead Engineer    Steve Jansen    4th Qtr 2011 Electrical Lead Engineer    Mike
Henderson    3rd Qtr 2011 Construction Management Leadership Responsibility   
Name    Roll-off Date Construction Site Representative    Terry Gray    3rd Qtr
2011 Site Manager    Bob Lynch    2nd Qtr 2012 Area Manager Balance of Plant
(BOP)    Tom Gibson    2nd Qtr 2011 Boiler Area Manager    TBD    2nd Qtr 2011
STG Area Manager    Frank Marshall    2nd Qtr 2011 AQCS Area Manager    Kim
Hornbuckle    2nd Qtr 2011 Project Controls Manager Field    Donny Sims    3rd
Qtr 2012 Quality Control Manager    Dave Cowart    2nd Qtr 2011 Construction
Engineering Manager    John Fehr    3rd Qtr 2011 Commissioning Management
Responsibility    Name    Roll-off Date Commissioning Manager    Phil Iddings   
2nd Qtr 2012

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

EXHIBIT H

***

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

EXHIBIT I

***

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

EXHIBIT J-1

*** GUARANTY

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

***Guaranty

THIS GUARANTY is given this *** by *** a corporation organized under the laws of
*** (“Guarantor”), for the benefit of DUKE ENERGY CAROLINAS, LLC, a limited
liability company organized under the laws of the State of North Carolina
(“Owner”).

WITNESSETH:

WHEREAS, Owner plans to have constructed a new nominally-rated 800 MW
supercritical generating Unit 6 and a new flue gas desulfurization system on the
existing Unit 5 at its electric generating facility known as Cliffside Steam
Station (the “Project”); and

WHEREAS, Owner has entered into a Engineering, Procurement and Construction
Agreement dated July 11, 2007 (the “Original EPC Agreement”) with Stone and
Webster National Engineering P.C. (“Contractor’s Predecessor”), whereby
Contractor’s Predecessor will provide certain services for the Project; and

WHEREAS, in connection with the Original EPC Agreement, Guarantor entered into
that certain Guaranty, pursuant to which Guarantor guaranteed the obligations of
Contractor’s Predecessor under the Original EPC Agreement; and

WHEREAS, pursuant to that certain Assignment and Assumption Agreement, dated as
of the date hereof, (i) Contractor’s Predecessor assigned to Shaw North
Carolina, Inc. (the “Contractor”) all of its right, title, interest and
obligations in, to and under the Original EPC Agreement and all of its right,
title and interest in the Documentation (as defined in the Original EPC
Agreement), and (ii) Contractor accepted such assignment and assumed and agreed
to pay and otherwise undertake, observe, perform and discharge in accordance
with its terms all of Contractor’s Predecessor’s obligations and other
liabilities under, arising out of or relating to the Original EPC Agreement (the
“Assignment and Assumption”); and

WHEREAS, immediately upon the Assignment and Assumption, Owner and Contractor
entered into that certain First Amended and Restated Engineering, Procurement
and Construction Agreement, dated as of the date hereof (the “Contract”),
pursuant to which the Original EPC Agreement was amended and restated in its
entirety by the Contract; and

WHEREAS, Guarantor has a substantial economic interest in the Contract and has
agreed, as a material inducement to Owner to consent to the Assignment and
Assumption and to enter into the Contract, to enter into this Guaranty, pursuant
to which Guarantor shall guaranty the obligations of Contractor under the
Contract in accordance with the terms set forth herein; and

NOW, THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor hereby agrees as follows:

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

1. GUARANTEE. Guarantor absolutely, unconditionally and irrevocably guarantees
to Owner that:

 

  (a) ***

 

  (b) ***

2. UNCONDITIONAL OBLIGATION. This is a guarantee of payment and performance and
not of collection. The liability of Guarantor under this Guaranty is direct,
irrevocable and not conditional or contingent upon the pursuit of any remedies
against Contractor or any other person or entity, nor upon any other recourse
available to Owner, its successors, endorsees, transferees, or assigns.
Guarantor waives any and all rights it may now or in the future have under law
or in equity to require either that an action be brought against Contractor or
any other person or entity as a condition to proceeding against Guarantor.

3. ABSOLUTE OBLIGATION. The obligations of Guarantor under this Guaranty are
absolute and without regard to lack of power or authority of Contractor to enter
into the Contract or any other circumstances which might otherwise constitute a
legal or equitable discharge of a surety or guarantor. Guarantor agrees that
Owner and Contractor may modify or amend the Contract and that Owner may delay
or extend the date on which any guaranteed obligation must be paid or performed,
or release Contractor from any guaranteed obligation or waive any right
thereunder, all without notice to or further assent by Guarantor, which shall
remain bound by this Guaranty, notwithstanding any such act by Owner. The
obligations of Guarantor under this Guaranty shall not be affected, reduced, or
impaired upon the happening of any of the following events:

(a) the failure to give notice to Guarantor of the occurrence of a default under
the terms and provisions of the Contract, provided Owner has complied with the
notice requirements of the Contract;

(b) the change, modification or amendment of any obligation, duty, guarantee,
warranty, responsibility, covenant or agreement (including without limitation
Change Orders) set forth in the Contract;

(c) any failure, omission, delay by or inability on the part of Owner to assert
or exercise any right, power or remedy conferred upon Owner under the Contract;

(d) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all of any of Contractor’s assets, the
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization of, or similar proceedings affecting Contractor or any of the
assets of Contractor;

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

(e) the merger or consolidation of Contractor into or with any corporation or
other entity, or Contractor’s loss of its separate corporate identity or its
ceasing to be an affiliate of Guarantor;

(f) any action by Owner under the Contract granting indulgence or extension of
time for payment to Contractor or any other surety except as so granted; or

(g) the assignment of any right, title or interest of Owner in the Contract
pursuant to the terms thereof to any other person or entity.

4. ***

5. WAIVER OF NOTICE. Guarantor hereby waives notice of (a) Owner’s acceptance
and reliance on this Guaranty; (b) default or demand in the case of default,
provided such notice or demand has been given to or made upon Contractor; and
(c) any indulgences, extensions or consents granted to Contractor or any other
surety. Guarantor waives promptness, diligence, presentment, demand of payment
or enforcement and any other notice with respect to any of the guaranteed
obligations and this Guaranty.

6. SUBROGATION RIGHTS. Any subrogation rights of Guarantor arising by reason of
any payments made under this Guaranty shall be subordinate to the performance in
full by Contractor of all obligations under the Contract, including, without
limitation, payment in full of all amounts which may be owing by Contractor to
Owner thereunder.

7. ***

8. ASSIGNMENT. This Guaranty shall inure to the benefit of Owner, its successors
and permitted assigns and shall be binding upon Guarantor and its successors and
permitted assigns. Owner may at any time assign this Guaranty to any person or
entity to whom Owner assigns the Contract in accordance with the terms thereof,
including a collateral assignment of Owner’s right, title and interest in and to
this Guaranty in connection with obtaining financing for the Project. Guarantor
may not assign this Guaranty without the prior written consent of Owner, which
may be withheld in Owner’s sole discretion.

9. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents, warrants and
covenants that:

(a) entering into this Guaranty and performance hereunder (i) is not an event of
default or otherwise contrary to any obligation by which Guarantor may be bound,
and (ii) will not result in the creation or imposition of any lien upon any
property of Guarantor;

(b) Guarantor is a corporation duly incorporated, validly existing and in good
standing under the laws of Louisiana and is in good standing in each
jurisdiction where the failure to be in good standing would materially and
adversely affect its ability to perform its obligations under this Guaranty, and
Guarantor will maintain its existence and remain in good standing under such
laws;

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

(c) the execution and delivery by Guarantor of this Guaranty, and the
performance by Guarantor of its obligations hereunder (i) are within Guarantor’s
corporate powers, (ii) have been duly authorized by all necessary action,
(corporate or otherwise), (iii) do not contravene any law or regulation
applicable to or binding on Guarantor or any of its properties, and (iv) do not
require the consent or approval of any person or entity which has not already
been obtained;

(d) this Guaranty constitutes the legal, valid and binding obligation of
Guarantor enforceable against Guarantor in accordance with its terms.

10. SEVERABILITY. The invalidity or unenforceability of any provision of this
Guaranty shall not affect the validity or enforceability of the remaining
provisions of this Guaranty, which shall be enforced to the greatest extent
permitted by law.

11. EXERCISE OF REMEDIES. No single or partial exercise by Owner or its
successors or assigns of any right or remedy shall preclude any further exercise
thereof.

12. WAIVERS. No delay or omission to exercise any right or power of Owner shall
impair any such right or power or shall be construed to be a waiver thereof. No
waiver of any right of Owner under this Guaranty shall be effective unless made
pursuant to an instrument in writing duly executed by Owner.

13. NOTICES. All notices permitted or required to be given under this Guaranty
shall be in writing and shall be deemed duly given when sent by telefacsimile
transmission, by overnight courier, by personal delivery or on the seventh
(7th) day following the date on which such notice is deposited in the mail,
postage prepaid, certified, return receipt requested. All notices shall be
delivered or sent to the parties at their respective address(es) or number(s)
shown below or to such other address(es) or number(s) as a party may designate
by prior written notice given in accordance with this provision to the other
party:

If to Owner:

 

If to Duke:    Duke Energy Carolinas, LLC    Mail Code EC11T    P. O. Box 1006
   Charlotte, NC 28201-1006    Attn: Dan Herzberg    Facsimile No: 704-382-5275
with a copy to:    Duke Energy Carolinas, LLC    Mail Code EC03T    P. O. Box
1006    Charlotte, NC 28201-1006   

Attn: General Counsel, Franchise Electric & Gas

Facsimile No: 704-382-5690

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

If to Guarantor:

***

14. AMENDMENT. No amendment of this Guaranty shall be effective unless made
pursuant to an instrument in writing duly executed by both Owner and Guarantor.

15. GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty shall in all respects
be governed by and construed in accordance with the laws of the State of North
Carolina, without giving effect to any choice of law rules thereof which may
direct the application of the laws of another jurisdiction.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first
written above.

 

“Guarantor” *** By:  

 

Name:  

 

Title:  

 

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EXHIBIT J-2

PERFORMANCE LETTER OF CREDIT

***

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EXHIBIT A

FORM OF DRAWING CERTIFICATE

(DATE)

[NAME AND ADDRESS OF ISSUER]

Attention:

 

  Re: Performance Letter of Credit No.                         

Dated                         

Ladies and Gentlemen:

1. Any capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the above-referenced letter of credit (the “Letter of
Credit”).

2. The undersigned certifies that the undersigned is an authorized officer
representative of [INSERT NAME OF BENEFICIARY], the beneficiary of the Letter of
Credit, and hereby further certifies as follows:

(a) [INSERT NAME OF BENEFICIARY] is the beneficiary of the Letter of Credit (the
“Beneficiary”), and hereby demands the payment of U.S. $                     to
the following account:

[Insert wire instructions (to include name and account number of the
Beneficiary)]

(b) The amount demanded in this Drawing Certificate does not exceed the amount
of the Letter of Credit on the date hereof.

(c) Pursuant to the terms and provisions of that certain [STATE AGREEMENT
BETWEEN BENEFICIARY AND APPLICANT TO WHICH THIS LETTER OF CREDIT RELATES] (the
“Contract”), Stone & Webster National Engineering P.C. has failed to fulfill
certain of its obligations under the Contract and Beneficiary is entitled to the
draw of the funds requested under this Drawing Certificate.

(d) Stone & Webster National Engineering P.C. has received our written
notification as required by the Contract specifying the non-compliance and has
failed to correct the same within the applicable cure period, if any, set forth
in the Contract.

IN WITNESS WHEREOF, the undersigned has executed this Drawing Certificate as of
the      day of                         ,             .

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[INSERT NAME OF BENEFICIARY] By:  

 

Name:  

 

Title:  

 

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

EXHIBIT B

FORM OF REDUCTION CERTIFICATE

(DATE)

[NAME AND ADDRESS OF ISSUER]

Attention:

 

  Re: Performance Letter of Credit No.                         

Dated                         

Ladies and Gentlemen:

1. Any capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the above-referenced letter of credit (the “Letter of
Credit”).

2. The undersigned certifies that the undersigned is an authorized officer
representative of [INSERT NAME OF BENEFICIARY], the beneficiary of the Letter of
Credit, and hereby further certifies as follows:

[INSERT NAME OF BENEFICIARY] is the beneficiary of the Letter of Credit (the
“Beneficiary”), and hereby authorizes a reduction of the amount of the Letter of
Credit, and the Issuer is hereby instructed and authorized to reduce the amount
of the Letter of Credit to                                      US dollars
(US$                    ).

IN WITNESS WHEREOF, the undersigned has executed this Reduction Certificate as
of the      day of                         ,             .

 

[INSERT NAME OF BENEFICIARY] By:  

 

Name:  

 

Title:  

 

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EXHIBIT J-3

***

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LOGO [g23445shaw_img.jpg]

 

   J.O./W.O. NO

PAGE

  

120631

Page 35 of 5

   SECTION NO.:

DATE

             2/20/08    CLIENT    Duke Energy Carolinas, LLC EPC CONTRACT   
PROJECT    Cliffside Modernization Exhibit K    TITLE    Exhibit K – Change
Order Costs/Reimbursable Costs

Change Order Costs/Reimbursable Costs

***

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EXHIBIT L-1

Unit 5 Scrubber

Performance Test and Guarantees

Performance Conditions

 

1.1 Section 1.0 presents performance conditions for the Unit 5 Scrubber.

 

1.2 The guaranteed values provided are valid only when the volumetric flow rate
of the flue gas from the boiler entering Unit 5 Scrubber, the flue gas
temperature, sulfur dioxide, sulfur trioxide, and particulate concentrations are
less than or equal to the values stated in Exhibit A.

 

1.3 Guarantee values are applicable only when the fuels, limestone, and water
are within the range as defined in Exhibit A. The guaranteed values are also
predicated upon operation of the Unit 5 Scrubber at or below a steady state
chlorides concentration of ***. Unit 5 guarantees are limited to operation with
fuels with up to ***when not using DBA in the scrubber, and *** when using DBA
in the scrubber.

The guaranteed values are conditioned upon: operation of the Equipment by the
Owner in accordance with generally accepted industry practice and the following
guidelines as set forth in ASME PTC 40; and in accordance with the specified
conditions of service and operating instructions furnished by the Contractor;
and the proper maintenance of the Equipment.

 

1.4 Guaranteed values are to be determined by testing in accordance with the
conditions and protocols provided in Section 4.0 entitled “Performance Testing.”

Emissions Guarantees

 

2.1 The following emissions guarantees are applicable to the Unit 5 Scrubber
based on the general conditions in Section 1.0. The flue gas flow rate shall be
measured simultaneously with all emissions testing using US EPA Methods 1–4.
Where removal guarantees are provided, flue gas flow rate measured upstream of
the WFGD scrubber shall be measured simultaneously using US EPA Methods 1-4.

 

2.2

SO2 Emission Limit: The Unit 5 Scrubber shall achieve a minimum SO2 removal
efficiency of ***, with an SO2 inlet concentration equal to or less than
***SO2/MMBtu, without organic acid addition, under all boiler load conditions
from ***MCR. The Unit 5 Scrubber shall be capable of operating

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at the guaranteed removal efficiency with inlet particulate concentrations up to
***lb/MMBtu. SO2 Emission is a Make Right Performance Guarantee. Testing will be
via EPA Method 6 or 6C as measured upstream and downstream of the Unit 5
Scrubber.

 

2.3 Particulate Matter Emission (excluding condensables): The particulate
emission at the exit of the Unit 5 Scrubber shall be *** removal or ***lb/MMBtu
(24 hour rolling average as measured by the average of three 4 hour tests);
whichever is less stringent, up to an inlet particulate load of ***lb/MMBtu.
Particulate matter emission is a Liquidated Damages Performance Guarantee.
Testing will be via EPA Method 5B.

Other Performance Guarantees

 

3.1 The following Performance Guarantees are applicable based on the performance
conditions in Section 1.0. All guarantees described in this section shall be
achieved simultaneously with the emissions guarantees.

Gypsum Composition: The gypsum cake leaving the Unit 5 Scrubber shall possess
the characteristics shown in Table 3.1 as verified using the procedures given in
Table 3.1. Gypsum Composition is a Make Right Performance Guarantee.

Table 3.1 Gypsum Characteristics

 

(b) Characteristics

  

(c) Values

 

(d) Units

  

Test Method

Purity (CaSO4•2H2O)

   ***   wt.%, dry   

ASTM C471 or

EPRI L1, F1, J3 or L2, M1, or M2; with calibrated instrument at elevated
temperature (e.g. Arizona Instruments Computrac Max 2000XL, Thermogravimetric
Analysis or similar)

Residual Moisture, (maximum)

   ***   wt.% free water    Solids content measured by EPRI F1, (e.g. Arizona
Instruments Computrac Max 2000XL, Thermogravimetric Analysis or similar)

Mean particle size, (range)

   ***   µm   

EPRI G1, Wet Screening or

Laser Diffraction, (e.g., Mictrotrac or similar)

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Table 3.1 Gypsum Characteristics

 

Heavy Metals

(applies to heavy metals only)

   ***      EPA SW846, Method 1311 Free Silica    ***   wt.%, dry    ASTM C471,
or , ASTM C-25-29 Aspect Ratio Z To Y    ***      NGC 19-4-14 Acid Insoluble
Inerts    ***   wt.%, dry    ASTM C471 or ASTM C25-8 Chloride (maximum)    ***  
ppmd   

ASTM C471 or

EPRI O4, Ion-specific electrode; or Ion Chromatograph

pH    ***      EPRI C1, pH meter Sulfite (CaSO3• | H2O), maximum    ***   ppmd
   EPRI M2, Titration; Ion Chromatograph, or Thermogravimetric Analysis Sodium
(water soluble)    ***   ppmd    ASTM C471 or Ion Chromatograph Magnesium (water
soluble)    ***   ppmd    ASTM C471/EPRI J3; on Ion Chromatography Nickel (water
soluble)    ***   ppmd    ASTM D1976 Vanadium (water soluble)    ***   ppmd   
ASTM D1976 Ammonia (NH4 ion)    ***   ppmd    ASTM D1426-B or Ion Chromatography

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Chloride Purge Stream: Based on fuel chloride concentration, the chloride purge
stream from the Unit 5 Scrubber shall meet the requirements specified in Tables
3.1.2-a and 3.1.2-b at the Contractor’s discharge to the Unit 5 Purge Stream
Waste Water Treatment System (PSWWTS). Chloride Purge Stream discharge
composition, except Mercury and Selenium, is a Make Right Performance Guarantee.
Remediation, which includes modifications to the system design and requirements
due to failure to meet the guaranteed Purge Stream Composition, are subject to
approval by the Owner.

 

Table 3.1.2-a Unit 5 Scrubber Purge Stream Characteristics

 

(excluding 2-day surge events)

 

For Low Fuel Chloride Concentration (***)

Characteristic

  

Units

  

Value

pH

   pH SU    ***

TSS

   wt%    ***

Chloride (Cl)

   Ppm    ***

Temperature

   ºF    ***

TDS

   mg/l    ***

Volumetric Flow Rate

   Gpm    ***

 

    Table 3.1.2-b Unit 5 Scrubber Purge Stream Characteristics

 

(excluding 2-day surge events)

 

For High Fuel Chloride Concentration (***)

Characteristic

  

Units

  

Value

pH

   pH SU    ***

TSS

   wt%    ***

Chloride (Cl)

   Ppm    ***

Temperature

   ºF    ***

TDS

   mg/l    ***

Volumetric Flow Rate

   Gpm    ***

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Electric Power Consumption: The 24-hour average electrical power consumption for
the entire Unit 5 Scrubber shall not exceed *** kW based on the following:

***MCR; up to *** acfm at ***°F

3 spray levels operating;

*** lbs SO2/MMBtu coal;

***SO2 removal.

The guaranteed value has been developed using a listing of electric power users
(documented in the Electric Load List for Unit 5), a methodology for assigning
duty factors to account for time of usage during the test period, and the
portion of common equipment that applies to Unit 5. The methodology and
associated duty factors may be modified to account for common equipment that
only operates part time (such as ball mills and belt filters) in a manner
representative to the Unit 5 usage during the 24-hour period. Corrections may
also be required, depending on final method of measurement that corrects for
equipment and line losses not in Contractor’s scope. The methodology and
associated adjustments will be agreed upon and documented in the Performance
Test Procedure.

Electric Power Consumption is a Liquidated Damages Performance Guarantee.
Passing this consumption guarantee at one (1) condition is all that is required.

Limestone Consumption: The stoichiometric ratio as measured in representative
gypsum samples for the Unit 5 Scrubber shall not exceed *** on a total plant
basis while operating at steady state conditions. This guarantee is predicated
on *** wt% (minimum) of the limestone being reactive calcium carbonate
equivalent. Reactive calcium carbonate shall be determined based on the total
calcium carbonate in limestone corrected for unreactive dolomitic limestone by
removing a molar equivalent of calcium carbonate for each mole of magnesium in
the limestone. The limestone will also meet the minimum requirements of the
Alstom Power Limestone Reactivity Test [included with Alstom contract].
Calculation of the limestone consumption

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

will be based on the actual tested fuel firing rate, measured SO2 inlet to the
AQCS system, and the amount of excess limestone for Liquidated Damages purposes
(if the stoichiometric ratio exceeds the guarantee) will be based on these
values only and the excess stoichiometry above the guarantee value. Gypsum is
tested for stoichiometric ratio per the equation below that corrects for
unreactive dolomitic limestone remaining in the gypsum by removing a molar
equivalent of calcium for each mole of magnesium remaining in the byproduct.
Results are to be based on the average of 3 valid samples.

***

***

Liquid carryover: Liquid carryover shall not exceed 0.01 grains per acf as
determined by hot wire anemometer (developed by KLD) method using the Army
Insecticide Monitoring System (AIMS-DC111 Probe) or agreed upon alternative
method.

Gypsum Solids: Gypsum solids product minimum oxidation fraction shall be no less
than ***. Method of verification to be mutually agreed to by Owner and
Contractor.

Performance Testing

 

4.1 The Performance Test Procedures will define the conditions and procedures
for executing the tests required to determine satisfaction of the Emissions and
Performance Guarantees. For more detailed information on performance testing,
refer to the Cliffside Modernization Project Testing Procedure.

 

4.2 Contractor shall be responsible for providing all permanent testing
instrumentation and sample test ports/valves required to conduct the Performance
Testing. The responsibility for submittal of any regulatory certification of
emissions monitoring equipment required by Government Authority will be borne by
the Owner.

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4.3 Performance Testing Procedures shall be developed by the Contractor with
approval by the Owner no less than *** Days prior to Contractor’s Substantial
Completion of the Unit 5 Scrubber. Testing Procedures shall include
identification of all sample/measurement points, specific test methods where
applicable, calibration requirements for all instrumentation and data collection
devices specified in the Testing Procedure. Contractor shall provide correction
or guarantee curves or equations *** Days prior to commencement of Performance
Testing, approved by the Owner, for determining compliance with guarantee
parameters where the basis of design conditions cannot be duplicated. At a
minimum, the following correction curves are to be provided:

***

***

 

4.4 Performance Testing shall be conducted by a mutually agreed upon third-party
testing Subcontractor hired by the Contractor for performing all Performance
Testing.

 

4.5 Performance Testing will commence no less than *** Days after Mechanical
Completion for the Unit 5 Scrubber and in accordance with the approved Test
Procedures. Prior to the start of the Performance Testing, the Unit 5 Scrubber
is to operate at steady-state conditions with *** for a duration of at least
***, or as otherwise agreed upon by Owner and Contractor to allow testing to
proceed.

 

4.6 Testing shall be performed by the Contractor-provided third party testing
Subcontractor with the Owner’s and Contractor’s full participation in accordance
with the approved Test Procedures. Testing shall be performed without cleaning
or adjustment of equipment except for that which is normally carried out while
in operation or which is approved by the Owner.

 

4.7 Test Locations: Contractor will provide test ports, sampling valves and
suitable access as required for all Contractor-supplied Equipment.
Testing/sampling locations will be noted on General Arrangement Drawings and are
provided in accordance with the Agreement.

 

4.8 During the Performance Testing, the Unit 5 Boiler shall be operated in a
steady-state mode at a *** of the design fuel firing rate and design flue gas
flow rate defined in Exhibit A for a minimum of ***and for the duration of the
testing. Operation of the boiler will be controlled to the maximum extent
possible to comply with the conditions listed above and the Owner’s
specification.

 

4.9 A draft test report will be prepared by the testing Subcontractor and
submitted simultaneously to the Owner and/or its agent and to Contractor for
review and comment. A final report incorporating any comments will then be
prepared and submitted by the testing Subcontractor. Reports will include, as a
minimum, a full discussion of the Testing Procedures, sample data reduction
calculations, raw data sheets and logs, tabulations of reduced data and results,
a discussion of potential uncertainty and error, and a discussion of the
results.

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

4.10 Not used.

 

4.11 Notification: The Contractor shall be notified within *** Days of Owner
receiving the test results in writing if, in the opinion of the Owner, there is
evidence that any Performance Guarantees are not being met.

 

4.12 Retuning or modifications required as a result of failure to meet
Guaranteed Emission Limits shall be cause for retesting of the Unit 5 Scrubber
at the discretion of the Owner in accordance with the approved Test Procedures
conducted by the Owner provided third party testing Subcontractor at the expense
of the Contractor. Retesting will be limited to specific failed items and those
items that are significantly related if it can be reasonably demonstrated by
Contractor and accepted by Owner that the retuning and/or correction of the
failed components would not impact the Contractor’s achievement of the Minimum
Performance Guarantees and the Performance Guarantees.

 

4.13 Availability of Supporting Data: The Owner and/or its agent agree to make
available to Contractor all pertinent facility operating logs and data obtained
during the performance test period, such as, but not limited to: ***.

Performance Liquidated Damages

 

5.1 Values for Unit 5 Scrubber Liquidated Damages (LD) Performance Guarantees
are listed in Table 5.1 below:

 

Characteristic

  

Measure

  

Value

***

   Based on scale of performance achieved    ***

***

   Exceeding Performance ***    ***

***

   Exceeding Performance ***    ***

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EXHIBIT L-2

PERFORMANCE TESTING of UNIT 6

GUARANTEED UNIT NET HEAT RATE, OUTPUT, STEAM FLOW CAPACITY & EMISSIONS

And

PERFORMANCE VERIFICATION of PLANT EQUIPMENT

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1.0 INTRODUCTION

1.1 Objective

This Exhibit establishes conditions, parameters and methods for *** of ***
guarantees established by the Agreement, corrected to the Base Performance
Conditions identified in Section 7 of this Exhibit.

Unit 6 *** will be tested, calculated and corrected based on the *** steam flow,
identified in the Section 7. Main Steam Flow Capacity Testing will be at the
***.

Additionally, Performance Verification of the Steam Generator, Steam Turbine,
and AQCS along with major plant equipment and systems is addressed.

Consumptive guarantees subject to Performance Liquidated Damages shall also be
tested in accordance with this Exhibit and measured while simultaneously
achieving Guaranteed Emission Limits and Guaranteed Gypsum Quality.

Unit 6 will not exceed Permitted Emissions Limits as identified in Exhibit M,
and measured in accordance with Table L-2.1 during Performance Testing. Emission
Compliance Testing, including CEMS Certification testing, may occur prior to
Substantial and Final Completion, with Guaranteed Emission Limits verified
during Performance Testing of the Unit 6 using the certifiable CEMS (defined in
Section 8.3).

If tuning or other adjustments to Unit 6 that may effect emissions occur after
non-CEMS monitored emission acceptance and prior to Substantial and/or Final
Completion, the Owner may require re-testing of emission compliance of non-CEMS
monitored parameters to verify that tuning has not violated emission compliance.

Guaranteed Emission Limits and Guaranteed Removal (%) found in Exhibit M are
Make Right Performance Guarantees.

1.2 Performance Test Program Philosophy

Table L-2 summarizes the Performance Testing and Equipment Verification Program.
The purpose of the Performance Test and Equipment Verification Program is
fivefold:

1.2.1 ASME Code Testing

Unit Performance Testing - Confirm that individual Unit 6 Net *** guarantees
contained in the Agreement are met, using ASME Performance Test Codes listed in
Table L-2. If these values are not met, to establish the shortfall value for
application of remedies or damages addressed in the Agreement with the
Contractor.

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

Steam Generator, Steam Turbine and AQCS Testing - Confirm the performance
guarantees of Owner Equipment are met, using Performance Test Codes listed in
Table L-2. If these values are not met, to establish the shortfall value. These
may be run concurrently with the Unit 6 Performance Test, where appropriate.

1.2.2 Non Code Testing

Major Equipment Verification - Report the performance of major equipment, using
data collected either during Unit 6 Performance Testing or individual Equipment
Verification Testing. If performance guarantees are not met, to establish an
estimate of the shortfall value, for possible Code Testing.

Plant Baseline Data - Establish the overall Unit 6 Baseline Performance Data for
key operating parameters based on a combination of data taken during the Unit 6
Performance Test, Steam Generator and Steam Turbine Performance Test and DCS
collected data.

Emissions Compliance Test and CEMS Certification – Perform emission compliance
test and certify CEMS in accordance with Cliffside Air Permit and referenced
regulatory requirements.

1.3 Agreement Authority

The Agreement contains specific information concerning guarantees, results,
re-testing, schedule, remedies, liquidated damages and warranties, and is not
addressed in this Performance Testing Exhibit.

1.4 Performance of Owner Equipment

The Contractor’s Net *** Performance Guarantees are based on the guaranteed
performance of the Owner Equipment. Plant performance test results shall be
corrected for Owner Equipment performance shortfalls that are not attributable
to Contractor responsibility. It will be the Contractor’s responsibility to
test, document and verify any such claimed performance shortfall.

1.5 Substantial Completion Testing

The initial Performance Testing is used to satisfy the Minimum Performance
Guarantee. This Test shall be satisfied by the same methods as the Unit 6
Performance Test methodology, except where a substitute test method is approved
by the Owner.

A substitute test using installed plant permanent instrumentation in lieu of
calibrated temporary test instrumentation may be approved after Owner review.
The pricing defined in Exhibit I is based on the Contractor using plant
permanent instrumentation for the

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

initial Performance Testing to satisfy the Minimum Performance Guarantee.
Additional temporary high accuracy instrumentation will be used by Contractor
for purposes of verifying compliance with the Guaranteed Performance.

The initial Performance Test may satisfy the requirement of the Performance
Guarantees if performed in accordance with Section 6. of this Exhibit.

2.0 TEST RESPONSIBILITY

All testing described in this Exhibit is in Contractor’s scope of supply.

Test Contractor approved by the Owner, shall conduct the Unit 6 Performance
Test, Steam Generator and Steam Turbine Performance Test, and compile the Plant
Baseline Data. The Contractor and the Test Contractor may share the
responsibility for the Major Equipment Verification as outlined in Table L-2.

The Test Contractor shall be responsible for the Performance Test Plan (PTP),
test instrumentation including calibration and set up, pre and post test
uncertainty analysis, conduct of the testing, data acquisition, data reduction,
post test calculations, and test report for Unit 6 Performance Testing, Steam
Generator and Steam Turbine Testing, Plant Baseline Data and Major Equipment
Verification (except where excluded in Table L-2).

3.0 PERFORMANCE TEST PLAN

The Contractor will submit *** days prior to commencement of the Performance
Test a complete detailed Performance Test Plan (PTP) mutually approved by Owner,
Test Contractor, Contractor and Owner Equipment Contractor’s. The PTP will
constitute an agreement for the Performance Testing by the Parties to the test.
Differences between the Test Procedures or methods contained in/or developed in
accordance with the PTP and the respective Agreements or established industry
test codes are by mutual agreement of the Parties to the test, as approved in
the PTP.

The PTP form and contents shall specifically meet the requirements of ASME PTC
46 – 1996, Section 3.2 “Test Plan”, where ASME Code Testing procedures are being
applied. The actual test methods and corrections for each test shall be in
accordance with Codes identified in Table L-2.

4.0 TEST UNCERTAINTY

*** test tolerances or uncertainties shall be applied to any Performance Test
results for the satisfaction of Unit 6 Performance Guarantees, or Steam
Generator or Steam Turbine Tests.

Pre-Test uncertainties (for ASME Code Tests) will be calculated in accordance
with applicable ASME Codes, and shall not exceed ASME PTC requirements for the
applicable Code Test. Post test field verifications will be performed on
instruments measuring parameters where there is no redundancy or for which the
data is questionable.

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

5.0 DEGRADATION

Degradation shall be applied to the Unit 6 *** Tests, in accordance with Owner
Equipment guarantees. An *** test in accordance with *** requirements, shall be
performed on the steam turbine by the Test Contractor as soon as practical after
startup, and prior to the Net ***. Degradation attributed to the *** shall be
based on enthalpy drop test results in accordance with Steam Turbine Generator
guarantees.

Corrections to test results due to *** that are attributable to Contractor’s
actions shall not be applied. This includes both equipment scope and schedule
effects.

6.0 PERFORMANCE TESTING – ASME CODE TESTING

6.1 Test Runs and Corrections

Performance Testing involves set-up, testing, measurements and data collection,
subsequent calculations and corrections. A series of three (3) individual Test
Runs meeting the Code requirements for duration (no less than 2 hours each),
shall be performed at the test conditions, which Unit 6 is subject to at the
time of the testing. Test operational and data stability requirements set forth
in ASME Codes shall be met.

Results of the three (3) Test Runs shall be corrected to Base Performance
Conditions and averaged for comparison. The Unit 6 Performance Test will be
compared to the Performance Guarantee values. The Steam Generator and Steam
Turbine will be corrected to Owner Equipment Contract conditions and compared to
contract values.

Demonstration of the Steam Generator and Steam Turbine performance will require
the Test Contractor to perform measurement/correction methodology required by
the governing ASME PTC.

Contractor shall provide all required ASME PTC 46, PTC 4 and PTC 6 correction
data. At a minimum, raw source data for curves or correction curve equations
shall be supplied. Curves may be additionally supplied as well, but priority of
test correction source will be, in order of preference; Manufacturer provided
source data or curve equations, best fit equations of Manufacturer provided data
or curves, visual reads of Manufacturer provided data or curves, and Contractor
supplied data, curves, and equations. Contractor shall submit all correction
calculations, correction data and any thermal models for review and approval 60
days prior to commencement of testing.

6.2 Instrument Calibration

Instrument calibration shall meet ASME PTC Code requirements. Test Contractor
shall submit all instrument calibration data to the Contractor and Owner for
review prior to the commencement of the Performance Test. Flow devices meeting
the requirements set forth by ASME Code to measure primary parameters and
variables need not undergo inspection following the performance test if the
devices have not experienced conditions that would violate their integrity. Such
conditions include steam blows and chemical cleaning.

6.3 Test Equipment and Instruments

The Contractor will have the responsibility for providing all test
instrumentation and equipment, whether temporary or permanently installed.
Instrumentation shall meet the

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

requirements of the applicable ASME PTC Code, in order that the calculated pre
test uncertainty does not exceed ASME Code requirements. Primary condensate flow
instrumentation shall be supplied and calibrated in accordance with ASME PTC 6 –
2004, and shall remain the property of the Owner after the completion of
Performance Testing.

6.4 Test Interruption

Test runs are not required to be continuous, but shall occur within the same 72
hour period, in order to assure that the Unit 6 configuration and the test
conditions are relatively similar. The Owner may waive this requirement.

6.5 Unit 6 Performance Testing

The Unit 6 Performance Test will be in accordance with ASME PTC 46-1996
“Performance Code on Overall Plant Performance”, except where modified by the
Contract, or by mutual agreement by the Parties to the Test.

For a coal fired unit, this will require determination of steam generator
efficiency, in order to calculate primary heat input, in accordance with ASME
PTC 4 - 1998, Energy Balance method, except as noted in this Exhibit.

The Performance Guarantee applies to the testing of Unit 6. Common loads shared
with Unit 5 will be proportioned to each Unit.

6.5.1 Electrical Terminal Point of Guarantees – Unit 6

Performance Testing

The electrical terminal point of the Unit 6 Performance Guarantee is as measured
at the high side of the main step up transformers. Transformer losses (main step
up and aux) due to corrections to Base Performance Conditions will be included
as part of the post test corrections.

Material Handling auxiliary load terminal point will be considered the inlet
(delivery point from truck or rail carrier) of the coal, limestone and lime
unloading hoppers or transport piping. For gypsum and ash, the terminal point
will be the ash silos and gypsum storage pile.

6.5.2 Unit 6 Performance Test Auxiliary Loads

The Unit 6 Net Output and Heat Rate Guarantee shall include all auxiliary loads,
including pumps, fans, motors, heaters, air conditioning, lighting, material
handling and miscellaneous equipment that are required to operate the equipment
in a normal plant configuration.

The Unit 6 Net Output and Heat Rate Guarantees are based on the electrical
auxiliary loads for major JPDA equipment as listed in Table L-2.2. The
Performance Guarantees will be revised to incorporate changes in any of the
Table L-2.2 values due to final equipment selections.

The auxiliary load methodology for the Unit 6 Performance Test will be

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

based on operation of Unit 6 during the Base Performance Condition (summer day).
As part of the PTP, the Contractor will submit, for approval, a load list,
indicating the test operating status of all plant electrical equipment greater
than 2 hp (valve motor operators need not be accounted for): The following is
the type of operation that is expected:

All normal interior lighting shall be energized.

All air conditioning/heating/ventilation required to maintain the plant
environment on the test day will be operating.

All equipment required for normal full load operation will be energized.

Redundant or surge capacity equipment shall be energized.

Material handling, water treatment and other loads of a cycling nature shall be
characterized prior to the Unit 6 Performance Test. The Contractor will submit
as part of the PTP, procedures for the determination of these cycling loads, for
Owner approval. Fuel, Ash, Limestone, Lime, Gypsum, make up and waste water
handling (except AQCS purge stream treatment) auxiliary loads will be determined
based on testing done prior to the Unit 6 Performance Testing. The methodology
shall also contain procedures and calculations for the proportioning of
auxiliary loads to Unit 6 and the Unit 5 Scrubber.

Auxiliary loads for major Owner Equipment will be individually measured for
determining satisfaction of Owner Equipment Contract guarantees.

Preliminary testing and results calculations shall occur prior to commencement
of Unit 6 Performance Testing (this testing is not required for Substantial
Completion). Results shall be submitted to the Owner and approved prior to Unit
6 Performance Testing.

Testing will determine the kw-hr consumed per unit of material, for correction
to the plant auxiliary loads measured. Where appropriate, and approved by the
Owner, operation of cycling loads during the test can be substituted. For
example, coal reclaim auxiliary load could be determined by characterization
test or by returning the coal silo to pre test levels prior to the end of the
test runs.

6.5.3 Unit Configuration

During the Unit 6 Performance Test, Unit 6 will be aligned and operated in the
normal plant configuration – as approved by the Owner, with regards to
mechanical and electrical components and systems. All steam and water drains and
traps will be aligned for safe system operation.

The DCS will be in automatic operation, except where approved by the Owner.
Setpoints, system limits, alarms and trips will be in normal plant configuration
and will not be deviated from, for the purpose of the Unit 6 Performance Test.

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

6.6 Main Steam Flow Capacity Test

As part of Unit 6 Performance Testing, a *** will be performed to assure that
Unit 6 can achieve this steam flow operating condition on a continuous basis.
Although not specifically addressed in ASME PTC 46, the Main Steam Flow Capacity
will be verified using the ASME PTC 46 governed Unit 6 Performance Test
instrumentation and calibration methods, except where approved by the Owner.

The test duration will be an 8 hour continuous run.

Fuel and sorbent corrections will not be applied unless outside the range of the
Agreement specified design range for these materials.

Condenser exhaust pressure will be controlled as close as possible to *** by
operation of the cooling tower fans. Corrections will be made to adjust results
to ***.

Equipment will not exceed EPC Agreement (Exhibit A) or Manufacturer ratings.

Spare/redundant equipment shall not be operated. These include, but are not
limited to:

Spare hotwell and condensate booster pumps

Spare pulverizer, unless allowed by Steam Generator guarantee

Spare closed cooling water pump and heat exchanger

Spare limestone ball mill

Spare gypsum dewatering train

Contractor shall report test results for the *** and the corresponding net
electrical output (which is not guaranteed for this test). Net electrical output
shall be corrected to Base Performance Conditions for power factor, and wet
bulb.

6.7 Steam Generator, Steam Turbine and AQCS Testing

A Steam Turbine Test (Full Test) in accordance with ASME PTC 6 – 2004 will be
required to demonstrate the steam turbine performance. Likewise, the performance
of the Steam Generator will be demonstrated using ASME PTC 4 - 1998. These Tests
shall be in accordance with the subject Owner Equipment Contracts and the
mutually agreed to test procedures. Test procedures shall also provide for
demonstration of individual auxiliary loads for Steam Turbine, Steam Generator
and AQCS. See Table L-2 of this Exhibit.

6.8 Test and Data Report

The Contractor shall provide a complete report in accordance with ASME PTC 46
(PTC 4 and 6 for the Steam Generator and Steam Turbine respectively), and will
be submitted

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

within the time specified in the Agreement. A preliminary report of results
shall be submitted within the time specified in the Agreement. The report shall
be submitted in both electronic and paper format. Final report contents shall be
defined in the Performance Test Plan. This shall include, but not be limited to:

Calibration data for all instruments used in calculations

Raw and summary averaged data for each Test Run

All fuel, ash, sorbent, gypsum and emission sample reports

Key Plant DCS data during each Test Run, as identified by the Owner prior to the
Test

All calculations and corrections, including correction curves and data.

Final performance correction calculations shall be in Excel and submitted as an
Excel format file.

7.0 BASE PERFORMANCE CONDITIONS

Unit 6 Performance Guarantees are based on the following reference conditions.
Test results for the Unit 6 Performance Testing will be corrected to these
conditions as detailed in the Performance Test Plan:

Power Factor (high side of main step up) = ***

Fuel – Performance Fuel as identified in EPC Agreement

Ambient dry-bulb temperature – ***

Ambient wet-bulb temperature – ***

Sorbent (limestone and lime) – per EPC Agreement

Barometric Pressure – ***

***

8.0 PERFORMANCE TESTING – NON CODE TESTING

8.1 Major Equipment Verification

The Contractor shall report the performance of major equipment, using data
collected either during Unit 6 Performance Testing or individual Equipment
Verification Testing. This testing is not required to be in strict accordance
with applicable Test Codes referenced in Manufacturer contracts, but shall be of
sufficient accuracy to give indication of the equipment performance. The results
shall be corrected to Manufacturer contract conditions as part of the Test
Report. The Contractor shall supply all raw data and calculations as part of the
Test Report.

The Owner will use these reports to make a determination concerning the need for
further detailed Code testing of equipment, outside of the Contractor’s scope.

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

These tests can be run concurrently with the Unit 6 Performance Test, where
appropriate:

***

***

***

***

***

***

***

***

***

8.2 Plant Baseline Data

The Contractor shall report the overall Unit 6 baseline performance data for key
operating parameters (to be identified with Owner agreement, in the Performance
Test Plan) based on a combination of data taken during the Unit 6 Performance
Test, Steam Generator and Steam Turbine Performance Test and DCS collected data.
The goal is to establish initial Plant Baseline Data for comparison for future
operation.

The basis of the report shall be uncorrected averaged data from both the DCS and
temporary performance test instrumentation from one of the Unit 6 Performance
Testing Test Runs selected by the Owner.

8.3 Emissions Compliance Test and CEMS Certification

Once Mechanical Completion has occurred and Unit 6 is sufficiently complete so
that all systems are capable of safe operation in accordance with applicable
Laws, Good Practices and the Project Manuals, Contractor shall test Unit 6 in
accordance with the requirements of applicable Government Approvals, applicable
regulations and Exhibit M to verify compliance with the Permitted Emission
Limits and to certify the Part 75 CEMS systems (the “Emissions Compliance
Test”). The Emissions Compliance Test shall be undertaken by the Contractor in
compliance with all federal, state, local, and Contract requirements; including
schedule.

The Emissions Compliance Test shall be completed successfully prior to
initiation of Performance Testing. Stack emissions, including opacity, will be
measured for Unit 6 during the Performance Test. Sulfur dioxide (SO2), nitrogen
oxide (NOX), and mercury (Hg) will be verified using the Unit 6 “certifiable”
CEMS or by a certified leased CEM system. A certifiable CEMS is defined as a
CEMS that has been installed, calibrated, tested (40 CFR, Part 75 Certification
Test) and maintained in accordance with the requirements of the air permit and
appropriate regulatory requirements. The “certifiable” CEMS are not required to
have received formal regulatory approval. Opacity will be verified using the
Unit “certifiable” continuous opacity monitoring system (COMS).

The Contractor shall develop a schedule for providing the Owner necessary forms,
data

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

and reports well in advance of regulatory required Owner notifications and
submittals. Contractor shall prepare forms, data and reports in accordance with
Applicable Permits and regulatory requirements.

9.0 AQCS Performance Liquidated Damages

Limestone Consumption— *** exceeding Performance Guarantee.

Lime Consumption— *** exceeding Performance Guarantee

Electric Power Consumption— *** exceeding Performance Guarantee

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

Table L-2

 

Cliffside Unit 6 Field Performance Testing & Equipment Verification Program
Matrix                    

Part of

    

Parameter

  

Guarantee

  

Test Method

Note 1

  

Steam

Flow/Load

  

Unit Test

  

Verification
Test

  

Notes

UNIT PERFORMANCE GUARANTEES

***

   EPC   

PTC 46 –1996

PTC 4 – 1998

   ***   

X

      Note 2

***

   EPC    PTC 46 –1996    ***    X      

***

   EPC    PTC 6 – 2004    ***    X       Note 3 STEAM TURBINE, STEAM GENERATOR,
AQCS PERFORMANCE

Steam Turbine

 

•     ***

•     ***

•     ***

  

Manuf.

Contract

   PTC 6 – 2004   

 

***

***

***

  

 

X

X

X

      Note 4

Steam Generator

 

•     Efficiency

  

Manuf.

Contract

(Note 6)

   PTC 4 – 1998    ***    X       Note 4

•     Steaming
Capacity

      PTC 4 – 1998    ***    X       Note 5

•     Auxiliary
Load

     

PTC 4 – 1998

PTC 4 – 1998

   ***   

X

X

     

•     SH and RH Outlet Temp

      PTC 4 – 1998   

***

***

   X      

•     SH and RH
dP

     

See L-2.1

See L-2.1

  

***

***

  

X

X

     

Note 5

Note 5

•     NOx

      See L-2.1    ***    X       Note 5

•     CO

      PTC 4 – 1998    ***    X      

•     VOC

                 

•     Air Heater
Leakage

      Unit Test   

***

***

   X      

•     Pulverizer Capacity (1 spare)

      Unit Test          X    Note 5

•     Ammonia Consumption

                 

AQCS

 

•     PM10 (Filterable and Condensable)

•     SO2

•     H2SO4

•     Hg

•     Limestone

•     Lime

•     Auxiliary

     

 

See L-2.1

 

See L-2.1

See L-2.1

See L-2.1

Unit Test

Unit Test

PTC - 40

PTC - 40

  

 

***

 

***

***

***

***

***

***

***

  

 

X

 

X

X

X

X

X

X

   X   

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

Cliffside Unit 6 Field Performance Testing & Equipment Verification Program
Matrix                    

Part of

    

Parameter

  

Guarantee

  

Test Method

Note 1

  

Steam

Flow/Load

  

Unit Test

  

Verification
Test

  

Notes

Load

•     SO2 Removal

•     Gypsum Quality

•     Forced Oxidation Rate

        

***

 

***

     

X

 

X

  

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

MAJOR EQUIPMENT VERIFICATION

 

Cooling Tower

 

•     WB Approach

•     Aux Load

•     Flow

  

Manuf.

Contract

  

 

Unit Test

Unit Test

n/a

   ***   

 

X

X

   X

Condenser

 

•     Exhaust Press

•     TTD

•     Tube Side dP

•     O2 and Non – Condensables

  

Manuf.

Contract

  

 

Unit Test

Unit Test

n/a

n/a

   ***   

 

X

X

   X

X

Feedwater Heater

 

•     FWH TTD

•     FWH DCA

•     Tubeside dP

  

Manuf.

Contract

  

 

Unit Test

Unit Test

Unit Test

  

 

***

  

 

X

X

X

  

FW Pump Turbine

 

•     Efficiency

  

Manuf.

Contract

   Unit Test    ***    X   

Feedwater, Condensate Booster, Hotwell & Circulating Water Pumps

 

•     Efficiency

•     Capacity

•     TDH

  

Manuf.

Contract

   Unit Test    ***    X

X

X

  

Main Step Up Transformers

 

•     Electrical Loss

  

Manuf.

Contract

   Unit Test    ***    X   

Ash Handling System

 

•     Bottom, Fly & Economizer Ash Conveying Rates

  

EPC

Contract

   Test Plan

(to be developed)

   ***       X

Water Treatment

 

•     System Flow

•     Effluent Quality

  

EPC

Contract

   Test Plan

(to be developed)

   ***       X

NOTES

 

1. All ASME Code Tests will require application of additional ASME Test Code
requirements such as PTC 1 and the PTC 19 Series. Where conflict exists, the
most recent approved PTC will govern. Plant Performance will be based on the
ASME 1967 Steam Tables.

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

2. ASME PTC 4 – 1998 Energy Balance Method for determination of Steam Generator
Efficiency used as part of and in accordance with ASME PTC 46.

 

3. Unit Steam Flow Capacity Guarantee will be tested utilizing appropriate
sections and corrections from PTC 6—2004.

 

4. Steam Generator and Steam Turbine efficiency and capacity testing will be
Code Tests capable of supporting potential claims of liquidated damages against
Manufacturers, if applicable.

 

5. Steam Generator guarantees associated with MCR will be satisfied by steam
turbine VWO flow values, if the steam generator cannot reach MCR due to turbine
flow capacity.

 

6. For steam generator guarantees, steam flows are as identified in the steam
generator contract

TABLE L-2.1

 

Cliffside Unit 6 Field Performance Testing & Equipment Verification Matrix

Steam Generator Supplied

  

Guarantee

  

Test Method or Code

NOx

   Manufacturer’s contract    Certified CEMS

CO

   Manufacturer’s contract    EPA Reference Test Method 10

VOC

   Manufacturer’s contract    EPA Reference Test Methods 25 A or 18

AQCS Supplied

     

SO2

   Manufacturer’s contract    Certified CEMS

Mercury

   Manufacturer’s contract    Certified CEMS

PM10 (Filterable and Condensable)

   Manufacturer’s contract    As dictated by Manufacturer’s Contract

Sulfuric Acid

   Manufacturer’s contract    As dictated by Manufacturer’s Contract

Opacity

   Manufacturer’s contract    Certified COMS

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

Table L-2.2: Auxiliary Loads - Basis for Output/Heat Rate Guarantee

AQCS

   ***

Boiler

   ***

Condenser Circulating Water Pumps

   ***

Cooling Tower

   ***

Generator Step-Up Transformer Loss

   ***

Condensate Booster Pumps

   ***

Hotwell Pumps

   ***

Air Compressors

   ***

Closed Cooling Water Pumps

   ***

Fly Ash Handling

   ***

Raw Water Pumps

   ***

Material Handling

   ***

D Heater Drain Pump

   ***

Auxiliary Transformer Losses

   ***

Bottom Ash Handling

   ***

Demineralized Water System

   ***

F Heater Drain Pump

   ***

Boiler SBS Injection System (based on 1200 cfm compressed air demand))

   ***

Removal of Air Compressor from AQCS Scope

   ***

Feedwater Pump Efficiency

   ***

Feedwater Pump Turbine Efficiency

   ***

Coal Unloading/Crushing

   ***

Sootblowing

   ***

Reheater Spray

   ***

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

EXHIBIT L-3

RELIABILITY TESTING

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

The Contractor shall perform the following tests prior to Final Completion.
Contractor shall submit test procedures, measurement points, acceptance criteria
and operating parameters for Owner approval, *** Days prior to the commencement
of testing. Use of permanently installed plant instrumentation, in lieu of
temporary test instrumentation, where appropriate, is acceptable. Failure to
satisfy Test Requirements due to Owner Furnished Equipment shall not be the
Contractor’s responsibility. It will be the Contractor’s responsibility to test,
document and verify any such claimed shortfall.

Emission limits provided in the EPC Agreement shall be satisfied at all times
during the test.

Contractor shall submit a report of the results of each test required. This
report will include the test procedure, measurement data and any calculations or
other data required to support successful completion of this test.

1.0 Part Load Test

(Four hour test) – Contractor shall demonstrate Unit 6 will operate in a stable
and reliable manner within equipment Manufacturers’ specifications.

2.0 Warm and Hot Start Tests

Contractor shall demonstrate that the Unit 6 is able to meet startup and
synchronization requirements indicated in Table L-3. The values in Table L-3
represent manufacturer’s predictions for the Owner Supplied Steam Generator,
Steam Turbine and AQCS equipment. The Test Plan will state actual (but not
guaranteed) values. Two warm and two hot start-up tests shall be conducted.

3.0 Ramp Loading and Unloading Tests

Contractor shall demonstrate that Unit 6 is able to meet load ramp rates
indicated in Table L-3 under automatic control. The values in Table L-3
represent manufacturer’s predictions for the Owner Supplied Steam Generator,
Steam Turbine and AQCS equipment. The Test Plan will state actual (but not
guaranteed) values.

4.0 Load Change Tests

Contractor shall demonstrate that Unit 6 is able to respond to block load
increases in accordance with requirements set forth in Table L-3. The values in
Table L-3 represent manufacturer’s predictions for the Owner supplied Steam
Generator, Steam Turbine and AQCS equipment. The Test Plan will state actual
(but not guaranteed) values.

5.0 Governor Droop Tests

Contractor shall demonstrate using specific droop setting values that the
turbine control system responds as expected to specific changes in the speed
(frequency) of the turbine-generator. Governor Droop Tests shall be specified by
turbine-generator manufacturer and approved by Owner.

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

6.0 AVR Performance Tests

Contractor shall demonstrate the ability of automatic voltage regulation
equipment to maintain stability under varying system frequency and voltage
conditions within the limits of manufacturer’s specifications and in accordance
with Owner’s system standards,(to be provided later).

7.0 Auxiliary Trip Tests

Contractor shall demonstrate the capability of Unit 6 (with operator
intervention) to automatically runback load upon the sudden loss of an operating
auxiliary. Such test shall demonstrate that Unit 6 is capable of maintaining
expected available capacity with particular auxiliaries out of service. Test
shall be conducted with Unit 6 running at maximum load achievable for the
configuration prior to the trip. The tests are the following:

Trip one induced draft fan

Trip one forced draft fan

Trip one primary air fan

Trip one pulverizer/feeder without initiation of standby

Trip one circulating water pump

Trip one condensate pump

Bypass each closed feedwater heater, one at a time, with Unit 6 at VWO and
normal pressure

8.0 Minimum Stable Load

Coal (twenty-four hour test firing coal)—This test will identify minimum stable
load which can be maintained indefinitely without fuel oil support using two
(2) mills. Minimum load on coal shall be no greater than 30% of BMCR for fuels
as specified in Steam Generator Performance Guarantees.

9.0 Reliability Demonstration

Reliability Demonstration shall mean the operation of Unit 6 by Owner under the
technical oversight of Contractor for a period of *** after the Minimum
Performance Guarantees with respect to Unit 6 have been met [but prior to Final
Completion of Unit 6] by which the Contractor demonstrates to Owner that Unit 6
shall be capable of meeting the reliability criteria set forth in this Exhibit.
Notification requirements for this test are the same as Performance Test
notification.

The average net electrical output during the Reliability Demonstration shall be
maintained and measured at the high side of the main step up transformer. The
time

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

weighted average net electrical output of Unit 6 generated during the
Reliability Demonstration period shall be utilized in determining the
Demonstration Results. Test results will only be corrected to ambient wet and
dry bulb base reference conditions and power factor. This correction procedure
may be done using an integrated plant computer model (such as Thermoflow Steam
Master).

The acceptance criteria shall be an average of *** during the *** period. This
criteria is based on the electrical auxiliary load for major *** equipment as
listed in Table L-2.2 of Exhibit L-2. The acceptance criteria will be revised to
incorporate changes in any of the Table L-2.2 values due to final equipment
selections. Operation is not limited to the ***. Fuels used during the test
shall be as specified in the Boiler Performance Guarantees.

If the test is aborted or acceptance criteria electrical demand is not
maintained by the Owner, this period shall be exempted from the test results,
without extending the required test duration of ***. For example, if Owner
cannot provide electrical demand for *** of the *** period, then *** will be
used in the calculation of test results.

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

Table L-3

 

RELIABILITY TEST TABLE

Test

  

Criteria

Dispatch Ramp Rate

***

   *** (note 1) Cold Start ***    *** STG Synchronization (note 2) Warm Start
***    *** STG Synchronization (note 2) Hot Start ***    *** STG Synchronization
(note 2)

STG Sync to Full Load

***

   ***    *** (note 2) ***    *** (note 2)

Note 1: “Hot” conditions defined as continuous stable load operation. Excludes
startup sequence prior to STG sync.

 

Note 2: Expected (not guaranteed) values from vendor data. Excludes variable
water clean-up time. Values to be revised later, if needed, due to final
equipment design.

  

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

Exhibit M

Emission Limits

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

Below is a table showing the guaranteed air emission limits for Units 5.

Unit 5 Emission Limits

 

Pollutant

  

Guaranteed Emission Limit (lb/MMBtu)**

Sulfur Dioxide (SO2)

  

*** with *** SO2/MMBtu inlet loading, down to *** outlet concentration, without
the addition of organic acid, ***

 

*** removal with *** lb SO2/MMBtu inlet loading, down to *** outlet
concentration, with the addition of organic acid, ***

 

Testing will be via EPA Method 6 or 6C based on actual SO2 measured upstream of
WFGD and in the stack.

Particulates - PM10 (filterable)

  

*** lb/MMBtu, *** – based on *** lb/MMBtu or lower leaving the existing ID fans
***

Testing will be via EPA Method 5B for filterable particulate in the stack.
Method 5 or other suitable method to be agreed upon will be used for particulate
inlet to the WFGD.

 

* This is based on all three (3) Recycle levels in operation

** As measured by the average of three 4-hour (nominal) tests

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

Below is a table showing the guaranteed and the final air permit emission limits
for Unit 6.

Unit 6 Emission Limits

 

Pollutant

  

Final Permit
Emission Limit1

(lb/MMBtu)

  

Guaranteed
Emission
Limit *

(lb/MMBtu)

  

Guaranteed Removal * (%)

  

Reference Test Method

Sulfur Dioxide (SO2)    ***    ***    ***    Reference Test Method 6 or 6C.
Removal efficiency is based on actual SO2 measured at AQCS inlet. Nitrogen Oxide
(NOx)    ***    ***    N/A    Reference Test Method 7 or 7E PM10 (filterable)   
***    ***    N/A    Reference Test Method 5B PM10 (filterable & condensable)   
***    ***    N/A    EPA Reference Test Method 5B (front half catch) for
filterable particulate only and condensables per EPA Method 25A for the VOC
portion and the Controlled Condensate Method (CCM) for the sulfuric acid
contribution. Volatile Organic Compounds (VOC’s)    ***    ***    N/A   

EPA Reference Method 25A or Method 18

***

 

Pollutant

  

Final Permit
Emission Limit2

(lb/MMBtu)

  

Guaranteed
Emission
Limit *

(lb/MMBtu)

  

Guaranteed Removal * (%)

  

Reference Test Method

Carbon Monoxide (CO)    ***    ***    N/A   

EPA Reference Method 10

***

Sulfuric Acid (H2SO4)    ***    ***    N/A   

EPA Reference Method 8 or controlled condensation method as described in the EPA
publication “Miniature Acid Condensation System: Design and
Operation”EPA/600/3-84/056 April 1984, (NTIS PB8418288230) or ASTM D3226
controlled condensation procedure.. In lieu of controlled condensation method,
EPA method 039 may be used if demonstrated and proven to ALSTOM’s satisfaction
prior to the time of testing.

Minimum 6 hours

 

1

***

* As measured by three 4-hour tests and subject to approval from Owner Equipment
Contracts

2

***

* As measured by three 4-hour tests and subject to approval from Owner Equipment
Contracts

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

Pollutant

  

Final Permit
Emission Limit3

(lb/MMBtu)

  

Guaranteed
Emission
Limit *

(lb/MMBtu)

  

Guaranteed Removal * (%)

  

Reference Test Method

Mercury (Hg)    ***       ***    The total mercury content in the coal as fired
shall be determined using ASTM method D6414-01 or ASTM Method D3684 –01, and the
stack mercury emissions shall be measured using ASTM D6784-02, EPA 40CFR60
part75, Appendix K (Ontario Hydro Method) or mutually agreed Certified Mercury
CEMS if available. The total mercury content of the coal shall be determined
from a representative, composite as fired fuel, sample that is collected over
the mercury stack emission test duration and shall be converted and expressed in
terms of lb/1012 Btu (HHV) of the composite fuel blend sample tested. The
mercury stack emissions shall be converted to and expressed in terms of EPA F-
Factor methodology in accordance with 40CFR 60 Appendix A, methods 2,3 and 5 and
based on the composite fuel blend analysis. Opacity    ***       ***   
Certified opacity monitors will be used downstream of the fabric filter and
upstream of the WFGD. The measured value will be related to the stack diameter
for compliance with guarantee value. Stack diameter is to be 29.0 diameter or
less.

 

3

***

* As measured by three 4-hour tests and subject to approval from Owner Equipment
Contracts

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

Pollutant

   Final Permit
Emission Limit4
(lb/MMBtu)   Guaranteed
Emission
Limit *
(lb/MMBtu)   Guaranteed Removal * (%)  

Reference Test Method

Lead (Pb)

   ***   ***   ***   Minimum 6 hours

Other considerations

 

  •  

The recommended federal guidance for location of opacity monitoring in ducts is
not met with the current site arrangement. Owner, Contractor and Alstom will
work together to demonstrate that the location is acceptable through modeling
and this will be submitted to DENR for acceptance.

 

4

***

* As measured by three 4-hour tests and subject to approval from Owner Equipment
Contracts

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

***

 

Effluent Characteristics

  

Discharge Limitations

  

Monitoring Requirements

  

Monthly

Average

  

Daily

Maximum

  

Measurement
Frequency

  

Sample Type

  

Sample

Location1

Flow (MGD)

         Weekly    Calculation or similar readings    T

Oil and Grease

   ***    ***    Monthly    Grab    E

Total Suspended Solids2

   ***    ***    Monthly    Grab    E

Total Recoverable Copper

   ***    ***    See Note 3    Grab    E

Total Recoverable Iron

   ***    ***    See Note 3    Grab    E

Total Recoverable Arsenic

         Monthly    Grab    E

Total Recoverable Selenium

         Monthly    Grab    E

Chronic Toxicity4

         Quarterly    Grab    E

Total Nitrogen (NO2+NO3+TKN)

         Quarterly    Grab    E

Total Phosphorus

         Quarterly    Grab    E

pH5

         2/Month    Grab    E

Total Cadmium6

         Weekly    Grab    E

Total Chromium6

         Weekly    Grab    E

Total Mercury6

         Weekly    Grab    E

Total Nickel6

         Weekly    Grab    E

Total Silver6

         Weekly    Grab    E

Total Zinc6

         Weekly    Grab    E

Notes:

 

1. ***

2. ***

3. ***

4. ***

5. ***

6. ***

***