Document:

Exhibit
10.1

 

 

 

ENGINEERING,
PROCUREMENT AND CONSTRUCTION AGREEMENT

BETWEEN
MIRANT MID-ATLANTIC, LLC & MIRANT CHALK POINT LLC 

(EACH
INDIVIDUALLY AN “OWNER” AND COLLECTIVELY THE 

“OWNERS”)
AND MIRANT MID-ATLANTIC, LLC AS AGENT FOR THE 

OWNERS

AND

STONE
& WEBSTER, INC. (“CONTRACTOR”)

FOR

ENGINEERING,
PROCUREMENT & CONSTRUCTION SERVICES

RELATING
TO

AIR
QUALITY CONTROL SYSTEMS

AT

MORGANTOWN
GENERATING STATION,

DICKERSON
GENERATING STATION AND

CHALK
POINT GENERATING STATION

 

TABLE OF CONTENTS

	
  

  	
  PAGE

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  OWNER ENTITIES

  	
  11

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Mirant Mid-Atlantic, LLC

  	
  11

  
	
   

  	
  2.2

  	
  Mirant Chalk Point, LLC

  	
  11

  
	
   

  	
  2.3

  	
  Owner’s Agent

  	
  12

  
	
   

  	
  2.4

  	
  Obligations

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  EFFECTIVE DATE

  	
  12

  
	
   

  	
   

  	
   

  
	
  4.

  	
  TERM

  	
  12

  
	
   

  	
   

  	
   

  
	
  5.

  	
  OWNER SCOPE

  	
  12

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Owner Scope

  	
  13

  
	
   

  	
  5.2

  	
  Gypsum Dewatering Plant

  	
  13

  
	
   

  	
  5.3

  	
  Schedule for Owner Scope

  	
  13

  
	
   

  	
  5.4

  	
  Non-Interference and Safety

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  PROJECT SCOPE

  	
  15

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Work To Be Performed

  	
  15

  
	
   

  	
   

  	
  6.1.1

  	
  LNTP for FGD Systems

  	
  15

  
	
   

  	
   

  	
  6.1.2

  	
  INTP for FGD Systems

  	
  15

  
	
   

  	
   

  	
  6.1.3

  	
  NTP for FGD Systems

  	
  15

  
	
   

  	
   

  	
  6.1.4

  	
  LNTP for SCR System

  	
  16

  
	
   

  	
   

  	
  6.1.5

  	
  INTP for SCR System

  	
  16

  
	
   

  	
   

  	
  6.1.6

  	
  Transition of SCR from Contractor to Owner

  	
  16

  
	
   

  	
   

  	
  6.1.7

  	
  Application of Terms and Conditions

  	
  16

  
	
   

  	
  6.2

  	
  Engineering/Design Services

  	
  17

  
	
   

  	
   

  	
  6.2.1

  	
  Technical Specifications

  	
  17

  
	
   

  	
   

  	
  6.2.2

  	
  Design Standards

  	
  17

  
	
   

  	
   

  	
  6.2.3

  	
  Design Documentation

  	
  17

  
	
   

  	
   

  	
   

  	
  6.2.3.1

  	
  Schematic Design Documents

  	
  17

  
	
   

  	
   

  	
   

  	
  6.2.3.2

  	
  Permitting Documents

  	
  18

  
	
   

  	
   

  	
   

  	
  6.2.3.3

  	
  Design Development Documents

  	
  18

  
	
   

  	
   

  	
   

  	
  6.2.3.4

  	
  Approved Drawings

  	
  19

  
	
   

  	
   

  	
   

  	
  6.2.3.5

  	
  Rough Site Grading, Demolition and Relocation

  	
  20

  
	
   

  	
   

  	
   

  	
  6.2.3.6

  	
  Interfaces and connections for the Gypsum Dewatering
  Plant

  	
  22

  
	
   

  	
   

  	
   

  	
  6.2.3.7

  	
  Contractor’s Obligations under Section 6.2.3.6

  	
  22

  
	
   

  	
  6.3

  	
  Procurement Services

  	
  23

  
	
   

  	
   

  	
  6.3.1

  	
  Procurement of Systems Equipment and Construction
  Equipment

  	
  23

  

 

 i
 

 

	
  

  	
   

  	
   

  	
  6.3.1.1

  	
  Title to Systems Equipment

  	
  23

  
	
   

  	
   

  	
   

  	
  6.3.1.2

  	
  Risk of Loss

  	
  23

  
	
   

  	
   

  	
   

  	
  6.3.1.3

  	
  Storage

  	
  23

  
	
   

  	
   

  	
  6.3.2

  	
  Procurement of Chemicals, Start-Up Spares and
  Consumables

  	
  24

  
	
   

  	
   

  	
  6.3.3

  	
  Inspection and Testing of Materials and Systems
  Equipment

  	
  24

  
	
   

  	
  6.4

  	
  Transportation Charges

  	
  24

  
	
   

  	
  6.5

  	
  Construction-Related Work

  	
  24

  
	
   

  	
   

  	
  6.5.1

  	
  Clearance of the Site (by Owner)

  	
  24

  
	
   

  	
   

  	
  6.5.2

  	
  Labor and Personnel

  	
  25

  
	
   

  	
   

  	
  6.5.3

  	
  Construction Utilities Interface

  	
  25

  
	
   

  	
   

  	
  6.5.4

  	
  Testing

  	
  25

  
	
   

  	
   

  	
  6.5.5

  	
  As-Built Drawings

  	
  25

  
	
   

  	
   

  	
  6.5.6

  	
  Operation and Maintenance Manuals

  	
  25

  
	
   

  	
   

  	
  6.5.7

  	
  Turnover Package

  	
  26

  
	
   

  	
   

  	
  6.5.8

  	
  Clean Up and Waste Removal

  	
  26

  
	
   

  	
   

  	
  6.5.9

  	
  Hazardous Substances

  	
  26

  
	
   

  	
   

  	
  6.5.10

  	
  Quality Assurance/Quality Control

  	
  27

  
	
   

  	
  6.6

  	
  General

  	
  28

  
	
   

  	
  6.7

  	
  Non-Interference

  	
  28

  
	
   

  	
  6.8

  	
  Safety

  	
  29

  
	
   

  	
   

  	
  6.8.1

  	
  Contractor Responsibility

  	
  29

  
	
   

  	
   

  	
  6.8.2

  	
  Fitness For Duty, Drug, Alcohol Abuse And Safety
  Policy For Access To Owner Facilities

  	
  29

  
	
   

  	
   

  	
  6.8.3

  	
  Access To Owner Facilities

  	
  29

  
	
   

  	
   

  	
  6.8.4

  	
  Prohibited Activities

  	
  30

  
	
   

  	
   

  	
  6.8.5

  	
  Suspected Violation Of Policy

  	
  30

  
	
   

  	
   

  	
  6.8.6

  	
  Refusal To Comply

  	
  31

  
	
   

  	
   

  	
  6.8.7

  	
  Protection

  	
  31

  
	
   

  	
   

  	
  6.8.8

  	
  OSHA Compliance

  	
  32

  
	
   

  	
   

  	
  6.8.9

  	
  Material Safety Data Sheets

  	
  32

  
	
   

  	
   

  	
  6.8.10

  	
  Dust and Fume Control

  	
  32

  
	
   

  	
   

  	
  6.8.11

  	
  Water Pollution

  	
  32

  
	
   

  	
   

  	
  6.8.12

  	
  Operating Environment

  	
  32

  
	
   

  	
   

  	
   

  	
  6.8.12.1

  	
  Generating Sites

  	
  32

  
	
   

  	
   

  	
   

  	
  6.8.12.2

  	
  Electrical System

  	
  33

  
	
   

  	
  6.9

  	
  Operating Utilities Interface

  	
  33

  
	
   

  	
  6.10

  	
  Owner’s Right to Inspect, Stop and Re-Perform Work

  	
  33

  
	
   

  	
   

  	
  6.10.1

  	
  Owner’s Right to Attend Contractor Inspections

  	
  33

  
	
   

  	
   

  	
  6.10.2

  	
  Inspection and Re-Performance

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  PERFORMANCE GUARANTEES

  	
  33

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Input Guarantees for
  FGD Systems

  	
  33

  
	
   

  	
   

  	
  7.1.1

  	
  Guaranteed Consumption
  Levels

  	
  33

  
	
   

  	
   

  	
  7.1.2

  	
  Consumption Within
  Engineering Design Margins

  	
  34

  
	
   

  	
   

  	
  7.1.3

  	
  Consumption Outside
  Engineering Design Margins

  	
  34

  
							

 

 ii
 

 

	
  

  	
   

  	
  7.1.4

  	
  Liquidated Damages for
  Input Guarantees for FGD Systems

  	
  34

  
	
   

  	
   

  	
   

  	
  7.1.4.1

  	
  Power Consumption

  	
  34

  
	
   

  	
   

  	
   

  	
  7.1.4.2

  	
  Make-Up Water
  Consumption

  	
  34

  
	
   

  	
   

  	
   

  	
  7.1.4.3

  	
  Limestone Consumption

  	
  34

  
	
   

  	
  7.2

  	
  Output Guarantees for
  FGD Systems

  	
  34

  
	
   

  	
   

  	
  7.2.1

  	
  List of Output Guarantees

  	
  34

  
	
   

  	
   

  	
  7.2.2

  	
  Correction by
  Contractor

  	
  35

  
	
   

  	
   

  	
  7.2.3

  	
  Mercury Removal

  	
  35

  
	
   

  	
  7.3

  	
  Operational Guarantees
  for FGD Systems

  	
  36

  
	
   

  	
   

  	
  7.3.1

  	
  List of Operational
  Guarantees

  	
  36

  
	
   

  	
   

  	
   

  	
  7.3.1.1

  	
  Minimum Turndown
  Capability

  	
  36

  
	
   

  	
   

  	
   

  	
  7.3.1.2

  	
  Maximum Entrained
  Moisture Carryover

  	
  36

  
	
   

  	
   

  	
   

  	
  7.3.1.3

  	
  Fan Characteristics

  	
  36

  
	
   

  	
   

  	
   

  	
  7.3.1.4

  	
  Pressure Drop

  	
  36

  
	
   

  	
   

  	
  7.3.2

  	
  Correction by
  Contractor

  	
  36

  
	
   

  	
  7.4

  	
  Blank

  	
  36

  
	
   

  	
  7.5

  	
  Blank

  	
  36

  
	
   

  	
  7.6

  	
  Blank

  	
  36

  
	
   

  	
  7.7

  	
  Performance Testing

  	
  36

  
	
   

  	
   

  	
  7.7.1

  	
  Performance Testing

  	
  36

  
	
   

  	
  7.8

  	
  Concurrent Obligations

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  PROJECT SCHEDULE;
  SCHEDULE GUARANTEES

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Project Schedule

  	
  37

  
	
   

  	
   

  	
  8.1.1

  	
  Guaranteed Provisional
  Acceptance Date

  	
  38

  
	
   

  	
   

  	
  8.1.2

  	
  Conditions for Outages

  	
  38

  
	
   

  	
   

  	
  8.1.3

  	
  Outage Start and End
  Dates

  	
  38

  
	
   

  	
   

  	
  8.1.4

  	
  Blank

  	
  38

  
	
   

  	
   

  	
  8.1.5

  	
  Concurrent Outages

  	
  38

  
	
   

  	
   

  	
  8.1.6

  	
  Immovable Milestones

  	
  39

  
	
   

  	
  8.2

  	
  Schedule Guarantee

  	
  39

  
	
   

  	
   

  	
  8.2.1

  	
  Work Progress and
  Completion

  	
  39

  
	
   

  	
   

  	
   

  	
  8.2.1.1

  	
  General

  	
  39

  
	
   

  	
   

  	
   

  	
  8.2.1.2

  	
  Maximum Outage Period

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
  8.2.1.2.1

  	
  Amounts Reasonable

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
  8.2.1.2.2

  	
  Bonus for Early
  Completion

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
  8.2.1.2.3

  	
  Payment of Excessive
  Outage Payments

  	
  41

  
	
   

  	
   

  	
  8.2.2

  	
  Guaranteed Provisional
  Acceptance Date

  	
  41

  
	
   

  	
   

  	
  8.2.3

  	
  Late Provisional
  Acceptance Payments

  	
  41

  
	
   

  	
   

  	
   

  	
  8.2.3.1

  	
  Before 23:59 on December
  31, 2009 for the FGD Systems

  	
  41

  
	
   

  	
   

  	
   

  	
  8.2.3.2

  	
  After 23:59 on December
  31, 2009 for FGD Systems

  	
  42

  
	
   

  	
   

  	
   

  	
  8.2.3.3

  	
  Blank

  	
  42

  

 

 iii
 

 

	
  

  	
   

  	
   

  	
  8.2.3.4

  	
  Reduced Late
  Provisional Acceptance Payments Period

  	
  42

  
	
   

  	
   

  	
   

  	
  8.2.3.5

  	
  Amounts Reasonable

  	
  43

  
	
   

  	
   

  	
   

  	
  8.2.3.6

  	
  Payment of Late
  Provisional Acceptance Payments

  	
  43

  
	
   

  	
   

  	
  8.2.4

  	
  Guaranteed Substantial Completion
  Date

  	
  44

  
	
   

  	
   

  	
   

  	
  8.2.4.1

  	
  Late Substantial
  Completion Payments

  	
  44

  
	
   

  	
   

  	
   

  	
  8.2.4.2

  	
  Amounts Reasonable and
  Exclusive Remedy for Delay

  	
  44

  
	
   

  	
   

  	
   

  	
  8.2.4.3

  	
  Payment of Late
  Substantial Completion Payments

  	
  44

  
	
   

  	
   

  	
  8.2.5

  	
  Guaranteed Final
  Completion Date

  	
  45

  
	
   

  	
   

  	
  8.2.6

  	
  Late Final Completion
  Payments

  	
  45

  
	
   

  	
   

  	
   

  	
  8.2.6.1

  	
  Amounts Reasonable and
  Exclusive Remedy for Delay

  	
  45

  
	
   

  	
   

  	
   

  	
  8.2.6.2

  	
  Payment of Late Final
  Completion Payments

  	
  45

  
	
   

  	
   

  	
  8.2.7

  	
  Full Program Completion

  	
  46

  
	
   

  	
   

  	
  8.2.8

  	
  Reduction of Liquidated
  Damages Based on Delayed Permitting

  	
  46

  
	
   

  	
  8.3

  	
  Schedules

  	
  47

  
	
   

  	
   

  	
  8.3.1

  	
  Schedule Software

  	
  47

  
	
   

  	
   

  	
  8.3.2

  	
  Activity Coding

  	
  47

  
	
   

  	
   

  	
  8.3.3

  	
  Level 3 Detail

  	
  47

  
	
   

  	
   

  	
  8.3.4

  	
  Schedule Updates

  	
  47

  
	
   

  	
  8.4

  	
  Work Operations

  	
  47

  
	
   

  	
  8.5

  	
  Recovery Schedule

  	
  48

  
	
   

  	
  8.6

  	
  Critical Schedule
  Situation

  	
  48

  
	
   

  	
  8.7

  	
  Contractor Responsible for
  Schedule

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  KEY PERSONNEL
  REQUIREMENTS

  	
  48

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Personnel Resources

  	
  48

  
	
   

  	
   

  	
  9.1.1

  	
  Key Personnel

  	
  48

  
	
   

  	
   

  	
  9.1.2

  	
  Departure of Key
  Personnel

  	
  49

  
	
   

  	
   

  	
  9.1.3

  	
  Assignment of Key Personnel

  	
  49

  
	
   

  	
   

  	
  9.1.4

  	
  Replacement of Key Personnel

  	
  49

  
	
   

  	
   

  	
  9.1.5

  	
  Key Personnel of
  Subcontractors

  	
  50

  
	
   

  	
  9.2

  	
  Contractor Personnel Transition Plan

  	
  50

  
	
   

  	
   

  	
  9.2.1

  	
  Notice of Departure of Key Personnel

  	
  50

  
	
   

  	
   

  	
  9.2.2

  	
  Mutual Agreement

  	
  50

  
	
   

  	
  9.3

  	
  Independent Contractor: Employees

  	
  51

  
	
   

  	
  9.4

  	
  Applicable Time Period

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  TARGET COST

  	
  51

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Facility Target Cost

  	
  51

  
	
   

  	
  10.2

  	
  Calculation of
  Contractor’s Actual Cost

  	
  51

  
	
   

  	
   

  	
  10.2.1

  	
  Categories of Costs

  	
  51

  
	
   

  	
   

  	
  10.2.2

  	
  Actual Home Office
  Labor Costs

  	
  52

  
							

 

 iv
 

 

	
  

  	
   

  	
  10.2.3

  	
  Actual Field Non-Manual
  Labor Costs

  	
  52

  
	
   

  	
   

  	
  10.2.4

  	
  Actual Self-Performed
  Field Manual Services Cost

  	
  52

  
	
   

  	
   

  	
  10.2.5

  	
  Actual Third Party
  Expenses

  	
  53

  
	
   

  	
   

  	
  10.2.6

  	
  Selling, General and
  Administrative Expenses

  	
  53

  
	
   

  	
   

  	
  10.2.7

  	
  Separate Accounts

  	
  54

  
	
   

  	
  10.3

  	
  Cap on Contractor’s
  Total Engineering Hours

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  PRICE

  	
  54

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  EPC Total Compensation

  	
  54

  
	
   

  	
  11.2

  	
  Project Compensation

  	
  54

  
	
   

  	
  11.3

  	
  Guarantee Costs

  	
  54

  
	
   

  	
   

  	
  11.3.1

  	
  Classification of
  Guarantee Costs

  	
  54

  
	
   

  	
   

  	
  11.3.2

  	
  Treatment of Guarantee
  Costs

  	
  55

  
	
   

  	
  11.4

  	
  Incentives

  	
  55

  
	
   

  	
   

  	
  11.4.1

  	
  Blank

  	
  55

  
	
   

  	
   

  	
  11.4.2

  	
  Performance Incentives

  	
  56

  
	
   

  	
   

  	
   

  	
  11.4.2.1

  	
  Early Completion of
  Work During Planned Outages

  	
  56

  
	
   

  	
   

  	
   

  	
  11.4.2.2

  	
  Safety, Schedule and
  Quality Incentive

  	
  56

  
	
   

  	
  11.5

  	
  Allocable Costs

  	
  58

  
	
   

  	
   

  	
  11.5.1

  	
  Sections Addressing
  Allocable Costs

  	
  58

  
	
   

  	
   

  	
  11.5.2

  	
  Treatment of Allocable
  Costs

  	
  58

  
	
   

  	
  11.6

  	
  Underrun Bonus

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  PAYMENT TERMS

  	
  59

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Payments Generally

  	
  59

  
	
   

  	
   

  	
  12.1.1

  	
  Owner Shall Pay
  Contractor EPC Total Compensation

  	
  59

  
	
   

  	
   

  	
  12.1.2

  	
  Milestone-based,
  Guarantee and Final Payments

  	
  59

  
	
   

  	
   

  	
  12.1.3

  	
  NTP Milestone Payment 

  	
  59

  
	
   

  	
  12.2

  	
  Milestone Progress
  Payments

  	
  59

  
	
   

  	
   

  	
  12.2.1

  	
  Approved Final
  Milestone Payment Schedule

  	
  59

  
	
   

  	
   

  	
  12.2.2

  	
  Milestone Progress
  Payments

  	
  59

  
	
   

  	
   

  	
  12.2.3

  	
  Partial Payment
  Requests

  	
  60

  
	
   

  	
   

  	
  12.2.4

  	
  Valid Payment Requests

  	
  61

  
	
   

  	
   

  	
  12.2.5

  	
  Documentary Evidence of
  Achieving Milestone

  	
  61

  
	
   

  	
   

  	
  12.2.6

  	
  Owner Review

  	
  61

  
	
   

  	
   

  	
  12.2.7

  	
  Payment of Milestone
  Payment shall not constitute approval or acceptance of Work by Owner

  	
  61

  
	
   

  	
  12.3

  	
  Quarterly
  Reconciliation

  	
  61

  
	
   

  	
   

  	
  12.3.1

  	
  Timing of Quarterly
  Reconciliation

  	
  61

  
	
   

  	
   

  	
  12.3.2

  	
  Scheduled Milestone

  	
  61

  
	
   

  	
   

  	
  12.3.3

  	
  Incomplete Milestone

  	
  62

  
	
   

  	
   

  	
  12.3.4

  	
  Quarterly
  Reconciliation Ratio

  	
  62

  
	
   

  	
   

  	
  12.3.5

  	
  Quarterly Actual Cost
  and Disputed Costs

  	
  62

  
	
   

  	
   

  	
  12.3.6

  	
  Reconcilable Cost

  	
  62

  
	
   

  	
   

  	
  12.3.7

  	
  Quarterly Milestone
  Payment Cost

  	
  62

  
	
   

  	
   

  	
  12.3.8

  	
  Quarterly Benchmark
  Cost

  	
  62

  
							

 

 v

 

	
  

  	
   

  	
  12.3.9

  	
  Performance of Reconciliation

  	
  63

  
	
   

  	
   

  	
   

  	
  12.3.9.1

  	
  Excess Payment

  	
  63

  
	
   

  	
   

  	
   

  	
  12.3.9.2

  	
  Payable Cost

  	
  63

  
	
   

  	
   

  	
  12.3.10

  	
  Reconcilable Cost greater than Quarterly Benchmark
  Cost

  	
  63

  
	
   

  	
   

  	
   

  	
  12.3.10.1

  	
  Supplemental Contingency Draw Request

  	
  63

  
	
   

  	
   

  	
   

  	
  12.3.10.2

  	
  Difference between Quarterly Milestone Payment Cost
  and 

  Quarterly Benchmark Cost

  	
  63

  
	
   

  	
   

  	
  12.3.11

  	
  Carryover Cost

  	
  64

  
	
   

  	
   

  	
  12.3.12

  	
  NTP Milestone Payment added to Quarterly Actual Cost
  in 13th month

  	
  64

  
	
   

  	
  12.4

  	
  Blank

  	
   

  	
   

  	
  64

  
	
   

  	
  12.5

  	
  Late Payment Interest

  	
  64

  
	
   

  	
  12.6

  	
  Contingency

  	
  64

  
	
   

  	
   

  	
  12.6.1

  	
  Quarterly Contingency Allowance Limit

  	
  64

  
	
   

  	
   

  	
  12.6.2

  	
  Contingency Draw Request

  	
  64

  
	
   

  	
   

  	
  12.6.3

  	
  Contingency Draw Notification

  	
  65

  
	
   

  	
   

  	
  12.6.4

  	
  Owner Approval of Contingency Draw Request

  	
  65

  
	
   

  	
  12.7

  	
  Purpose of Quarterly Reconciliation Process

  	
  65

  
	
   

  	
  12.8

  	
  Retention

  	
  65

  
	
   

  	
  12.9

  	
  Effect of Change Order on Approved Final Milestone
  Payment Schedule

  	
  66

  
	
   

  	
  12.10

  	
  Conditions of Payments; Withholdings, Set-Offs

  	
  66

  
	
   

  	
   

  	
  12.10.1

  	
  Material Breach

  	
  66

  
	
   

  	
   

  	
  12.10.2

  	
  Required Submittals

  	
  66

  
	
   

  	
   

  	
   

  	
  12.10.2.1

  	
  Progress Reports

  	
  66

  
	
   

  	
   

  	
   

  	
  12.10.2.2

  	
  Partial Lien Waivers

  	
  66

  
	
   

  	
   

  	
   

  	
  12.10.2.3

  	
  Full Lien Release

  	
  66

  
	
   

  	
   

  	
   

  	
  12.10.2.4

  	
  Form of Waivers and Releases

  	
  67

  
	
   

  	
   

  	
   

  	
  12.10.2.5

  	
  Lien Bonds

  	
  67

  
	
   

  	
   

  	
  12.10.3

  	
  Withholding to Protect Owner from Loss

  	
  67

  
	
   

  	
   

  	
   

  	
  12.10.3.1

  	
  Owner may withhold or retain any Milestone Progress
  Payment, payment or part

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
  12.10.3.1.1

  	
  Contractor Event of Default

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
  12.10.3.1.2

  	
  Lien or Charge Not Discharged

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
  12.10.3.1.3

  	
  Work Performed by Owner

  	
  68

  
	
   

  	
   

  	
   

  	
  12.10.3.2

  	
  Lien Bonds

  	
  68

  
	
   

  	
   

  	
   

  	
  12.10.3.3

  	
  Payment after Removal of Cause

  	
  68

  
	
   

  	
   

  	
  12.10.4

  	
  Set Off

  	
  68

  
	
   

  	
  12.11

  	
  Final Payment for Target Work at Each Facility

  	
  68

  
	
   

  	
   

  	
  12.11.1

  	
  Open Book Basis Showing Actual Costs

  	
  68

  
	
   

  	
   

  	
  12.11.2

  	
  Target Final Payment

  	
  69

  
	
   

  	
   

  	
  12.11.3

  	
  Target Final Payment Documentation

  	
  69

  
	
   

  	
   

  	
   

  	
  12.11.3.1

  	
  Final lien waiver

  	
  69

  
	
   

  	
   

  	
   

  	
  12.11.3.2

  	
  As-Built Drawings

  	
  69

  
	
   

  	
   

  	
   

  	
  12.11.3.3

  	
  Operating manuals

  	
  69

  
								

 

 vi
 

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  12.11.3.4

  	
  Warranty documents

  	
  69

  
	
   

  	
   

  	
   

  	
  12.11.3.5

  	
  Back-charges and/or claims satisfied

  	
  69

  
	
   

  	
   

  	
   

  	
  12.11.3.6

  	
  Quality and reliability requirements

  	
  69

  
	
   

  	
   

  	
   

  	
  12.11.3.7

  	
  Nonconformance items

  	
  69

  
	
   

  	
   

  	
   

  	
  12.11.3.8

  	
  Spare parts list

  	
  69

  
	
   

  	
   

  	
   

  	
  12.11.3.9

  	
  Mill certifications

  	
  69

  
	
   

  	
  12.12

  	
  Liens After Final Payment

  	
  69

  
	
   

  	
  12.13

  	
  Payment of Guarantee Costs

  	
  70

  
	
   

  	
   

  	
  12.13.1

  	
  Separate Accounting

  	
  70

  
	
   

  	
   

  	
  12.13.2

  	
  Prior to Target Final Payment

  	
  70

  
	
   

  	
   

  	
  12.13.3

  	
  After Target Final Payment

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  PRICING METHOD

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Blank

  	
   

  	
   

  	
  70

  
	
   

  	
  13.2

  	
  Target Price Method

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  WARRANTIES

  	
  71

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Parts and Labor Warranties

  	
  71

  
	
   

  	
   

  	
  14.1.1

  	
  Warranties

  	
  71

  
	
   

  	
   

  	
  14.1.2

  	
  Parts and Labor Warranty Period

  	
  72

  
	
   

  	
   

  	
  14.1.3

  	
  Conditions and Limitations of Warranty

  	
  72

  
	
   

  	
   

  	
  14.1.4

  	
  Repair of Defects

  	
  72

  
	
   

  	
   

  	
  14.1.5

  	
  Parts and Labor Warranty Period Extension

  	
  73

  
	
   

  	
   

  	
   

  	
  14.1.5.1

  	
  Extension for Corrected Work

  	
  73

  
	
   

  	
   

  	
   

  	
  14.1.5.2

  	
  Extension for Total Shutdown

  	
  73

  
	
   

  	
  14.2

  	
  Blank

  	
   

  	
   

  	
  73

  
	
   

  	
  14.3

  	
  Aggregation of Warranties and Specific Time
  Limitation

  	
  73

  
	
   

  	
  14.4

  	
  No Other Warranties/Obligations

  	
  74

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  STANDARDS OF PERFORMANCE

  	
  74

  

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  MECHANICAL COMPLETION

  	
  74

  
	
   

  	
   

  	
   

  
	
   

  	
  16.1

  	
  Mechanical Completion

  	
  74

  
	
   

  	
  16.2

  	
  Notice and Achievement of Mechanical Completion for
  Each System

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  PROVISIONAL ACCEPTANCE/SUBSTANTIAL COMPLETION

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.1

  	
  Criteria for Provisional Acceptance of FGD System

  	
  75

  
	
   

  	
  17.2

  	
  Criteria for Substantial Completion of FGD System

  	
  76

  
	
   

  	
  17.3

  	
  Notice and Report of Provisional Acceptance for Each
  System

  	
  76

  
	
   

  	
  17.4

  	
  Achievement of Provisional Acceptance of the Work

  	
  76

  
	
   

  	
  17.5

  	
  Creation of Punch-List

  	
  77

  
	
   

  	
  17.6

  	
  Notice and Report of Substantial Completion for Each
  System

  	
  77

  
	
   

  	
  17.7

  	
  Achievement of Substantial Completion of the Work

  	
  77

  
	
   

  	
  17.8

  	
  Transfer of Possession and Control of the Systems to
  Owner

  	
  78

  

 

 vii
 

 

	
  18.

  	
  FINAL COMPLETION

  	
  78

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.1

  	
  Requirements

  	
  78

  
	
   

  	
  18.2

  	
  Notice and Report of Final Completion

  	
  79

  
	
   

  	
  18.3

  	
  Achievement of Final Completion

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  CHANGE ORDERS

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.1

  	
  Changes

  	
  79

  
	
   

  	
  19.2

  	
  Procedure for Changes

  	
  79

  
	
   

  	
   

  	
  19.2.1

  	
  Changes Initiated by Contractor

  	
  79

  
	
   

  	
   

  	
  19.2.2

  	
  Changes Initiated by Owner

  	
  80

  
	
   

  	
   

  	
  19.2.3

  	
  Change in Cost Element and Fee Element

  	
  80

  
	
   

  	
  19.3

  	
  Change Order Due to Force Majeure Event

  	
  80

  
	
   

  	
  19.4

  	
  Change Order Due to Suspension of Work by Owner

  	
  81

  
	
   

  	
  19.5

  	
  Change Order Due to Differing Site Conditions

  	
  81

  
	
   

  	
  19.6

  	
  Change Order Due to Pre-Existing Hazardous
  Substances

  	
  81

  
	
   

  	
  19.7

  	
  Change Order Due to Actions of Owner

  	
  81

  
	
   

  	
  19.8

  	
  Blank

  	
  82

  
	
   

  	
  19.9

  	
  Change Order Due to Changes in Applicable Law

  	
  82

  
	
   

  	
  19.10

  	
  Change Order Due to Escalation in Actual
  Self-Performed Field Manual Services Cost

  	
  82

  
	
   

  	
  19.11

  	
  Change Order Due to Escalation in Home Office Labor
  Costs and Actual Field Non-Manual Labor Costs

  	
  83

  
	
   

  	
  19.12

  	
  Change Order Due to Escalation of Commodities

  	
  83

  
	
   

  	
  19.13

  	
  Changes Involving Schedule Extensions

  	
  83

  
	
   

  	
  19.14

  	
  Changes to the Contract Price

  	
  83

  
	
   

  	
  19.15

  	
  Continued Performance Pending Resolution of Disputes

  	
  84

  
	
   

  	
  19.16

  	
  Owner’s Right to Offset Changes

  	
  85

  
	
   

  	
  19.17

  	
  Other Work on Site

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  FORCE MAJEURE

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.1

  	
  Force Majeure

  	
  85

  
	
   

  	
  20.2

  	
  Burden of Proof

  	
  86

  
	
   

  	
  20.3

  	
  Obligations Excused

  	
  86

  
	
   

  	
  20.4

  	
  Costs

  	
  86

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  AGGREGATE LIABILITY

  	
  86

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  21.1

  	
  Aggregate Liability

  	
  86

  
	
   

  	
  21.2

  	
  Sub-limits of Liability

  	
  86

  
	
   

  	
   

  	
  21.2.1

  	
  Liquidated Damages and Warranty Work

  	
  87

  
	
   

  	
   

  	
  21.2.2

  	
  Systems Equipment Subcontractors

  	
  87

  
	
   

  	
   

  	
  21.2.3

  	
  Other Subcontractors

  	
  87

  
	
   

  	
   

  	
  21.2.4

  	
  Facility Limits

  	
  88

  
	
   

  	
  21.3

  	
  Pursuit of Subcontractor Warranties

  	
  88

  
	
   

  	
  21.4

  	
  Consequential Damages

  	
  88

  
	
   

  	
  21.5

  	
  Consequential Damages for Subcontractors

  	
  88

  
	
   

  	
  21.6

  	
  Indemnity for Lessor Claims

  	
  89

  

 

 viii
 

 

	
  22.

  	
  SECURITY

  	
  89

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  22.1

  	
  Contractor’s Parent Company Guarantee

  	
  89

  
	
   

  	
  22.2

  	
  Contractor’s Letter of Credit

  	
  89

  
	
   

  	
  22.3

  	
  Performance Bond and Payment Bond

  	
  90

  
	
   

  	
  22.4

  	
  Owner Security

  	
  90

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  SUSPENSION AND TERMINATION

  	
  91

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  23.1

  	
  Right to Stop Work for Cause

  	
  91

  
	
   

  	
  23.2

  	
  Right to Suspend Work for Convenience

  	
  92

  
	
   

  	
  23.3

  	
  Suspension by Contractor

  	
  92

  
	
   

  	
  23.4

  	
  Termination by Owner for Convenience

  	
  92

  
	
   

  	
   

  	
  23.4.1

  	
  Right to Terminate

  	
  92

  
	
   

  	
   

  	
  23.4.2

  	
  Termination Payment

  	
  92

  
	
   

  	
   

  	
  23.4.3

  	
  Withholding/Conditions Precedent

  	
  93

  
	
   

  	
   

  	
  23.4.4

  	
  Return of Security

  	
  93

  
	
   

  	
  23.5

  	
  Termination by Owner for Cause

  	
  93

  
	
   

  	
   

  	
  23.5.1

  	
  Insolvency

  	
  94

  
	
   

  	
   

  	
  23.5.2

  	
  Delay After Provisional Acceptance

  	
  94

  
	
   

  	
   

  	
  23.5.3

  	
  Key Personnel

  	
  94

  
	
   

  	
   

  	
  23.5.4

  	
  Material Breach

  	
  94

  
	
   

  	
  23.6

  	
  Actions Upon Termination

  	
  94

  
	
   

  	
  23.7

  	
  Survival

  	
  94

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
  ASSIGNMENT

  	
  94

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
  INSURANCE

  	
  95

  
	
   

  	
   

  	
   

  
	
   

  	
  25.1

  	
  Contractor’s Insurance

  	
  95

  
	
   

  	
   

  	
  25.1.1

  	
  Casualty Insurance

  	
  95

  
	
   

  	
   

  	
   

  	
  25.1.1.1

  	
  Commercial General Liability Insurance

  	
  95

  
	
   

  	
   

  	
   

  	
  25.1.1.2

  	
  Business Automobile Liability Insurance

  	
  96

  
	
   

  	
   

  	
  25.1.2

  	
  Workers’ Compensation and Employer’s Liability
  Insurance

  	
  96

  
	
   

  	
   

  	
  25.1.3

  	
  Contractor’s Property

  	
  96

  
	
   

  	
   

  	
  25.1.4

  	
  Transit Insurance

  	
  96

  
	
   

  	
   

  	
  25.1.5

  	
  Other Insurance

  	
  96

  
	
   

  	
   

  	
   

  	
  25.1.5.1

  	
  International Insurance

  	
  97

  
	
   

  	
   

  	
   

  	
  25.1.5.2

  	
  Differences in Condition Policy

  	
  97

  
	
   

  	
   

  	
  25.1.6

  	
  General Insurance Conditions

  	
  97

  
	
   

  	
   

  	
  25.1.7

  	
  Other Duties, Representations, and Obligations

  	
  97

  
	
   

  	
   

  	
   

  	
  25.1.7.1

  	
  Certificates of Insurance

  	
  97

  
	
   

  	
   

  	
   

  	
  25.1.7.2

  	
  Violation of Insurance Terms

  	
  98

  
	
   

  	
   

  	
   

  	
  25.1.7.3

  	
  Failure to Maintain Insurance

  	
  98

  
	
   

  	
   

  	
   

  	
  25.1.7.4

  	
  No Waiver of Liability

  	
  98

  
	
   

  	
   

  	
   

  	
  25.1.7.5

  	
  Additional Insurance

  	
  98

  
	
   

  	
   

  	
   

  	
  25.1.7.6

  	
  Premium Audit

  	
  98

  
	
   

  	
   

  	
  25.1.8

  	
  Subcontractor’s Insurance

  	
  98

  

 

 ix
 

 

	
  

  	
   

  	
   

  	
  25.1.8.1

  	
  Levels of Coverage

  	
  98

  
	
   

  	
   

  	
   

  	
  25.1.8.2

  	
  Waiver of Rights

  	
  99

  
	
   

  	
  25.2.

  	
  Owner’s Insurance

  	
  99

  
	
   

  	
   

  	
  25.2.1

  	
  Builder’s All Risk

  	
  99

  
	
   

  	
   

  	
  25.2.2

  	
  Exclusion from Builder’s Risk

  	
  99

  
	
   

  	
   

  	
  25.2.3

  	
  Contractor Compliance

  	
  99

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
  TIME

  	
  99

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
  TAXES

  	
  99

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  27.1

  	
  Taxes

  	
  100

  
	
   

  	
  27.2

  	
  Sales Taxes

  	
  100

  
	
   

  	
  27.3

  	
  Property Taxes

  	
  100

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
  INDEMNIFICATION

  	
  100

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  28.1

  	
  Property Damage

  	
  100

  
	
   

  	
  28.2

  	
  Limitation on Property Damage Indemnification

  	
  101

  
	
   

  	
  28.3

  	
  Royalties and License Fees

  	
  101

  
	
   

  	
  28.4

  	
  Operation of Systems

  	
  101

  
	
   

  	
  28.5

  	
  No Liens or Encumbrances

  	
  101

  
	
   

  	
  28.6

  	
  Contractor’s Indemnities for Personal Injury or
  Property Damage

  	
  101

  
	
   

  	
  28.7

  	
  Other Contractor’s Indemnities

  	
  102

  
	
   

  	
  28.8

  	
  No Limitation to Workers’ Benefits

  	
  102

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
  GOVERNING LAW

  	
  102

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
  PERMITTING

  	
  102

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  30.1

  	
  Responsibility for Permitting

  	
  102

  
	
   

  	
   

  	
  30.1.1

  	
  Owner’s Permits Required for Construction

  	
  103

  
	
   

  	
   

  	
  30.1.2

  	
  Permission to Begin Installation of Pilings

  	
  103

  
	
   

  	
  30.2

  	
  Other Permits

  	
  103

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
  SITE CONDITIONS

  	
  103

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  31.1

  	
  Geotechnical Study

  	
  103

  
	
   

  	
  31.2

  	
  Special Site Characteristics

  	
  103

  
	
   

  	
  31.3

  	
  Contractor’s Knowledge of Conditions

  	
  103

  
	
   

  	
  31.4

  	
  Sub-Surface Site Conditions

  	
  104

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
  SUBCONTRACTORS

  	
  104

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  32.1

  	
  Approved Subcontractors

  	
  104

  
	
   

  	
  32.2

  	
  Subcontractor and Vendor Identification

  	
  104

  
	
   

  	
  32.3

  	
  Substitute Contractors

  	
  104

  
	
   

  	
  32.4

  	
  Purchase Orders and Subcontracts

  	
  104

  
	
   

  	
  32.5

  	
  Subcontractor Warranties

  	
  105

  
	
   

  	
  32.6

  	
  Subcontractor Insurance

  	
  105

  
	
   

  	
  32.7

  	
  No Privity with Subcontractors

  	
  105

  
	
   

  	
  32.8

  	
  Assignment of Subcontracts to Owner

  	
  106

  

 

 x
 

 

	
  

  	
  32.9

  	
  Directed Payments

  	
  106

  
	
   

  	
  32.10

  	
  Neglect to Pay

  	
  106

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
  DISPUTE RESOLUTION

  	
  106

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  33.1

  	
  Applicability of Resolution Procedures

  	
  106

  
	
   

  	
  33.2

  	
  Management Discussions

  	
  106

  
	
   

  	
  33.3

  	
  Mediation

  	
  107

  
	
   

  	
  33.4

  	
  Arbitration

  	
  107

  
	
   

  	
  33.5

  	
  Dispute Review Board

  	
  108

  
	
   

  	
  33.6

  	
  Obligations Continue

  	
  108

  
	
   

  	
  33.7

  	
  Injunctive Relief

  	
  109

  
	
   

  	
  33.8

  	
  Survival

  	
  109

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
  MISCELLANEOUS

  	
  109

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  34.1

  	
  Audit and Maintenance of Records

  	
  109

  
	
   

  	
  34.2

  	
  Rights to Work Product

  	
  109

  
	
   

  	
   

  	
  34.2.1

  	
  Deliverables

  	
  109

  
	
   

  	
   

  	
  34.2.2

  	
  License

  	
  109

  
	
   

  	
   

  	
  34.2.3

  	
  Reuse

  	
  109

  
	
   

  	
  34.3

  	
  Compliance with Laws

  	
  110

  
	
   

  	
   

  	
  34.3.1

  	
  Familiarity with Laws

  	
  110

  
	
   

  	
   

  	
  34.3.2

  	
  No Fees or Commissions

  	
  110

  
	
   

  	
  34.4

  	
  Authorized Representatives

  	
  110

  
	
   

  	
  34.5

  	
  Confidentiality

  	
  110

  
	
   

  	
   

  	
  34.5.1

  	
  Confidential Information

  	
  110

  
	
   

  	
   

  	
  34.5.2

  	
  Nondisclosure

  	
  111

  
	
   

  	
   

  	
  34.5.3

  	
  Compelled Disclosure

  	
  111

  
	
   

  	
   

  	
  34.5.4

  	
  Use Restrictions

  	
  111

  
	
   

  	
  34.6

  	
  Owner Caused Project End Suspension and Other Owner
  Caused Event

  	
  111

  
	
   

  	
  34.7

  	
  Notices

  	
  112

  
	
   

  	
  34.8

  	
  Relationship of the Parties

  	
  113

  
	
   

  	
  34.9

  	
  Amendments

  	
  114

  
	
   

  	
  34.10

  	
  No Third Party Beneficiaries

  	
  114

  
	
   

  	
  34.11

  	
  Priority Among Contract Documents

  	
  114

  
	
   

  	
  34.12

  	
  Severability

  	
  114

  
	
   

  	
  34.13

  	
  Remedies

  	
  114

  
	
   

  	
  34.14

  	
  Nonwaiver

  	
  114

  
	
   

  	
  34.15

  	
  Interpretation

  	
  114

  
	
   

  	
  34.16

  	
  Entire Agreement

  	
  115

  
	
   

  	
  34.17

  	
  Representations and Warranties of Contractor

  	
  115

  
	
   

  	
   

  	
  34.17.1

  	
  Due Organization of Contractor

  	
  115

  
	
   

  	
   

  	
  34.17.2

  	
  Due Authorization of Contractor, Binding Obligation

  	
  116

  
	
   

  	
   

  	
  34.17.3

  	
  Non-Contravention

  	
  116

  
	
   

  	
   

  	
  34.17.4

  	
  Regulatory Approvals

  	
  116

  
	
   

  	
  34.18

  	
  Representation and Warranties of Owner

  	
  116

  
	
  

  	
   

  	
  34.18.1

  	
  Due Organization of Owner

  	
  116

  

 

 xi
 

 

	
  

  	
   

  	
  34.18.2

  	
  Due Authorization of Owner; Binding Obligation

  	
  116

  
	
   

  	
   

  	
  34.18.3

  	
  Non-Contravention

  	
  116

  
	
   

  	
  34.19

  	
  Further Assurances

  	
  117

  
	
   

  	
  34.20

  	
  No Implied Waiver

  	
  117

  
	
   

  	
  34.21

  	
  Exhibits and Schedules

  	
  117

  

 

 

 xii

TABLE OF
EXHIBITS

	
  EXHIBIT

   NUMBER

  	
   

  	
  TITLE

  	
   

  
	
   

  	
  1

  	
   

  	
   

  	
  FGD Technical
  Specification

  	
   

  
	
   

  	
  2

  	
   

  	
   

  	
  FGD Division of
  Responsibility

  	
   

  
	
   

  	
  3

  	
   

  	
   

  	
  Intentionally Omitted

  	
   

  
	
   

  	
  4

  	
   

  	
   

  	
  Permitting Division of
  Responsibility

  	
   

  
	
   

  	
  5

  	
   

  	
   

  	
  Intentionally Omitted

  	
   

  
	
   

  	
  6

  	
   

  	
   

  	
  Performance Guarantees
  and Test Methods

  	
   

  
	
   

  	
  7

  	
   

  	
   

  	
  Key Personnel

  	
   

  
	
   

  	
  8

  	
   

  	
   

  	
  Cost Submitted with
  Proposal

  	
   

  
	
   

  	
  8

  	
  A

  	
   

  	
  Detailed Cost Summary

  	
   

  
	
   

  	
  8

  	
  B

  	
   

  	
  Details of Cost

  	
   

  
	
   

  	
  8

  	
  C

  	
   

  	
  Contractor’s Technical
  and Commercial Clarification/Exceptions

  	
   

  
	
   

  	
  8

  	
  D

  	
   

  	
  Rate Sheet

  	
   

  
	
   

  	
  8

  	
  E

  	
   

  	
  Intentionally Omitted

  	
   

  
	
   

  	
  8

  	
  F

  	
   

  	
  Escalation of
  Commodities

  	
   

  
	
   

  	
  9

  	
   

  	
   

  	
  Progress Milestone
  Payments

  	
   

  
	
   

  	
  10

  	
   

  	
   

  	
  Applicable Codes and
  Standards

  	
   

  
	
   

  	
  11

  	
   

  	
   

  	
  Letter of Credit

  	
   

  
	
   

  	
  12

  	
   

  	
   

  	
  Payment Bond and
  Performance Bond

  	
   

  
	
   

  	
  13

  	
   

  	
   

  	
  Agency Letter

  	
   

  
	
   

  	
  14

  	
   

  	
   

  	
  Intentionally Omitted

  	
   

  
	
   

  	
  15

  	
   

  	
   

  	
  Draft Project Schedule

  	
   

  
	
   

  	
  16

  	
   

  	
   

  	
  Forms for Lien Waivers
  and Releases

  	
   

  
	
   

  	
  17

  	
   

  	
   

  	
  Dispute Resolution Board Procedure

  	
   

  

 

ENGINEERING,
PROCUREMENT AND CONSTRUCTION AGREEMENT

THIS
ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT  is
made this 30th day of   July, 2007, by
and between MIRANT MID-ATLANTIC, LLC, a
Delaware limited liability company, and MIRANT CHALK POINT, LLC,
a Delaware limited liability company (each individually an “Owner”,
or collectively, “Owners” as further described in
Sections 2.1 and 2.2), MIRANT MID-ATLANTIC, LLC
as agent for the Owners, and STONE & WEBSTER, INC.,
a Louisiana corporation (“Contractor”).

NOW,
THEREFORE, for and in consideration of the mutual covenants set forth in this
Agreement, the Parties agree as follows:

1. DEFINITIONS

1.1               “Actual Cost” is the sum of all actual costs for performing
the Work as described in Section 10.2.

1.2               “Actual Field Non-Manual Labor Costs” has the meaning set
forth in Section 10.2.3.

1.3               “Actual Home Office Labor Costs” has the meaning set forth
in Section 10.2.2.

1.4               “Actual Self-Performed Field Manual Services Costs” has the
meaning set forth in Section 10.2.4.

1.5               “Actual Third Party Expenses” has meaning set forth in
Section 10.2.5.

1.6               “Agreement” means this Engineering, Procurement and
Construction Agreement, consisting of Articles 1 through 34, and Exhibits 1, 2,
4, 6 through 13, 15 through 17.

1.7               “Alliance Agreement” means the agreement between Owner and
Contractor dated July 11, 2006 pursuant to which preliminary Work has been
performed as authorized by Owner through the issuance of LNTP and INTP.

1.8               “Allocable Costs” has the meaning set forth in Section
11.5.1.

1.9               “Applicable Laws” means all laws, statutes, ordinances,
rules, regulations, judgments, interpretations, policies and orders of any
court, arbitrator or governmental agency or authority having or asserting
jurisdiction over the Facility, the Site, the Systems or the performance of the
Work, as may be in effect from time to time.

 

 

1.10             “Applicable Permits” means all valid waivers, franchises,
variances, permits, authorizations, licenses or orders of or from any
governmental body, agency, authority, court or other body having jurisdiction
over the Facility, the Site, the Systems or the performance of Work that are
required, necessary or desirable to be obtained or maintained in connection
with the Project.

1.11             “Approved Final Milestone Payment Schedule” has the meaning
set forth in Section 12.2.1.

1.12             Blank

1.13             “Approved Project Schedule” has the meaning set forth in
Section 8.1.

1.14             “Approved Subcontractor List” has the meaning set forth in
Section 10.2.5.

1.15             “As-Built Drawings” means drawings which are revised to show
all modifications and revisions made by the Contractor (including all
Subcontractors to the Contractor) up to Final Completion, for all key drawings
which are necessary for the Owner’s continued operation, maintenance, and
regulatory compliance for the Project. 
The final list of As-Built Drawings is listed in Exhibit 1.

1.16             “Authorized Representative” has the meaning set forth in
Section 34.4.

1.17             “Baseline Commodity Index Price” for an individual Commodity
means the PPI Index Price for that Commodity as provided in Exhibit 8F.

1.18             “Business Day” means a calendar day other than Saturday,
Sunday or a national holiday.  As used in
Section 17.5, “Business Day” also excludes a holiday recognized and followed in
the State of Maryland.

1.19             “Chalk Point” means the power station known as “Chalk Point
Plant” located at 25199 Chalk Point, Aquasco, MD 20608 consisting of Units E1
and E2.

1.20             “Change” means (i) any addition to, deletion from,
suspension of or other modification to the quality, function, intent, quantity,
method or entity performing the Work, including without limitation any such
addition, deletion, suspension or other modification that requires a change in
the Contract Price or the Approved Project Schedule, or (ii) any extension of
the Approved Project Schedule or increase in the Contract Price.

1.21             “Change in Applicable Law” has the meaning set forth in
Section 19.9.

1.22             “Change Order” has the meaning set forth in Section 19.1.

 

 2
 

 

1.23             “Change Order Notice” has the meaning set forth in Section
19.2.1.

1.24             “Change Order Request” has the meaning set forth in Section
19.2.2.

1.25             “Confidential Information” has the meaning set forth in
Section 34.5.

1.26             “Construction Equipment” means the equipment, materials,
tools and supplies which are to be provided
by Contractor and used in the performance of the Work, but which are not
incorporated into or become a part of the Systems.

1.27             “Commodities” has the meaning set forth in Exhibit 8F.

1.28             The
“Contingency” is an amount equal to ten
percent (10%) of the Target Cost at issuance of NTP for that Facility.  References to “50%
Contingency” mean an amount that equals one-half of the Contingency
amount.

1.29             “Contract Documents” means this Agreement and the Drawings, as
either of these may be supplemented or amended.

1.30             “Contract Price” has the meaning set forth in Section 13.2.

1.31             “Contractor” has the meaning set forth in the preamble of
this Agreement.

1.32             “Contractor Event of Default” has the meaning set forth in
Section 23.5.

1.33             “Contractor’s Additional Direct Costs or Savings” has the
meaning set forth in Section 19.14.3.

1.34             “Critical Schedule Situation” has the meaning set forth in
Section 8.6.

1.35             “Dedicated” has the meaning set forth in Section 9.1.1.

1.36             “Deliverables” has the meaning set forth in Section 34.2.1.

1.37             “Design Development Documents” has the meaning set forth in
Section 6.2.3.3.

1.38             “Dickerson” means the power station known as “Dickerson
Plant” located at 21200 Martinsburg Road, Dickerson, MD 20842 consisting of
Units D1, D2 and D3.

1.39             “Direct Cause” or “Directly Cause(d)”
means a cause that naturally brings about a delay or Direct Cost without
intervention of any new and independent 

 

 3
 

 

cause,
and without which the delay would not have occurred or the Direct Cost would
not have been incurred.

1.40             “Direct Cost” means an actual cost necessarily incurred by
Contractor in performing the Work, that is substantiated by written invoices,
payment applications, time sheets, or other reasonable documentation, that is
paid for Actual Third Party Expenses, Actual Field Non-Manual Labor, Actual
Self-Performed Field Manual Services, or engineering services by Contractor’s
employees, or for costs of repair or replacement of Construction Equipment or
Systems Equipment and that is not reimbursed by proceeds of insurance.

1.41             “Disclosing Party” has the meaning set forth in Section
34.5.1.

1.42             “Disputes” has the meaning set forth in Article 33.

1.43             “Drawings” has the meaning set forth in Section 6.2.3.4.

1.44             “DRB” is the Dispute Review Board referred to in Section
33.5.

1.45             “Effective Date” has the meaning set forth in Article 3.

1.46             “Engineering Design Margins” has the meaning set forth in Section 7.1.1.

1.47             The
“EPC Total Compensation” is the total
compensation to be paid by the Owner to the Contractor for proper performance
of all of the Work and shall be calculated pursuant to Article 11.

1.48             “Equivalent Availability Guarantee” has the meaning set
forth in Section 1.2 of Exhibit 6.

1.49         “Escalation
Report” has the meaning set forth in
Section 19.10.

1.50              “Excessive Outage Payments” has the meaning set forth in
Section 8.2.1.2.

1.51             “Extended Warranty Equipment” is the booster fans, absorber
vessel (materials, internals and internal piping), spray nozzles, agitator,
ball mill and recycle pumps.

1.52             “Facilities” means the Morgantown, Chalk Point and Dickerson
power stations.

1.53             “Facility” means either Chalk Point, Dickerson or
Morgantown, as the context requires.

 

 4
 

 

1.54             “Fee” means the Target Fee.

1.55             “Fee Element” has the meaning set forth in Section 19.2.3.2.

1.56             “FGD System” means the total equipment, materials, tools and
supplies supplied by Contractor for each fully operable flue gas
desulfurization unit as described in Exhibit 1, including the associated
balance of plant (“BOP”) required
to meet the Input Guarantees, Output Guarantees and Operational Guarantees
applicable to an FGD System under Article 7.

1.57             “FGD Subcontractor” means the Subcontractor supplying the
FGD System.

1.58             “Final Completion” has the meaning set forth in Section
18.1.

1.59              “Financing Parties” means any and all lenders providing the
construction, interim or long-term financing for the Project, their successors
and assigns, and any trustee or agent acting on their behalf.

1.60            
“Force Majeure” has the meaning set
forth in Section 20.1.

1.61             “Geotechnical Study” has the meaning set forth in Section
31.1.

1.62             “Guarantee Costs” has the meaning set forth in Section 11.3.

1.63             “Guaranteed Final Completion Date” has the meaning set forth
in Section 8.2.5 and shall be the date set forth in the Approved Project
Schedule.

1.64             “Guaranteed Provisional Acceptance Date” has the meaning set
forth in Section 8.2.2 and shall be the date set forth in the Approved Project
Schedule.

1.65             “Guaranteed Substantial Completion Date” has the meaning set
forth in Section 8.2.4 and shall be the date set forth in the Approved
Project Schedule.

1.66             “Gypsum Dewatering Plant” has the meaning set forth in
Section 5.1.5.

1.67             “Hazardous Substance” means any and all chemicals,
constituents, contaminants, pollutants, materials, and wastes and any other
carcinogenic, corrosive, ignitable, radioactive, reactive, toxic or otherwise
hazardous substances or mixtures (whether solids, liquids, or gases), or any
similar substances now or at any time before Final Completion subject to
regulation, control, remediation or otherwise addressed under Applicable Laws,
including but not limited to those Applicable Laws relating to the discharge,
emission, spill, release, or threatened release into the environment or
relating 

 

 5
 

 

to
the disposal, distribution, manufacture, processing, storage, transport,
treatment or other use of such substances.

1.68             “Incremental Payment Amount” has the meaning set forth in
Section 12.2.1.

1.69             “Incremental Percentage” means the Incremental Percentage
identified for a Milestone in the Approved Percentage Milestone Payment
Schedule as set forth in Exhibit 9.

1.70             An
“Initial Performance Test” is the first
occurrence of Performance Test PA, the first occurrence of Performance Test 1,
or the first 180 days of Performance Test 2, all as referred to in Exhibit 6.

1.71             “Input Guarantee” has the meaning set forth in Section 7.1.

1.72             “INTP” means
the Intermediate Notice to Proceed  for FGD System
set forth in Section 6.1.2.

1.73             “INTP for SCR” means
the intermediate notice to proceed for the SCR system as set forth in Section
6.1.5.

1.74             “INTP Security”
means the letter of credit posted by Contractor in a form and by an issuing
bank acceptable to Owner, in the amount equal to the sum of the purchase
orders issued by Owner at LNTP and INTP.

1.75             “Key Personnel”
has the meaning set forth in Section 9.1.1.

1.76             “Late Final Completion Payments” has the meaning set forth
in Section 8.2.6.

1.77             “Late Provisional Acceptance
Payments” has the meaning set forth in Section 8.2.3.

1.78             “Letter of Credit” shall have the meaning as set forth in
Section 22.2 and 22.4.

1.79             “LNTP” means the  Limited Notice
to Proceed  for the FGD Systems as set forth in
Section 6.1.1.

1.80              “LNTP for SCR” means the limited notice to proceed for the
SCR System as set forth in Section 6.1.4.

1.81             “LNTP Security” means the letter of credit posted by
Contractor in a form and by an issuing bank acceptable to Owner, in the amount
equal to the purchase order issued  by Owner for
the Work to be performed during the LNTP phase.

 

 6

1.82             “Lost Time Incident Rate” means the number of lost time
incidents divided by manhours worked multiplied by two hundred thousand
(200,000).

1.83             “Mechanical Completion” has the meaning set forth in Section
16.1.

1.84             “Milestone” means a portion of the Work identified in the
Approved Final Milestone Payment Schedule, and for which a related Incremental
Payment Amount has been established.

1.85             “Milestone Progress Payment” has the meaning set forth in
Section12.2.2.

1.86             “Morgantown” means the power station known as “Morgantown Plant”
located at 12620 Crain Highway, Newburg, MD 20664 consisting of Units F1 and
F2.

1.87             “Notice of Final Completion” has the meaning set forth in
Section 18.2.

1.88             “Notice of Mechanical Completion” has the meaning set forth
in Section 16.2.

1.89             “Notice of Project Completion” has the meaning set forth in
Section 8.2.7.

1.90             “Notice of Provisional Acceptance” has the meaning set forth
in Section 17.3.

1.91             “Notice of Substantial Completion” has the meaning set forth
in Section 17.6.

1.92             “NTP” means the notice to proceed for the FGD Systems  set forth in Section 6.1.3.

1.93             “Open Book” means that Contractor will maintain and make all
of its books, records, schedules, logs and electronic communications and data
related to the Work available to Owner to substantiate and document the design,
pricing, progress and sequencing of the Work and costs and other expenses
incurred or expected to be incurred in connection with performing the Work.

1.94             “Operational Guarantees” has the meaning set forth in Section 7.3.1.

1.95             “Output Guarantees” has the meaning set forth in Section 7.2.1.

1.96             “Owner” has the meaning set forth in Sections 2.1 and 2.2 of
this Agreement.

 

 7
 

 

1.97             “Owner Agent” has the meaning set forth in Sections 2.1 and
2.3 of this Agreement.

1.98             “Owner Scope” has the meaning set forth in Section 5.1.

1.99             “Owner Security” has the meaning set forth in Section 22.4.

1.100           “Owner’s Separate Contractors” means contractors hired by
Owner to perform work in connection with a Facility, not including Contractor.

1.101           “Parties” means Owner and Contractor.

1.102           “Parts and Labor Warranties” has the meaning set forth in
Section 14.1.1.2.

1.103           “Parts and Labor Warranty Period” has the meaning set forth
in Section 14.1.2.

1.104           “Performance Guarantees” has the meaning set forth in
Article 7.

1.105           “Performance Incentives” has the meaning set forth in Section
11.4.2.

1.106           “Performance Test PA” means the Performance Test for
Provisional Acceptance referred to in Section One of Exhibit 6.

1.107           “Performance Test 1” means the Performance Test 1 referred
to in Section One of Exhibit 6.

1.108           “Performance Test 2” means the Equivalent Availability Test
referred to in Section One of Exhibit 6.

1.109           “Performance Tests” has the meaning set forth in Section
7.7.1.

1.110           “PPI Index Price” means the unit price for a Commodity as
reported in the applicable publication of the United States Bureau of Labor
Statistics, effective as of the date that the firm price is established for
purchase of the Commodity by Contractor.

1.111           “Progress Report” means a progress report containing the
following information:  (i) description
of Contractor’s and all Subcontractors’ activities and progress on the Work
completed to the date of such report, including but not limited to a comparison
of such progress with the Approved Project Schedule, (ii) an identification and
evaluation of any problems or deficiencies in the Work, (iii) the status of all
deliveries of Systems Equipment, and (iv) a
forecast of the Work to complete.

 

 8
 

 

1.112           “Project” means the complete design, engineering,
procurement, permitting, construction, installation, initial performance tests,
commissioning, start-up and completion of the Systems for the Facilities by
Contractor on a turn-key basis in accordance with the Contract Documents,
excluding only the Owner Scope.

1.113           “Project Compensation” is the amount calculated pursuant to
Section 13.2.2.

1.114           “Provisional Acceptance” has the meaning set forth in Section
17.1.

1.115           “Prudent Electrical Practices” means the use of, and
adherence to, equipment, practices and methods of applicable United States of
America industry codes, standards and regulations, required, necessary or
desirable to protect the Systems, the Facility and Owner’s employees, agents,
and customers from electrical malfunctions, as embodied in the National
Electric Code.

1.116           “Prudent Utility Practices” means the practices, methods,
materials, supplies and equipment that are commonly used in the United States
of America electric power production industry to design, construct and operate
power plants and related equipment (including equipment such as the Facility
and the Systems) or any practices, methods and acts, which in the exercise of
reasonable judgment in light of the facts known at the time, could have been
expected to be used to accomplish the desired result to the specified standards
and at the lowest reasonable cost consistent with good business practices,
reliability, safety and expedition.

1.117           “Punch-List” has the meaning set forth in Section 17.5.

1.118           “Qualified Person” has the meaning set forth in Section
9.1.4.

1.119           “Receiving Party” has the meaning set forth in Section
34.5.1.

1.120           “Total Recordable Incident Rate” means the number of
recordable injuries divided by manhours multiplied by two hundred thousand
(200,000).

1.121           “Scheduled Outage Period” means, with respect to each Unit,
the time period as set forth in the Approved Project Schedule, during which
such Unit will be taken out of operation by Owner for the purpose of allowing
Contractor to install the System for such Unit.

1.122           “Schematic Design Documents” has the meaning set forth in
Section 6.2.3.1.

1.123           “Separate Contractor” means a
person or entity having a separate contract with the Owner to perform all or part
of the Owner Scope.

 

 9
 

 

1.124           “Site” means a site upon which a Facility is located and
upon which the Systems will be constructed.

1.125           “Spill” shall mean any discharge, overflow, spill or release
of any kind or nature that constitutes, either by way of adherence, conformance
or compliance with Applicable Law or any of either Contractor’s or Owner’s
environmental, health and safety policies or programs, a reportable event or
requires specialized or significant containment, treatment, action or remediation.

1.126           “Subcontractor” means each and every vendor, supplier,
manufacturer, materialman, contractor, subcontractor or sub-subcontractor of
any tier other than Contractor, performing any part of the Work, providing any
of the Systems Equipment and Construction Equipment, or providing other
services or supplies in connection with the Work directly or indirectly for or
to Contractor.

1.127           “Substantial Completion” has
the meaning set forth in Section 17.2.

1.128           “System” means an FGD System.

1.129           “Systems Equipment” means
the equipment, materials, tools and supplies which are to be provided by
Contractor as part of the Work, pursuant to Section 6.3.1 and are to be
incorporated into and become a part of the Systems owned by Owner.

1.130           The
“Target Cost” for each Facility has the
meaning set forth in Section 10.1.

1.131           The
“Target Fee” is an amount that is five
percent (5%) of the Target Cost.

1.132           The
“Target Final Payment” has the meaning
set forth in Section 12.11.2.

1.133           The
“Target Price” is an amount equal to
the sum of the Target Cost plus 50% of the Contingency.

1.134           “Taxes” means
all sales, use, gross receipts, income and withholding taxes and other similar
taxes and contributions imposed by any taxing authority upon the sale, purchase
or use of the Systems Equipment or the Construction Equipment, or upon services
or labor provided as part of the Work, including, without limitation, taxes on
or measured by Contractor’s receipts hereunder and taxes on or measured by
wages earned by employees of Contractor or any Subcontractor, subject to
application of Article 27.

1.135           “Technical Specifications” means the requirements and specifications set forth
in Exhibits 1, 2, 4 and 6.

1.136           “Termination Payment” has the meaning set forth in Section
23.4.2.

 

 10
 

 

1.137           “Time” has the meaning set forth in Article 26.

1.138           “Underrun Bonus” has the meaning set forth in Section 11.6.

1.139           “Unit D1” means the electricity generating unit comprising
part of Dickerson, as more specifically described in Exhibit 1.

1.140           “Unit D2” means the electricity generating unit comprising
part of Dickerson, as more specifically described in Exhibit 1.

1.141           “Unit D3” means the electricity generating unit comprising
part of Dickerson, as more specifically described in Exhibit 1.

1.142           “Unit E1” means the electricity generating unit comprising
part of Chalk Point, as more specifically described in Exhibit 1.

1.143           “Unit E2” means the electricity generating unit comprising
part of Chalk Point, as more specifically described in Exhibit 1.

1.144           “Unit F1” means the electricity generating unit comprising
part of Morgantown, as more specifically described in Exhibit 1.

1.145           “Unit F2” means the electricity generating unit comprising
part of Morgantown, as more specifically described in Exhibit 1.

1.146           “Units” means all units at the specified Facility; “Unit” means a single Unit at a Facility.

1.147           “Warranty Bond” has the meaning set forth in Section 22.3.

1.148           “Work” has the meaning set forth in Section 6.1 of this
Agreement.

2. OWNER ENTITIES

2.1           Mirant Mid-Atlantic, LLC.  Mirant Mid-Atlantic, LLC leases the
Morgantown Generating Station located in Newberg, Maryland (Unit F1 and Unit
F2) and the Dickerson Generating Station located in Dickerson, Maryland (Unit
D1, Unit D2 and Unit D3).  Mirant
Mid-Atlantic, LLC is an “Owner” for purposes of the Morgantown and Dickerson
Facilities, and is an authorized agent (“Owner Agent”) of itself and Mirant
Chalk Point, LLC for the purposes set forth herein.

2.2           Mirant Chalk Point, LLC.  Mirant Chalk Point, LLC owns Units E1 and E2
of the Chalk Point Station located in Aquasco, Maryland. Mirant Chalk Point,
LLC is an “Owner” for purposes of the Chalk Point Facility.

 

 11
 

 

2.3           Owner’s Agent.  Mirant Mid-Atlantic, LLC, as an Owner Agent,
is authorized to act as Owners’ agent in connection with this Agreement with
authority to bind such Owners and to delegate such authority as set forth in
this Agreement.

2.4           Obligations.  Obligations of an Owner set forth in this
Agreement shall be deemed to be the obligations of an Owner of the Facility
with respect to the applicable obligation. 
Obligations owed by Contractor to an Owner under this Agreement shall be
deemed owed to the Owner of the Facility(ies) applicable to such obligation.  Owner obligations that are independent of a
particular Facility shall be owed jointly and severally by both Owners as a
single obligation, and Contractor’s obligations owed independent of a
particular Facility shall be owed to both Owners as a single obligation by
Contractor.

3. EFFECTIVE
DATE

The
effective date of this Agreement is 30th day of July, 2007 (the “Effective Date”).

4. TERM

This
Agreement will commence on the Effective Date and will expire following the fulfillment of all obligations of the Parties
hereunder, unless terminated earlier pursuant to the terms of this
Agreement.

5. OWNER
SCOPE

5.1           Owner Scope.  Owner, in addition to its other obligations
under the Agreement, will engage Separate Contractors to perform the following
(the “Owner Scope”):

5.1.1        Rough Site Grading in accordance with
the bidding information prepared by Contractor pursuant to Section 6.2.3.5.1;

5.1.2        Underground Relocation in accordance
with the bidding information prepared by Contractor pursuant to Section
6.2.3.5.2;

5.1.3        Site Demolition in accordance with the
bidding information prepared by Contractor pursuant to Section 6.2.3.5.3; and

5.1.4        Railroad Improvements in accordance with
the general arrangement drawings included in the Drawings approved by Owner
pursuant to Section 6.2.3.4, as such general arrangement drawings may be
modified from time to time by mutual agreement of the Parties in writing; and

5.1.5        Gypsum handling and dewatering systems (“Gypsum Dewatering Plant”) in accordance
with Section 5.2.

 

 12

 

5.2           Gypsum
Dewatering Plant.  Owner will provide
to Contractor, for Contractor’s use in performing its services under Section
6.2.3.6, the foundation loads, general arrangement drawings, and
interconnection information for the Gypsum Dewatering Plant for each of the
Facilities.  Owner will engage a Separate
Contractor to engineer, procure and construct a Gypsum Dewatering Plant for
each of the Facilities.

5.3           Schedule
for Owner Scope.  The Owner Scope
shall be performed in accordance with Sections 5.3.1 through 5.3.5 below.  Owner’s obligations under this Section 5.3
shall be conditioned on timely completion of the related obligations of
Contractor.  Failure of Owner to timely
perform its obligations under this Section 5.3 shall constitute an omission of
Owner for the purposes of Section 19.7.

5.3.1            Owner will perform the Rough Site
Grading in accordance with Exhibit 15, as same may be modified by mutual
agreement of the Parties.

5.3.2            Owner will perform the Underground
Relocation in accordance with Exhibit 15, as same may be modified by mutual
agreement of the Parties, and from time to time as may be requested by
Contractor and agreed by Owner.

5.3.3            Owner will perform the Site
Demolition in accordance with Exhibit 15, as same may be modified by mutual
agreement of the Parties, and from time to time as may be requested by
Contractor and agreed by Owner.

5.3.4            Owner will perform the Railroad
Improvements in accordance with Exhibit 15, as same may be modified by mutual
agreement of the Parties.

5.3.5            With respect to the Gypsum
Dewatering Plants:

5.3.5.1         Owner will provide the certified
foundation loads for Morgantown to Contractor on or before August 30, 2007

5.3.5.2     Owner will provide the certified foundation
loads for Chalk Point to Contractor on or before August 30, 2007.

5.3.5.3         Owner will provide the certified
foundation loads for Dickerson to Contractor on or before August 30, 2007

5.3.5.4     Owner will provide “issued for construction”
general arrangement drawings for Morgantown to Contractor on or before August
30, 2007.

5.3.5.5     Owner will provide “issued for construction”
general arrangement drawings for Chalk Point to Contractor on or before August
30, 2007.

 

 13
 

 

5.3.5.6     Owner will provide “issued for construction”
general arrangement drawings for Dickerson to Contractor on or before August
30, 2007.

5.3.5.7     Owner will provide utility interface
information for Morgantown to Contractor in accordance with Exhibit 15, as same
may be modified by mutual agreement of the Parties,

5.3.5.8     Owner will provide utility interface
information for Chalk Point to Contractor in accordance with Exhibit 15, as
same may be modified by mutual agreement of the Parties,

5.3.5.9     Owner will provide utility interface
information for Dickerson to Contractor in accordance with Exhibit 15, as same
may be modified by mutual agreement of the Parties.

5.3.5.10   The “Ready for Tie-In” milestone in the
construction schedule of the Separate Contractor for the Gypsum Dewatering
Plant at Morgantown will be substantially completed on or before the later of
15 months from substantial completion of piles for the Gypsum Dewatering Plant
at Morgantown by Contractor.

5.3.5.11   The “Ready for Tie-In” milestone in the
construction schedule of the Separate Contractor for the Gypsum Dewatering
Plant at Chalk Point will be substantially completed on or before the later of
15 months from substantial completion of piles for the Gypsum Dewatering Plant
at Chalk Point by Contractor.

5.3.5.12   The “Ready for Tie-In” milestone in the
construction schedule of the Separate Contractor for the Gypsum Dewatering
Plant at Dickerson will be substantially completed on or before the later of 15
months from substantial completion of piles for the Gypsum Dewatering Plant at
Dickerson by Contractor.

5.3.5.13   The “Ready for Slurry” milestone in the
construction schedule of the Separate Contractor for the Gypsum Dewatering
Plant at Morgantown will be substantially completed on of before the later of
45 days satisfactory completion of tie in by Contractor and the last day of the
final tie-in outage for the first System at Morgantown.

5.3.5.14   The “Ready for Slurry” milestone in the
construction schedule of the Separate Contractor for the Gypsum Dewatering
Plant at Chalk Point will be substantially completed on of before the later of
45 days satisfactory completion of tie in by Contractor and the last day of the
final tie-in outage for the System at Chalk Point.

 

 14
 

 

5.3.5.15       The “Ready for Slurry” milestone in the
construction schedule of the Separate Contractor for the Gypsum Dewatering Plant
at Dickerson will be substantially completed on of before the later of 45 days
satisfactory completion of tie in by Contractor and the last day of the final
tie-in outage for the System at Dickerson.

5.4           Non-Interference and Safety.  In performing Owner Scope, the Separate
Contractors will be subject to the requirements applicable to Contractor under
Sections 6.7 and 6.8.

6. PROJECT
SCOPE

6.1           Work To Be Performed.  Excluding the Owner Scope, Contractor will
perform or cause to be performed in accordance with the Contract Documents all
work, services and management required for the complete design, engineering,
procurement, manufacturing, furnishing, delivery (FOB at Facility), unloading,
placement and maintenance in storage as required, removal from storage,
permitting, construction, installation, commissioning, check-out, tuning,
testing, start-up and completion and placement of air quality control systems
that are ready for continuous operation on a turn-key basis (collectively, the “Work”), such systems consisting of the
following:

Two
FGD Systems on:

Morgantown- (Units F1 and F2)

One FGD System on each
of:

Chalk Point- (Units E1 and E2)

Dickerson- (Units D1, D2, and D3)

The
Work with respect to each of the above is further detailed in Exhibits 1, 2, 4,
8C and 15, and includes but is not limited to Sections 6.2 through 6.10 below. For the avoidance of doubt, the Work does
not include the Owner Scope.

6.1.1        LNTP for FGD Systems.  Pursuant to the Alliance Agreement, Owner has
issued a Limited Notice to Proceed (LNTP) and Contractor has posted the LNTP
Security.

6.1.2        INTP for FGD Systems.  Pursuant to the Alliance Agreement, Owner has
issued an Intermediate Notice to Proceed (INTP) and Contractor has posted the
INTP Security.

6.1.3        NTP for FGD Systems.  Contractor shall continue performance of the
Work on the INTP until the Owner’s issuance of an NTP.  Prior to issuance of the NTP, Owner and
Contractor have agreed on a Target Cost for the Work 

 

 15
 

 

included in each
Facility.  Owner shall issue a Notice to
Proceed (“NTP”) to continue the
Work upon execution of this Agreement. 
Contractor shall commence Work on the NTP on the next Business Day after
receipt of the NTP. Upon issuance of the NTP, Owner shall post the Owner
Security in accordance with Section 22.4 and Contractor shall maintain the
Letter of Credit pursuant to Section 22.2.3 and shall post the performance bond
and payment bond pursuant to Section 22.3.

6.1.4        LNTP for SCR System.  Pursuant to the Alliance Agreement, Owner has
issued a Limited Notice to Proceed for the SCR system at Chalk Point, and
Contractor commenced work on the LNTP for SCR on the next Business Day after
receipt of the LNTP for SCR.

6.1.5        INTP for SCR System.  Pursuant to the Alliance Agreement, Owner has
issued an Intermediate Notice to Proceed to Contractor for an SCR system at
Chalk Point.  Contractor commenced Work
on the INTP for SCR and has developed certain design documents and has
initiated certain procurement activities in connection with that SCR system.

6.1.6        Transition of SCR from Contractor to
Owner.  Contractor shall tender to
Owner, at Owner’s request, all documents relating to the Chalk Point SCR
system, including all preliminary and other design documents, CAD files, books,
records, drawings, specifications, electronically stored information and other
information or data relating to that SCR system.  Within ten (10) days after execution of this
Agreement Contractor shall obtain and tender appropriate written consents of
all subcontractors and vendors, and complete the assignment to Owner of all
contracts or agreements relating to the SCR system, including all contracts for
procurement of materials or equipment to be used in the construction of that
system.  Contractor shall also submit to
Owner waivers of lien, if any, received from subcontractors and vendors for the
SCR System, and a certificate of Contractor verifying payment to date for all
materials, equipment, or services provided by subcontractors or vendors.  Along with the documents required under this
Section 6.1.6, Contractor shall submit to Owner a request for payment of all
amounts due and owing to Contractor for work performed by Contractor in
connection with the SCR system.  Such
request for payment shall include documentation of all Actual Costs incurred by
Contractor in performing work necessary for the SCR system, and a calculation
of the Fee owed to Contractor for such work. 
Such Fee shall be calculated at the rate of five percent (5%) of Actual
Costs.  Upon receiving such request,
Owner will make payment within 30 days.

6.1.7        Application of Terms and Conditions.  The terms and conditions of this Agreement
apply to any Work performed by Contractor following Owner’s issuance of the
LNTP. Owner reserves the right to modify the scope of the Work (other than
deletion of all of the Work associated with a single Facility, except in
connection with termination of all the Work for the entire Project) at any time
pursuant to this Agreement.

 

 16

6.2           Engineering/Design Services.  As part of the Work, Contractor will perform
the following engineering and design services, and Owner shall have the right
to review all drawings, specifications and other documents and electronic
records relating to such services:

6.2.1        Technical Specifications.  Exhibits 1, 2 and 4 set forth the basic
design concept, intent, objectives and requirements of Owner for the Project.
Contractor represents and warrants that it has thoroughly familiarized itself
with the Technical Specifications contained in Exhibits 1, 2 and 4, and agrees
that it has and will provide all engineering and design services, excluding
only the Owner Scope, necessary to produce fully completed Systems that meet or
exceed the requirements set forth in the Technical Specifications. All
engineering work requiring certification under the laws of the State of
Maryland will be certified by professional engineers licensed and properly
qualified to perform such engineering services in the State of Maryland.  Contractor shall follow the State of Maryland
requirements in identifying the Contractor’s drawings, calculations and
specifications that must be sealed and signed by a professional engineer
licensed in the State of Maryland.

6.2.2        Design Standards.  In addition to causing each System to meet or
exceed the requirements set forth in the Technical Specifications under the
design conditions set forth in Exhibits 1, 2, 4 and 6.  Contractor will cause each System, and all design
documentation prepared pursuant to Section 6.2.3, to be engineered and designed
in a manner which is consistent and in conformance with Prudent Electrical
Practices and Prudent Utility Practices, including, without limitation, all
applicable codes and standards (including without limitation all applicable
engineering, environmental, construction, safety, and electrical generation
codes and standards) and in conformance with all other Applicable Laws and
Applicable Permits, all as in effect as of the date of Substantial Completion,
subject to changes pursuant to Section 19.9. 
A list of the applicable codes and standards has been agreed upon by the
Parties and included as Exhibit 10 to the EPC Agreement.

6.2.3        Design Documentation.

6.2.3.1           Schematic Design Documents.  Based upon the Technical Specifications,
Contractor will prepare, for written approval by Owner, schematic design
documents for the Project consisting of drawings, system descriptions, process
flow diagrams, general arrangement drawings, models and other documents
illustrating the scale and relationship of the components of each System
(collectively, the “Schematic Design
Documents”). The Parties
have agreed that the list of the Schematic Design Documents to be reviewed and
approved by Owner consists of General Arrangement drawings, P&IDs,
Electrical One-line diagrams, and equipment Specifications. Contractor shall
provide to  

 

 17
 

 

Owner each listed Schematic Design Document as it is prepared by
Contractor.  Owner shall notify
Contractor as to whether it approves or disapproves (and, if it disapproves,
the reasons therefore) each of the listed Schematic Design Documents within ten
(10) Business Days of its receipt of the same. 
Owner will review the Schematic Design Documents for compliance and will
mark and stamp them to indicate whether changes and/or corrections are
required.  Contractor shall address all
material comments and questions appropriately including, when appropriate,
incorporating the comments, corrections and/or changes on the original drawing
or document and resubmitting the drawing or document.  Should Owner fail to provide notification to
Contractor within the aforesaid ten (10) day period after its receipt of
Schematic Design Documents, then the Schematic Design Documents for which
notification is not provided shall be deemed to have been returned as
acceptable for procurement, fabrication or construction. One paper print or
copy of each submitted design document will be marked with the Owner’s review
stamp, comment, and corrections and/or changes and returned to Contractor with
a transmittal letter.  On resubmitted
drawings, Contractor shall clearly mark the section of the drawing which has
been revised with a revision number, cloud around the appropriate item or a
similar written designation.  Owner’s
approval or disapproval, or refusal to review any design documents, including
but not limited to the “Schematic Design Documents” shall not impose on Owner
any responsibility for the design and shall not be deemed a waiver and will not
relieve Contractor of Contractor’s obligations for turnkey design, procurement
and construction of the Work in accordance with the Contract Documents.

6.2.3.2         Permitting Documents.  Contractor shall produce and provide to
Owner, pursuant to the schedule and list of Deliverables to be agreed upon by
the Parties after issuance of the LNTP, all Deliverables required for
permitting under Applicable Law and Applicable Permits.  Should Contractor fail to provide any such
Deliverable by the scheduled date, then for each such late Deliverable, Contractor
shall be assessed liquidated damages in the amount of Five Thousand Dollars
($5,000) per day for each day after the scheduled date of delivery until such
Deliverable is provided to Owner.  Such
liquidated damages shall accrue and be treated as Guarantee Costs pursuant to
Section 11.3.

6.2.3.3           Design Development Documents.  Based upon the Technical Specifications and
the approved Schematic Design Documents, Contractor will prepare, for written
approval by Owner, both basic and detailed design development documents for the
Project consisting of drawings, models, specifications, plans and other
documents necessary to fix and describe the size and character of each System
with respect to the civil engineering, structural, instrumentation, control,
mechanical, electrical, fire protection, acoustical and life safety systems to
be 

 

 18
 

 

incorporated therein
(collectively, the “Design Development
Documents”). The Parties
have agreed that the list of the Design Development Documents to be reviewed
and approved by Owner consists of General Arrangement drawings, P&IDs,
Electrical One-line diagrams, and equipment Specifications. Contractor shall
provide to Owner each listed Design Development Document as it is prepared by
Contractor.  Owner shall notify
Contractor as to whether it approves or disapproves (and, if it disapproves,
the reasons therefore) each of the listed Design Development Documents within
ten (10) Business Days of its receipt of the same. Owner will review the design
documents for compliance and will mark and stamp them to indicate whether
changes and/or corrections are required. 
Contractor shall address all material comments and questions
appropriately including, when appropriate, incorporating the comments, corrections
and/or changes on the original drawing or document and resubmitting the drawing
or document.  Should Owner fail to
provide notification to Contractor within the aforesaid ten (10) day period
after its receipt of Design Development Documents, then the Design Development
Documents for which notification is not provided shall be deemed to have been
returned as acceptable for procurement, fabrication or construction.  On resubmitted drawings, Contractor shall
clearly mark the section of the drawing which has been revised with a revision
number, cloud around the appropriate item, or a similar written
designation.  After expiration of Owner’s
ten (10) day review period, Contractor may proceed with the Work during the
review process.  Owner’s approval or
disapproval, or refusal to review any design documents, including but not
limited to the “Design Development Documents” shall not impose on Owner any
responsibility for design, and shall not be deemed a waiver and will not
relieve Contractor of Contractor’s obligations for turnkey design, procurement
and construction of the Work in accordance with the Contract Documents.

6.2.3.4           Approved Drawings.  After issuance of an INTP, and based upon the
Technical Specifications, the approved Design Development Documents, and any
further adjustments in the scope of the Project authorized in writing by Owner,
Contractor will proceed to prepare, for written approval by Owner, a list of
the drawing type as well as drafts of the key drawings setting forth the
requirements for the complete construction of each System (as approved by
Owner, the “Drawings”).  The
Parties have agreed that the list of the Drawings to be reviewed and approved
by Owner consists of General Arrangement drawings, P&IDs, Electrical
One-line diagrams, and equipment Specifications.  Contractor shall provide to Owner each listed
Drawing as it is prepared by Contractor. Following Owner’s written
approval of the listed Drawings, Contractor will proceed with the procurement,
construction, installation, start-up and completion of the Systems based upon
the Technical Specifications and the Drawings. Owner shall notify 

 

 19
 

 

Contractor as to whether
it approves or disapproves (and, if it disapproves, the reasons therefore) each
of the Drawings within ten (10) Business Days of its receipt of the same.  Owner will review the Drawings for compliance
and will mark and stamp them to indicate whether changes and/or corrections are
required.  Contractor shall address all
material comments and questions appropriately including, when appropriate,
incorporating the comments, corrections and/or changes on the original drawing
or document and resubmitting the drawing or document.  Should Owner fail to provide notification to
Contractor within the aforesaid ten (10) day period after its receipt of
Drawings, then the Drawings for which notification is not provided shall be
deemed to have been returned as acceptable for procurement, fabrication or
construction. Owner’s approval or disapproval of any design documents,
including but not limited to the “Drawings” shall not impose on Owner any
responsibility for design and shall not be deemed a waiver, and will not
relieve Contractor of Contractor’s obligations for turnkey design, procurement
and construction of the Work in accordance with the Contract Documents.  Performance of any work, fabrication of
materials or procurement of fabricated material, requiring the review of
drawings, data, etc., prior to obtaining final review of drawings, data, etc.,
is at Contractor’s risk.

6.2.3.5           Rough Site Grading, Demolition and
Relocation: As part of the Work, Contractor shall perform the following
engineering and design services in connection with the Owner Scope:

6.2.3.5.1   Contractor
has provided to Owner preliminary bidding information that includes Contractor’s
requirements for rough site grading work (“Rough Site Grading”).  The bidding information shall include, as
necessary to satisfy Contractor’s requirements, engineering, drawings, and
specifications.  The bidding information
shall be suitable for soliciting bids from rough site grading contractors
for  performance of the Rough Site
Grading by such contractors in accordance with Contractor’s requirements.  The design for the Rough Site Grading shall
account for, be prepared in accordance with, and be coordinated with, the
Approved Project Schedule, the approved Drawings, the existing Site conditions
and any other planned or reasonably anticipated activities in the vicinity of
Rough Site Grading.  The drawings and
specifications included in the bidding information shall provide detail, such
as relevant geotechnical information, locations of existing structures and
utilities, and beginning and final coordinates and elevations, so as to
facilitate efficient and effective prosecution of the Rough Site Grading.

6.2.3.5.2   Contractor
has provided to Owner bidding information that includes Contractor’s
requirements for 

 

 20
 

 

underground
relocation work (“Underground Relocation”).  The bidding information consists of drawings
indicating existing locations of underground utilities and proposed relocation
routing. Existing underground utilities locations are based on Ground
Penetrating Radar (GPR) surveys and as built drawings obtained from Owner, and
will have to be field verified by Owner or Owner’s underground relocation
contractors. The proposed relocation routing for the utilities is based on
existing General Arrangement drawings. Field rerouting will be verified by the
Underground Relocation contractors. For other unanticipated interferences
encountered during the re-routing implementation, the Owner or the Owner’s
underground relocation contractor will follow the same process.  The bidding information is suitable for
soliciting bids from underground relocation contractors for performance of the
Underground Relocation by such contractors in accordance with Contractor’s
requirements as outlined above.  The plan
for the Underground Relocation shall account for, be prepared in accordance
with, and be coordinated with, the Approved Project Schedule, the approved
Drawings, the existing Site conditions and any other planned or reasonably
anticipated activities in the vicinity of Underground Relocation.  The drawings included in the bidding
information provide, in as much detail as can be reasonably determined by GPR
surveys and other information on as-built drawings provided to Contractor by
Owner, such as location, size, nature, and other defining characteristics of
the identified underground utilities and other items required to be relocated,
approximate coordinates and approximate elevations for those items (elevation
and plan), relevant geotechnical information, locations of existing structures
and obstructions, so as to facilitate prosecution of the Underground Relocation
and to avoid subsequent relocation of the same utilities or other items.  Before any relocated utilities or other items
are covered up or buried, Contractor shall be afforded an opportunity, at its
option, to inspect the utilities or other items to confirm that they have been
relocated.  Owner and Contractor shall follow
the same process for any subsequent Underground Relocation required by
Contractor during performance of the Work.

6.2.3.5.3   Contractor
will prepare and deliver to Owner a package describing the demolition work at
each Site necessary for proper construction and completion of the Project (“Site Demolition”). 
Contractor shall provide to Owner bidding information that includes
Contractor’s requirements for Site Demolition. 
The bidding information shall include, as necessary to satisfy
Contractor’s requirements, engineering and drawings. Design and implementation
of rerouting for utilities and services in 

 

 21
 

 

the structures and
other facilities to be demolished or relocated shall be part of the scope of
Owner or Owner’s Site Demolition contractors. The bidding information shall be
suitable for soliciting bids from site demolition contractors, and for
performance of the Site Demolition by such contractors in accordance with
Contractor’s requirements.  The design
for the Site Demolition shall account for, be prepared in accordance with, and
be coordinated with, the Approved Project Schedule, the approved Drawings, the
existing Site conditions and any other planned or reasonably anticipated
activities in the vicinity of Site Demolition. 
The information provided by Contractor concerning Site Demolition shall
provide information, such as location, size, nature, and other defining
characteristics of structures and other facilities to be demolished or
relocated, any adjoining structures that should not be demolished or damaged,
and other details, so as to facilitate prosecution of the Site Demolition.  Owner and Contractor shall follow the same
process for any subsequent Site Demolition required by Contractor during
performance of the Work.

6.2.3.6           Interfaces and connections for the
Gypsum Dewatering Plant shall be located five feet outside the building battery
limit.  Based on the information provided by Owner pursuant to Section 5.2,
Contractor shall prepare and submit to Owner detailed engineering, drawings and
specifications for the pilings, and interfaces on Contractor’s side, for the
Gypsum Dewatering Plant as described in Exhibit 1.  After addressing Owner’s comments, if any,
Contractor shall prepare “issued for construction” drawings showing the final
locations of points of interface between the Gypsum Dewatering Plant and other
portions of the Project.

6.2.3.7           Contractor’s
obligations under Section 6.2.3.6 shall be performed in accordance with
Sections 6.2.3.7.1 through 6.2.3.7.6.

6.2.3.7.1        Contractor shall submit to Owner for its
approval “issued for construction” drawings and specifications for the pilings
at Morgantown in accordance with Exhibit 15, as same may be modified by mutual
agreement of the Parties.

6.2.3.7.2          Contractor shall submit to Owner for its
approval “issued for construction” drawings and specifications for the pilings
at Chalk Point in accordance with Exhibit 15, as same may be modified by mutual
agreement of the Parties.

6.2.3.7.3          Contractor shall submit to Owner for
its approval “issued for construction” drawings and specifications for the
pilings at Dickerson 

 

 22
 

 

in accordance with
Exhibit 15, as same may be modified by mutual agreement of the Parties.

6.2.3.7.4          Contractor shall submit to Owner for
its approval “issued for construction” drawings and specifications for the
utility interfaces at Morgantown in accordance with Exhibit 15, as same may be
modified by mutual agreement of the Parties.

6.2.3.7.5          Contractor shall submit to Owner for
its approval “issued for construction” drawings and specifications for the
utility interfaces at Chalk Point in accordance with Exhibit 15, as same may be
modified by mutual agreement of the Parties.

6.2.3.7.6          Contractor shall submit to Owner for
its approval “issued for construction” drawings and specifications for utility
interfaces at Dickerson in accordance with Exhibit 15, as same may be modified
by mutual agreement of the Parties.

6.3           Procurement Services. As part
of the Work, Contractor will provide the following services:

6.3.1        Procurement of Systems Equipment and
Construction Equipment.  Contractor
will provide or procure in Contractor’s name, pay for, receive and transport to
the Site, receive at the Site, unload, place and maintain in storage, remove
from storage, and check-out all Construction Equipment and all Systems
Equipment and any and all other equipment necessary to design and build the
complete Project, excluding only the Owner Scope.  In addition, all items constituting the
Systems Equipment shall be in strict compliance with the Contract Documents.

6.3.1.1           Title to Systems Equipment.  Title to the Systems Equipment procured by
Contractor will pass to Owner when Owner has made a payment to Contractor that
represents payment for such Systems Equipment. The Parties expressly understand
and agree, however, that the passage of title will not release Contractor from
its responsibility to perform fully its obligations under the Agreement.

6.3.1.2           Risk of Loss.  Notwithstanding passage of title from
Contractor to Owner, risk of loss, destruction or damage of or to Systems
Equipment for each System will be borne by Contractor to the extent that
Contractor will be responsible for any insurance deductible amounts required
under Section 28.2 to cover such risk of loss at all times until Substantial Completion
of such System.  Any such insurance
deductible amounts shall be treated as Allocable Costs under Section 11.5.

6.3.1.3           Storage.  Contractor will provide and pay for all
appropriate storage and maintenance while in storage, in accordance with 

 

 23
 

 

manufacturers’
recommendations, for all Systems Equipment and any and all other equipment
necessary to design and build the Project on or off the Site.

6.3.2        Procurement of Chemicals, Start-Up
Spares and Consumables.  Contractor
will pay for, receive, and deliver to the Site all of the chemicals, start-up
spares and consumables required for the completion of the Project (other than
fuel, ammonia, limestone, make-up water, any chemicals required for waste-water
treatment). Contractor will coordinate with Owner regarding the delivery and
storage of such chemicals, start-up spares and consumables at the Site.
Contractor will at all times transport, store and use these chemicals in a
manner that is in accordance with all Applicable Laws and Applicable Permits.

6.3.3        Inspection and Testing of Materials
and Systems Equipment.  As part of
the Work, Contractor will inspect and test the Systems Equipment to ensure that
all fabrication work is proceeding in accordance with the Approved Project
Schedule and the Contract Documents and to protect Owner against defects and
deficiencies in such items. Contractor will notify Owner of any
pre-installation testing to any Systems Equipment (i) fourteen (14) calendar
days in advance of such testing for any testing outside the Site, and (ii)
twenty-four (24) hours in advance of such testing for any testing within the
Site. Owner will have the option of being present at all inspections and
testing on or off the Site. No inspection observed or performed or failed to be
observed or performed by Owner will be deemed a waiver of any of Contractor’s
obligations under this Agreement or be construed as an approval or acceptance
of any portion of the Work.

6.4           Transportation Charges.  Contractor will pay all transportation
charges incurred by Contractor in connection with its performance of this
Agreement including, without limitation, procuring and transporting the Systems
Equipment and Construction Equipment, chemicals (other than fuel, ammonia,
limestone, make-up water, any chemicals required for waste-water treatment) and
any other items provided by Contractor pursuant to this Agreement and all
charges for shipping, air travel and in-land transportation. Contractor shall
have the sole and exclusive right to make the selection of vessels and
transportation agencies unless otherwise reasonably directed in writing by
Owner’s Authorized Representative.

6.5           Construction-Related Work.  After issuance of the NTP, and as part of the
Work, Contractor will perform and undertake the construction-related services
described below:

6.5.1        Clearance of the Site (by Owner).    Contractor will be responsible for the
removal of obstructions to the Work that may be located on the Site other than
those conditions or items expressly included within the Rough Site Grading,
Underground Relocation or Site Demolition described in Section 5.1, 5.3.2 and
5.3.3 and for the clean up, disposal and removal of any matter related to such
removal or arising in any way from the performance of such work.  

 

 24
 

 

Before removing any such
obstructions, Contractor will discuss and agree with Owner concerning the items
to be removed. Contractor will follow any instructions that Owner may have with
respect to such removal. Contractor will take all reasonable precautions
necessary to avoid any damage to persons or any property during the course of
any such removal work..

6.5.2        Labor and Personnel.  Contractor will provide and be solely
responsible for all labor and personnel required in connection with the Work.
All labor and personnel provided by Contractor will by training, experience or
otherwise be qualified and duly licensed to perform the assigned Work
items.  Owner will not be responsible for
or have control or charge over the acts or omissions of the Contractor,
Subcontractors, or any of their agents or employees, or any other persons
performing any of the Work.

6.5.3        Construction Utilities Interface.  Contractor shall include in its design all
equipment, parts, or other items necessary to interface with Owner’s utility
facilities to fully perform and complete the Work. Contractor will interface
with the Facility for the purposes of accessing reasonable consumption of
utilities as described in Section 3.3.5 of Exhibit 1. Such interface will be
performed according to a schedule agreed upon by Owner and Contractor.

6.5.4        Testing.  Contractor shall perform all Performance
Tests and the costs thereof are Allocable Costs.  If the test results for the Initial
Performance Test, as witnessed by Owner and adjusted to the design conditions
asset forth in Section 7.7.1, reveals that a System does not meet the
Performance Guarantees for such System, then the direct costs and expenses
relating to the subsequent re-performance of any Performance Tests shall be
treated as Guarantee Costs under Section 11.3; provided, however, that in all
cases Owner shall bear the cost of fuel, ammonia, limestone, make-up water, and
any chemicals required for waste-water treatment required for re-testing.

6.5.5        As-Built Drawings.  As a condition to achieving Final Completion
for each Facility, Contractor will provide Owner with (i) five (5) hard copies
of the As-Built Drawings; and (ii) one (1) electronic copy of such As-Built
Drawings and Technical Specifications in a form acceptable to Owner. In advance
of Final Completion, representatives of Contractor and Owner will consult and
agree upon the acceptable type, form and substance that will be required for
the As-Built Drawings.

6.5.6        Operation and Maintenance Manuals.  As a condition to achieving Mechanical
Completion of a System hereunder, for each Facility Contractor will provide
Owner with three (3) individually bound final operation and maintenance
instruction manuals in hard copy and three (3) copies in electronic form, in a
form and containing such information as Owner may require, with respect to each
System and all subsystems thereof. The format and content for this document
shall be as mutually agreed between the Parties.

 

 25

6.5.7        Turnover Package.  Prior to achieving Substantial Completion,
Contractor will provide Owner with a turnover package with respect to such
System, which will include all such drawings, start-up procedures, log sheets,
and settings. Contractor shall provide a draft of the turnover package to Owner
no later than four months before Substantial Completion of each System, and the
format and content for this document shall be as mutually agreed between the
Parties.

6.5.8        Clean Up and Waste Removal.  Contractor will keep the work area and
surrounding areas clean and free from accumulation of waste materials and
rubbish caused by the Work. Contractor will provide a dumpster of a size and
type reasonably acceptable to Owner, to be kept at a location acceptable to
Owner, for the temporary storage and ultimate removal of all waste materials
and rubbish. As a condition of achieving Final Completion of a System
hereunder, Contractor will completely clean the work area and surrounding areas
and will remove from the Site all waste materials and rubbish generated, and
(unless necessary for the completion of the remaining System) all Contractor’s
tools, Construction Equipment, machinery and surplus materials used in
connection with such System. Contractor shall remove and dispose of all such
waste materials and rubbish in accordance with the Contract Documents, all
Applicable Laws, all Applicable Permits and all Owner’s rules, regulations,
practices and procedures. If, in the reasonable opinion of Owner, Contractor
has failed to fulfill its obligations under this Section, then Owner, after
having given prior notice to Contractor, may itself clean or cause to be
cleaned the work area and surrounding areas and remove all waste materials,
rubbish, Contractor’s tools, Construction Equipment, machinery and surplus
materials from the Site. All costs and expenses related to such actions of
Owner will be Allocable Costs under Section 11.5.  Owner’s taking such actions will not relieve
Contractor of its obligations under this Agreement or Applicable Laws or
constitute a waiver of any of Owner’s rights or a mitigation or diminution of
any of Contractor’s obligations under this Agreement. For the avoidance of
doubt, Contractor is not required to clean up or remove waste generated by Separate
Contractors performing the Owner Scope.

6.5.9        Hazardous Substances.  Contractor will take all measures necessary
to prevent the release by Contractor or any of its Subcontractors of any
Hazardous Substances at the Site or adjacent areas. Contractor will immediately
notify Owner of any spills, emissions or other releases of Hazardous Substances
at or adjacent to the Site due to Contractor or its Subcontractors. Contractor
will be responsible for removing from the Site and areas adjacent thereto, and
for properly disposing of, in compliance with the Contract Documents, all
Applicable Laws and Applicable Permits, all Hazardous Substances generated or
accumulated by Contractor or any Subcontractor in the course of performing the
Work. In the event Contractor encounters on the Site material reasonably
believed to be a Hazardous Substance that existed prior to the effective date
of the NTP, then Contractor will immediately cease performance of any Work in
the area 

 

 26
 

 

affected and report the
condition to Owner in writing. Contractor will not thereafter resume
performance of the Work in the affected area except with the prior written
permission of Owner.  Contractor shall
provide reasonable advance notice before contacting any local, state or federal
environmental regulatory agency concerning such pre-existing Hazardous
Substance.  Contractor may be entitled to
cost and schedule relief pursuant to Section 19.6.

6.5.10      Quality Assurance/Quality Control.  The Contractor shall submit to the Owner for
review its quality control manual.  The
Contractor shall be responsible for assuring that any Subcontractor’s quality
control program meets the specified requirements imposed on Contractor by
Owner.  Contractor’s quality program
shall be consistent with Owner’s Quality Program (MIRMA Standard Quality
Requirements, Rev. 0 — 07/16/01).  In
addition, Contractor shall comply with the following supplemental requirements:

6.5.10.1         All quality control documentation, as
specified, shall be submitted for review and acceptance, to Owner, and shall
include, but not be limited to the following: 
material certifications; inspection and nondestructive examination
records; test records; and copies of deviations and approved deviation reports.

6.5.10.2         All materials, equipment or products
and accessories furnished by Contractor shall be new and of first-class quality
for the service intended and shall be free of all defects.  Owner shall have the right to reject all
materials and workmanship not conforming to the Technical Specifications or
Drawings.  Any defective material found
shall be promptly replaced or corrected by Contractor to the satisfaction of
Owner.

6.5.10.3         Contractor shall develop an inspection
point program.  This program shall
include the manufacturing, inspection, and test operations which are required
for Contractor to demonstrate product quality, whether performed in its or its
Subcontractor’s or supplier’s facilities.

6.5.10.4         Owner and/or its designated
representative shall have full access to Contractor and Subcontractor’s
facilities for reviewing conformance to the approved quality control records,
and for witnessing of inspections and tests. 
Owner or its designated representative shall be notified fourteen (14)
calendar days prior to the start of the tests and inspection points as
specified by Owner.

6.5.10.5         Non-conformances and deviations shall
be documented in detail including review, acceptance, and resolution and made
available for Owner review upon request. 
Contractor shall furnish Owner with triplicate certified copies of any
and all factory test data and certificates. 
Owner shall have the right to reject all materials and workmanship not 

 

 27
 

 

conforming to the Technical
Specifications or Drawings.  Any
defective material found during the progress of the work shall be promptly
replaced or corrected by Contractor to the satisfaction of Owner.

6.5.10.6          All manufacturing errors or omissions
required to be corrected in the field shall be performed by Contractor and the
cost shall be treated as Allocable Cost pursuant to Section 11.5, or if
performed by Owner after failure of Contractor to perform same, the cost of
same shall be an Allocable Cost.  Work
performed in the field shall be in the same standards of quality, using approved
procedures and personnel, as required in the Contractor’s shops.

6.5.11      Contractor
shall provide all labor, materials and equipment and other services necessary
to construct and install the pilings, and utility interfaces on Contractor’s
side (including power supply interface, water interface and point-to-point
control interconnections) for the Gypsum Dewatering Plant in accordance with
the approved “issued for construction” drawings and specifications prepared by
Contractor pursuant to Section 6.2.3.6

6.5.12      Contractor’s obligations under Section
6.5.11 shall be performed in accordance with Sections 6.5.12.1 through 6.5.12.3
below.

6.5.12.1         Contractor shall achieve substantial
completion of the utility interfaces at Morgantown in accordance with Exhibit
15, as same may be modified by mutual agreement of the Parties.

6.5.12.2         Contractor shall achieve substantial
completion of the utility interfaces at Chalk Point in accordance with Exhibit
15, as same may be modified by mutual agreement of the Parties.

6.5.12.3         Contractor shall achieve substantial
completion of the utility interfaces at Dickerson in accordance with Exhibit
15, as same may be modified by mutual agreement of the Parties.

6.6           General.  As part of the Work, Contractor will perform
all other obligations imposed under the Contract Documents and any other
services that may reasonably be inferred from the Contract Documents as being
necessary for the proper execution and completion of the Work.

6.7           Non-Interference.  Contractor will not, and will ensure that
Contractor’s Subcontractors do not, interfere with the ongoing operations of
the Facility, except as otherwise approved by Owner. Contractor will take all
reasonable action to protect the Facility and all other property of Owner from
damage as a result of its performance of the Work.  Contractor shall at all times limit its
employee’s activities to the specific work areas on the Site.  Contractor’s vehicles or personnel are not to
enter or pass through the operating areas of the Facility, except for travel to
and from the work areas along designated routes approved by Owner.

 

 28
 

 

6.8           Safety.  Owner is committed to a safe workplace.
Contractor shall at all times be solely responsible for providing safe
conditions in its work area free from hazards that may cause harm to person or
property while performing the Work for Owner. 
Contractor will initiate, maintain and supervise all necessary or
desirable safety precautions and programs in connection with the performance of
the Work. Such safety precautions and programs will be in compliance with Owner’s
safety and job work rules and regulations applicable at each site as well as
Applicable Laws and Applicable Permits. Pursuant to such safety precautions and
programs, Contractor will take all reasonable actions necessary to prevent
injury or death to any persons and to prevent damage or loss to any property
while it is performing the Work at the Site. During its performance of the
Work, Contractor will be responsible for providing for the safety of workers
employed by Contractor and its Subcontractors and for the safety of any other
persons who may be affected by the Work on or in proximity to the Site.
Contractor will comply with all Owner safety requirements, and all Applicable
Laws and Applicable Permits regarding safety. Contractor will immediately
notify Owner upon the occurrence of any injury or damage to property that
occurs on the Site. Contractor will promptly remedy any damage or loss to
property at or to the Site or at the site of or to the Facility caused by
Contractor or its Subcontractors. Whenever, in the reasonable opinion of Owner,
Contractor has failed to take sufficient precautions for the safety of the
public or the protection of the Facility, the Systems, the Site or property
adjacent thereto, creating, in the reasonable opinion of Owner, an emergency
requiring immediate action, then Owner, after having given reasonable prior
notice to Contractor (except in the case of an emergency, in which event notice
may be given after the fact), may cause such sufficient precautions to be taken
or provide such protection. The cost and expense of taking or provision of any
such precautionary actions by Owner or its agents will be treated as an
Allocable Cost pursuant to Section 11.5. Owner’s taking any such precautionary
actions will not relieve Contractor of its obligations under this Agreement or
Applicable Laws or constitute a waiver of any of Owner’s rights or a mitigation
or diminution of any of Contractor’s obligations under this Agreement. In
addition to, and to further describe Contractor’s safety obligations, the
following are understood and agreed:

6.8.1        Contractor
Responsibility.  Contractor agrees to
employ the appropriate means, methods, techniques, sequences, or procedures of
construction, and to establish or undertake safety precautions/programs in
accomplishing the Work. Contractor shall also be responsible for assuring that
all of its Subcontractors comply with these safety conditions.  Contractor shall at all times be responsible
for initiating, maintaining, and supervising all safety precautions and
programs in connection with the Work, and will perform the Work in accordance
with good safety practices.

6.8.2        Fitness For Duty, Drug, Alcohol Abuse
And Safety Policy For Access To Owner Facilities.  Sections 6.8.3 through 6.8.6 apply to the
personnel of Contractor and all Subcontractors providing maintenance,
construction, and related services at the Sites.  Owner employees are covered by Mirant Drug
Prevention Policy and employee conduct policy.

 

 29
 

 

6.8.3        Access To Owner Facilities.  Owner may deny access to, or remove from its
Facilities the personnel of Contractor or any Subcontractor, who Owner has
reasonable grounds to believe has:

6.8.3.1           Engaged in alcohol abuse, illegal
drug activity or unsafe work practices which in any way impairs Owner’s ability
to maintain safe work facilities, to protect the health and well-being of Owner
employees, customers, and the general public, and to promote the public’s
confidence in Owner service and operations; or,

6.8.3.2           Been found guilty, pled guilty, or
pled nolo contendere to a charge of sale or distribution of any illegal drug or
controlled substance as defined under federal or governing state law within the
past five (5) years, whether or not the criminal record was later expunged or
sealed by a court order.

Any individual who has been denied access to, or
removed from, Owner facilities for violating this policy may obtain permission
to enter or reenter provided the individual establishes, to the satisfaction of
his or her employer and Owner that the previous activity which formed the basis
for denying access or removal has been corrected and his or her future conduct
will conform with this policy. Owner retains the right of final approval for
the entry or reentry of any individual previously denied access to or removed
from Owner facilities.

6.8.4        Prohibited Activities.  The following activities are prohibited at
all Facilities:

6.8.4.1           Possessing, furnishing, selling,
offering, purchasing or using firearms, weapons, or explosives, or being under
the influence of drugs or other controlled substances as defined under federal
or governing state law;

6.8.4.2           Possessing, furnishing, selling,
offering, or using alcoholic beverages, or being under the influence of
alcohol; or

6.8.4.3           Engaging in any unsafe work
practices.

6.8.5        Suspected Violation Of Policy.  Where reasonable cause exists that Section
6.8.4 has been violated, Contractor or Subcontractor shall inform the Owner.
Contractor or Subcontractor shall also take any or all of the following actions:

6.8.5.1           Search the individual, his or her
vehicle, locker, storage area, and personal effects;

 

 30
 

 

6.8.5.2           Require the individual to undergo a
medical examination to determine his or her fitness for duty. Such examination
shall include obtaining a urine and/or blood specimen for drug or alcohol
analysis unless the examining physician deems such tests to be inappropriate;
or

6.8.5.3           Take any other appropriate action to
determine if there has been a violation of Section 6.8.4.

6.8.6        Refusal To Comply.  Refusal to comply with a request made under
this Section 6.8 shall be grounds for denying access to, or immediate removal
from, any Owner facility.

6.8.7        Protection.  At all times with respect to its Work
activities, Contractor must provide a safe environment and working conditions,
and shall take necessary precautions for the safety of, and shall provide the
necessary protection to prevent damage, injury, or loss to:

6.8.7.1           Its employees and those employees of
its Subcontractors on the Project, and other persons who may be affected
thereby, including, without limitation, any employees of Owner or Owner’s
Separate Contractors on the Project. Contractor will provide such safety
equipment to its employees as is necessary to meet the requirements of good
safety practices and Applicable Laws and regulations, including, but not
limited to, eye, head, and ear protection. Hard hats, approved safety shoes and
approved eye protection will be used while working on Owner work sites. Ear
protection is required inside operating parts of the plants.

6.8.7.2           All the Work and all materials or
equipment to be incorporated therein, whether in storage on or off the Site.

6.8.7.3           Other property at the Site or
adjacent thereto, including trees, shrubs, lawns, walks, pavements, roadways,
structures, and utilities not designated for removal, relocation, or
replacement in the course of the Work.

Contractor shall erect and maintain, as required by
the conditions and progress of the Work, all necessary safeguards for the
safety and protection of the Work and of persons and property.  Contractor shall advise Owner whenever the
Work is expected to affect the owners of adjacent utilities and shall cooperate
with Owner in providing notice to such owners. 
Contractor shall keep all its tools, equipment, materials, etc., in such
condition that the Work can be carried on with safety to employees of Owner,
Contractor, other contractors, and to other persons and property on or near the
Site or Owner premises. Contractor shall furnish and erect all temporary
barricades required by federal, state, or local laws, ordinances, rules, or
regulations, by any governmental authority or by Project conditions. All such
barricades shall be arranged so as to ensure the safety of all workers, 

 

 31
 

 

persons, and property, and shall be removed by
Contractor at the completion of the Work.

6.8.8        OSHA Compliance.  Contractor shall comply with OSHA
Construction Safety and Health Standards, Construction Industry Standards (29
CFR part 1926), applicable General Industry Standards (29 CFR part 190), and
all other Applicable Laws, ordinances, rules, regulations, and orders of any
public body having jurisdiction for the safety of persons or property or to
protect them from damage, injury, or loss. 
Contractor shall also comply with Owner safety regulations and rules.

6.8.9        Material Safety Data Sheets.  In accordance with Applicable Laws,
Contractor must provide Material Safety Data Sheets (MSDS) on all chemical
products and toxic substances. This MSDS must be sent to the Owner’s contract
administrator authorizing the contract or purchase order.

6.8.10      Dust and Fume Control.  Contractor has the responsibility for
knowledge of applicable laws and regulations relating to dust and fumes arising
from, or related to, the Work, as well as methods of compliance and control.
Contractor must treat, in an approved fashion, the area in which it is
conducting its operations, as well as any access areas into its area in order
to control dust. When demolition or other Work creates harmful dust or fumes,
Contractor shall provide satisfactory means to protect personnel and property
against any such substances in accordance with Applicable Laws and Applicable
Permits.

6.8.11      Water Pollution.  Contractor has the responsibility for
knowledge of Applicable Laws and Applicable Permits relating to water pollution
arising from, or related to, the Work, as well as methods of compliance and
control. Contractor shall provide suitable facilities to prevent the
introduction of any substances or materials into any stream, river, lake,
underground aquifer, or other body of water which may pollute the water or
constitute substances or materials deleterious to fish and wildlife in
accordance with Federal, State, and local laws and regulations.  Contractor is responsible for developing,
maintaining and complying with a Storm Water Pollution Prevention Plan (SWPPP)
necessary for the Work at each Site in accordance with Applicable Laws and
Applicable Permits.  Contractor shall furnish
Owner with a copy of its SWPPP for each Site before commencing the Work at that
Site.

6.8.12      Operating Environment.  Contractor must assure that its employees and
Subcontractors work safely in the environment of an electric utility.

6.8.12.1         Generating Sites.  Within power plants, there are fire,
high-pressure steam, high-voltage electricity, and chemicals. All require
careful attention to those hazards and extreme care to assure that Contractor’s
operation does not damage or interfere with the plant operation.

 

 32

6.8.12.2         Electrical System.  Within substations, and overhead and
underground transmission lines, extremely high-voltage electricity requires the
strict compliance with OSHA and Owner’s safety regulations.

6.9           Operating Utilities Interface.  Owner will, in accordance with the schedule
agreed to by Owner pursuant to Section 8.1, make such utilities available to
Contractor as described in Exhibit 1.

6.10         Owner’s
Right to Inspect, Stop and Re-Perform Work.

6.10.1      Owner’s Right to Attend Contractor
Inspections.  Owner will have the
option of being present at all inspections and testing on or off the Site, and,
in the event that the progress and quality of the Work are not proceeding in
accordance with Contract Documents or the Approved Project Schedule, will be entitled
to make recommendations to Contractor or any Subcontractor for the purpose of
remedying such deficiencies. No inspection observed or performed or failed to
be observed or performed by Owner will be deemed a waiver of any of Contractor’s
obligations or be construed as an approval or acceptance of the Work.

6.10.2      Inspection and Re-Performance.  Owner will have the right to have access to
and inspect the Work, wherever located and at any stage of completion. Owner
may reject any Work that does not comply with the Contract Documents. If Owner’s
inspection reveals any such non-compliance or any other defects in any portion
of Work, then Contractor will promptly correct all such defective Work and the
cost of such correction shall be treated as an Allocable Cost under Section
11.5. If Contractor fails to initiate correction of the defective Work within
five (5) calendar days of Owner’s notice, Owner may, without prejudice to any
other remedy Owner may have under this Agreement, correct such defective Work.
Owner’s correction of such defective Work will not relieve Contractor of its
obligations under this Agreement. All costs and expenses related to such
actions of Owner will be treated as Allocable Costs, and Contractor will
promptly reimburse Owner for all such amounts if and to the extent such costs
are to be borne by Contractor pursuant to Section 11.5.

7. PERFORMANCE
GUARANTEES

Contractor
guarantees that the Systems will meet the performance guarantee requirements
below, as further described in Exhibit 6 (the “Performance
Guarantees”).

7.1           Input Guarantees for FGD Systems.  The following input guarantees as further set forth in Exhibit 6 (“Input Guarantees”) apply to the FGD Systems:

7.1.1        Guaranteed Consumption Levels.  The guaranteed consumption levels and related
engineering design margins (the “Engineering Design 

 

 33
 

 

Margins”) are
set forth in Exhibit 6 for consumption of auxiliary power, limestone, and
makeup water.

7.1.2        Consumption Within Engineering Design
Margins.  In cases where the actual
consumption exceeds the guarantee, but is within the Engineering Design Margins
as established pursuant to Section 7.1.1, then, as Owner’s sole and exclusive
remedy, the liquidated damages for excess consumption listed below shall accrue
and be treated as Guarantee Costs under Section 11.3.

7.1.3        Consumption Outside Engineering
Design Margins.  In cases where the
actual consumption exceeds both the guarantee and the Engineering Design
Margins, then the liquidated damages for excess consumption shall apply plus Contractor
shall perform all Work necessary to satisfy the
Engineering Design Margins and re-test the Systems until the testing verifies
that consumption is within the Engineering Design Margins as established
pursuant to Section 7.1.1.  The costs of such work and re-testing shall
be treated as Guarantee Costs pursuant to Section 11.3. Once a System is
placed in service and the actual operating parameters are established, the
Engineering Design Margin shall be adjusted by agreement of the Parties to
reflect the actual operating requirements and to allow reasonable operating
capacity margins in accordance with Prudent Utility Practices and Prudent
Electrical Practices.

7.1.4        Liquidated Damages for Input
Guarantees for FGD Systems.  Liquidated damages shall be assessed against
Contractor for exceeding guaranteed consumption levels for FGD Systems as
follows:

7.1.4.1           Power Consumption.  Liquidated damages of $1,370 per kW shall
apply for every kW in excess of the guaranteed power consumption (excluding
fan).

7.1.4.2           Make-Up Water Consumption.  Liquidated damages of $4,000 per
gallon/minute shall apply for every gallon/minute in excess of the guaranteed
water consumption.

7.1.4.3           Limestone Consumption.  Liquidated damages of $1,000,000 per ton/hr
for each ton/hr in excess of the guaranteed limestone consumption.

7.2                                 Output
Guarantees for FGD Systems.

7.2.1        List of Output Guarantees.  The following output guarantees as further set forth in Exhibit 6 (“Output Guarantees”) shall apply to the FGD Systems:

7.2.1.1     SO2 Removal as described in Section 1.1.1
of Exhibit 6.

 

 34
 

 

7.2.1.2     Mercury Removal as described in Section
1.1.14 of Exhibit 6.

7.2.1.3     Equivalent Availability Guarantee as
described in Section 1.2 of Exhibit 6.

7.2.1.4     Particulate Emission Level as described in
Section 1.1.2 of Exhibit 6.

7.2.1.5     Oxidation Level as provided in Section
1.1.10 of Exhibit 6.

7.2.1.6     Sound Level as provided in Section 1.1.12
of Exhibit 6.

7.2.1.7     Wastewater Effluent Quality as provided in
Section 1.1.13 of Exhibit 6, and Item 6 of Exhibit 8C.

7.2.2        Correction by Contractor.  For each of the Output Guarantees for a FGD
System, System output shall satisfy the guaranteed value as a minimum.  If during testing the guaranteed value is not
met, Contractor shall correct the Work, repair or replace the affected parts or
systems and re-test until the guaranteed values are achieved, except that for
Mercury Removal the provisions of Section 7.2.3 shall apply.  The costs of such correction and re-testing
(and any payments due from Contractor pursuant to Section 7.2.3 to the extent
not collected by Contractor from the FGD Subcontractor) shall be treated as
Guarantee Costs pursuant to Section 11.3.

7.2.3        Mercury Removal.  Mercury Removal will be tested for during
Performance Test PA as described in Exhibit 6. 
In the event that the actual Mercury Removal is less than the guaranteed
Mercury Removal,  Owner shall asses
Contractor $1,000,000 per each FGD System where the performance guarantee was
not achieved, and the Mercury Removal criteria for successful completion shall
be deemed to have occurred as of the date of the Performance Test PA.  Such assessment shall be treated in
accordance with Article 7.2.2. For a period of ninety (90) days after the
Performance Test PA, Contractor shall be given the opportunity to modify and
re-test the system in order to achieve the Mercury Removal performance
guarantee.  If the performance guarantee
is met after re-testing by Contractor, within the ninety (90) day cure period,
Owner shall return to Contractor the above-referenced payments if such amounts
were paid to Owner pursuant to Article 7.2.2 for each FGD System where the
performance guarantee was achieved. 
After the ninety (90) day cure period has expired and the performance
guarantee is not met after re-testing by the Contractor, Owner, as a
performance liquidated damage, shall retain the above-referenced payments
pursuant to Article 7.2.2 for each FGD System where the performance guarantee
was not achieved.  During the ninety (90)
day cure period, the Contractor shall 

 

 35
 

 

have access to the
equipment to implement potential remedies, and the FGD shall be operated in a
reasonable manner to support Contractor’s efforts.

7.3                                 Operational
Guarantees for FGD Systems.

7.3.1        List of Operational Guarantees.  The following operational guarantees as further set forth in Exhibit 6 (“Operational Guarantees”)
shall apply to the FGD Systems:

7.3.1.1        Minimum Turndown Capability as a
percentage of full load as provided in Section 1.1.9 of Exhibit 6.

7.3.1.2        Maximum Entrained Moisture Carryover as
provided in Section 1.1.4 of Exhibit 6.

7.3.1.3        Fan Characteristics.  Performance guarantees for the booster fans
shall be as provided in Section 1.1.11 of Exhibit 6.

7.3.1.4        Pressure Drop.  Pressure drop through FGD System as provided
in Section 1.1.3 of Exhibit 6.

7.3.2        Correction by Contractor.  For each of the Operational Guarantees for
the FGD Systems, the System shall satisfy the guaranteed value as a
minimum.  In case during testing the
guaranteed value is not satisfied, Contractor shall correct the Work, repair or
replace the affected parts or systems and re-test until the guaranteed values
are achieved.  The costs of such
correction and re-testing shall be treated as Guarantee Costs pursuant to
Section 11.3.

7.4           Blank

7.5           Blank.

7.6           Blank.

7.7           Performance
Testing.

7.7.1        Performance Testing .  After the occurrence of Mechanical Completion
for each System, and after the “Ready for Flue Gas to Scrubber”
milestone in Exhibit 15 is achieved,  Contractor will start-up the System.  Once Contractor has started a System,
Owner will operate the corresponding Unit or Units continuously for ninety (90)
days (the “FGD Tuning Period”) during which Contractor and its FGD
Subcontractor will be afforded an opportunity to tune and maximize the operation
of the System.  The FGD Tuning Period
shall include at least twenty (20) days, scheduled at Contractor’s reasonable
requirement, during which the corresponding Unit or Units are operated at or
near full load.  Contractor shall notify Owner when each System is ready to be tested (such
notice, the “Testing-Ready Notice”).  Contractor will provide notice to Owner of 

 

 36
 

 

Performance
Test PA no later than fifteen (15) days prior to the then-scheduled date of
Provisional Acceptance for the System to be tested.  Contractor will provide notice to Owner of
Performance Test 1 no later than fifteen (15) days prior to the then-scheduled
date of Substantial Completion for the System to be tested.  Contractor will perform the tests on each
System as are described in Exhibit 6, which tests are designed to demonstrate
whether the System achieves the Performance Guarantees (the “Performance Tests”); provided, that
the results of such tests will be adjusted, in a manner agreed to by the
Parties, to the design conditions set forth in Exhibits 1 and 6 and in
accordance with correction curves prepared by Contractor in accordance with
Exhibit 6 and approved by Owner.  Owner
has the right to witness all occurrences of Performance Test 1 and Performance
Test PA.  If a System fails to meet any
of the Performance Guarantees during such Performance Test PA or Performance
Test 1, then Contractor will immediately take such actions as are required to
correct the Work so as to meet the Performance Guarantees, and notify Owner
when such System is ready to be re-tested. Contractor will use all reasonable
efforts to complete the re-performed Performance Test 1 and Performance
Test PA on such System within thirty (30) days. 
The costs of such correction and re-testing shall be treated as Guarantee
Costs pursuant to Section 11.3.  If a
System fails to satisfy the requirements at Performance Test 2 within the first
270 days of testing, any costs of retesting and correction that are not due to
failure of the Owner to operate the System in accordance with Section 1.2 of
Exhibit 6 and the manuals provided by Contractor pursuant to Section 6.5.6,
shall be treated as Guarantee Costs. Owner shall afford the Contractor
opportunity to test at least two FGD Systems before July 2011. Provided that
the Performance Guarantees as set forth in Exhibit 6 are met during these
tests, and the Performance Tests have not been performed on a maximum of two
FGD Systems, the Systems not tested shall be deemed Substantially Complete.

7.8           Concurrent
Obligations.  The Performance Tests
listed in Sections 2.1.5 of Exhibit 6 shall be performed concurrently.  If Contractor’s performance of such
Performance Tests on a System reveals that such System is not capable of
concurrently passing such Performance Tests, then Contractor will immediately
and continuously take all measures that are necessary to cause such System to
pass such Performance Tests concurrently; provided, that
such measures must meet the standards set forth in Article 15. The cost of
taking such measures, including without limitation all additional costs of
labor, equipment, supplies, tools, non-consumable chemicals and materials shall
be treated as Guarantee Costs under Section 11.3.

8. PROJECT
SCHEDULE; SCHEDULE GUARANTEES

8.1           Project Schedule.  Attached as Exhibit 15 is the “Draft Project Schedule”. 
Contractor has used its best efforts to schedule all work that requires
a Unit to be taken out of service during Owner’s planned outages excepting for “tie-in” outages where Contractor’s
obligation is to use reasonable efforts to schedule those outages.  The Parties shall agree on the Approved
Project Schedule within thirty (30) days of execution of this Agreement.  Once the Approved Project Schedule is agreed,
it shall replace and 

 

 37
 

 

govern over the
Draft Project Schedule.   The “Approved Project Schedule” contains an integrated detailed engineering, procurement, fabrication,
delivery, construction and startup schedule of the Work and the interface
activities of Owner’s Separate Contractors and specifies the Guaranteed
Provisional Acceptance Dates for the Work included in each System, the
Guaranteed Final Completion Date of the Work included in each Facility and all
Scheduled Outage Periods, and meets the following conditions:

8.1.1        Guaranteed Provisional Acceptance Date.  The Work necessary for and included in the
milestone identified in Exhibit 15 as “Ready for Flue Gas to Scrubber” for each
FGD System at each Facility shall be completed before 23:59 December 31, 2009,
and the Guaranteed Provisional Acceptance Date for each FGD System shall be a
date not later than one hundred five (105) days after the first day of the
Scheduled Outage Period set forth in the Approved Project Schedule for the
final tie-in outage for that System.

8.1.2        Conditions for Outages.  The start dates, end dates, and duration of
outages (defined as calendar days from 07:00 on the start date of the outage
until 23:59 on the end date of the outage) are subject to Owner’s approval and
shall meet the following conditions:

8.1.2.1           Final tie-in outages for each Unit
for Work on an FGD System will have a maximum duration of fifteen (15) days;

8.1.2.2           Electrical tie-in outages per Unit
will occur in March 2009 and have a maximum duration of five (5) days; and

8.1.2.3           The start dates, end dates, and duration
of all other outages, shall be as agreed by Owner with a minimum of six (6) months advance notice to Owner from Contractor.

8.1.3        Outage Start and End Dates.  The start and
end dates of all outages will be mutually agreed between the Parties.  Contractor shall be flexible and work with
the Owner towards agreeing on the start and end dates of outages.

8.1.4        Blank.

8.1.5        Concurrent Outages.  Except as set forth in this Section 8.1.5,
Contractor shall not plan an outage for any Unit at Morgantown or Chalk Point
for a time when any other Unit at the same Facility is also out of service for
a planned outage by Owner or Contractor. 
In the specific case of Chalk Point Owner shall allow one concurrent
outage, prior to the tie-in outage, for a time and duration to be mutually
agreed by the Parties.  Contractor shall
not schedule an outage for any Unit at Dickerson, if two other Units at
Dickerson are also out of service for a planned outage by Owner or Contractor.  Owner shall
provide six (6) months advance notice of outages planned by Owner.  Contractor shall provide six (6) months
advance notice of outages planned by Contractor that are not in or in
accordance with the Approved Project Schedule.

 

 38

8.1.6        Immovable Milestones.  There shall be no change to the following
milestones in Exhibit 15:

8.1.6.1           Provisional
Acceptance for each FGD System shall occur not later than one hundred
five (105) days after the first day of the last Scheduled Outage Period set
forth in the Approved Project Schedule for the final tie-in outage for that
System, and Substantial Completion for each FGD System shall occur not later
than ninety (90) days after the date of Provisional Acceptance for that System;

8.1.6.2           Owner permitting completion and
construction full release shall occur not later than September 1, 2007;

8.1.6.3           Required dates for operating
utilities interface as described in Exhibit 15;

8.1.6.4           Permitting
documents submission date as described in Section 6.2.3.2;

8.1.6.5           The Guaranteed
Provisional Acceptance Date as set forth in 8.1.1;

8.1.6.6           Owner’s schedule commitments as set
forth in Section 5.3;

8.1.6.7        With
respect to each FGD System, the Work included in the milestone identified as “Ready
for Flue Gas to Scrubber” in Exhibit 15 shall be completed not later than
December 31, 2009.

8.2           Schedule Guarantee.  As further provided
in this Section 8.2, liquidated damages will accrue for certain extended and
unplanned outages, and for delay in achieving any Guaranteed Provisional
Acceptance Date, the Guaranteed Substantial Completion Date, or Guaranteed
Final Completion Date.  Such liquidated
damages shall be treated as Guarantee Costs pursuant to Section 11.3.

8.2.1        Work Progress and Completion.

8.2.1.1           General.  Contractor will schedule, report and perform
the Work according to the Approved Project Schedule.  Contractor will provide Owner with a Progress
Report on the fifteenth (15th) day of each month during the performance of the Work.

8.2.1.2           Maximum Outage Period.  Contractor acknowledges that Owner will incur
significant damages and liabilities if any of the Units is taken out of
operation for any period longer than the Scheduled Outage Period for such Unit
(as will be reflected in the Approved Project 

 

 39
 

 

Schedule). Accordingly,
all Work that must be performed while a Unit is out of operation will be
performed by Contractor during normal
maintenance outages scheduled by Owner or during the Scheduled Outage
Period for such Unit.  Subject only to
adjustment by Change Order, the Contractor’s exact compliance with the
Scheduled Outage Period set forth in the Approved Project Schedule is crucial
to Owner’s business and Contractor has planned, organized and coordinated the
Work to fully and exactly comply with such Scheduled Outage Period.  Because of the significant economic harm that
Owner will suffer if the Contractor does not comply with the Scheduled Outage
Period, Owner and Contractor agree that if, during an outage, Contractor is not
performing the Work in accordance with the time
limits for a Scheduled Outage Period and Owner can reasonably deduce,
during the outage, that Contractor will not complete the Work necessary within
the Scheduled Outage Period, then Owner may utilize separate contractors to
perform all or part of the Work necessary to complete such Work within the
Scheduled Outage Period.  Liquidated
damages for such losses shall accrue for each day that the Contractor does not
start and finish the work in exact accordance with the Scheduled Outage Period
(such payment with respect to each Unit, the “Excessive
Outage Payments”) in the following amounts:

Morgantown; $125,000 per
Unit per day

Dickerson; $70,000 per
Unit per day

Chalk Point; $100,000 per Unit per day

Owner shall use its best efforts to avoid interference
with the Contractor’s Work by the Owner and Owner’s Separate Contractors during
the Scheduled Outage Period.  Contractor
understands and agrees that it shall not interfere with and shall cooperate
with the Owner and Owner’s Separate Contractors at the Project Site to fully
perform the Work with no or minimal impact to any other party.

8.2.1.2.1  Amounts Reasonable.  The Parties agree that the terms, conditions
and amounts fixed as liquidated damages pursuant to Section 8.2.1.2 for
Excessive Outage Payments are reasonable, considering the actual losses that
Owner will incur if the outage of a Unit exceeds the Scheduled Outage Period
for such Unit. The amounts of these liquidated damages are agreed upon and
fixed hereunder by the Parties because of the difficulty of ascertaining the
exact amount of losses that Owner will actually incur in such event, and the
Parties agree that such amounts are a reasonable estimate of Owner’s probable
loss (and are not a penalty) and that such amounts will be applicable
regardless of the actual losses incurred by Owner.

 

 40
 

 

8.2.1.2.2        Bonus for Early Completion.  If the Contractor finishes its Work during an
outage before the end date of the Scheduled Outage Period, then for each day
Owner is able to generate power from the affected Unit Contractor shall receive
a bonus as follows:

Morgantown:        $ 35,000 per Unit per day

Dickerson:             $15,000 per Unit per day

Chalk Point:           $25,000
per Unit per day

8.2.1.2.3         Payment of Excessive Outage Payments.  Owner will invoice Contractor for any
Excessive Outage Payments due under Section 8.2.1.2 on a monthly basis, and
Contractor will be assessed the undisputed portion of each such invoice in full
within thirty (30) calendar days of its receipt.  If, subject to Section 11.3, an undisputed
amount remains unpaid for more than five (5) days after receipt of notice from
Owner that the amount is overdue, Owner may deduct any such amounts due as
Excessive Outage Payments from any unpaid amounts owed by Owner to Contractor
under this Agreement.

8.2.2        Guaranteed Provisional Acceptance
Date.  Contractor guarantees that
Provisional Acceptance of each of the Systems will occur on or before the “Guaranteed Provisional Acceptance Date”  for
each System as set forth in the Approved Project Schedule, subject only to
adjustment by Change Order pursuant to Article 19 of this Agreement.

8.2.3        Late Provisional Acceptance Payments.  If Provisional Acceptance of a System does
not occur on or before the Guaranteed Provisional Acceptance Date for such
System, as adjusted by Change Order pursuant to the provisions of this
Agreement, liquidated damages shall accrue in the amounts provided below  (“Late Provisional Acceptance Payments”):

8.2.3.1           Before 23:59 on
December 31, 2009 for the FGD
Systems.  In the event that Provisional Acceptance of
an FGD System is not achieved by a Guaranteed Provisional Acceptance Date that
is prior to 23:59 on December 31, 2009, then the following Late Provisional
Acceptance Payment shall apply for each day beginning with the day after the
Guaranteed Provisional Acceptance Date and ending on the earlier of (i) 23:59
on December 31, 2009, or (ii) the date Provisional Acceptance is achieved:

Dickerson
– $25,000 per FGD System per day

Chalk
Point – $25,000 per FGD System per day

Morgantown – $25,000 per FGD System
per day

 

 41
 

 

8.2.3.2           After 23:59 on December 31, 2009 for FGD Systems.  The
Late Provisional Acceptance Payments set
forth below shall apply in the following circumstances.  In the event that the Milestone described as “Ready
for Flue Gas to Scrubber” in Exhibit 15 for an FGD System is not achieved
before 23:59 on December 31, 2009, then the stated Late Provisional Acceptance Payment shall apply for each day beginning
with January 1, 2010, and ending with the day before such Milestone is
achieved.  In the event that Provisional Acceptance of an FGD System is not
achieved by a Guaranteed Provisional Acceptance
Date that is after December 31, 2009 then, unless reduced pursuant to
Section 8.2.3.4, the stated Late Provisional
Acceptance Payment shall apply for each day beginning with the
Guaranteed Provisional Acceptance Date
and ending with the day before Provisional
Acceptance is achieved. The Late Provisional
Acceptance Payments applicable to the FGD Systems at each Facility are
as follows:

Dickerson
– $100,000 per FGD System per day

Chalk
Point – $100,000 per FGD System per day

Morgantown – $125,000 per FGD System
per day

In the event that there
is delay in both achievement of the “Ready for Flue Gas to Scrubber” milestone
for a System and achievement of Provisional Acceptance for the same System,
then such Late Provisional Acceptance Payments shall apply without
duplication.  For example, if completion
of the “Ready for Flue Gas to Scrubber” milestone for the System is delayed for
ten days (i.e., such milestone is not achieved until January 11, 2010), and
Provisional Acceptance of the System is delayed by fifteen days (i.e., from a
Guaranteed Provisional Acceptance Date of February 28, 2010 until an actual
date of Provisional Acceptance of March 16, 2010) then Late Provisional
Acceptance Payments will accrue for the ten days of delay in achieving the
milestone (from January 1 through 10), but will not accrue for the first ten
days of delay in achieving Provisional Acceptance (from February 28 through
March 10). Under this example, Late Provisional Acceptance Payments will accrue
for the remaining five days of delay in achieving Provisional Acceptance, from
March 11 to March 15.

8.2.3.3           Blank.

8.2.3.4           Reduced Late
Provisional Acceptance Payments Period. 
In the event that Provisional Acceptance of an FGD System is not
achieved on or before the Guaranteed Provisional Acceptance Date, but such
Provisional Acceptance would have been achieved if not for an initial SO2
removal test showing an SO2 removal percentage below 98% but greater than 94%,
then the following Late Provisional Acceptance Payments shall apply for each
day beginning on the later of (i) January 1, 

 

 42
 

 

2010 or (ii) the date of the initial SO2 removal test, and ending on the
day before Provisional Acceptance is achieved:

8.2.3.4.1            If the initial test result is less
than 98% and greater than 97%, then the Late Provisional Acceptance Payment
shall be $30,000 per FGD System per day for the first 30 days, and the full
amount set forth in Section 8.2.3.2 for each day thereafter.

8.2.3.4.2            If the initial test result is less
than or equal to 97% and greater than 96%, then the Late Provisional Acceptance
Payments shall be $30,000 per FGD System per day for the first 26 days, and the
full amount set forth in Section 8.2.3.2 for each day thereafter.

8.2.3.4.3            If the initial test result is less
than or equal to 96% and greater than 95%, then the Late Provisional Acceptance
Payments shall be $30,000 per FGD System per day for the first 19 days, and the
full amount set forth in Section 8.2.3.2 for each day thereafter.

8.2.3.4.4            If the initial test result is less
than or equal to 95% and greater than 94%, then the Late Provisional Acceptance
Payments shall be $30,000 per FGD System per day for the first 10 days, and the
full amount set forth in Section 8.2.3.2 for each day thereafter.

8.2.3.5           Amounts Reasonable.  The Parties agree that the terms, conditions
and amounts fixed as liquidated damages pursuant to Section 8.2.3 for Late Provisional Acceptance Payments are
reasonable, considering the actual losses that Owner will incur if Contractor
fails to achieve Provisional Acceptance
of a System by the Guaranteed Provisional
Acceptance Date for such System. The amounts of these liquidated damages
are agreed upon and fixed hereunder by the Parties because of the difficulty of
ascertaining the exact amount of losses that Owner will actually incur in such
event, and the Parties agree that such amounts are a reasonable estimate of
Owner’s probable loss (and are not a penalty) and that such amounts will be
applicable regardless of the actual losses incurred by Owner. The receipt of
any such liquidated damages will not affect, nor be affected by, Owner’s rights
to terminate this Agreement pursuant to Sections 23.4 or 23.5.

8.2.3.6           Payment of Late Provisional Acceptance Payments.  Owner will invoice Contractor for any Late Provisional Acceptance Payments due under
Section 8.2.3 on a monthly basis, and Contractor will be assessed the
undisputed portion of each such invoice in full within thirty (30) calendar
days of its receipt.  If, subject to
Section 11.3, an 

 

 43
 

 

undisputed amount remains
unpaid for more than five (5) days after receipt of notice from Owner that the
amount is overdue, Owner may deduct any such amounts due as Late Provisional Acceptance Payments from any
unpaid amounts owed by Owner to Contractor under this Agreement.

8.2.4        Guaranteed Substantial Completion
Date.  Contractor guarantees that
Substantial Completion of each of the Systems will occur on or before the “Guaranteed Substantial Completion Date” for each
System.  The Guaranteed Substantial
Completion Date for each FGD System at each Facility shall be the date that is
ninety (90) days after date on which such System achieves  Provisional Acceptance.

8.2.4.1            Late Substantial Completion
Payments.  If Substantial Completion
of the Work required in connection with a Facility does not occur on or before
the Guaranteed Substantial Completion Date for such Facility, then subject only
to adjustment of the Substantial Completion Date by Change Order pursuant to
Article 19 of this Agreement, Contractor hereby agrees to be assessed to
Owner, $500 per calendar day for each calendar day after such Guaranteed
Substantial Completion Date until Substantial Completion of all Work required
in connection with such System is achieved (“Late
Substantial Completion Payments”).

8.2.4.2           Amounts Reasonable and Exclusive
Remedy for Delay.  The Parties agree
that the terms, conditions and amounts fixed as liquidated damages pursuant to
Section 8.2.4.1 for Late Substantial Completion Payments are reasonable,
considering the actual losses that Owner will incur if Contractor fails to
achieve Substantial Completion for a System by the Guaranteed Substantial
Completion Date for such System.  The
amounts of these liquidated damages are agreed upon and fixed hereunder by the
Parties because of the difficulty of ascertaining the exact amount of losses
that Owner will actually incur in such event, and the Parties agree that such amounts
are a reasonable estimate of Owner’s probable loss (and are not a penalty) and
that such amounts will be applicable regardless of the actual losses incurred
by Owner.  The Parties agree that the
Late Provisional Acceptance Payments, Excessive Outage Payments, and Late
Substantial Completion Payments are the sole and exclusive monetary remedy of
Owner for damages it incurs due to delay in completing outages or achieving
Provisional Acceptance or Substantial Completion; notwithstanding anything
herein to the contrary, Owner reserves all of its rights and remedies under
Section 6.10, Article 7, Article 14, Article 23 and Article 28.

8.2.4.3           Payment of Late Substantial
Completion Payments.  Owner will
invoice Contractor for any Late Substantial Completion Payments due under
Section 8.2.4 on a weekly basis, and Contractor will 

 

 44
 

 

be assessed the
undisputed portion of each such invoice in full within thirty (30) calendar
days of its receipt.  If, subject to
Section 11.3, an undisputed amount remains unpaid for more than five (5) days
after receipt of notice from Owner that the amount is overdue, Owner may deduct
any amounts due as Late Substantial Completion Payments from any unpaid amounts
owed by Owner to Contractor.

8.2.5        Guaranteed Final Completion Date.  Contractor guarantees that Final Completion
of the Work at each Facility will be achieved by no later than ninety (90) days
after Substantial Completion of the Work required in connection with the last
System at that Facility (such date, the “Guaranteed Final
Completion Date” for each Facility).

8.2.6        Late Final Completion Payments.  If Final Completion of the Work required in
connection with a Facility does not occur on or before the Guaranteed Final
Completion Date for such Facility, then subject only to adjustment of the Final
Completion Date by Change Order pursuant to Article 19 of this Agreement,
Contractor hereby agrees to pay to Owner, $10,000 per calendar day for each
calendar day after such Guaranteed Final Completion Date until Final Completion
of all Work required in connection with such Facility is achieved (“Late Final Completion Payments”).

8.2.6.1           Amounts Reasonable and Exclusive
Remedy for Delay.  The Parties agree
that the terms, conditions and amounts fixed as liquidated damages pursuant to
Section 8.2.6 for Late Final Completion Payments are reasonable, considering
the actual losses that Owner will incur if Contractor fails to achieve Final
Completion for a System by the Guaranteed Final Completion Date for such
System.  The amounts of these liquidated
damages are agreed upon and fixed hereunder by the Parties because of the
difficulty of ascertaining the exact amount of losses that Owner will actually
incur in such event, and the Parties agree that such amounts are a reasonable
estimate of Owner’s probable loss (and are not a penalty) and that such amounts
will be applicable regardless of the actual losses incurred by Owner.  The Parties agree that the Late Provisional
Acceptance Payments, Excessive Outage Payments, and Late Final Completion
Payments are the sole and exclusive monetary remedy of Owner for damages it
incurs due to delay in completing outages or achieving Provisional Acceptance
or Final Completion; notwithstanding anything herein to the contrary, Owner
reserves all of its rights and remedies under Section 6.10, Article 7, Article
14, Article 23 and Article 28.

8.2.6.2           Payment of Late Final Completion
Payments.  Owner will invoice
Contractor for any Late Final Completion Payments due under Section 8.2.6 on a
weekly basis, and Contractor will pay be assessed the undisputed portion of
each such invoice in full within thirty (30) 

 

 45
 

 

calendar days of its
receipt.  If, subject to Section 11.3, an
undisputed amount remains unpaid for more than five (5) days after receipt of
notice from Owner that the amount is overdue, Owner may deduct any amounts due
as Late Final Completion Payments from any unpaid amounts owed by Owner to
Contractor.

8.2.7        Full Program Completion.  Once the Contractor has successfully achieved
Final Completion of all of its Work at all of the Project Sites, then it will
deliver a notice of completion of the Project (the “Notice of
Project Completion”) to the Owner for verification.  Owner shall, within ten (10) days of receipt
of this notice, either approve or validate the notice or provide a specific
list of the area or areas in which it believes there are remaining Punch List
items to be completed that have not been bought-down by mutual agreement
pursuant to Section 17.5.  Existence of
any Punch List items that have not been bought-down at a Facility shall be
grounds for rejection of the “Notice of Project Completion.”

8.2.8         Reduction of Liquidated Damages
Based on Delayed Permitting.   Should
issuance of a permit that is listed in Exhibit 4 as the responsibility of
Contractor be delayed beyond the scheduled date indicated in Exhibit 15 for
issuance of such permit, Contractor shall promptly prepare for Owner’s review a
revised schedule accelerating such work activities as are reasonably necessary
to address the impact of such delay so that the immovable milestones may be
completed in accordance with Section 8.1.6. 
After review and discussion of the Contractor’s proposed revised
schedule on an Open Book basis, Owner shall enter a Change Order adjusting the
Target Cost in accordance with Section 19.14 so as to equitably compensate
Contractor for any additional Direct Costs that are Directly Caused by such
acceleration.  Should Owner fail to issue
such a Change Order then, to the extent that such failure is the Direct Cause
of a delay in (i) achieving Provisional Acceptance pursuant to Section 8.2.2,
(ii) achieving Substantial Completion pursuant to Section 8.2.4 or (ii)
achieving Final Completion pursuant to Section 8.2.5:

8.2.8.1   the
liquidated damages applicable to the days of delay Directly Caused by the
failure of Owner to issue a reasonable Change Order in accordance with Section
19.14 shall be calculated using one-half (50%) of the daily rate that would
otherwise be applicable under Sections 8.2.3.1, 8.2.3.2, 8.2.3.4, 8.2.4.1 and
8.2.6; and

8.2.8.2   the total
amount of liquidated damages payable by Contractor for delay Directly Caused by
failure of Owner to issue  a reasonable
Change Order pursuant to Section 19.14 shall not exceed the following:

8.2.8.2.1   Five
Million Two Hundred and Fifty Thousand Dollars ($5,250,000) for all Systems at
Morgantown;

 

 46
 

 

8.2.8.2.2   Three
Million Eight Hundred and Fifty Thousand Dollars ($3,850,000)  for all Systems at Chalk Point; and

8.2.8.2.3   Two
Million One Hundred Thousand Dollars ($2,100,000) for all Systems at Dickerson.

8.3           Schedules.   Sections 8.3.1 through 8.3.4 apply to the
Approved Project Schedule:

8.3.1        Schedule
Software.  The schedule has been
developed utilizing “Project Planner” project management system software by
Primavera.  Contractor shall submit
subsequent monthly updates, in both hard copy and diskette format at the lowest
level of detail.

8.3.2        Activity
Coding.  The schedule has been
developed using a detailed “work breakdown structure” (“WBS”) for activity
coding.

8.3.3        Level
3 Detail.  The subsequent monthly
updates of the Approved Project Schedule shall contain a level of detail consistent with a Level 3 schedule.  The subsequent updates of the Approved
Project Schedule for each Facility will contain at minimum a specific activity
for each group of similar engineering deliverables, material procurement
activity, group of similar site deliverables, and work that interfaces with
others.  The subsequent updates shall
also contain specific construction activities for the Work, consistent with the
detail afforded by the work breakdown structure.

8.3.4        Schedule
Updates.  On a monthly basis,
Contractor shall submit to Owner on the tenth (10th) day of each calendar month an update of
the Approved Project Schedule.  This
submittal shall be by an electronic transfer method approved by Owner. The
updated schedule shall identify any changes in Contractor’s scheduling logic
and shall show the status of all activities relative to:

Completion dates

Estimate man-hours

Actual man-hours

Percent complete

Estimated
quantities

Actual quantities

8.4           Work Operations.  Contractor shall provide Owner, in a timely
and convenient fashion, all information regarding Work operations, sequence of
Work including work of Subcontractors, breakdown of the Work into individual
activities with estimated durations, logical relationships in the schedule for
the Work, and descriptions of critical path and non-critical path activities,
and monthly schedule updates as required.

 

 47

8.5           Recovery Schedule.  If, in the reasonable opinion of Owner after considering Contractor’s monthly Progress
Report and the facts and information known to Owner, Contractor’s Work
on critical path activities should fall behind the Approved Project Schedule by
greater than one week, the parties will meet to
discuss appropriate remedial actions. 
Based on these discussions, Contractor shall, at Owner’s reasonable
request, develop a recovery schedule for review and acceptance by
Owner.  In order to achieve the recovery
schedule, Contractor agrees to take some or all of the following actions:  increase manpower, increase Project Work
periods, and/or increase concurrency in such quantities and crafts as shall
substantially eliminate the backlog of Work. 
The additional costs of such action shall be treated as Allocable Costs
under Section 11.5. This recovery schedule, once approved by Owner, shall be
incorporated into the Approved Project Schedule and maintained until the
interim schedule milestones in question are accomplished.

8.6           Critical Schedule Situation.  If, in the reasonable opinion of Owner after consideration of Contractor’s monthly Progress
Report and the facts and information known to it, Contractor’s Work on
the critical path activities necessary for Provisional Acceptance of a System
fall behind the Approved Project Schedule by greater than one week, and should
the Guaranteed Provisional Acceptance Date for such System be less than nine
(9) months away (a “Critical
Schedule Situation”), then the
parties will immediately meet to discuss appropriate remedial actions.  Based on these discussions, Contractor shall develop
a recovery schedule for review and acceptance by Owner.  In order to achieve the recovery schedule,
Contractor agrees to take some or all of the following actions:  increase manpower, increase Work periods,
and/or increase concurrency in such quantities and crafts as shall
substantially eliminate the backlog of Work. 
This recovery schedule, once approved by Owner, shall be incorporated into
the Approved Project Schedule and maintained until the delay is eliminated.

8.7           Contractor Responsible for
Schedule.  Owner’s review and
approval of schedules specified within the Contract Documents shall not relieve
Contractor of its responsibility for accomplishing the Work according to the
Contract Documents. Omissions and errors in the Approved Project Schedule shall
not excuse performance less than that required by the Contract Documents.  Owner’s approval of Contractor certified and
submitted schedules in no way makes Owner an insurer of the success of those
schedules or liable for time or cost overruns resulting from shortcomings in
such schedules.

9. KEY
PERSONNEL REQUIREMENTS

9.1                                  Personnel Resources.

9.1.1        Key Personnel.  The Parties will designate a certain number of Contractor employees as “Key Personnel”. 
Exhibit 7 identifies individuals designated as Key Personnel as of the
Effective Date and a Project organization chart.  In addition, any personnel identified
on Exhibit 7 shall be considered Key Personnel, regardless of any statement set
forth in this Agreement.  The Key 

 

 48
 

 

Personnel will be highly
qualified and capable of fulfilling the responsibilities of their positions,
and Contractor will cause each of them to be primarily Dedicated to the
Project.  The Parties may agree to change
the Contractor personnel and/or positions designated as Key Personnel.  Contractor shall guarantee that Key Personnel
shall be dedicated, devoted and assigned to Work applicable to such personnel’s
discipline at each such person’s assigned Facility for as long as and for the duration that their discipline is needed to complete
the Work (“Dedicated”).

Contractor acknowledges that the presence of certain Key Personnel at
the Facilities is critical to the Project and agrees to make any requested Key
Personnel available at the Facilities upon Owner’s reasonable request.  Such request will be provided to Contractor
at least thirty (30) days before the presence of Key Personnel is required, or,
in the case of specialists to be identified by agreement of the Parties,
fourteen (14) days; provided that where less than the required notice is
provided, Contractor shall use reasonable efforts to make such Key Personnel
available.

9.1.2        Departure of Key Personnel.  Contractor
shall be deemed in default of this Agreement if Contractor breaches Section
9.1.1, except (i)
where a Key Personnel leaves his or her employment for reasons that are beyond
the reasonable control of Contractor (e.g., retirement,
resignation, death, disability,
illegal or wrongful activity, etc), (ii) where a change in
the person identified as a Key Personnel is agreed to by Owner in accordance with Section 9.1.4, or (iii) where a
person identified as a Key Personnel is transferred due to demonstrable personal
hardship of the Key Personnel.

9.1.3        Assignment of Key
Personnel.  Before assigning an individual as a Key
Personnel, Contractor will (i) notify Owner of the proposed assignment, (ii)
introduce the individual to the Owner’s Authorized Representative (and provide
such representative with the opportunity to interview the individual), and
(iii) provide Owner with a résumé and other information requested by Owner
about the individual.  If Owner objects
to the proposed assignment for any reason that is not unlawful, Contractor will
not assign the individual as a Key Personnel and will promptly propose to Owner
another highly qualified individual to serve in such position.

9.1.4        Replacement of Key
Personnel.  Key Personnel may not be transferred or
re-assigned until a suitable replacement has been approved by Owner.  Any replacement of Key Personnel, whether
requested by Owner or Contractor, must be conducted in accordance with a
mutually agreed upon transition plan in accordance with Section 9.2.  If any Key Personnel leaves his or her
employment with Contractor for reasons that are beyond the reasonable control
of Contractor, Contractor may temporarily replace such person, for a period not
to exceed sixty (60) days, with a Qualified Person without Owner’s approval
until a permanent replacement has been identified to and approved by
Owner.  For purposes of this Section, a “Qualified Person” shall mean a person of equal or greater
education and experience, or as otherwise approved by 

 

 49
 

 

Owner.  Owner’s approval of
replacements for Key Personnel will not be unreasonably withheld or
delayed.  The Parties agree that
promotion will be acceptable grounds for replacing Key Personnel provided that
Contractor first identifies a replacement and such replacement is pre-approved
by Owner.

9.1.5        Key Personnel of Subcontractors.  Owner’s
ultimate right to replace an employee of Contractor includes employees of its
Subcontractors.  Owner shall have the
right to instruct Contractor to remove any of its employees or its Subcontractors’
employees from the Project Site or the Work if Owner determines in its
reasonable discretion and for reasons that are not unlawful that the continued
assignment to the Project of such personnel is not in the best interest of
Owner.  Owner’s Authorized Representative
may request by notice that Contractor remove and replace any such person with
another qualified individual.  After
receipt of such notice, Contractor will remove, or require that its
Subcontractor remove such person from the Project and replace such person with
personnel possessing qualifications and skills appropriate to the position.

9.1.5.1           For Key Personnel,
in a safety or emergency situation, such personnel shall be removed
immediately, and replaced as soon as practicable.  In all other instances, Key Personnel shall be removed and replaced within 30 calendar
days of Owner’s notice.

9.1.5.2           For non-Key
Personnel, in a safety or emergency situation, such personnel shall be removed
immediately, and replaced as soon as
practicable.  In all other instances,
non-Key Personnel shall be removed and replaced within 30 calendar days of
Owner’s notice.

9.2           Contractor Personnel Transition
Plan.

9.2.1        Notice of Departure
of Key Personnel.  Contractor will
notify Owner promptly upon determining that any Key Personnel will no longer be
serving in such person’s position.  Where
practicable, notice will be delivered to Owner at least thirty (30) Business
Days prior to the date on which such person will cease to serve in such role.

9.2.2        Mutual Agreement.  In addition to providing notice to Owner
pursuant to Section 9.2.1, Contractor will cause Key Personnel not to be
removed or re-assigned from their positions and to continue to perform the Work
until the Parties reach mutual agreement regarding a transition plan, unless
(i) otherwise requested by Owner or (ii) the continued performance of any such
person in such role is impossible due to illness, disability, death or
termination of employment. The Parties will promptly begin to negotiate in good
faith the terms of the transition plan for the departing personnel immediately
following Contractor’s delivery of notice pursuant to Section 9.2.1.  Each transition plan will be 

 

 50
 

 

developed by the Parties on a case-by-case basis for any departing
personnel and will be mutually agreed upon in writing by the Parties.  All transition plans will include at least
the following:  (i) technical
requirements (if not already defined), (ii) a timetable for integration of the
replacement personnel into the Key Personnel position, and (iii) replacement
methodology designed to minimize the loss of knowledge as a result of losing
the previous Key Personnel.

9.3           Independent
Contractor:  Employees.  Neither Contractor nor Contractor’s employees
are or shall be deemed to be employees of Owner. Contractor shall be solely
responsible for the payment of compensation (including provision for employment
taxes, federal, state and local income taxes, workers compensation and any
similar taxes) associated with the employment of Contractor’s employees.  Contractor shall also be solely responsible
for obtaining and maintaining all requisite work permits, visas, and any other
documentation required under Applicable
Law and Applicable Permits for its employees and shall require that all Subcontractors
do the same for their employees.  Contractor represents that
Contractor, its employees, and those Subcontractors authorized by Owner under
this Agreement, are authorized to perform services under this Agreement.

9.4           Applicable Time Period.  The provisions set forth in this Article 9
shall be applicable and binding upon Contractor from the date of issuance of
the LNTP through and up to the date of Final Completion.

10. TARGET
COST

10.1         Facility Target Cost.  The Target Cost of the Work associated with
each Facility is as follows:

Morgantown         –              $402,621,000.00

Dickerson              –              $269,329,000.00

Chalk
Point            –              $285,224,000.00

as such Target
Cost may be adjusted from time to time pursuant to a Change Order.

10.2         Calculation of Contractor’s Actual
Cost.

10.2.1      Categories of Costs.  The Actual Cost for Work performed on a
System is the sum of the costs for Actual Home Office Labor Costs, Actual Field
Non-Manual Labor Costs, Actual Self-Performed Field Manual Services Costs, and
Actual Third Party Expenses as described in Sections 10.2.2 through 10.2.5
incurred before the date of the first occurrence of an Initial Performance Test
that does not satisfy the applicable Performance Guarantees, plus any such
actual costs incurred to perform the Initial Performance Test and to complete
the Punch List, but excluding any liquidated damages under Section 8.2.

 

 51
 

 

10.2.2      Actual Home Office Labor Costs.  The actual costs for home office labor
including labor employed at the Contractor’s home office and at any other
location away from a Site (“Actual Home Office Labor
Costs”) shall be calculated by
multiplying the number of hours spent on tasks necessary for proper performance
of the Work by such persons times the labor rates set forth in
Exhibit 8D.  Such rates are fully
burdened including mark-up for SG&A and will not be modified except by
Change Order in accordance with Section 19.11 for escalation on January 1 of
each year, of five percent (5%) per annum as provided in Exhibit 8D.  The reasonable actual cost of travel of
persons classified as home office labor shall be allowed only as provided in
accordance with Contractor’s travel and expense reimbursement policy in effect
on the Effective Date, subject only to non-material annual adjustments such as
adjustment of the rate of reimbursement for mileage to match changes in the
mileage allowance contained in the Internal Revenue Code.

10.2.3      Actual Field Non-Manual Labor Costs.  The actual costs for field non-manual labor
including Contractor’s supervisory or management personnel located on a Site (“Actual Field Non-Manual Labor Costs”) shall be calculated
by multiplying the number of hours spent on tasks necessary for proper
performance of the Work by such persons times the labor rates set forth in
Exhibit 8D.  Such rates are fully
burdened including mark-up for SG&A and will not be modified except by
Change Order in accordance with Section 19.11 for escalation on January 1 of
each year, of five percent (5%) per annum as provided in Exhibit 8D.  The reasonable actual cost of travel of
persons classified as field non-manual labor shall be allowed only as provided
in accordance with Contractor’s travel and expense reimbursement policy in
effect on the Effective Date, subject only to non-material annual adjustments
such as adjustment of the rate of reimbursement for mileage to match changes in
the mileage allowance contained in the Internal Revenue Code.

10.2.4     Actual Self-Performed Field Manual
Services Costs.  The actual costs for
employees the Contractor has hired to perform construction related tasks at a
Site (“Actual Self-Performed Field Manual Services Costs”)
shall be calculated by multiplying the number of hours spent on tasks necessary
for proper performance of the Work by such persons times the hourly costs for
such persons as set forth in certified payrolls and any other evidence as
provided by Contractor.  The hourly rates
stated in Exhibit 8B shall be subject to increase or decrease semi-annually by
Change Order pursuant to the process provided in Section 19.10 below.  The rates shall be burdened only with the
following categories of additional labor-related costs applicable thereto,
which shall be adjusted by Change Order pursuant to Section 19.2 in the event
of a change in the benefits, safety incentive or per diem paid by Contractor to
its employees working on the Project or a change in premiums paid for WC/GL
insurance, or by Change Order pursuant to Section 19.9 for a Change in
Applicable Law:

 

 52
 

 

Benefits =              5% (initial)

Federal Unemployment
Insurance = 0.8% (initial)

State Unemployment
Insurance =     2.3% (initial)

FICA/HI =             7.65% (initial)

WC/GL =               5% (initial)

Safety Incentive =                $0.5/hour (initial)

Per Diem =             $7/hour (initial)

SG&A =                 8.5%

The percentage mark-ups for Benefits, FUI, SUI,
FICA/HI, and WC/GL shall be applied only to the base published craft labor
rate, and shall not be applied to the Safety Incentives or Per Diem. The
SG&A shall be applied to the fully-burdened rates including the base craft
labor rate, Benefits, FUI, SUI, FICA/HI, WC/GL, Safety Incentive and Per
Diem.  The percentage mark-ups for FUI,
SUI, FICA/HI and WC/GL shall be charged only on the portion of wages and other
compensation that is actually subject to tax, withholding or deduction under
FUI, SUI, FICA/HI and WC/GL, and shall not apply to any amount of wages or
other compensation that exceeds the applicable caps or limitations on wages or
other compensation, as provided by relevant statute, regulation or contract.

10.2.5     Actual Third Party Expenses: Unless
expressly waived by Owner in writing, all Subcontractors will be selected by
Contractor based on a competitive sourcing process demonstrating best value,
including subcontractors that are on the approved subcontractor lists included
in Exhibit 1, as further supplemented by agreement of the Parties (the “Approved Subcontractor List”).  “Actual Third Party
Expenses” shall include only payments made by Contractor to
Subcontractors or other third parties that are necessary for proper performance
of the Work and substantiated by paid invoices.    Actual Third Party Expenses shall be
marked-up by 8.5% to cover SG&A expenses. 
Actual Third Party Expenses shall be calculated net of discounts,
rebates, insurance proceeds, or other payments or credits of any kind received
by Contractor from a Subcontractor or other third party. Subject to the
conditions and requirements of this Section 10.2.5, Actual Third Party Expenses
may include, among other costs, costs incurred for Commodities, for equipment
packages, for furnish & erect subcontracts and for subcontracted labor.

10.2.6      Selling, General and Administrative
Expenses.  All SG&A costs are
included in the rates used for calculating Actual Home Office Labor Costs and
Actual Field Non-Manual Labor Costs as set forth in Exhibit 8D, the
calculation of Actual Self-Performed Field Manual Services Costs set forth in
Section 10.2.4, and the calculation of Actual Third Party Expenses set forth in
Section 10.2.5.  

 

 53
 

 

These percentage mark-ups
will be Contractor’s sole source of recovery or compensation for SG&A
costs.

10.2.7      Separate Accounts.  Contractor shall keep separate accounts for
Actual Costs, Performance Incentives and Guarantee Costs incurred at each
Facility for Work performed under the Target Price method (Section 13.2), and
shall make such accounts available for Owner’s inspection on an Open Book
basis.

10.3         Cap on Contractor’s Total
Engineering Hours.  Subject to
modification by Change Order pursuant to Article 19, Contractor’s total
engineering hours to complete the Work, including hours before and after issuance
of NTP, shall not exceed the following:

Morgantown =     275,000 hours

Chalk Point =        253,000 hours

Dickerson =           242,000
hours

Any hours in
excess of the capped amount shall be the Contractor’s sole expense and shall
not be included in the Actual Costs.

11. PRICE

11.1         EPC Total Compensation.  “EPC Total Compensation”
is the sum of Project Compensation (Section 11.2) plus the Performance
Incentives (Section 11.4.2), plus the Underrun Bonus (Section 11.6), plus the
Guarantee Costs to be paid by Owner (Section 11.3).

11.2         Project Compensation.  “Project Compensation”
is calculated in accordance with Article 13.

11.3         Guarantee Costs.

11.3.1      Classification of Guarantee Costs.  The “Guarantee Costs”
for Work performed on a System is the sum of the costs for Actual Home Office
Labor Costs, Actual Field Non-Manual Labor Costs, Actual Self-Performed Field
Manual Services Costs, and Actual Third Party Expenses as described in Sections
10.2.2 through 10.2.5 incurred after the date of the first occurrence of an
Initial Performance Test that does not satisfy the applicable Performance
Guarantees, plus any liquidated damages under Section 8.2, but excluding such
actual costs incurred to complete the Punch List. The following sections
contain references to costs identified therein as Guarantee Costs:

6.2.3.2 (Permitting
Documents)

6.5.4 (Testing)

7.1 (Input Guarantees for
FGD Systems)

7.2 (Output Guarantees for FGD Systems)

 

 54
 

 

7.3 (Operational
Guarantees for FGD Systems)

7.7 (Performance Testing)

7.8 (Concurrent
Obligations)

8.2 (Schedule Guarantee)

8.2.1.2.2 (Bonus for
Early Completion)

14.1.4 (Repair of
Defects)

14.1.5 (Parts and Labor
Warranty Period Extension)

28.1 (Property Damage)

11.3.2      Treatment of Guarantee Costs.

11.3.2.1         Blank.

11.3.2.2         Contractor shall keep a separate
accounting on an Open Book basis of all Guarantee Costs as they are incurred,
and shall include a breakdown and cumulative total of Guarantee Costs in each
Progress Report.  Guarantee Costs that
are identified below as Owner’s payment responsibility shall be included in the
calculation of EPC Total Compensation payable by Owner. Guarantee Costs that
are identified below as Contractor’s sole responsibility shall not be included
in the calculation of EPC Total Compensation payable by Owner.  The final responsibility for Guarantee Costs
shall be determined as follows:

11.3.2.2.1          If Actual Cost is less than the Target
Price, and Guarantee Cost is less than the difference between Target Price and
Actual Cost, then Owner shall be responsible for paying Contractor for the
Guarantee Costs.

11.3.2.2.2          If Actual Cost is less than the Target
Price, and Guarantee Cost is greater than the difference between Target Price
and Actual Cost, then Owner shall be responsible for paying the Guarantee Costs
up to an amount equal to the difference between Target Price and Actual
Cost.  Contractor shall be solely
responsible, and Owner shall not pay Contractor, for Guarantee Cost in excess
of such difference up to the limits of liability as set forth in Article
21.  Owner shall be responsible for
paying the Guarantee Cost beyond the limits of liability set forth in Article
21.

11.3.2.2.3          If Actual Cost is greater than the
Target Price, then Contractor shall be responsible, and Owner shall not pay,
for Guarantee Cost up to the limits of liability set forth in Article 21.  Owner shall be responsible for paying
Guarantee Cost beyond the limits of liability set forth in Article 21.

11.4         Incentives

 

 55

11.4.1      Blank

11.4.2      Performance Incentives.  The following incentives (the “Performance Incentives”) can be earned by Contractor based
on its performance:

11.4.2.1         Early Completion of Work During
Planned Outages.  If an outage is
planned exclusively for Contractor, and the Contractor completes its Work
during the outage early so that the outage duration is reduced and Owner is
able to benefit from this early completion, Owner shall pay Contractor the
following incentive:

Morgantown =                     $35,000
per Unit per day

Chalk Point =                        $25,000 per Unit per day

Dickerson =                           $15,000
per Unit per day

11.4.2.1.1          For the purpose of calculation of the
above incentive, the outage start shall be 07:00 on the start date and the
outage end shall be 23:59 on the end date. 
Each day of early completion shall be calculated from the end date and
time.  The following examples illustrate
the implementation of this incentive and are for intended solely for
clarification purposes:

1.       If an
outage at Morgantown was to be completed on August 31, 2009, and the outage is
complete on August 30, 2009, at 23:00 hours, Owner shall owe Contractor an
incentive of $35,000.

2.       If an
outage at Morgantown was to be completed on August 31, 2009, and the outage is
complete on August 30, 2009, at 08:00 hours, Owner shall owe Contractor an
incentive of $35,000.

3.       If the
outage at Morgantown was to be completed on August 31, 2009, and the outage is
complete on August 31, 2009, at 02:00 hours, Owner shall owe Contractor an
incentive of $0.00.

11.4.2.1.2          The early completion payment for each
System shall be paid at Substantial Completion for that System.

11.4.2.2         Safety, Schedule and Quality
Incentive.

11.4.2.2.1           During the progress of the Work, the
following performance parameters shall be measured:

 

 56
 

 

11.4.2.2.1.1           Safety, on a Per-Facility basis.  This incentive includes incentives based on
Contractor’s safety record each calendar quarter, and also its safety record
for each Facility. The incentive for Contractor’s safety record during a
calendar quarter shall be paid if Contractor has met the criteria set forth in
the table below. This incentive shall be assessed for safety and spills
specified for once each Calendar Quarter in the Approved Final Milestone
Payment Schedule.  Such incentive shall
be payable as part of the first payment after the end of the Calendar
Quarter.  If there is any  incentive that is assessed prior to NTP due
to the Contractor, such incentive amount shall be paid with the first safety
incentive payment after NTP.

If
Contractor does not meet the standard in some of the specified quarters,
however meets the standard for the Facility as a whole, the unpaid safety
incentive shall be considered earned at Substantial Completion of the last
System of the Facility.

	
  Metric

  	
   

  	
  Quarterly Target

  	
   

  	
  Facility Target

  	
   

  	
  Applicable

  Incentive

  	
   

  
	
  Recordables/Record-able
  Incident Rate

  	
   

  	
  ≤
  2 per qtr.

  	
   

  	
  1.55

  	
   

  	
  0.2%

  	
   

  
	
  Lost Time
  Incidents/Lost time Incident Rate

  	
   

  	
  0

  	
   

  	
  0.35

  	
   

  	
  0.25%

  	
   

  
	
  Fatality(ies)

  	
   

  	
  0

  	
   

  	
  ≤
  1

  	
   

  	
  Keep
  the Fee

  	
   

  
	
  Spills

  	
   

  	
  0

  	
   

  	
  ≤ 3

  	
   

  	
  0.05%

  	
   

  

 

11.4.2.2.1.2            Quality, including (i) number of
defects in drawings and documents (defects shall be measured in terms of Owner’s
written comments or instructions agreed to by the Parties that are not
implemented); and (ii) number of defects during supply and installation
(defects in materials, non-compliance with drawings and specifications not
addressed) that have not been corrected. 
The report card for the framework that reflects the evaluation of this
performance will be mutually agreed to by the Parties.

11.4.2.2.1.3            Schedule, including completion of
Milestones with zero delay.  This
incentive shall be payable if no delay occurs. Incentives not earned in
specific Milestones shall not be earned at the end of the Project even though
the overall Project was within schedule.

11.4.2.2.2       The following percentages shall be
applied to the Milestone Progress Payment as an incentive for Contractor to
meet the performance parameters identified in Section 11.4.2.2.1 above:

 

 57
 

 

Safety =           0.5% of each milestone

Quality =          0.25% of each milestone

Schedule =      0.25%
of each milestone

11.4.2.2.3         The schedule incentive shall be paid
with specific Milestones identified in the Approved Final Milestone Payment
Schedule.  Accordingly, Contractor shall
include a request for this payment as a separate line item in the request for
payment of the applicable Milestone Progress Payment.   The quality incentives shall be paid at
Substantial Completion of the System.

11.5         Allocable Costs.

11.5.1      Sections Addressing Allocable Costs.  Certain costs incurred by Contractor in
performance of the Work (“Allocable Costs”)
are treated as indicated in Section 11.5.2. The following Sections contain
references to costs that are identified therein as Allocable Costs:

6.3.1.2
(Risk of Loss)

6.5.4
(Testing)

6.5.8
(Clean Up and Waste Removal)

6.5.10
(Quality Assurance/Quality Control)

6.8
(Safety)

6.10.2
(Inspection and Re-Performance)

8.5
(Recovery Schedule)

8.6
(Critical Schedule Situation)

12.10.3.2
(Lien Bonds)

17.5 (Creation of Punch
List)

11.5.2      Treatment
of Allocable Costs.

Allocable Costs
shall be included in the appropriate category of Actual Home Office Labor
Costs, Actual Field Non-Manual Labor Costs, Actual Self-Performed Field Manual
Services Costs or Actual Third Party Expenses.

11.6         Underrun Bonus.

11.6.1      Should the sum of the Actual Costs plus
Guarantee Costs be less than the Target Cost plus Contingency, when Substantial
Completion is achieved by Contractor, then Contactor shall be paid an “Underrun Bonus”.  If
payable, the amount of such Underrun Bonus shall equal one-half of the
difference between (i) the Target Cost plus Contingency and (ii) the sum of the
Actual Cost plus the Guarantee Cost.  The
amount of the Underrun Bonus shall not exceed $65MM.

 

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12. PAYMENT
TERMS

12.1         Payments
Generally.

12.1.1      Owner shall pay Contractor the EPC Total
Compensation in accordance with this Agreement and shall make all payments if
and when due under this Agreement. 
Wherever Owner’s consent or approval is required, such consent or
approval shall not be unreasonably delayed or withheld.

12.1.2       Owner shall make milestone-based payments
in accordance with Section 12.2 through 12.3, Guarantee Payments in accordance with Section 12.13 and Final Payment
in accordance with Section 12.11.

12.1.3      The Milestone Progress Payment payable at
the NTP Milestone shall be equal to: (a) Sixty Million Dollars ($60,000,000)
(the “NTP Milestone Payment”), plus (b) ten percent (10%) of the sum of (the
Target Cost plus the Target Fee of five percent (5%) applicable to the Target
Cost), less (c) the amounts invoiced by Contractor for the Work for the
Facility to July 20, 2007.  The amounts
invoiced but not yet received by Contractor to July 20, 2007 shall be promptly
paid by Owner no later than thirty (30) days from receipt of the original
invoices by Owner, without the need for further invoicing by Contractor. The
NTP Milestone Payment shall be accounted for pursuant to section 12.3.12, and
in any reconciliation of the balance of the amount of the Milestone Progress
Payment made at NTP, the Target Fee of five percent (5%) of the amounts
invoiced by Contractor for the Work to July 20, 2007 shall be excluded from
such reconciliation.

12.2         Milestone Progress Payments

12.2.1      A schedule (the “Approved
Final Milestone Payment Schedule”) showing the dollar amount
associated with each Milestone (the “Incremental Payment Amounts”), and the
Calendar Quarter in which the Milestone is scheduled to be completed, is
included in Exhibit 9.  Exhibit 9 also
includes a curve (the “Cash Curve”)
based on an original schedule of the cumulative value of Incremental Payment
Amounts for Milestones scheduled for completion in each Calendar Quarter. So
long as the cumulative total to date of actual Milestone Progress Payments does
not exceed the Cash Curve (as is adjusted from time to time by the same Change
Order adjustments to the Target Cost and Fee), Contractor is entitled to
payment for any completed Milestones irrespective of the number of Milestones
or sequence.  Notwithstanding, if the
Parties mutually agree that, in certain circumstances, it is in the best
interest of the Project to allow for increased expenditures, then Owner shall
allow for exceeding the Cash Curve or shall otherwise adjust the Cash Curve to
a higher level to allow the desired expenditures.

12.2.2      The Approved Final Milestone Payment
Schedule shall be used as the basis for preparation of requests for payment,
and payment, of progress payments (“Milestone Progress
Payments”) to Contractor. 
Milestone Progress Payments shall be made in accordance with the
Milestones achieved under the 

 

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Approved Final Milestone
Payment Schedule.  Upon achievement of a
Milestone, Contractor shall submit to Owner for its approval a request for
payment for (i) the corresponding Incremental Payment Amount, (ii) the Target
Fee associated with this  payment that
equals Five Percent (5%) of this payment and (iii) any Applicable Safety ,
Schedule and Quality Incentives as set forth in Article 11.4.2.2 .  Each request for payment shall identify in
detail the amounts to which Contractor
considers it is entitled under this Agreement for the applicable Milestone. As
a minimum, each request for payment shall identify the following:

12.2.2.1             the Milestone to which the request
for payment relates and the corresponding Incremental Payment Amount for that
Milestone;

12.2.2.2             any amount which Owner is entitled
to deduct set off or withhold from Contractor;

12.2.2.3             each request for payment shall
contain the tax identification number of both Owner and Contractor and all such
other information as may be required from time to time under applicable tax
laws; and

12.2.2.4             the total amount which Contractor
claims under that request for payment.

12.2.3      Contractor can request a partial payment for
a Scheduled Milestone where the Work included in that Milestone may not
be fully completed, provided Contractor shall submit with its request for
payment sufficient documentation satisfactory to Owner to substantiate the cost
of the associated Work completed. Each request for partial payment shall
identify in detail the amounts to which
Contractor considers it is entitled under this Agreement as of the date the
applicable Milestone is partially completed.
Contractor shall submit to Owner for its approval a request for payment
for (i) the corresponding partial payment amount, (ii) the Target Fee
associated with this payment that equals Five Percent (5%) of this payment and
(iii) any Applicable Safety , Schedule and Quality Incentives as set forth in
Article 11.4.2.2. As a minimum, each request
for payment shall identify the following:

12.2.3.1             the Milestone to which the request
for payment relates and the corresponding Incremental Payment Amount for that
Milestone;

12.2.3.2             any amount which Owner is entitled
to deduct set off or withhold from Contractor;

12.2.3.3             each request for payment shall
contain the tax identification number of both Owner and Contractor and all 

 

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such other information as
may be required from time to time under applicable tax laws; and

12.2.3.4             the total amount which Contractor
claims under that request for payment.

12.2.3.5             the calculations that support the
percentage of milestone payment that is being requested.

12.2.4      Any request for payment which is not
accompanied by all of the information identified in Section 12.2.2 and 12.2.3 shall not constitute a valid
and proper request for payment.

12.2.5      In addition, each request for payment
shall include documentary evidence of achieving the corresponding
Milestone.  Owner shall not be obligated
to make payment of amounts in the current month that would cause the cumulative
total to date of Milestone Progress Payments to exceed the Cash Curve for the
current month, but Owner shall pay such amounts promptly with the next request
for payment from Contractor.

12.2.6      Owner shall review each such
request for payment and may make such exceptions in accordance with this
Agreement within fifteen (15) calendar
days of receipt of same.  Payment of
amounts due and payable shall be made by Owner within fifteen (15) calendar
days after the foregoing fifteen-day
review period has expired. Unless Owner within the fifteen-day review
period confirms that a request for payment does not include all information and
documentation required by this Section 12.2, or that the Work included in the
relevant Milestone has not been completed properly, then Owner shall make
payment to Contractor as provided in this Article 12. If Owner discovers an
error in Contractor’s request for payment, Owner shall immediately notify
Contractor thereof and upon receipt of a correct request for payment by
Contractor shall immediately pay such invoice in accordance with the Agreement.

12.2.7      The payment of any Milestone Progress
Payment by Owner shall not constitute approval or acceptance by Owner of the
Work, any part thereof or of any item of cost in the corresponding request for
payment.

12.3         Quarterly Reconciliation.

12.3.1  Each January, April, July, and October, Owner
and Contractor shall work together in good faith to complete, for the
immediately preceding Calendar Quarter, the reconciliation activities described
in Sections 12.3.2 through 12.3.12.

12.3.2  A “Scheduled Milestone”
is a Milestone which, according to the Approved Final Milestone Schedule as
modified in accordance with Section 12.1.1.1.4, was scheduled to be completed
during the Calendar Quarter being 

 

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reconciled
or which was re-sequenced by Contractor from prior or subsequent Calendar
Quarters to occur in the current Calendar Quarter.

12.3.3      An “Incomplete Milestone”
is a Scheduled Milestone that was not completed during the Calendar Quarter
being reconciled.

12.3.4      The “Quarterly Reconciliation
Ratio” is expressed as a percentage, and is the quotient of (i) the
sum of the Incremental Payment Amounts for Scheduled Milestones that were
actually completed during the Calendar Quarter, divided by (ii) the total of
the Incremental Payment Amounts for all of the Scheduled Milestones for that
Calendar Quarter.

12.3.5      The “Quarterly Actual Cost”
is the sum of the costs incurred by Contractor for its own personnel or paid by
Contractor to third parties during the immediately preceding Calendar Quarter
that are verified and documented by Contractor’s records for its own personnel
or invoices paid by Contractor to third parties as evidenced by electronic
payment receipts or other reliable means of verification and documentation,
that are Actual Costs in accordance with Section 10.2.  Any costs or expenses about which Contractor
and Owner disagree as being Actual Costs shall not be included in the Quarterly
Actual Cost for the purpose of the reconciliation and shall be deemed to be “Disputed Costs”.  Any
Disputed Costs shall be grounds for a Claim by either Party under Article 33.
The quarterly reconciliation process shall be conducted solely for the purposes
of determining the amount of interim progress payments, and not for the purpose
of determining Project Compensation and EPC Total Compensation. Any agreement
by Owner and Contractor concerning Quarterly Actual Cost, and any determination
or agreement of the Parties regarding Disputed Cost, shall not be relevant or
binding for the purpose of determining the Project Compensation and EPC Total
Compensation.

12.3.6      The “Reconcilable Cost”
is the sum of (i) the Quarterly Actual Cost for a Calendar Quarter multiplied
by the Quarterly Reconciliation Ratio for that Calendar Quarter, plus (ii) any
Carryover Cost allocated to a delayed Milestone that is completed during that
Calendar Quarter.

12.3.7      The “Quarterly Milestone
Payment Cost”  is the sum of
the Milestone Progress Payments made by Owner to Contractor during a Calendar
Quarter, less any portion of the Target Fee and Safety, Quality and Schedule
Incentive included in those payments.

12.3.8      The “Quarterly Benchmark Cost”
is the sum of (i) the Quarterly Milestone Payment Cost, (ii) the Quarterly
Contingency Allowance, and (iii) any Approved Contingency Draw Requests
approved by Owner for that Calendar Quarter.

 

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12.3.9      To perform the reconciliation, the
Reconcilable Cost for the Calendar Quarter shall be compared to the Quarterly
Milestone Payment Cost paid by Owner to Contractor for the immediately
preceding Calendar Quarter and the Quarterly Benchmark Cost for that Calendar
Quarter, as follows:

12.3.9.1             Should the Reconcilable Cost be
less than the Quarterly Milestone Payment Cost then the difference shall be
deemed an “Excess Payment.”  Any Excess Payment shall be deducted from any
amount otherwise due and payable by Owner to Contractor under the next payment
request submitted by Contractor to Owner. 
Such amounts shall not be treated as Contingency and shall be available to Contractor in subsequent Calendar Quarters by
the use of an internal change order without the need for a Contingency Draw
Request.  If no further payment requests
are to be submitted by Contractor to Owner, then the Excess Payment shall be
credited to Owner if due following final reconciliation as set forth in Section
12.11.2 and the calculation of the EPC Total Compensation and Target Final
Payment pursuant to Section 12.11.2 and Article 13.

12.3.9.2             Should the Reconcilable Cost be
greater than the Quarterly Milestone Payment Cost and less than the Quarterly
Benchmark Cost, then the difference between the Quarterly Milestone Payment
Cost and the Reconcilable Cost shall be deemed a “Payable Cost”.  Contractor shall add the Payable Cost to its
next payment request to Owner. If no further payment requests are to be
submitted by Contractor to Owner, then Contractor shall submit a separate
payment request for the Payable Cost and Owner shall make payment on such
application in accordance with the provisions of this Agreement relating to
requests for payment.

12.3.10  Should the Reconcilable Cost be greater than
the Quarterly Benchmark Cost then:

12.3.10.1  Contractor shall submit a supplemental
Contingency Draw Request to support the difference between the Reconcilable
Cost and the Quarterly Benchmark Cost, which shall be subject to approval by
Owner in accordance with Section 12.6.4; and.

12.3.10.2
the difference between the Quarterly Milestone Payment Cost and the Quarterly
Benchmark Cost shall be a Payable Cost and shall be included in a subsequent
payment request, and paid by Owner, as provided Section 12.3.9.2; and

 

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12.3.11        A “Carryover Cost” is a cost that is excluded from
reconciliation on account of one or more Incomplete Milestones.  If there are no Incomplete Milestones during
a Calendar Quarter, then the Reconciliation Ratio shall be one (1.0) and there
shall be no Carryover Cost from that Calendar Quarter.  If there are one or more Incomplete
Milestones during a Calendar Quarter, then the Reconciliation Ratio is less
than one (1.0) and the Carryover Cost 
from that Calendar Quarter shall be (i) the Quarterly Actual Cost multiplied
by (ii) the difference between one (1.0) and the Quarterly Reconciliation
Ratio.   If there is one Incomplete
Milestone during the Calendar Quarter, the Carryover Cost shall be assigned to
that Incomplete Milestone.  If there is
more than one Incomplete Milestone during the Calendar Quarter, then the
Carryover Cost shall allocated and assigned to the Incomplete Milestones in
amounts proportional to the Incremental Payment Amounts associated with each
such Incomplete Milestone.  The Carryover
Cost assigned to any Incomplete Milestone shall be added to the Payable Cost
for the Calendar Quarter in which that Incomplete Milestone is completed.

12.3.12         The NTP Milestone
payment referred to in Section 12.1.3 shall be excluded from the reconciliation
described in Sections 12.3.2 through 12.3.11 for the Calendar Quarters
beginning with the month the NTP is issued and ending with the month that is
twelve (12) months after NTP.  Beginning
with the thirteenth (13th)
month after NTP, the NTP Milestone 
payment referred to in Section 12.1.3 shall be added back to the
Quarterly Actual Cost at the rate of twelve million dollars ($12 million) for
each Calendar Quarter until the total of such NTP Milestone Payment amount is
accounted for in the reconciliation process.

12.4  Blank

12.5  Payments not
made in accordance with Sections 12.2.6, 12.3.12., 12.8, 12.11.2, 12.13
shall be subject to late payment interest at the prime rate reported in the
Wall Street Journal on the date such payment is due and payable, plus 1%.

12.6  Contingency

12.6.1       The “Quarterly Contingency
Allowance Limit” for each Calendar Quarter is One Million Five
Hundred Thousand Dollars ($1,500,000.00). 
Contractor shall be allowed access and use of the Quarterly Contingency
Allowance Limit without prior approval of the Owner.  Any unused portion of the Quarterly
Contingency Allowance Limit shall not be subject to carryover.

12.6.2       Contractor shall attempt to identify, as
early as practicable, any events, causes, conditions, trends or occurrences
that are likely to cause the Actual Costs during a Calendar Quarter to be
greater than Contractor’s original estimate of the cost of the Work to be
performed during that Calendar Quarter by an amount greater than the Quarterly
Contingency Allowance. Without limiting Contractor’s rights and other obligations
under the Agreement, including its rights 

 

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and
obligations under Article 19, Contractor shall give notice to Owner, in the
form of a written “Contingency Draw Request”,
of all such events, causes, conditions or occurrences of which Contractor becomes
aware .  The Contingency Draw Request
shall identify and describe (i) the anticipated or actual magnitude of the cost
overrun, (ii) the events, circumstances, conditions or occurrences giving rise
to the cost overrun, and (iii) the individual incurred or anticipated cost
items involved.

12.6.3       When complete information is not readily
available, Contractor shall issue a “Contingency Draw
Notification” including such information as is reasonably available
at the time.  Contractor may convert a
Contingency Draw Notification to a Contingency Draw Request by providing the
information specified in Section 12.6.2. 
While such notification cannot form part of the quarterly reconciliation
process, the notification will provide a basis for more expeditious consideration
by Owner of a cost, when it is converted to a Contingency Draw Request.

12.6.4       Upon receipt by Owner of a Contingency
Draw Request, Owner and Contractor will discuss any measures that Contractor
has taken, and any additional steps that Contractor or Owner might take, to
minimize or eliminate the potential cost overrun and any time limits or other
practical limitations relating to such additional steps.  Owner and Contractor shall make a good-faith
effort to work collaboratively to determine what work-around steps or alternate
measures may be appropriate. Owner may by written notice to Contractor, based
on these discussions and collaborative efforts, approve a Contingency Draw
Request in whole or in part.  Any dispute
with respect to Owner’s approval of Contingency Draw Request shall be subject
to provisions of Article 33.5.

12.7  The
quarterly reconciliation  process shall
be conducted solely for the purposes of assisting in the determination of the
amount of interim progress payments, and not for the purpose of determining
Project Compensation and EPC Total Compensation. Any use of the Quarterly
Contingency Allowance, approval of a Contingency Draw Request, or determination
or agreement of the Parties regarding Disputed Cost, shall not be relevant or
binding for the purpose of the determining the amount of Project Compensation
and EPC Total Compensation.

 12.8  Retention.  Owner shall retain from
each payment made for each Milestone Progress Payment pursuant to Section
12.2.1, Payable Cost pursuant to Section 12.3.9.2, and Carryover Cost pursuant
to 12.3.11 (when paid), ten percent (10%) of the amount due and payable to
Contractor; provided, however, that no such retention shall be withheld from
the amount of the Milestone Progress Payment made at the time of issuance of
the NTP pursuant to section 12.1.3 nor from the payment of invoices outstanding
to July 20, 2007.  Upon Substantial
Completion of each System, Owner shall remit to Contractor fifty percent (50%)
of the amount retained with respect to such System.  Owner shall remit the balance of the
retention in the Final Payment.

 

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12.9  A Change Order that increases or decreases
the Cost Element and/or the Fee Element shall also increase or decrease the
amount of each Milestone Progress Payment in the Approved Final Milestone
Payment Schedule.  The amount of the
increase or decrease to each Milestone Progress Payment shall be calculated by
multiplying the increase or decrease in the Contract Price stated in the Change
Order times the Incremental Percentage for each such Milestone.  In addition, the amount of a Milestone
Progress Payment may be changed pursuant to Section 12.2.1 or by mutual
agreement of the Parties in writing. 
Other than as provided in this Section 12.9, the Milestone Progress
Payments contained in the Approved Final Milestone Payment Schedule shall not
be increased or decreased.

12.10  Conditions of Payments; Withholdings,
Set-Offs.

12.10.1    Material Breach.  Notwithstanding Sections 12.1, 12.11, and
12.13, Owner may withhold payment to Contractor pursuant to Section 12.10.3 if Contractor is in material breach
of its obligations under this Agreement.

12.10.2    Required Submittals.  Notwithstanding Section 12.1.2, Owner will
not be required to make any payment to
Contractor until Contractor has provided the submittals described in
Sections 12.2.2 and 12.2.3 and any other lien-waiver documentation as Owner may
reasonably request and which is not inconsistent with standard practice in
similar construction projects in the State of Maryland.

12.10.2.1       Progress Reports.  In order for each request for payment to be
valid, Contractor must have submitted to
Owner all monthly Progress Reports required under Section 8.2.1.1. if
due prior to the date of such request for payment.

12.10.2.2         Partial Lien Waivers.  In order to be valid, each request for payment submitted by Contractor must be
accompanied by partial lien waivers and releases in the form attached as
Exhibit 16 executed by Contractor and all Subcontractors with whom Contractor
has a direct contract or purchase order, and who submitted an invoice or
application for payment to Contractor more than thirty (30) days prior to
Contractor’s application for payment to Owner. 
In addition, and at Owner’s request, Contractor shall submit such lien
waivers of any and all other Subcontractors who may have the right to pursue a
mechanic’s or materialman’s lien under Applicable Law.

12.10.2.3         Full Lien Release  In order to be valid, Contractor’s invoice
for the final payment from Owner under this Agreement must be accompanied by
full lien releases and waivers executed by Contractor and all Subcontractors
which have provided equipment or materials or performed work at the Site in the
prior 180 days.

 

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12.10.2.4         Form of Waivers and Releases.  The lien waivers and releases required from Contractor under this Section 12.10.2
must be in the form and substance as set forth in Exhibit 16.

12.10.2.5       Lien Bonds.  Notwithstanding the other provisions of
Section 12.10, Contractor may substitute lien discharge bonds sufficient under
applicable law to remove any lien attaching to a Site, or other security reasonably acceptable to Owner in
lieu of the lien waivers required hereunder.

12.10.3  Withholding to Protect Owner from Loss.  Notwithstanding Sections 12.1 through 12.9,
Owner may, without prejudice to any other rights Owner may have under this
Agreement, withhold all or any portion of any payment to such extent as may be
reasonably necessary to protect Owner from loss due to:  (i) defective or incomplete Work by
Contractor or any of its Subcontractors; (ii) claims filed by third parties
arising out of Contractor’s performance of the Work for which Contractor has an
indemnity obligation or other responsibility under the Agreement; (iii) failure
of Contractor to make payments to Subcontractors (other than as a result of
non-payment by Owner to Contractor); (iv) reasonable evidence that a System
will not be completed by the Guaranteed Substantial Completion Date for such
System and that the retention, Letter of Credit and unpaid balance would not be
adequate to cover liquidated damages for the anticipated cumulative delay on
all Systems; (v) damage to Owner
caused by Contractor or its Subcontractors (provided, that if such damage is
only partially caused by Contractor or its Subcontractors, Owner may only
withhold a portion of such damage equal to the relative degree of fault of
Contractor or its Subcontractors in causing such damage) for which Contractor
has an indemnity obligation or other liability under this Agreement; (vi) liens
filed against a System, Facility, Site or any other property of Owner by
Subcontractors which Contractor fails to remove, discharge or bond over; or
(vii) failure by Contractor to maintain the insurance required by this
Agreement. Notwithstanding the foregoing, Contractor may substitute bonds or
other reasonable security for specific items in question under Sections
12.10.3.2 or 12.10.3.3, subject to the agreement of Owner which will not be
unreasonably withheld or delayed.

12.10.3.1       In addition, upon prior notice to
Contractor, Owner may withhold or retain any Milestone Progress Payment,
payment or part thereof in any of the following
circumstances:

12.10.3.1.1       A Contractor Event of Default shall have
occurred;

12.10.3.1.2       Any lien or charge has been created on
the Facility, the Work or any portion thereof by Contractor or a Subcontractor
based on Work for which Owner has made payment to the Contractor 

 

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pursuant to this
Agreement, and such lien or charge has not been discharged; or

12.10.3.1.3      Owner has performed any part of the Work
in lieu of Contractor.

12.10.3.2      Lien Bonds.  Notwithstanding Section 12.10.3(vi) and
12.10.3.1.2, Owner will release any payments withheld due to any lien if
Contractor obtains a lien discharge bond which is (i) issued by a surety reasonably acceptable by Owner, (ii) in
form and substance satisfactory to Owner, and (iii) in an amount sufficient
under applicable law to remove the lien from Owner’s property. By posting a
lien discharge bond, however, Contractor will not be relieved of any
obligations (including its indemnity obligations) under this Agreement.  The premium for any such lien discharge bond
shall be treated as an Allocable Cost pursuant to Section 11.5.

12.10.3.3       Payment after Removal of Cause.  When Contractor has remedied the cause for
withholding any payment and has furnished satisfactory evidence of such
remediation to Owner, Owner will make the
payment so withheld to Contractor within ten (10) calendar days following Owner’s
receipt of such evidence. If Contractor, after receipt of notice from Owner,
fails or refuses to remedy the cause for withholding such payment within the
time specified in the notice, then Owner may, without prejudice to any other
rights Owner may have under this Agreement,
remedy it, but such action by Owner will not be or be considered to be a
waiver of any default by Contractor under this Agreement.

12.10.4    Set Off.  Owner may set off any sums payable by
Contractor to Owner under this Agreement against any payments due to Contractor
under this Agreement.

12.11  Final
Payment for Target Work at Each Facility.

12.11.1         For Work performed at each Facility,
Contractor shall check all materials, equipment and labor involved with or
incorporated into the Work and shall keep on an Open Book basis (and require
all Subcontractors performing work on a cost-plus basis to keep) full, detailed
and accurate records and accounts thereof, showing the Actual Costs of all
items of labor, materials, supplies, services and other expenditures of
whatever nature for which payment or reimbursement is authorized or required
under this Agreement, and the system of accounting shall be satisfactory to
Owner.  Contractor shall retain and
preserve all such records for not less than three (3) years after Target Final
Payment.

 

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12.11.2.        At the time that Contractor submits a
Notice of Final Completion for Work performed under the Target pricing method
(Section 13.2), Contractor shall submit to Owner on an Open Book basis a final
accounting of all Actual Costs and Guarantee Costs incurred in performing such
Work, in accordance with Section 10.2 and Section 11.3.  Owner’s accountants will review Contractor’s
accounting and may request such further information as is necessary for Owner
to substantiate the accounting and to determine the amount of Actual Costs and
Guarantee Costs incurred.  Based on its
review of Contractor’s accounting, Owner shall determine and pay, within thirty
(30) days after the date of Final Completion of a Facility, the unpaid amount
(excluding Guarantee Costs to be paid at a later date pursuant to Sections
12.13) of EPC Total Compensation for such Work (the “Target
Final Payment”) and shall release all remaining retention amounts,
less any amounts that may be  due and
payable by Contractor to Owner.  Should
Owner’s review of Contractor’s accounting show that a net amount is owed by
Contractor to Owner, Contractor shall pay such amount to Owner within thirty
(30) days of demand for such payment by Owner.

12.11.3         When application for Target Final
Payment is submitted by the Contractor, the Contractor shall assure that the
following documents or conditions have been previously completed, submitted and
approved by Owner:

12.11.3.1       Final lien waiver
documents in the form attached as Exhibit 16;

12.11.3.2       As-Built Drawings;

12.11.3.3       Operating manuals;

12.11.3.4       Warranty documents
under this Agreement;

12.11.3.5       Back-charges
and/or claims satisfied;

12.11.3.6       Quality and
reliability requirements complete;

12.11.3.7       Nonconformance
items complete or bought-down;

12.11.3.8       Spare parts list;
and

12.11.3.9       Mill
certifications.

12.12  Liens After Final Payment.  Should there be any claim, obligation, or
lien existing for Work for which Target Final Payment has been made, then
Contractor shall refund to Owner all monies that Owner shall have paid or may be obligated to pay in
satisfying, discharging, or defending against any such claim, obligation or
lien or any action brought or adjustment recovered thereon, including all costs
and expenses, including attorney’s fees and disbursements incurred in
connection therewith.

 

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12.13  Payment of Guarantee Costs.  Guarantee Costs incurred by Contractor in
connection with the FGD Systems and for which Owner is responsible for payment
pursuant to Section 11.3.2 shall be paid to Contractor as follows:

12.13.1.      Separate Accounting.  Contractor shall keep a separate accounting
of all Guarantee Costs incurred to satisfy Contractor’s obligations to correct
the Work, to repair or replace affected parts or systems and to retest, due to
failure to satisfy the Equivalent Availability Guarantee as set forth in
Sections 7.2.1.3 and 7.2.2.  To the
extent that Owner is responsible pursuant to Section 11.3.2.2 for paying such
Guarantee Costs, payment of same shall be made within thirty (30) days after
the Equivalent Availability Guarantee is satisfied.

12.13.2.      Prior to Target Final Payment.
Guarantee Costs for which Owner is responsible for payment pursuant to Section
11.3.2.2, that are incurred prior to Target Final Payment and are not addressed
under Section 12.13.1 shall be paid to Contractor in the Target Final Payment.

12.13.3.        After Target Final Payment. In the
event that Contractor incurs Guarantee Costs subsequent to Target Final Payment
that are not addressed under Section 12.13.1, and all of Contractor’s
responsibility for Guarantee Costs has been exhausted, then Contractor may
submit monthly requests for payment to Owner for such Guarantee Costs, and
Owner will make payment on such requests for payment in accordance with the
accounting procedure set forth in Sections 12.11.1 and 12.11.2.  

13. PRICING METHOD

13.1         Blank.

13.2.        Target Price Method.  The provisions of this Section 13.2 apply to
the “Target” pricing method.

13.2.1.     The “Contract Price”
under this method is the sum of the following:

Target Cost

50% Contingency

Target Fee

13.2.2.     The Project Compensation under this method
is calculated as follows:

13.2.2.1         If

 

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i.                        Actual
Cost is less than or equal to the sum of the Target Price plus 50% Contingency
and,

ii.                     Actual
Cost is greater than Target Cost

then Project Compensation equals the sum of the
following:

Actual Cost

Target Fee

Underrun Bonus

13.2.2.2         If Actual Cost is less than or equal to
the Target Cost, then Project Compensation equals the sum of the following:

Actual Cost

Target Fee

Underrun Bonus

13.2.2.3         If

i.                        Actual
Cost is less than or equal to the sum of Target Price plus Target Fee plus 50%
Contingency, and

ii.                     Actual Cost
is greater than the sum of Target Price plus 50% Contingency

then Project Compensation equals the sum of the
following:

Target Price

50% Contingency

Target Fee

minus 50% of the difference between the following:

i.        Actual
Cost and

ii.       the sum of the Target Price plus 50%
Contingency.

13.2.2.4         If Actual Cost is greater than the sum
of the following:

Target Price

50% Contingency

Target Fee

then Project Compensation equals the sum of the
following:

Actual Cost

50% of Target Fee

14. WARRANTIES

14.1         Parts and Labor Warranties.

14.1.1      Warranties.  Contractor warrants that for the duration of
the Parts and Labor Warranty Period set forth below:

 

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14.1.1.1         all Systems
Equipment provided by Contractor or any Subcontractor and incorporated
into any of the Systems will be (i) new and of good quality, (ii) free from
defects in workmanship and materials, (iii) in accordance with the Contract
Documents (iv) satisfy the requirements of Article 15 “Standards of Performance”
and (v) in compliance with all Applicable Laws and Applicable Permits in effect
on the date of Substantial Completion; and

14.1.1.2         all Work performed by Contractor or its
Subcontractors will be performed (i) in accordance with the Contract Documents,
(ii) in satisfaction of the requirements of Article 15 “Standards of
Performance” (iii) in compliance with all Applicable Laws and Applicable
Permits (all of Sections 14.1.1.1 and 14.1.1.2, the “Parts and
Labor Warranties”).

14.1.2      Parts and Labor Warranty Period.  Subject to Section 14.1.5, with respect to
each System, the Parts and Labor Warranties will remain in full force and
effect for defects appearing between Substantial Completion of the Work
required for the System and the date that is twelve (12) months after
Substantial Completion of the System; provided, however, that the Parts and
Labor Warranties for Extended Warranty Equipment will remain in full force and
effect for defects appearing between Substantial Completion of the Work
required for the System and the date that is 
two (2) years after Substantial Completion of its associated System (the
“Parts and Labor Warranty Period” for
such System or Extended Warranty Equipment).

14.1.3      Conditions and Limitations of Warranty.  The Parts and Labor Warranty is conditioned
upon Owner’s operation and maintenance of the Systems in accordance with the
operations manual provided by Contractor pursuant to Section 6.5.6 and in
accordance with Prudent Utility Practices. 
Excluded from Contractor’s repair obligations under the Parts and Labor
Warranty are repairs and replacements required as a result of (i) normal wear
and tear of the System(s), (ii) damage due to deterioration or wear occasioned
by abrasion, corrosion, erosion or chemical attack resulting from exposure to
conditions not anticipated in the design basis set forth in Exhibit 1, and (iii)
operation or maintenance not in accordance with the operation and maintenance
manual provided by Contractor in accordance with Section 6.5.6.

14.1.4      Repair of Defects.  Within a reasonable time after discovering
that Contractor has failed to meet any of the Parts and Labor Warranties, Owner
will notify Contractor thereof.  Upon
receipt of such notice, Contractor will promptly cure such failure to Owner’s
reasonable satisfaction and in accordance with Prudent Utility Practices,
Prudent Electrical Practices, Applicable Laws and Applicable Permits.  The costs of cure shall be treated as a
Guarantee Cost pursuant to Section 11.3. 
The expiration of the Parts and Labor Warranty Period is only applicable
to the Parts and Labor Warranties and will have no effect on 

 

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any assigned
Subcontractor warranties or guarantees that may be of longer duration.

14.1.5      Parts and Labor Warranty Period
Extension.

14.1.5.1         Extension for Corrected Work.  Any Work re-performed and any part of any
System reworked, repaired or replaced in satisfaction of Contractor’s
obligations in connection with the Parts and Labor Warranties will be
re-warranted pursuant to the same Parts and Labor Warranties set forth in
Section 14.1.1, and Contractor will have the same obligations in relation
thereto as set forth in Section 14.1.4, for a period equal to the longer of (i)
twelve (12) months, or two (2) years (for Extended Warranty Equipment) from the
date such re-performance, rework, repair or replacement is completed, or (ii)
the remaining period under the Parts and Labor Warranty Period for such System
or Extended Warranty Equipment.  Except
for Extended Warranty Equipment, all Parts and Labor Warranties, including
Parts and Labor Warranties on repaired or replaced parts, shall expire no later
than two (2) years after the date of Substantial Completion of the System.  All Parts and Labor Warranties on Extended
Warranty Equipment, including Parts and Labor Warranties on repaired or
replaced parts, shall expire no later than four (4) years after Substantial
Completion of the associated System.  The
cost of performing the Contractor’s warranty obligations under this Section
14.1.5 shall be treated as Guarantee Costs pursuant to Section 11.3.

14.1.5.2         Extension for Total Shutdown.  If, after the date of Substantial Completion
of a System and during the Parts and Labor Warranty Period for such System,
such System is shut down or derated (other than for the purpose of scheduled or
routine maintenance) and such shutdown would not have occurred but for the
existence of a defect or failure covered by one of the Parts and Labor
Warranties, then the Parts and Labor Warranty Period for such System will be
extended by a period equal to the duration of the shutdown or derating.

14.2         Blank.

14.3         Aggregation of Warranties and
Specific Time Limitation.  Contractor’s
obligations in connection with the Parts and Labor Warranties are separate and
in addition to, and not to the exclusion of the Performance Guarantee.  In no instance will the expiration or
limitation of any warranty imply the expiration or limitation of any other
warranty.  In order for Owner to exercise
any remedy under this Article 14, Owner must have notified Contractor of Owner’s
intention to make a claim under such warranty no later than thirty (30) days
after the expiration of the given warranty period for such warranty.

 

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14.4         No Other Warranties/Obligations.  THE PARTS AND LABOR WARRANTY, AND THE
PERFORMANCE GUARANTEES CONSTITUTE THE SOLE AND EXPRESS WARRANTIES OF CONTRACTOR
WITH RESPECT TO THE SYSTEMS UNDER THIS AGREEMENT, AND ANY AND ALL WARRANTIES
THAT MAY BE IMPLIED UNDER APPLICABLE LAW, EQUITY OR CUSTOM OF TRADE, INCLUDING
WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A SPECIFIED
OR INTENDED PURPOSE, ARE HEREBY DISCLAIMED. 
The remedies of Owner (and obligations of Contractor) expressly provided
in this Agreement for any breach of any of the Parts and Labor Warranty during
the Parts and Labor Warranty Period, shall constitute Owner’s sole remedies
(and Contractor’s sole obligations), whether based on contract, tort (including
negligence and strict liability) or otherwise, with respect to such
breach.  For the avoidance of doubt, the
Parties expressly agree that the foregoing shall not affect Owner’s rights
under Section 6.10, Article 7, Article 8, Article 23 and Article 28.

15. STANDARDS
OF PERFORMANCE

Contractor
shall be solely responsible for all construction means, methods, techniques, sequences, procedures and safety and security
programs in connection with the performance of the Work. Contractor will
supervise and direct the Work using its best skill and attention. Contractor
will enforce strict discipline and good order among all employees of Contractor
and its Subcontractors. Contractor will not
permit employment of unfit persons or persons not skilled in tasks assigned
to them. Contractor shall perform the Work in accordance with the following
standards:  (a) with a design basis
objective for the Facility that assumes at least a thirty (30) year commercial
life from Substantial Completion; (b) in accordance with (i) the plans and
specifications and accompanying data set forth in Exhibit 1; (ii) Applicable
Laws and Applicable Permits; (iii) the codes and standards provided in this
Agreement, Prudent Utility Practices and Prudent Electrical Practices; and (c)
in a manner that is approved as to form, use and content by public entities
authorized under Applicable Laws to administer or enforce any building or
construction code or standard and whose approval of the final design of the
Facility, or any portion thereof, is necessary for the construction, operation
or maintenance of the Facility in accordance with Applicable Laws.

16. MECHANICAL
COMPLETION

16.1         Mechanical Completion.  “Mechanical Completion” of
each System will be achieved when, with
respect to such System, each of the following conditions have been met:

16.1.1      Contractor has completed the design,
engineering, procurement, permitting, construction and installation of such
System in accordance with the Contract Documents, including:  the setting of the Systems Equipment for such
System on its foundations; connecting such Systems Equipment to other
applicable equipment with piping, wiring, controls, and safety systems;
ensuring that such Systems Equipment is individually cleaned, leak checked,
lubricated, 

 

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and point-to-point
checked to verify that such Systems Equipment is ready for initial operation
and testing and may be so operated and tested without damage thereto or to any
other property and without injury to any person;

16.1.2      Contractor has completed the Work in
connection with such System so that it is capable of operating safely in
accordance with Prudent Utility Practices, Prudent Electrical Practices,
Applicable Laws and Applicable Permits; and

16.1.3      Contractor has provided to Owner the
operation and maintenance instruction manuals for such System as required under
Section 6.5.6.

16.2         Notice and Achievement of Mechanical
Completion for Each System. 
Contractor will notify Owner in writing ten (10) calendar days in
advance of the date on which it anticipates Mechanical Completion for a System
will occur. When Contractor believes that it has achieved Mechanical Completion
for a System, Contractor shall deliver a written notice thereof to Owner (“Notice of Mechanical Completion”). The Notice of Mechanical
Completion for each System will contain a report in a form acceptable to Owner
and with sufficient detail to enable Owner to determine whether Mechanical
Completion has occurred. Within ten (10) Business Days of receipt of a Notice
of Mechanical Completion of a System, Owner shall inspect the System and either
(i) deliver to Contractor a written certification stating that Contractor has
achieved the requirements set forth in Sections 16.1.1 through 16.1.3, or (ii)
notify Contractor in writing that such criteria have not been achieved, stating
the reasons therefore. If Owner certifies that such requirements have been met,
then the date of the Notice of Mechanical Completion will be deemed to be the
date Mechanical Completion of such System has been achieved. In the event Owner
notifies Contractor that such requirements have not been met, Contractor shall
undertake such action or work that is reasonably necessary to achieve such
requirements and shall then issue another written notice to Owner stating that
Contractor believes that such requirements have been achieved. Such procedure
shall be repeated until Mechanical Completion for such System is achieved.
Should Owner fail to make any notification to the Contractor within the
aforesaid ten (10) day period after its receipt of Notice of Mechanical
Completion, then the System shall be deemed to have achieved Mechanical
Completion as of the date of the Notice of Mechanical Completion.  So long as Owner has satisfied the ten-day
notice requirement, issuance by Owner of a certificate stating that the
requirements of Sections 16.1.1 through 16.1.3 have been met shall be a
condition to achievement of Mechanical Completion.

17. PROVISIONAL
ACCEPTANCE / SUBSTANTIAL COMPLETION

17.1.        Criteria for Provisional Acceptance
of FGD System.  “Provisional
Acceptance” of the Work required in connection with each FGD System
will be achieved when, with respect to such System, each of the following
conditions have been met:

17.1.1      Mechanical Completion for such System has
been achieved; and

 

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17.1.2      Contractor has completed Performance Test
PA as described in Exhibit 6 and such Performance Test PA has demonstrated that
the System complies with the Performance Guarantees for Performance Test PA,
subject to the provisions of Section 7.2.3 with respect to Mercury Removal.

17.2.        Criteria for Substantial Completion
of FGD System.  “Substantial
Completion” of the Work required in connection with each FGD System
will be achieved when, with respect to such System, each of the following
conditions have been met:

17.2.1      Mechanical Completion for such System has
been achieved;

17.2.2      Contractor has completed Performance Test
1 as described in Exhibit 6 and such Performance Test 1 has demonstrated that
the System complies with the Performance Guarantees for Performance Test 1 or,
with respect to the Input Guarantees as provided in Section 7.1, that the
System complies with the Engineering Design Margins as provided in Section
7.1.2;

17.2.3. Contractor
has completed performance of all the Work for such System in accordance with the Contract Documents, except for any
remaining items set forth in the Punch-List for such System;

17.2.4. Contractor has provided to Owner, and Owner has
reviewed and approved, the Punch-List for such System as described in
Section 17.5; and

17.2.5. Contractor has delivered to Owner all such lien
releases and waivers as are required under Section 12.10.2.

17.3         Notice and Report of Provisional
Acceptance for Each System.  At such
time as Contractor believes that it has met the requirements under Section 17.1
with respect to a System, it will deliver to Owner notice thereof (the “Notice of Provisional Acceptance”).  The
Notice of Provisional Acceptance for each System will contain a report in a form acceptable to Owner and with sufficient
detail to enable Owner to determine whether Contractor has achieved such
requirements.

17.4         Achievement of Provisional
Acceptance of the Work.  Owner will
within seven (7) Business Days after Owner’s receipt of the Notice of
Provisional Acceptance for a System either (i) deliver to Contractor a written
certificate stating that the requirements for Provisional Acceptance of such
System have been met, or (ii) notify Contractor in writing that such
requirements have not been met, stating the reasons therefore.  If Owner certifies that such requirements
have been met, then the date of the Notice of Provisional Acceptance will be
deemed to be the date Provisional Acceptance of such System has been achieved.
In the event Owner notifies Contractor that such requirements have not been met,
Contractor will promptly take such actions as will cause such requirements to
be met, and upon meeting such requirements, Contractor will issue

 

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to Owner another
Notice of Provisional Acceptance for such System. Such procedure will be
repeated as necessary until Owner certifies that such requirements have been
met for such System.  Should Owner fail
to make any notification to the Contractor within the aforesaid seven (7)
Business Day period after its receipt of Notice of Provisional Acceptance, then
the System shall be deemed to have achieved Provisional Acceptance as of the
date of the Notice of Provisional Acceptance. 
So long as Owner has satisfied the seven-day notice requirement, the
issuance by Owner of a certificate stating that the requirements of Section
17.1 have been met shall be a condition to achievement of Provisional
Acceptance.

17.5         Creation of Punch-List.  No later than ten (10) calendar days prior to
the then-scheduled date of Substantial Completion for a System, Contractor will
prepare and deliver to Owner a prepared punch list setting forth those minor,
non-operational items that remain to be performed to complete the Work required
in connection with such System and the proposed time limits within which
Contractor will complete such remaining Work. 
Upon its receipt of Contractor’s prepared punch list for a System, Owner
will review and direct Contractor to make any appropriate or necessary
revisions to the same, after which Owner’s Authorized Representative and
Contractor’s Authorized Representative will meet and consult in good faith to
agree upon the definitive, final punch-list for such System, including the
approved time limits within which Contractor will perform such remaining Work
(such punch-list, with respect to each System constituting the “Punch-List” for such System). Once the final Punch-List for
such System is agreed upon, Contractor will immediately begin work on the items
thereon, provided, that if
Contractor has not commenced such Work within three (3) Business Days, or has
not completed such Work within the approved time limits set forth in the final
Punch-List, then Owner may have such items completed. All costs and expenses
related to such actions of Owner will be accounted for as Allocable Costs under
Section 11.5. Notwithstanding the foregoing, Owner and Contractor may agree for
Owner to undertake certain Punch-List items for Contractor, in which event such
item(s) will be removed from the Punch-List, and Contractor will pay to Owner
the amount agreed upon for such undertaking. Owner’s taking of any actions
under this Section will not relieve Contractor of its obligations under this
Agreement or Applicable Laws, or constitute a waiver of any of Owner’s rights
or a mitigation or diminution of any of Contractor’s obligations under this
Agreement.

17.6         Notice and Report of Substantial
Completion for Each System.  At such
time as Contractor believes that it has met the requirements under Section 17.2
with respect to a System, it will deliver to Owner notice thereof (the “Notice of Substantial Completion”).  The
Notice of Substantial Completion for each System will contain a report in a form acceptable to Owner and with sufficient
detail to enable Owner to determine whether Contractor has achieved such
requirements.

17.7         Achievement of Substantial
Completion of the Work.  Owner will
within seven (7) Business Days after Owner’s receipt of the Notice of
Substantial Completion for a System either (i) deliver to Contractor a written
certificate stating that the requirements for Substantial Completion of such
System have been met, or (ii) notify 

 

 77
 

 

Contractor in
writing that such requirements have not been met, stating the reasons
therefore.  If Owner certifies that such
requirements have been met, then the date of the Notice of Substantial
Completion will be deemed to be the date Substantial Completion of such System
has been achieved. In the event Owner notifies Contractor that such
requirements have not been met, Contractor will promptly take such actions as
will cause such requirements to be met, and upon meeting such requirements,
Contractor will issue to Owner another Notice of Substantial Completion for
such System. Such procedure will be repeated as necessary until Owner certifies
that such requirements have been met for such System.  Should Owner fail to make any notification to
the Contractor within the aforesaid seven (7) Business Day period after its
receipt of Notice of Substantial Completion, then the System shall be deemed to
have achieved Substantial Completion as of the date of the Notice of
Substantial Completion.  So long as Owner
has satisfied the seven-day notice requirement, the issuance by Owner of a
certificate stating that the requirements of Section 17.2 have been met shall
be a condition to achievement of Substantial Completion.

17.8         Transfer of Possession and Control
of the Systems to Owner.  Upon
Substantial Completion of a System, Owner shall take possession and control of
such System.  Following transfer of
possession and control of such System to Owner and prior to Final Completion of
such System, Contractor will have reasonable access to such System and the Site
so as to complete the Punch-List items on such System.

18. FINAL
COMPLETION  .

18.1         Requirements.  “Final Completion”  of the Work required in connection with each Facility will
be achieved, with respect to such Facility or System, when:

18.1.1      Contractor has achieved Substantial Completion of the Work required in
connection with all Systems at the Facility;

18.1.2      Owner and Contractor have completed Final
Reconciliation.

18.1.3      Contractor has completed all Punch-List
items for all Systems at the Facility, or has bought-down all such Punch-List
items of a price mutually agreed upon by Owner and Contractor;

18.1.4      Contractor has executed and delivered to
Owner all full lien waivers and releases for the Facility or System as required under
Section 12.10.2.3 (or, in lieu thereof, Contractor has provided and
Owner has accepted a lien discharge bond or other security as allowed under
Section 12.10.2.5); and

18.1.5      Contractor has delivered to Owner (i)
As-Built Drawings as required under Section 6.5.5; (ii) copies of all purchase
orders, contracts, subcontracts and material requisitions with its
Subcontractors who performed Work on or in connection with such System, as
required under Section 32.8; (iii) legally effective written assignments of all
Subcontractor guarantees and 

 

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warranties on
Systems Equipment that were provided by such Subcontractors in connection with
such System, as required in Section 32.5; (vi) a list of the names, addresses,
and telephone numbers of all Subcontractors providing such guarantees and
warranties; and (v) the turnover package required under Section 6.5.7.

18.2         Notice and Report of Final
Completion.  At such time as
Contractor believes that it has met the requirements under Sections 18.1.1
through 18.1.5 for a Facility, it will deliver to Owner a written notice
thereof (the “Notice of Final Completion”). The
Notice of Final Completion for each System will contain a report in a form
acceptable to Owner and with sufficient detail to enable Owner to determine
whether Contractor has achieved such requirements.

18.3         Achievement of Final Completion.  Owner will within five (5) Business Days
following Owner’s receipt of the Notice of Final Completion for a Facility,
either (i) deliver a written certification stating that the requirements for
Final Completion of such Facility have been achieved, or (ii) notify Contractor
in writing that such requirements have not been achieved, stating the reasons
therefore. If Owner certifies that such requirements have been met, then the
date of such Notice of Final Completion will be deemed the date Final
Completion of such Facility or System. If Owner notifies Contractor that such
requirements have not been met, then Contractor will promptly take such actions
as will cause such requirements to be met, and upon meeting such requirements,
Contractor will issue to Owner another Notice of Final Completion. Such
procedure will be repeated as necessary until Owner certifies that such
requirements have been met. Should Owner fail to make any notification to
Contractor within the aforesaid five (5) Business Day period after its receipt
of Notice of Final Completion, then the Facility shall be deemed to have achieved
Final Completion as of the date of the Notice of Final Completion.  So long as Owner has satisfied the aforesaid
five-Business Day notice requirement, the issuance by Owner of a certificate
stating that the requirements of Sections 18.1.1 through 18.1.5 have been met
shall be a condition to achievement of Final Completion.

19. CHANGE
ORDERS

19.1         Changes.  Without invalidating this Agreement, Owner
may issue an order making Changes (each such order, a “Change
Order”) to the Work, in which event one or more of the Contract
Price or the Approved Project Schedule may be adjusted as provided in this
Article 19.  Changes may only be
authorized by Change Orders issued in accordance with this Article 19.  Change Orders will constitute the exclusive
remedy to Contractor for any Changes.

19.2         Procedure for Changes.

19.2.1      Changes Initiated by Contractor.  Should Contractor become aware of any
circumstances which Contractor has reason to believe may necessitate a Change,
Contractor will issue to Owner a written “Change Order Notice.”  All Change Order
Notices will include, to the extent practicable, documentation 

 

 79
 

 

sufficient to enable
Owner to determine (i) the factors necessitating the possibility of a Change,
(ii) the impact which the Change is likely to have on the Contract Price based
on the time and materials rate charges in effect at the time of the Change
pursuant to Section 10.2 of this Agreement, (iii) the impact which the Change
is likely to have on Contractor’s compliance with the Approved Project Schedule,
and (iv) such other information which Owner may request in connection with such
Change.  If Contractor fails to provide a
Change Order Notice to Owner within fifteen (15) Business Days after Contractor
knew about the first occurrence or circumstance resulting in the possibility of
such Change, then notwithstanding anything in this Article 19 to the contrary,
Contractor agrees that Owner’s ability to exercise its rights pursuant to
Section 19.16 shall have been compromised and Contractor will be deemed to have
waived any right to receive a Change Order based upon such occurrence or
circumstance.  Owner may, but except as
provided in Sections 19.3, 19.4, 19.5, 19.6, 19.7,  19.9, 19.10, 19.11 and 19.12below, will not
be obligated to, issue a Change Order pursuant to a Change Order Notice.  Unless otherwise stated by Owner in writing
or in the event of an emergency that poses an immediate threat to life or
property, any work outside the Work described in the Contract Documents
performed by Contractor prior to its having received a Change Order from Owner
will be at Contractor’s sole risk.

19.2.2      Changes Initiated by Owner.  If Owner desires to make a Change, it will
submit a “Change Order Request” to
Contractor.  Contractor will promptly
review the Change Order Request and notify Owner in writing, as promptly as
possible and no later than five (5) Business Days after receipt, of the options
for implementing the proposed Change (including, if possible, any option that
does not involve an increase in the Contract Price or an extension of the
Approved Project Schedule) and to the extent practicable based on reasonably
available information the effect, if any, each such option would have on the
Contract Price and the Approved Project Schedule.  After consideration of such information,
Owner may, but will not be obligated to, issue a Change Order pursuant to this
Section 19.2.2.

19.2.3        Change in Cost Element and Fee Element.  Any change to the Contract Price shall be in
the amount of the sum of the associated changes in the Cost Element and the Fee
Element pursuant to Section 19.14:

19.2.3.1         The “Cost
Element” means the Target Cost.

19.2.3.2         The “Fee Element”
means the Target Fee.

19.3         Change Order Due to Force Majeure
Event.  In the event and to the
extent that a Force Majeure event Directly Causes a delay to the critical path
of the Work at the time of the Force Majeure event, then upon submission of a
proper Change Order Notice and subject to the other Sections of this Article
19, the Approved Project Schedule will be extended by Change Order by the
number of calendar days of actual delay to the critical 

 

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path of the Work
at the time of the Force Majeure event. 
Such Change Order will be Contractor’s sole and exclusive remedy for any
such delay.  To the extent an event of
Force Majeure affects Contractor’s costs, the provisions of Section 20.4 will
apply.

19.4         Change Order Due to Suspension of
Work by Owner.  In the event that
Owner suspends the Work pursuant to the provisions of Section 23.2, then, upon
submission of a proper Change Order Notice and subject to the other Sections of
this Article 19, Contractor will be entitled to a Change Order extending the
Approved Project Schedule as required and, if necessary, increasing the
Contract Price pursuant to Section 19.14 so as to equitably compensate
Contractor for additional demonstrable Direct Costs incurred by Contractor as
Directly Caused by such suspension.  Such
Change Order will be Contractor’s sole and exclusive remedy for such increased
costs and/or delay.  During the
suspension period, Owner shall reimburse Contractor on a time and material
basis for its stand-by charges, storage and maintenance charges, and
demobilization and remobilization charges.

19.5         Change Order Due to Differing Site
Conditions.  In the event Contractor
encounters a subsurface condition at the Site that is not reasonably
ascertainable from the information provided in the Geotechnical Study prepared
pursuant to Section 31.1 (including but not limited to information relating to
the water table, rock formations, and the bearing capacity of soil) and to the
extent such condition Directly Causes an increase to Contractor’s Direct
Cost  of performing the Work and/or
Directly Causes a delay to the critical path of the Work at the time such condition
is encountered, then, upon submission of a proper Change Order Notice and
subject to the other Sections of this Article 19, the Approved Project Schedule
will be extended by Change Order by the number of calendar days of actual delay
to the critical path of the Work at the time the subsurface condition is
encountered, and the Contract Price shall be increased pursuant to Section
19.14 so as to equitably compensate Contractor for additional demonstrable
Direct Costs incurred by Contractor and Directly Caused by such condition.

19.6         Change Order Due to Pre-Existing
Hazardous Substances.  In the event
Contractor encounters Hazardous Substances that were present at the Site prior
to the date of the NTP, or that were brought to or deposited on the Site by Owner
or a separate contractor of Owner, and to the extent such condition Directly
Causes an increase to Contractor’s Direct Cost of performing the Work and/or
Directly Causes a delay to the critical path of the Work at the time such
condition is encountered, then, upon submission of a proper Change Order Notice
and subject to the other Sections of this Article 19, the Approved Project
Schedule will be extended by Change Order by the number of calendar days of
actual delay to the critical path of the Work at the time the subsurface
condition is encountered, and the Contract Price shall be increased pursuant to
Section 19.14 so as to equitably compensate Contractor for additional
demonstrable Direct Costs incurred by Contractor and Directly Caused by such condition.

19.7         Change Order Due to Actions of Owner.  In the event Contractor suffers increased
costs and/or a delay in the critical path progress of the Work and to the
extent such increased costs and/or delay is Directly Caused by the acts or
omissions of Owner, 

 

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including delay or
failure of Owner to perform its obligations under this Agreement including
Owner’s obligations under Article 5, then, upon submission of a proper Change
Order Notice and subject to the other Sections of this Article 19, Contractor
shall be entitled to a Change Order extending the Approved Project Schedule as
required and, if necessary, increasing the Contract Price pursuant to Section
19.14 so as to equitably compensate Contractor for additional demonstrable
Direct Costs or critical path delay incurred or experienced by Contractor as
Directly Caused by such acts or omissions of Owner.  Such Change Order shall be Contractor’s sole
and exclusive remedy for such increased costs and/or delay.

19.8         Blank.

19.9         Change Order Due to Changes in
Applicable Law.  The Parties
acknowledge that Contractor must adhere to all Applicable Laws.  In the event Contractor incurs increased
Direct Costs and/or a delay in the critical path progress of the Work that are
Directly Caused by a Change in Applicable Law, then, upon submission of a
proper Change Order Notice and subject to the other Sections of this Article
19, Contractor shall be entitled to a Change Order extending the Approved
Project Schedule by the number of calendar days of actual delay to the critical
path of the Work at the time of such Change in Applicable Law, and increasing
the Contract Price pursuant to Section 19.14 so as to equitably compensate
Contractor for additional demonstrable Direct Costs or critical path delay
incurred by Contractor and Directly Caused by such Change in Applicable
Law.  For purposes hereof, a “Change in Applicable Law” means the adoption, imposition,
promulgation, cancellation, modification or change in the interpretation or
application of, after the execution of this Agreement of any state, city,
county or other Applicable Law, which affects Contractor’s cost or performance
of the Work; provided, however, that a change in law or regulation relating to
(i) gross receipts, income, or other similar taxes, or (ii) immigration or
naturalization, shall not constitute a Change in Applicable Law for the
purposes of this Section 19.9.

19.10       Change Order Due to Escalation in Actual
Self-Performed Field Manual Services Costs. 
Contractor’s initial hourly costs for Actual Self-Performed Field Manual
Services are set forth in Exhibit 8B.  On
or before January 1 and July 1 of each year, Contractor shall submit to Owner a
report (the “Escalation Report”) showing the amount of increase or decrease in
such hourly cost that Contractor request for the upcoming six-month period,
based on changes in labor surveys and published reports of the cost for such
labor. Each Escalation Report shall contain (i) the man-hours of labor for the
remaining Work as set forth in Exhibit 8B, and (ii) such information as Owner
shall reasonably require to demonstrate the amount of labor cost escalation or
de-escalation reported in the indices or published reports for such hourly
labor.  Owner shall review and verify
each Escalation Report within  fifteen
(15) days of receipt.  To the extent that
such escalation or de-escalation is justified by the Contractor’s Escalation
Report, the Contract Price shall be adjusted by Change Order in the amount of
the increase in hourly costs multiplied by the remaining Work hours as set
forth in Exhibit 8B, without any mark-up for Target Fee. The exclusive method
for modifying the Contract Price based on increases or decreases in Contractor’s
hourly labor costs under Section 10.2.4 shall be a 

 

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Change Order
pursuant to this Section 19.10 and such Change Order shall be Contractor’s sole
and exclusive remedy for escalation of Actual Self-Performed Field Manual
Services Costs.

19.11       Change
Order Due to Escalation in Home Office Labor Costs and Actual Field Non-Manual
Labor Costs .  Contractor’s initial
hourly rates for Home Office Labor and Field Non-Manual Labor are set forth in
Exhibit 8D.  On or before January 15 of
each year, Contractor shall submit to Owner a Change Order Notice for a five
percent (5%) increase in such rates. 
Upon submission of a proper Change Order Notice and subject to the other
Sections of this Article 19, Contractor shall be entitled to a Change Order
increasing the Target Cost by the product of the increase in rates multiplied
by the man-hours for the remaining Work 
hours as set forth in Exhibit 8B, and the amount of the increase in the
Target Fee shall be calculated in accordance with Section 19.14.4.  The exclusive method for modifying the
Contract Price based on increases or decreases in Contractor’s hourly cost
under Section 10.2.2 and 10.2.3 shall be a Change Order pursuant to this
Section 19.11.

19.12       Change Order Due to Escalation of
Commodities.  Within fifteen (15)
days after the date that a firm and enforceable price is established for the
Commodity, Contractor shall submit a Change Order Notice. The Change Order
shall be based on the change in the value of the index as set forth in Exhibit
8F, the quantity to which this price is applicable and the baseline price for
the Commodity as set forth in Exhibit 8F. Upon submission of a proper Change
Order Notice and subject to the conditions of Section 10.2.5the other Sections
of this Article 19, upon Owner’s approval, Contractor shall be entitled a
Change Order to increase or decrease the Target Cost and the Target Fee in
accordance with Section 19.14.

19.13       Changes Involving Schedule Extensions.  Within five (5) Business Days of submission
of a Change Order Notice under Section 19.2.1, or within ten (10) Business Days
after submission of a Change Order Request under Section 19.2.2, the Contractor
shall prepare and submit, on an Open Book basis, an analysis of the delay, if
any, caused by such Change to the critical path progress of the Work.  Contractor shall supplement this analysis on
an Open Book basis with such other information as Owner may reasonably require.
Any Change Order extending any date in the Approved Project Schedule will only
extend such date(s) by a number of calendar days, at a maximum, equal to the
number of calendar days of delay Directly Caused to the actual critical path of
the Work at the time of the event giving rise to the Change Order and only to
the extent that such delay to the critical path progress of the Work has been
demonstrated by Contractor to Owner’s reasonable satisfaction.

19.14       Changes to the Contract Price.  Within five (5) Business Days of submission
of a Change Order Notice under Section 19.2.1, or within ten (10) Business Days
after submission of a Change Order Request under Section 19.2.2, the Contractor
shall prepare and submit, on an Open Book basis, an analysis of the impact of
the Change on the Cost Element for the System, Facility, or Project, as the
context may require.  

 

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Contractor shall
supplement this analysis on an Open Book basis with such other information as
Owner may reasonably require. The amount of an increase or decrease in the Cost
Element and Fee Element, if any, resulting from a Change will be determined and
will be included in the Change Order as follows:

19.14.1        in a lump sum amount proposed by
Contractor and accepted by Owner; or

19.14.2        if Owner does not accept the lump sum
amount proposed by Contractor, by unit prices agreed upon by the Parties; or

19.14.3        if neither of the methods set forth in
Sections 19.14.1 or 19.14.2 is agreed upon after good faith negotiation by the
Parties, Contractor will provide Owner with such purchase orders, invoices,
Subcontractor quotes and other documents and records as Owner may require to
verify, to its satisfaction, Contractor’s incremental Direct Costs or savings
of effecting such Change (or Directly Caused by the event necessitating such
Change) (“Contractor’s Additional Direct Costs or Savings”).  All equipment, materials, labor, equipment
rental and other items associated with such Change will be purchased by
Contractor at competitive market prices. 
Owner will, upon verifying Contractor’s Additional Direct Costs or
Savings associated with such Change, adjust the Cost Element by an amount equal
to such Contractor’s Additional Direct Costs or Savings, the calculation of
these shall be in accordance with the methodology used to develop the Target
Cost. Owner will make appropriate adjustments to the amount of the applicable
Incremental Payment Amount in the Approved Final Milestone Payment Schedule.

19.14.4        A Change Order that increases or
decreases the Cost Element shall also increase or decrease the Fee Element in
an amount calculated by multiplying the percentage Fee times the amount of the
increase or decrease in the Cost Element. 
The amount of increase or decrease in the Cost Element and the Fee
Element shall be stated separately on each Change Order. Adjustment in the Fee
Element as provided in this Section 19.14.4 shall be Contractor’s sole remedy
and sole means for adjusting its margins for profit, overhead, or similar costs
due to Changes in the Work, and Contractor expressly waives any claims for
modification of such margins based on cardinal change or other legal or
equitable theories.

19.15       Continued Performance Pending
Resolution of Disputes. 
Notwithstanding and pending resolution of any dispute with respect to a
Change, Contractor must proceed, upon written notice from Owner, with the
performance of any Change ordered by Owner. 
Contractor will be reimbursed provisionally on a time and material basis
for any such Change ordered by Owner that increases the scope of the Work.  For disputed Changes that do not increase the
scope of the Work, Contractor may request provisional reimbursement.  Should Owner deny such provisional
reimbursement, Contractor may submit a request for provisional reimbursement to
the DRB pursuant to Section 33.5.

 

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19.16       Owner’s Right to Offset Changes.  Whenever it is determined that any Changes
may require an extension of the Approved Project Schedule, Owner may, at its
sole discretion and to the extent possible, elect to offset all or any part of
such extension with other Changes (including but not limited to Changes to the
Contract Price) that will maintain the Approved Project Schedule.  Whenever it is determined that any Changes
may require an increase in the Contract Price, Owner may at its sole discretion
and to the extent possible, elect to offset all or any part of such increase
with other Changes (including but not limited to Changes to the Approved
Project Schedule) that will maintain the Contract Price.

19.17       Other Work on Site.  Owner reserves the right to perform, and to
award separate contracts for the performance of, construction or operations
related or ancillary to other work on the Site. Contractor will in good faith
coordinate its performance of the Work with any activities of Owner and/or
other contractors operating at the Site or at the Facility.

20. FORCE
MAJEURE

20.1         Force Majeure.  At each particular Site, an event of “Force Majeure” will mean any act or event that prevents or
delays the affected Party from performing its obligations under this Agreement
or complying with any conditions required by the other Party under this
Agreement if such act or event is beyond the reasonable control and not the
fault of the affected Party and such Party has been unable by the exercise of
all reasonable efforts to prevent, overcome or mitigate the effects of such act
or event.  To the extent the foregoing
conditions are satisfied, Force Majeure events will include, but not be limited
to:

20.1.1      acts of God, including lightning,
hurricanes, unusually severe storms, earthquakes and floods;

20.1.2      acts of the public enemy, war,
hostilities, terrorism, pandemic, civil or military insurrection, expropriation
or confiscation of facilities, public disorders, sabotage, riots; and

20.1.3      national or regional strikes and national
or regional labor disturbances; provided,
however, that unavailability of labor and strikes and labor disturbances
confined to the work forces of Contractor and/or its Subcontractors are
explicitly excluded from a Force Majeure event and are the sole responsibility
of Contractor;

provided, further,
that Force Majeure shall not include (i) reasonably anticipatable weather
conditions at the Site, (ii) events caused by negligence or willful misconduct
of the Party claiming Force Majeure, or (iii) failure by a Subcontractor to
perform in accordance with the terms of its subcontract or purchase order,
unless such failure is 

 

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caused by the
Subcontractor being a Party affected by Force Majeure as defined in this
Section 20.1.

20.2         Burden of Proof.  The burden of proof as to whether Force
Majeure has occurred will be upon the Party claiming a Force Majeure event.

20.3         Obligations Excused.  If either Party is rendered wholly or partly
unable to perform its obligations under this Agreement because of Force
Majeure, Contractor will be entitled to a Change Order pursuant to Section
19.3, and Owner will be excused from whatever performance is affected by Force
Majeure to the extent so affected; provided that:

20.3.1      the Party claiming Force Majeure, within
seventy-two (72) hours after knowing of the occurrence of or the effect of the
Force Majeure, gives the other Party written notice describing the particulars
of the occurrence;

20.3.2      any suspension of performance is of no
greater scope and of no longer duration than is reasonably required by the
Force Majeure;

20.3.3      the Party claiming Force Majeure uses its
best efforts to overcome or mitigate the effects of such occurrence;

20.3.4      when the non-performing Party is able to
resume performance of its obligations hereunder, that Party will give the other
Party written notice to that effect and will promptly resume such performance;
and

20.3.5      No Force Majeure event shall excuse Owner’s
payment obligations.

20.4         Costs.  Any additional Direct Cost incurred by Contractor
in performing Work, and Directly Caused by Force Majeure shall not be grounds
for an increase in the Target Cost by Change Order pursuant to Section 19.3
until the aggregate of such Direct Costs shall equal or exceed two million
dollars ($2,000,000), and Contractor shall only be entitled to a Change Order
based on Force Majeure for the additional Direct Costs incurred by Contractor
that exceed two million dollars ($2,000,000). 
Any costs incurred by Owner by reason of or Directly Caused by Force
Majeure will be borne by Owner.

21. AGGREGATE
LIABILITY

21.1         Aggregate Liability.  The aggregate liability of Contractor and its
affiliates under this Agreement for the Work performed at all three Facilities
shall not exceed the amount of three hundred million dollars ($300,000,000).

21.2         Sub-limits of Liability.

 

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21.2.1      Liquidated Damages and Warranty Work.  The maximum liability of Contractor and its
affiliates for liquidated damages under Sections 6.2.3.2, 7.1,  and 8.2, and for performance of warranty work
under Article 14 shall be for each Facility an amount equal to the Fee for such
Facility; provided, however, that should the Project Compensation be calculated
in accordance with Section 13.2.2.3 or 13.2.2.4, then such maximum liability
shall be as follows:

21.2.1.1        If Project Compensation is calculated in
accordance with Section 13.2.2.3, then the maximum liability shall be the
amount by which the Target Fee exceeds one-half (50%) of the difference between
Actual Cost and the sum of the Target Price plus 50% Contingency.

21.2.1.2        Blank.

21.2.1.3        Blank.

21.2.1.4        Blank.

21.2.1.5        If Project Compensation is calculated in
accordance with Section 13.2.2.4, then the maximum liability shall be limited
to 50% of the Target Fee.

21.2.2      Systems Equipment Subcontractors.  For Work performed or provided by the
Subcontractors providing Systems Equipment, the maximum liability of Contractor
and its affiliates for defects in such Work on all three Facilities shall be:

For the FGD Systems, an
amount equal to any amounts collected from the Subcontractors providing Systems
Equipment, plus fifteen million dollars ($15,000,000).

21.2.2.1        Contractor’s liability in connection
with the Mercury removal guarantee in Section 7.2.1.2 shall not exceed one
million dollars ($1,000,000) per FGD System

21.2.3      Other Subcontractors.  For Work not performed or provided by the
Subcontractors providing Systems Equipment, the maximum liability of Contractor
and its affiliates for services, materials, rework, or reperformance pursuant
to Sections 7.1.3, 7.2.2, and 7.3.2 at all three facilities shall be one
hundred million dollars ($100,000,000), and shall be further limited as follows
for such services, material, rework or reperformance at a Facility:

Morgantown=                      $100,000,000 maximum

Chalk
Point =                        $80,000,000 maximum

Dickerson=                            $80,000,000 maximum

 

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21.2.4      Facility Limits.  In any event, (i) liquidated damages pursuant
to Sections 8.2 and 6.2.3.2 for schedule delay at a single Facility will not
exceed ten percent (10%) of the portion of the Contract Price for that
Facility; (ii) liquidated damages under Section 7.1 based on failure to satisfy
performance guarantees at a single Facility shall not exceed five percent (5%)
of the Contract Price for that Facility; and the aggregate of (i) and (ii) shall
not exceed fifteen percent (15%) of the Contract Price for each Facility. For
the purposes of this Section 21.2.4, the Contract Price for a Facility shall be
calculated using the Target Cost for the Facility provided pursuant to Section
6.1.3, as adjusted by Change Order pursuant to Article 19.

21.3         Pursuit of Subcontractor Warranties.  Contractor shall use reasonable and good
faith efforts to recover warranty, re-work, and make good obligation amounts
from its Subcontractors and at Owner’s request shall assign to Owner all rights
of recovery Contractor may have against such Subcontractors.

21.4         Consequential Damages.  In no event shall either Party or an
affiliate of either Party be liable to the other Party, whether based on
contract, tort, strict liability, or otherwise, for special, incidental or
consequential losses or damages, including without limitation loss of profits
or revenue, loss by reason of plant shutdown, non-operation or increased
expense of operation, service interruptions, cost of purchased or replaced
power, claims of customers, cost of money, lost profits, loss of business
opportunity, loss of bonding capacity, loss of use of capital or revenue, or
loss or damage arising out of or related to occupational disease or
non-compliance with environmental law; provided, however, that the foregoing
limitation shall not be construed as a waiver or limit of liability of
Contractor (i) under the provisions of this Agreement that provide Owner with
specific remedies against Contractor (i.e. liquidated damages payable by
Contractor), or (ii) in cases of any breach of the Confidentiality Section 34.5
of this Agreement and any breaches of the patent indemnity by Contractor as
fully described in Section 28.3 of this Agreement and (iii) in cases of fraud
or willful misconduct.  Furthermore, the
Parties hereby expressly agree that any claims of third parties for which
Contractor has an indemnification obligation under Article 28 are not
consequential losses or damages.

21.5         Consequential Damages for Subcontractors.  In no event shall any Subcontractor be liable
to Owner, and in no event shall Owner be liable to any Subcontractor, whether
based on contract, tort, strict liability, or otherwise, for special,
incidental or consequential losses or damages, including without limitation
loss of profits or revenue, loss by reason of plant shutdown, non-operation or
increased expense of operation, service interruptions, cost of purchased or
replaced power, claims of customers, cost of money, lost profits, loss of business
opportunity, loss of bonding capacity, loss of use of capital or revenue, or
loss of damage arising out of or related to occupational disease or
non-compliance with environmental law; provided, however, that the foregoing
limitation shall not be construed as a waiver or limit of liability of any
Subcontractor (i) under the provisions of this Agreement or any subcontract
that provide Owner or Contractor with specific remedies against a Subcontractor
(i.e. liquidated damages payable by a Subcontractor), or (ii) in cases of any
patent infringement 

 

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indemnity or other
indemnity by a Subcontractor (iii) in cases of a false or misleading  statement in a lien waiver or (iii) in cases
of fraud or willful misconduct. 
Furthermore, any claims of third parties for which a Subcontractor has
an indemnification obligation are not consequential losses or damages.

21.6         Indemnity for Lessor Claims.
Mirant Mid-Atlantic shall defend, indemnify and hold Contractor and its
affiliates harmless against any claim, damage, liability, suit, or action
asserted against Contractor by any real property lessor of the Mirant
Mid-Atlantic, LLC Facilities (collectively “Lessor Claim”)
to the extent that such Lessor Claim would be barred by Sections 21.1, 21.2,
21.3 or 21.5.

22. SECURITY

22.1         Contractor’s Parent Company
Guarantee.  No later than ten (10)
Business Days after issuance of the NTP, Contractor shall  provide a parent company guarantee acceptable
to the Owner which shall guarantee all of Contractor’s obligations under this Agreement;
provided, however, that the obligations of the guarantor under such guarantee
shall be limited to three hundred million dollars ($300,000,000).

22.2         Contractor’s Letter of Credit.  Contractor shall provide a letter of credit
in form and substance acceptable to Owner (as shown in Exhibit 11) from a
mutually acceptable U.S. financial institution (“Letter of
Credit”) in the following amounts and at the following times:

22.2.1      Not later than ten (10) Business Days
after issuance of the LNTP, Contractor has provided a Letter of Credit in an
amount equal to the purchase order issued by Owner to Contractor for the Work
to be performed under the LNTP, excluding the value of the purchase order
allocated to Systems Equipment to be purchased from Subcontractors. Contractor
shall use good faith efforts to obtain from such Subcontractors, to the extent
commercially practicable, letters of credit securing the performance of the
Subcontractors. Such letters of credit shall be in the greatest amount
practicable and shall be in favor of and drawable by Owner until such time as
Contractor satisfies its obligation to provide the $50,000,000 letter of credit
required by Section 22.2.3.

22.2.2      Not later than ten (10) Business Days
after issuance of the INTP, Contractor shall amend the Letter of Credit or
provide a new substitute Letter of Credit equal to the amount of the purchase
orders issued by Owner to Contractor for the Work performed or to be performed
under the LNTP and INTP, excluding the value of the purchase order allocated to
Systems Equipment to be purchased from Subcontractors. Contractor shall use
good faith efforts to obtain from such Subcontractors, to the extent
commercially practicable, letters of credit securing the performance of the
Subcontractors. Such letters of credit shall be in the greatest amount
practicable and shall be in favor of and drawable by Owner until such time as
Contractor satisfies its obligation to provide the $50,000,000 letter of credit
required by Section 22.2.3.

 

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22.2.3      Not later than ten (10) Business Days of
issuance of the NTP for FGD Systems, Contractor shall amend the Letter of
Credit or provide a new substitute Letter of Credit equal to fifty million
dollars ($50,000,000). The Letter of Credit in this Section 22.2 shall remain
in effect and drawable by Owner until Substantial Completion of all Work for
the last System on each Facility whereupon, the amount of the Letter of Credit
will be stepped down by an amount proportionate to the relative Target Cost of
such Facility to the sum of the Target Costs for all three Facilities. The
Letter of Credit shall be promptly returned to Contractor upon the last System
of the last Facility achieving Substantial Completion.  To the extent that any replacement of a
Letter of Credit is required to maintain compliance with this Section 22.2,
Contractor shall deliver the replacement Letter of Credit to Owner no later
than thirty (30) days prior to the date when the existing Letter of Credit will
expire.  In the event of a failure to
comply with the preceding sentence, Owner shall be entitled to draw upon the
existing Letter of Credit prior to the expiration thereof and take such further
action to protect its interests pursuant to this Agreement.

22.3         Performance Bond and Payment Bond.  To further assure Contractor’s performance
under this Agreement, within ten (10) Business Days after the issuance of the
NTP for FGD Systems, Contractor will furnish to Owner a performance bond and a
payment bond each having a face value of one hundred and fifty-five million
dollars ($155,000,000).  The combined
penal sum of both bonds in the aggregate shall not exceed the face value of
either bond.  Such performance and
payment bonds shall be substantially in the form set forth in Exhibit 12.  The payment bond shall remain in effect and
drawable until Final Completion. The performance bond will remain in effect and
drawable until Substantial Completion. 
The face value of the performance bond shall be stepped down as each Facility
achieves Substantial Completion and the face value of the payment bond shall be
stepped down as each facility achieves Final Completion (the step-down being in
an amount proportionate to the relative target Cost of the Facility to the sum
of the Target Costs of all three Facilities). The payment bond shall be
promptly returned to Contractor upon the last Facility achieving Final
Completion. At Substantial Completion of the last Facility, the performance
bond provided at NTP shall be replaced with a performance bond covering all
obligations of Contractor under Article 14 and Sections 7.2.2 for the
Equivalent Availability Guarantee referred to in Section 7.2.1.3 with a penal
sum equal to ten percent (10%) of the Contract Price of the Project (the “Warranty Bond”).  In
no event shall the combined penal sum of the performance bond provided at NTP,
and the Warranty Bond be less than ten percent (10%) of the Contract Price for
the Project.

22.4         Owner Security.  No later than ten (10) Business Days of
issuance of the NTP for FGD Systems\, Owner shall provide a letter of credit in
form and substance acceptable to Contractor (as shown in Exhibit 11) from a
mutually acceptable U.S. financial institution (“Letter of
Credit”) for an amount of $55,000,000 (the “Owner
Security”).  Contractor can
request a change in Owner’s Security to an amount not to exceed $80,000,000 in
the event that Contractor’s committed cost exposure increases. 

 

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Contractor shall
include in such request all documents as requested by Owner to justify the
increase. If Owner is satisfied, Owner will amend the Letter of Credit to the
approved value. Such amendment shall be issued no later than Ten (10) business
days from such approval. The letter of credit in this Section 22.4 shall remain
in effect and drawable by Contractor until release of fifty percent (50%) of
the retention at Substantial Completion of each System, whereupon, the amount
of the letter of credit will be stepped down by an amount proportionate to the
relative Target Cost of the Facility to the sum of the Target Costs of all
three Facilities. The letter of credit shall be promptly returned to Owner upon
Substantial Completion of the last System at the last Facility and release of
the corresponding fifty percent of retention for that System. To the extent
that any replacement of a Letter of Credit is required to maintain compliance
with this Section 22.4, Owner shall deliver the replacement Letter of Credit to
Contractor no later than thirty (30) days prior to the date when the existing
Letter of Credit will expire.  In the
event of a failure to comply with the preceding sentence, Contractor shall be
entitled to draw upon the existing Letter of Credit prior to the expiration
thereof and take such further action to protect its interests pursuant to this
Agreement.  Upon the issuance of the
INTP, Owner shall provide to Contractor a parent company guarantee in a form
acceptable to Contractor and issued by Mirant North America, Inc., which shall
guarantee the payment obligations of the Owner under this Agreement and the EPC
Agreement up to the maximum amount of sixty-two million five hundred thousand
dollars ($62,500,000).

23. SUSPENSION
AND TERMINATION

23.1         Right to Stop Work for Cause.  If, due to Contractor’s failure (i) to
correct defective Work under Section 6.10.2, (ii) to meet its repair or
replacement obligations under Section 28.1; (iii) to meet its safety
obligations under Section 6.8; (iv) to meet its obligations to complete
Punch-List items as provided in Section 17.5; (v) to achieve Provisional
Acceptance  on or before the date that is
thirty (30) days after the applicable Guaranteed Provisional Acceptance Date,
or (vi) to perform the Work in accordance with the Approved Project Schedule
such that Owner can reasonably deduce that Contractor will not complete the
Work necessary to comply with the requirements for an outage in accordance with
Section 8.2.1.2, Owner shall be entitled to take any of the Owner-cure actions
under such Sections, then Owner may, by a written order signed by its
Authorized Representative, order Contractor to stop performing all or a portion
of the Work in order to allow Owner to take such actions. The foregoing right
of Owner to stop Contractor’s performance will not give rise to any duty on the
part of Owner to exercise this right for the benefit of Contractor or any other
person or entity. In addition, Owner, by written order signed by its Authorized
Representative, may order Contractor to stop performance if the activities of
Contractor or Contractor’s Subcontractors reasonably appear to Owner to cause
or threaten to cause damage to the property of Owner. In the event of such a
stop order, Contractor will not be entitled to a Change Order extending the
Approved Project Schedule. The cost of any delays experienced by Contractor as
a result of orders issued by Owner ordering Contractor to stop performance
hereunder will be borne by Contractor. Owner’s right to stop work under this
Section 23.1 will be without prejudice to any other right or remedy Owner may
have under this Agreement.

 

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23.2         Right to Suspend Work for
Convenience.  Owner may at any time
and from time to time, by a written order signed by its Authorized
Representative, suspend (and later reinstate) all or a portion of the Work
without terminating this Agreement. Upon receipt of such order, Contractor will
immediately suspend its performance of the Work. In the event of a suspension
of the Work, Contractor shall use its best efforts to mitigate potential delays
to the date of Substantial Completion and to minimize the amount of personnel
and equipment that is idled and the costs associated with such suspension. If
Owner suspends the Work pursuant to this Section, then Contractor will be
entitled to a Change Order as described in Section 19.4.

23.3         Suspension by Contractor.  Subject to Sections 19.15 and 33.6 for
amounts that are disputed in good faith, if Owner fails to pay to Contractor
any payment when due under this Agreement and such failure continues for
fifteen (15) calendar days after written notice thereof has been received by
Owner from Contractor, and so long as such notice from Contractor to Owner was
given at least five (5) days after payment was due, then Contractor may suspend
the Work until payment of the amount owing has been received.

23.4         Termination by Owner for Convenience.

23.4.1      Right to Terminate.  Owner may, at any time and for any reason,
terminate all or any part of this Agreement (provided that termination of part
of the Agreement shall not be for substantially the entire scope for a
Facility, unless Owner decides not to proceed with the Work for the Facility)
for Owner’s convenience and without cause by providing Contractor with written
notice regarding the same. In the event of
partial termination, the remaining Work under this Agreement shall be performed
in accordance with all of the terms and conditions of this Agreement, and the
Target Cost and Fees will be increased or decreased in proportion to the value
of the Work terminated.

23.4.2      Termination Payment.  Within thirty (30) calendar days of Contractor’s
having received notice from Owner under Section 23.4.1, Owner will reimburse
Contractor for completed Work and work-in-progress, applicable vendor
cancellation charges, demobilization costs, and reasonable costs to bring the
work to an orderly conclusion (collectively the “Termination
Payment”).  The Termination
Payment will be Contractor’s sole and exclusive remedy for such
termination.  Owner will not be liable to
Contractor, any Subcontractor or any other party for any damages or indirect,
special, incidental costs or consequential liability resulting from such
termination, including without limitation, prospective profits on Work not
performed or other consequential or incidental damages.  The Parties recognize, agree and acknowledge
that Owner’s termination right hereunder is a permitted action under this
Agreement (and not a breach hereof or a default hereunder), which right carries
with it the obligation to make the Termination Payment.  In the event of termination by Owner for
convenience, Contractor’s liability limitations that are expressed as a
percentage 

 

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of the Contract Price
shall instead be calculated as a percentage of the actual compensation paid to
Contractor.

23.4.3      Withholding/Conditions Precedent.  Notwithstanding Section 23.4.2 Owner may
withhold from such Termination Payment any unpaid amounts due from Contractor
to Owner under this Agreement. 
Furthermore, the following will be conditions precedent to Owner’s
obligation to pay Contractor the Termination Payment:  (i) Contractor’s executing and delivering all
such documents and taking all such steps, including the assignment of
Contractor’s contractual rights, as Owner may require for the purpose of fully
vesting in Owner all rights, title and interests of Contractor in and to all
subcontracts, purchase orders, warranties, guarantees and other agreements
pertaining to the Work; (ii) Contractor’s executing and delivering to Owner all
waivers and releases, in form and substance acceptable to Owner, required to
establish that the Systems, the Facility and the Site, and any and all
interests, estates or improvements related thereto, are free from any and all
claims, liens, security interests or encumbrances arising out of or in
connection with performance by Contractor or any Subcontractor of the Work;
(iii) Contractor’s delivering to Owner any other information reasonably
requested by Owner; and (iv) Contractor’s delivery to Owner of assignments of
any agreements with Subcontractors for which Owner requests assignment.

23.4.4      Return of Security In the event of
termination for convenience pursuant to this Section 23.4, and subject to all
of the rights of the Parties under the Contract Documents, (i) Owner shall
return the original Letter of Credit issued by Contractor pursuant to Section
22.2 to Contractor for cancellation; (ii) Contractor shall return the original
Letter of Credit issued by Owner pursuant to Section 22.4 to Owner for
cancellation; (iii) Owner shall return the original Payment and Performance
Bond  issued by Contractor pursuant to
Section 22.3 to Contractor for cancellation; and (iv) Owner shall pay all
undisputed retainage to Contractor. Upon request of either Party, the exchange
of Letters of Credit and Payment and Performance Bonds pursuant to subparts
(i),  (ii) and (iii) shall be
simultaneous.

23.5         Termination by Owner for Cause.  If a Contractor Event of Default occurs, then
Owner may, without prejudice to any other right or remedy Owner may have under
this Agreement and notwithstanding any other provision under this Agreement, at
any time terminate all or any part of this Agreement, such termination becoming
effective seven (7) calendar days after notice thereof is provided from Owner
to Contractor.  For purposes hereof, a “Contractor Event of Default” will be deemed to have
occurred if:

23.5.1      Insolvency.  Contractor is adjudged as bankrupt or
insolvent, makes a general assignment for the benefit of its creditors, has a
trustee or receiver appointed for its property, or files a petition to take
advantage of any debtor’s act;

 

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23.5.2      Delay After Provisional Acceptance.  (a) Provisional Acceptance of an FGD System
has failed to occur on or before the date that is thirty (30) calendar days
after the Guaranteed Provisional Acceptance Date for such System as adjusted by
Change Order, and (b) Contractor has not provided an acceptable recovery plan
to Owner;

23.5.3      Key Personnel.  Breach by Contractor of Article 9 of this
Agreement (“Key Personnel”); or

23.5.4      Material Breach.  Contractor otherwise refuses to perform, or
commits a material breach, of any of the terms of this Agreement and fails to
cure such breach within a reasonable time after notice.

Upon such
termination or partial termination Owner may take possession of the applicable
portion of the Site and of the applicable materials, equipment (including,
without limitation, Construction Equipment and Systems Equipment) and tools
thereon owned by Contractor, may take assignment of the applicable Contractor’s
agreements with Subcontractors, and may finish the applicable Work by whatever
method Owner may deem expedient.  If the
costs of finishing the applicable Work exceed the unpaid balance of the
Contract Price for such Work, then Contractor will pay the difference to Owner,
subject to the provisions relating to limitations of liability and cost sharing
set forth in this Agreement.  Such right
of termination for cause and right to take possession shall be in addition to
and not in limitation of Owner’s other rights and remedies under the Agreement
or, should Owner have exhausted any non-exclusive specific remedy under this
Agreement, under law or equity.

23.6         Actions Upon Termination.  Upon receipt of written notice from Owner of
termination of this Agreement pursuant to either Section 23.4 or 23.5,
Contractor will (i) cease operations as directed by Owner in the notice; (ii)
take all actions necessary, including such actions as Owner may direct, for the
protection and preservation of all Systems Equipment, Construction Equipment
and the Systems (in whatever stage of completion); and (iii) terminate all
existing subcontracts and purchase orders for the portion of the Work
terminated (unless and to the extent Owner directs Contractor to assign such
subcontracts and/or purchase orders to Owner pursuant to Section 23.4.3) and
enter into no further subcontracts and purchase orders in connection with the
Work.

23.7         Survival.  Termination of this Agreement will not
relieve Contractor of any obligation hereunder which expressly or by
implication survives termination hereof, including, without limitation, its
liabilities, warranties, and indemnification obligations under Article 28 with
respect to any acts or omissions prior to the effectiveness of such termination
or arising out of such termination.

24. ASSIGNMENT

Contractor
may not assign its rights or obligations under this Agreement without the prior
written consent of Owner.  Owner may
assign its rights and obligations under 

 

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this Agreement at
any time to any future owner of the Facility and to any lender or other
financing entity.  When requested by
Owner, Contractor will execute and return a consent to assignment in a form
acceptable to such lender, financing entity or future owner. Subject to the
foregoing, all of the rights, benefits, duties, liabilities and obligations of
the Parties will inure to the benefit of and be binding upon their respective
successors and permitted assigns.

25. INSURANCE

25.1.        Contractor’s
Insurance.  Prior to commencement of
the Work, Contractor shall purchase and maintain the following insurance coverages
and limits until the earlier of Final Completion or termination of this
Agreement except for Products and Completed Operations coverage as described in
the sections below.  The limits of
coverage required by this Agreement may be satisfied by a combination of
primary and excess (or umbrella) insurance policies provided that the form of
the excess/umbrella coverage follows the form of the primary liability
insurance.  All insurance obtained
by Contractor hereunder shall be written by a company or companies with a Best’s
rating of no less than A: VII or equivalent. 
Such company or companies must be lawfully authorized to do business in
the jurisdiction in which the Facility is located or where any services related
to this Agreement are performed.

25.1.1      Casualty Insurance.

25.1.1.1   Commercial General Liability Insurance.  Commercial
General Liability Insurance providing coverage of Ten Million Dollars
($10,000,000), reduced to Two Million Dollars ($2,000,000) between Substantial
Completion and Final Completion, each occurrence as will protect Contractor,
Owner, Owner’s affiliates, employees, representatives, agents and the Financing
Parties from third party bodily injury (including death) and property damage
claims which may arise out of or result from Contractor’s operations under the
Agreement and for which Contractor, Owner or the Financing Parties may be
legally liable.

25.1.1.1.1                Liability
insurance in Section 25.1.1.1 shall be written on an occurrence form and
include Comprehensive Form, Premises and Operations, Independent Contractors,
Products and Completed Operations, Blanket Written Contractual, Broad Form
Property Damage, Explosion, Collapse and Underground Hazard (XCU coverage),
Sudden and Accidental Pollution and Personal Injury liability coverages.  A cross liability and severability of
interest clause shall be included. 
Blanket Contractual Liability Insurance shall specifically include
Contractor’s indemnification obligations under this Agreement.

 

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25.1.1.1.2       Products and Completed Operations
coverage shall continue for two (2) years after the earlier of Substantial
Completion of the Work, and termination of this Agreement.

25.1.1.2      Business Automobile Liability Insurance.  Business Automobile
Liability Insurance, including coverage for the operation of all owned,
non-owned and hired vehicles including trailers with limits of liability for
bodily injury (including death) and property damage of $5-Million Dollars
($5,000,000), reduced to Two Million
Dollars ($2,000,000) between Substantial Completion and Final Completion,
combined single limit per occurrence (and with no aggregate limit).  Such insurance shall cover occurrences both
at and away from the Facility Site.

25.1.2      Workers’ Compensation and Employer’s Liability Insurance.  Contractor shall provide and maintain Workers’
Compensation Insurance or its substantial equivalent on its employees for
statutory obligations imposed by Workers’ Compensation or Occupational Disease
laws and regulations of the applicable jurisdiction, including coverage for the
benefits provided under the United States Longshoremen & Harbor Workers’
Act, the Jones Act and other appropriate extensions, with Employer’s Liability
Insurance (Coverage B) including Maritime, to limits of One-Million Dollars
($1,000,000) each accident.  Coverage
under the Broad Form All States extension shall be included.  For comparable exposures falling outside the
United States, Contractor shall comply with all legally required obligations
related to employee injuries, including obligations related to compensation for
medical costs and/or lost wages.

25.1.3
     Contractor’s Property.  Contractor shall be responsible for and shall
bear the risk of loss and damage to any property including but not limited to
(i) tools and equipment of Contractor (owned or rented) and (ii) any property
(other than the Work) for which it is responsible or that is in its care,
custody and control, wherever located, to the extent that such property is not
covered under Owner’s Builder’s Risk insurance. 
Any insurance provided for property owned or rented by Contractor shall
be at Contractor’s expense.  All
deductibles with respect to Contractor’s insurance shall be for the account of
Contractor.

25.1.4      Transit Insurance.  Where Contractor has responsibility to coordinate
transportation, whether ocean or air (inland transit being by Owner pursuant to
Section 25.1.6), Contractor shall bear responsibility for providing transit
coverage on an all-risk basis from warehouse to warehouse, unless total risk of
loss in transit is borne by the shipper or supplier, or Owner provides
notification that it will carry such coverage. 
Coverage shall include lightering operations and loading and unloading
exposures therefrom and provide a limit of full replacement value of each conveyance.  Any marine inspections and/or survey fees
under this coverage shall be for the account of Contractor.

25.1.5      Other Insurance.

 

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25.1.5.1        International
Insurance.  Additional Insurance may
be required in accordance with the customs of the country where any part of the
operation of this Agreement will occur.

25.1.5.2        Differences in
Condition Policy.  Difference in
Conditions Policy with the applicable limit required in Section 25.1.1 above to
complete gaps left by the local policy that are customarily included in a
policy issued in the United States.

25.1.6      General Insurance Conditions.  Other than coverage under Builder’s All Risk
or All Risk Property and Inland Marine Insurance to be procured by Owner
pursuant to Section 25.2.1, all coverages provided by Contractor shall be
primary coverage for incidents arising from Contractor’s work under the
Agreement and pay without contribution from any other coverage procured or
maintained by Owner, its affiliates and/or the Financing Parties regardless of
whether or not Owner has similar coverage. 
Contractor shall bear all cost for payment of any and all deductibles or
self-insured retentions under its policies and shall remain solely and fully
liable for the full amount of any claim or item not compensated by
insurance.  The Contractor’s deductible
shall encompass the costs of defense, including court costs and attorney’s
fees.  Except with respect to
Professional Liability, Worker’s Compensation/Employer’s Liability coverages
and insurance on Contractor’s property, all coverages required to be carried by
Contractor under this Agreement shall be endorsed to name Owner, its
affiliates, employees and the Financing Parties as additional insureds and
other parties reasonably requested by Owner for their imputed liability as a
result of Contractor’s operations hereunder. 
Unless prohibited by law, Contractor shall and require its insurers to
waive any right of recovery, under subrogation or otherwise, against Owner, its
affiliates, employees and the Financing Parties.

25.1.7      Other Duties, Representations, and Obligations.

25.1.7.1   Certificates of Insurance.  Certificates
of Insurance will be provided on an industry standard ACORD Form 25 shall be
filed with Owner prior to commencement of the Work.  These Certificates and the insurance polices
required by this Agreement shall contain a provision that the coverages
afforded under Contractor’s policies shall not be modified, canceled, allowed
to expire, or the limits changed without first giving at least thirty (30) days
prior written notice thereof to Owner. 
No such cancellation, modification or change shall affect Contractor’s
obligation to maintain the insurance coverages required by the Agreement.  Upon expiration of all required policies,
renewal certificates shall be sent to Owner for verification of continued
compliance of Contractor’s Insurance requirements under this Agreement.

 

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25.1.7.2        Violation of Insurance Terms.  Contractor shall not violate or knowingly
permit any violation of any conditions or terms of the policies of insurance
required by this Agreement.

25.1.7.3        Failure to
Maintain Insurance.  In the event Contractor neglects, refuses or
fails to provide or maintain any of the insurance required under this
Agreement, or if such insurance is canceled for any reason, Owner shall have
the right, but not the obligation, to procure or maintain the same.  In the event Owner does procure or maintain
such insurance, Owner shall have, in addition to any and all other, available
remedies, the right to recover from Contractor all of the costs associated with
procuring or maintaining such insurance.

25.1.7.4        No Waiver of Liability.  The
foregoing provisions requiring Contractor to carry insurance shall not be
construed in any manner as waiving, restricting or limiting the liability of
Contractor as to any obligations imposed under this Agreement, whether or not
same are, or may be, covered by insurance. 
In addition, the maintenance of Contractor’s insurance shall not in any
way operate to limit the liability of Contractor to Owner under this Agreement.

25.1.7.5        Additional Insurance.  Upon a
reasonable written request from Owner, Contractor shall provide as soon as
practical additional insurance, including increased coverage and /or limits of
liability, as it deems appropriate for the risk involved, and Owner will pay
Contractor the actual premium cost thereof.

25.1.7.6        Premium Audit.  With respect to any special policies or
additional limits procured as a result of this Agreement, Contractor hereby
grants permission to Owner, or Owner’s representative, to audit any request for
premium reimbursement including permission for Owner to contact and receive its
broker’s certification.

25.1.8      Subcontractor’s Insurance.

25.1.8.1        Levels of
Coverage.  Contractor shall require all Subcontractors of
any tier that may work on or in connection with the Project to maintain the
coverages required in this Article (or at least equivalent coverage); provided
however, that Contractor may vary the limits of such coverage of subcontractors
depending on the services provided, but such limits shall be comparable to
those customarily provided by others within similar size and scope of
business.  In no event shall the
insurance requirements be deemed to limit the liability or responsibility of Contractor
or any of its Subcontractors to Owner.

 

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25.1.8.2      Waiver of Rights.  Contractor
shall require all tiers of Subcontractors to waive the rights of recovery
against Owner, its affiliates, employees and the Financing Parties.

25.2.        Owner’s Insurance.

25.2.1      Builder’s All Risk.  Owner shall provide and maintain for the
duration of the Project Builder’s Risk Insurance or All Risk Property Insurance
written on an “all-risk” form insuring all real and personal property of Owner
at the Facility Site, on a replacement cost basis while under construction and
during any testing, including hot testing, as well as operating property
insurance for the existing and completed Facility through the Warranty
Period.  This insurance includes the interests of Owner, Financing Parties and
Contractor (including Contractor’s affiliates and Subcontractors). Owner shall
provide to Contractor a certificate of insurance confirming the status of
Contractor as an additional insured on the Project Builder’s Risk or All Risk
Property Insurance policy.  The Insurance
policy shall provide for a waiver of all rights of subrogation against the
Financing Parties and Contractor (including Contractor’s affiliates and
Subcontractors).  Contractor will be
responsible for any deductible or self-insured retention under this
insurance up to a maximum of (US$5,000,000) for each and every occurrence.  The
foregoing shall in no way affect Contractor’s obligation for any breach of the
Warranty as described in the Terms and Conditions of the Agreement.  The furnishing of said insurance by the Owner
shall in no way relieve, or limit, or be construed to relieve or limit, the
Contractor or Subcontractors of any tier of any other responsibility or
obligation otherwise imposed by this Agreement.

25.2.2      Exclusion from Builder’s Risk.  Contractor
is aware that insurance companies providing “all-risk” Builder’s Risk insurance
usually exclude several classes of unusual risk.  Upon Contractor review and concurrence,
Contractor agrees that the terms of the Builder’s Risk policy shall define any
exclusion, which may reasonably exist.

25.2.3      Contractor Compliance.  Contractor
will promptly comply with the recommendations of the insurance carriers so that
said insurance carriers will continue to provide the coverage to be maintained
by the Owner pursuant to this Agreement at a reasonable premium.

26. TIME

The
time periods, time deadlines and other temporal descriptions (collectively “Time”) contained in this Agreement are a material part of
the bargain between the parties and are considered essential to the performance
of the Parties under this Agreement. 
Furthermore, all references to Time are considered fixed and absolute,
subject only to the cure periods expressed in this Agreement, and Change Orders
pursuant to Article 19.

 

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27. TAXES

27.1         Taxes.  Contractor will administer, pay for and
furnish to the appropriate taxing authorities all required information and
reports in connection with, all Taxes. 
Contractor shall be responsible for paying all Taxes associated with the
Work, except as otherwise provided in Sections 27.2 and 27.3 below. If and to
the extent Owner is legally required to pay any such Taxes associated with the
Work, Contractor will promptly reimburse Owner for the full amount of such
Taxes paid by Owner.

27.2         Sales Taxes.  Owner will provide Contractor with a Maryland
Exempt Use Affidavit, for the express purpose of allowing Contractor to use the
Affidavit to procure Systems Equipment free of any and all sales or use taxes,
in and outside of the State of Maryland. 
Should the Affidavit not be applicable to any item of Systems Equipment,
then Contractor shall pay the tax due to the relevant taxing authority, and
Owner shall reimburse Contractor for such tax in the Milestone Progress Payment
applicable to the subject item of Systems Equipment.  Such reimbursement shall be outside the EPC
Total Compensation.

27.3         Property Taxes.  Owner will be responsible for all property
taxes assessed on the Site and on Systems Equipment.  Contractor will be responsible for paying, and
shall administer, any property taxes assessed against, or on, Construction
Equipment.

28. INDEMNIFICATION

28.1         Property Damage.  In addition to and not in limitation of its
compliance with all Applicable Laws and Applicable Permits (including, without
limitation, those relating to work and occupational safety and health measures)
Contractor will take all reasonable precautions to avoid any damage to person
or property at the Site or any adjacent areas due to its activities at the
Site.  Subject to Section 28.2, if
Contractor or its Subcontractors cause any property damage at the Site during
the course of the performance of the Work, and to the extent Owner is not
reimbursed for such damages as an insured or an additional insured under any
policy of insurance, then Contractor will bear the cost of same; provided,
however, that for any such cost covered by Contractor’s insurance, the portion
of such cost paid by Contractor as an insurance deductible shall be treated as
Guarantee Cost pursuant to Section 11.3; provided further that the maximum
amount of such costs that may be treated as Guarantee Costs shall be five
hundred thousand dollars ($500,000) for each occurrence.  If, in the reasonable opinion of Owner,
Contractor has failed to fulfill its obligations under the foregoing sentence
within a reasonable period of time, then Owner may repair or replace or cause
to be repaired or replaced any damaged property and take all such actions as it
deems necessary in order to return the affected part of the Site or any
adjacent areas to the condition in which they were in prior to such
damage.  All costs and expenses related
to such actions of Owner will be for the account of Contractor, and Contractor
will promptly reimburse such amounts to Owner, subject to the limitation set
forth in Section 28.2 and Article 21. 
Owner’s taking such actions will not relieve Contractor of its
obligations under this Agreement and Applicable Laws or constitute a waiver of
any of Owner’s rights or a mitigation or diminution of any of Contractor’s
obligations under this Agreement.  

 

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Contractor
understands and agrees that it shall not interfere, and shall coordinate and
cooperate, with the Owner, Owner’s Separate Contractors and other contractors
at the Project Site to fully perform the Work with no or minimal impact to any
other party.

28.2         Limitation on Property Damage
Indemnification.  Notwithstanding
anything to the contrary, Contractor’s liability for damage to the Work under
Section 28.1 shall be limited to the deductible of the Builders All Risk and
Liability Insurance to be procured by Owner pursuant to Section 25.2 hereunder,
and Contractors Liability for damage to the existing Facilities shall be
limited to the deductible of Owner’s property insurance.  To the extent that Contractor damages any
personnel or property of another Owner authorized party at the Project Site by
or through its negligence, and such damage is not covered by any applicable
insurance policy, then Contractor shall be and remain liable for such damage.

28.3         Royalties and License Fees.  Contractor will pay all royalties, license
fees and the like, if any, for any tangible or intangible property or software
or any other intellectual property rights including, without limitation,
materials, methods, processes and systems used, purchased or provided by or on
behalf of Contractor for incorporation into a System. In performing the Work,
Contractor will not incorporate into a System any materials, methods, processes
or systems which involve the use of any confidential information, intellectual
property or proprietary rights which Owner or Contractor does not have the
right to use or which may result in claims or suits against Owner or Contractor
arising out of claims of infringement including, without limitation, of any
domestic or foreign patent rights, copyrights, trademarks or service marks, or
other proprietary rights, or applications for any such rights, or unauthorized
use of confidential information.

28.4         Operation of Systems.  The operation and maintenance of the Systems
will be within the exclusive control of Owner. The Parties acknowledge that, in
operating and maintaining the Systems, Owner will be following the instructions
set forth in the operating and maintenance manual provided to Owner by
Contractor under Section 6.5.6. Owner agrees to indemnify and save Contractor
harmless from expense and liability (including reasonable attorney’s fees)
incurred by or imposed upon Contractor based upon injury to person (including
death) or damage to tangible property resulting from Owner’s operation or
maintenance of the Systems in violation of the operating and maintenance manual
provided under Section 6.5.6.

28.5         No Liens or Encumbrances.  Contractor warrants and guarantees that good
and clear title to the Systems, the Systems Equipment and all materials and
supplies provided pursuant to this Agreement will pass to Owner free and clear
of all claims, liens, security interests and other rights and encumbrances.

28.6         Contractor’s Indemnities for
Personal Injury or Property Damage. 
To the extent of Contractor’s or its Subcontractor’s negligence or
fault, Contractor hereby assumes liability for, and will indemnify, defend and
hold harmless Owner and its respective shareholders, members, partners,
affiliates, employees, and representatives 

 

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(the “Owner Indemnitees”) from and against liability (including
any strict liability), claims, suits, actions, costs (including attorneys’
fees), expenses, losses or judgments that may be imposed on, incurred by or
asserted against any Owner Indemnitee arising out of personal injuries
(including wrongful death) or any third party property damage arising from the
Work.

28.7         Other Contractor’s Indemnities.  Contractor hereby assumes liability for, and
will indemnify, defend and hold harmless Owner Indemnitees from and against
liability (including any strict liability), claims, suits, actions, costs
(including attorneys’ fees), expenses, losses or judgments that may be imposed
on, incurred by or asserted against any Owner Indemnitee arising out of (i) the
release or threatened release by Contractor or its Subcontractors, of any
Hazardous Substances on the Site or any areas adjacent thereto that are brought
onto the site by Contractor or its Subcontractors, (ii) the violation by
Contractor or its Subcontractors of any Applicable Laws and/or Applicable
Permits, (iii) any claim or allegation that any Systems Equipment, Construction
Equipment or other equipment, materials or information provided by Contractor
or any Subcontractor in connection with its performance of the Work constitutes
an infringement of any patent, trade mark, trade secret or confidential
information, copyright or proprietary rights of any kind belonging to or
claimed by any third party, or (iv) any Subcontractor liens, claims of lien or
similar encumbrances arising in connection with any Subcontractor claims.

28.8         No Limitation to Workers’ Benefits.  In any and all claims against any Owner
Indemnitee or any of their agents or employees by any employee of Contractor or
any Subcontractor, the indemnification obligation under Section 28.6 above will
not be limited in any way by any limitation on the amount or type of damages,
compensation or benefits payable by or for Contractor or any Subcontractor
under workers’ or workmen’s compensation acts, disability benefit acts or other
employee benefit acts.

29. GOVERNING
LAW

This
Agreement will be governed in all respects by the laws of the State of New
York, U.S.A. without giving effect to any choice of law ruled thereof which may
direct the application of the laws of another jurisdiction.  Subject to the Dispute resolution Article 33,
any action arising out of, or related to, this Agreement or the Project shall
be brought in a court of competent jurisdiction sitting in the Borough of Manhattan,
City of New York, New York, U.S.A. and the Parties consent to jurisdiction and
venue in such court.

30. PERMITTING

30.1         Responsibility for Permitting.  Responsibility for permitting is set forth in
Exhibit 4.  For permits for which Owner
is responsible, Contractor shall provide technical support and reasonable
assistance in support of Owner’s application for such permits.  For permits for which Contractor is
responsible, Owner shall provide reasonable assistance in support of Contractor’s
application for such Applicable Permits.

 

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30.1.1      Owner’s Permits Required for
Construction. With respect to each FGD System, Owner shall obtain all
permits as required for construction for which it is responsible on or before
September 1, 2007. Should Owner fail to obtain such permits by such date, then
by Change Order pursuant to Sections 19.7 and 19.13, and subject to Section
19.16, the milestone identified in Exhibit 15 as “Ready for Flue Gas to
Scrubber” and the Guaranteed Provisional Acceptance Date for such System shall
each be extended day-for-day for each day of delay in obtaining such permits.

30.1.2      Permission to Begin Installation of
Pilings  With respect to each FGD
Systems, Owner shall use good faith efforts to obtain permission for Contractor
to begin installing the necessary piles at the Site on or before August 1,
2007. Should Owner fail to obtain such permission, then by Change Order pursuant to Sections 19.7 and 19.13, and subject to Section
19.16, the milestone identified in Exhibit 15 as “Ready for Flue Gas to
Scrubber” and the Guaranteed Provisional
Acceptance Date for such System shall each be extended day-for-day for each day
of delay in obtaining such permission.

30.2         Other Permits.  To the extent that any permits are required
that are not listed in Exhibit 4, then Owner will obtain and pay for all
environmental and operating permits, and Contractor will obtain and pay for all
construction permits.

31. SITE
CONDITIONS

31.1         Geotechnical Study.  The Contractor shall perform and have full
responsibility for the comprehensive geotechnical study (the “Geotechnical Study”) which shall indicate the results of
Contractor’s full investigation, discovery, and conclusions regarding the
subsurface conditions and all other geotechnical issues at the Site. The findings
and conclusions of the Geotechnical Study shall be incorporated into the design
of the Project.

31.2         Special Site Characteristics.  Prior to issuance of NTP, Contractor shall
thoroughly inspect the Site and fully familiarize itself with the structures,
features, characteristics and conditions of the available working space and the
ongoing operations of the Facility. Contractor shall ascertain the most
suitable means and methods for executing and delivering the Work in accordance
with this Agreement, and shall employ such means throughout its performance of
the Work.

31.3         Contractor’s Knowledge of Conditions.  Contractor will be responsible for having
taken all steps necessary to ascertain the suitability of the location of the
Work, and the general and local conditions which may affect the Work or the
scheduling or cost thereof. Failure by Contractor to fully acquaint itself with
all conditions which may affect the Work, such as transportation, handling,
storage of materials, normal weather patterns and ambient conditions,
Applicable Laws, Applicable Permits, Taxes, insurance, and the character and
availability of labor, consumables, supplies, Systems Equipment, 

 

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Construction
Equipment, the nature and timing of work being performed by other contractors
and the facilities needed preliminary to and during the performance of the
Work, will not relieve Contractor of its responsibilities under this Agreement.

31.4         Sub-Surface Site Conditions.  Contractor agrees that each Site is or will
be made by Contractor satisfactory for performance of the Work in accordance
with the Approved Project Schedule and for
the Contract Price (except as the Approved Project Schedule and Contract Price
may be adjusted in accordance with Article 19). 
Contractor expressly assumes the risk of any sub-surface conditions
relating to soils, water, or rock that may affect the performance of the Work
that could reasonably have been deduced from or revealed by the Geotechnical
Study described in Section 31.1 of this Agreement.

32. SUBCONTRACTORS

32.1         Approved Subcontractors.  Owner will have the right to approve any and
all Subcontractors from whom Contractor or its Subcontractors may obtain bids
to subcontract portions of the Work. In no case shall Owner’s approval of any
subcontract impose on Owner any responsibility for the Work or relieve
Contractor of any of its obligations under this Agreement. Owner’s approval of
Contractor’s proposed Subcontractors of any tier will not be unreasonably
withheld.  If Contractor receives a
disapproval notice for any Subcontractor it shall not use or utilize such
Subcontractor. Those approved Subcontractors are listed in Exhibit 1.
Contractor may also have
portions of the Work performed by its affiliates, in which
event the Work shall be awarded by competitive sourcing and shall be subject to
all provisions of Article 10.

32.2         Subcontractor and Vendor
Identification.  Prior to issuance of
the NTP, Contractor shall identify all equipment and erection Subcontractors or
potential Subcontractors that Contractor will employ to complete the Work.  Contractor shall not add any additional
Subcontractors after issuance of the NTP without Owner’s prior approval.

32.3         Substitute Contractors.  If Contractor proposes to substitute a
non-preapproved subsupplier, the subsupplier’s credentials shall be submitted
to Owner for approval.  Sufficient data
must be provided to Owner in a timely manner to prove that the proposed
equipment is of an equivalent quality and has proven operation in similar
service conditions, including capacity, to that provided by the pre-approved
subsuppliers.  If an offshore subsupplier
is proposed, contractor shall provide information providing satisfactory
domestic stockpiling of any required spare parts.

32.4         Purchase Orders and Subcontracts.  Except as otherwise expressly agreed or
directed by Owner, Contractor will ensure that each Subcontractor with whom
Contractor has a direct contract is bound to Contractor to the same extent that
Contractor is bound to Owner hereunder. Contractor will use in connection with
the Work such Contractor-prepared purchase orders, contracts, subcontracts,
material requisitions, terms and conditions and similar purchasing forms as are
generally used from time to time by Contractor, however, these forms shall be designed
to facilitate an Open Book analysis of 

 

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underlying costs
related to the Work. As a condition to Final Completion, Contractor will
provide Owner with copies of all purchase orders, contracts, subcontracts and
material requisitions relating to such System (unpriced for any Work being
performed on a lump sum pricing method). 
Contractor shall purchase the DCS equipment and software on the terms
and conditions for purchase of same by Owner pursuant to the Master Agreement
between Mirant Services LLC and Invensys Systems, Inc dated March 26, 2007,
(the “DCS Master Agreement”) a copy of which
was provided to Contractor prior to the Effective Date. Contractor’s
responsibility to Owner under this Agreement for the DCS equipment shall be
equal to but no higher than the obligations of the DCS Contractor for the DCS
Equipment under the DCS Master Agreement.

32.5         Subcontractor Warranties.  Except as otherwise expressly agreed or
directed by Owner in writing, Contractor will procure from suppliers standard
warranties and guarantees with respect to the Systems Equipment.
Notwithstanding any failure of Contractor to obtain such a warranty from a
supplier, the Parts and Labor Warranty shall apply to all Systems
Equipment.  If, and to the extent, that
Owner is not able to effectuate a warranty remedy from the Contractor, where
Contractor has subcontracted such services, then Owner may contact and
prosecute such warranty services from such Subcontractor.  As a condition to the achievement of Final
Completion, and/or prior to the termination of this Agreement, Contractor will
(i) assign in writing all such warranties and guarantees to Owner; (ii) secure
any consents necessary for such assignment from each Subcontractor; and (iii)
deliver to Owner copies of all contracts and subcontracts (unpriced for any
Work being performed on a lump sum pricing method) providing for warranties and
guarantees enforceable by Owner. Neither Contractor, nor its Subcontractors
will take any action which could release, void, impair or waive any warranties
or guarantees on Systems Equipment, materials or services that it procures from
others.

32.6         Subcontractor Insurance.  Except as otherwise agreed or directed by
Owner in writing, Contractor will require all Subcontractors with whom
Contractor has a direct contract to obtain, maintain and keep in force (and to
require from their lower tier Subcontractors to obtain, maintain and keep in
force) during the time in which they are engaged by Contractor similar
insurance coverages, if and as applicable to their respective scopes of
services and activities as are required of Contractor pursuant to Section 25.1.
The limits for such coverage may be reduced
by the Contractor in which case the Contractor agrees to be solely
responsible to Owner, the Financing Parties, claimants or employees for any
otherwise un-recovered losses which fall in the area between the required
Subcontractor coverage and that which is actually procured and maintained.
Furthermore, Contractor will require of its subcontractors that the policies
providing such coverages meet the same requirements as are applicable to
Contractor’s policies, as set forth in Article 25.

32.7         No Privity with Subcontractors.  Other than subsequent to an assignment of a
subcontract or purchase order to Owner, Owner will not be deemed by virtue of
this Agreement or otherwise to have any contractual obligation to or
relationship with any Subcontractor. Furthermore, no Subcontractor will have
any rights against Owner under 

 

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this Agreement,
whether as a third party beneficiary or otherwise. Contractor will include
clauses that expressly state the concepts set forth in this Section 32.7 in
each subcontract with Subcontractors.

32.8         Assignment of Subcontracts to Owner.  In the event of termination of this Agreement
pursuant to its terms, Contractor shall assign any or all of its agreements
with Subcontractors to Owner at Owner’s request and shall ensure that each such
subcontract is assignable to Owner.  In
the event of partial termination of this Agreement pursuant to its terms,
Contractor shall assign the applicable agreements with Subcontractors to Owner
at Owner’s request and shall ensure that each such subcontract is assignable to
Owner

32.9         Directed Payments.  From the monies paid by Owner to Contractor,
Contractor shall make payment to Subcontractors, to utilities furnished and
Taxes owed by Contractor, to the payment of premiums on surety bonds and
insurance, and to any other purpose related to the Project. The Contractor
agrees that any liquidating agreement, pass-through agreement, or other
agreement between the Contractor and a Subcontractor that purports to make
Owner responsible for paying a Subcontractor for work on the Project is void
and unenforceable and deemed to be waived.

32.10       Neglect to Pay.  Should Contractor neglect or refuse to pay
promptly when due any legitimate or undisputed bill incurred by it pursuant to
the Agreement, Owner, after giving Contractor seven (7) calendar days’ notice
of its intentions so to do, shall have the right but not the obligation, to pay
such bill by joint check made payable to Contractor and the applicable
Subcontractor and such payments shall be accounted for as a payment to
Contractor.  Owner shall be entitled to
offset such amounts against any payments thereafter becoming due to
Contractor.  The payment of any bill by
Owner pursuant to the foregoing shall not be deemed to cure or waive Contractor’s
default, and Owner may exercise any other right or remedy granted by the
Agreement or by law or equity.  Owner
will not make any such payment, however, without prior consultation with
Contractor concerning Contractor’s reason for refusing to pay such bill.

33. DISPUTE
RESOLUTION

33.1        Applicability
of Resolution Procedures.  All
claims, disputes or other matters in question between the Parties arising out
of or relating in any way to this Agreement (“Disputes”)
will be resolved pursuant to this Article 33.

33.2         Management Discussions.  The Parties agree to make a diligent,
good-faith attempt to resolve all Disputes. 
If the Authorized Representatives of the Parties are unable to resolve a
Dispute arising under this Agreement within ten (10) calendar days after notice
from one Party to the other, such Dispute will be submitted promptly to the
senior executive officers of the Parties, who will meet, in person or by
telephone, not later than ten (10) calendar days after the date such Dispute
was submitted to them.  In the event that
the officers cannot resolve the Dispute within five (5) Business Days after the
matter is submitted to them, then, unless otherwise agreed, the Parties will
refer such Dispute to mediation proceedings under Section 33.3.

 

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33.3         Mediation.  Provided that the Parties have been unable to
resolve a Dispute pursuant to the procedures set forth in Section 33.2, the
Parties will make a good faith effort to mediate a resolution of the dispute
with the assistance of a qualified mediator to be chosen by agreement of the
Parties.  In the event that the Parties
are unable to agree upon a qualified mediator, a mediator will be designated by
the American Arbitration Association (“AAA”).  Any such mediation will be held in accordance
with the Construction Industry Mediation Rules of the AAA or by such other
standards as established by the mediator. 
Such mediation will be held in Atlanta, Georgia or at such other site as
the Parties may agree.  If, despite the
Parties’ good faith efforts to mediate a Dispute, such Dispute remains
unresolved forty-five (45) calendar days after the first date on which such
mediation commenced (or such longer period as the Parties may agree to in
writing), then the Parties may pursue such rights and remedies as may be
available under applicable law.

33.4         Arbitration. Should a mediation
under Section 33.3 be unsuccessful, and so long as the aggregate amount of all
disputed Changes, Change Order Notices, Change Order Requests, Change Orders,
and other Disputes, claims, controversies or other matters disputed in good
faith between the Parties at one time is equal to or less  than twenty-five million dollars
($25,000,000), then all such Disputes, controversies or claims arising out of
or related to the Project shall be settled by mandatory and binding “baseball”
arbitration in accordance with this Section 33.4, and judgment upon the award
may be entered in any court having jurisdiction thereof; provided, however,
that should such aggregate amount exceed twenty-five million dollars
($25,000,000), then arbitration shall not be mandatory and the Parties may
elect, by mutual agreement in writing, to have none, any or all such Disputes,
controversies or claims decided by binding or non-binding arbitration, as may
be agreed by the Parties. The Parties agree that they will not assert frivolous
claims in bad faith in an effort to subvert the purpose of the preceding
sentence, which is to establish an objective standard for distinguishing
between situations in which arbitration is mandatory, and situations in which
arbitration is not mandatory and will be used only upon agreement of the
Parties. Any arbitration pursuant to this Section 33.4 shall be held in
Atlanta, Georgia and conducted pursuant to the Uniform Arbitration Act (2000).  The arbitration shall be heard by three
arbitrators, who shall be appointed using the process for the selection of the
members of the DRB, and who shall strictly enforce the terms and conditions of
this Agreement. In the event of such arbitration, each Party agrees to produce
to the other Party all non-privileged documents that such other Party considers
to be related to the Dispute, including all electronic documents and data in
native format.  Provided that the other
Party is provided a reasonable opportunity to obtain and preserve such
electronic data before a Party ceases to maintain it, the requirement that data
be provided in native format shall apply only so long as that electronic data
is still maintained in the ordinary course of business.  All such documents shall be produced at least
six months before the date set for the hearing, and the initial production
shall be supplemented promptly to include any additional documents that come
into possession of a Party after the initial production.  Each Party shall also provide to the other
Party, at least forty-five (45) days before the hearing or such shorter period
as the arbitrators may direct upon application of a Party (but not less than 30
days before the 

 

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hearing), (i) a
copy of all exhibits the Party will introduce at hearing, and a (ii) complete
list of all witnesses the Party may call and a detailed summary of their
testimony, including a written report of all expert witnesses in accordance
with Fed. R. Civ. P. 26(a)(2)(B). 
Documents that have not previously been exchanged, and witnesses for
whom proper information has not previously been provided, may not be considered
by the arbitrators without a showing of good cause.  The attorneys for the Parties and the
arbitrators shall have the authority to issue subpoenas for the appearance of
witnesses at the hearing and for production of documents (including documents
in the possession of persons other than the Parties) at or in advance of the
hearing.  At least fifteen (15) days
before the date set for the hearing, the Parties will exchange, and provide to
the arbitrators, best and final offers of compromise, which the Parties may
amend at any time before the tenth (10th) day after the close of the hearing.
Within forty-five (45) days after the conclusion of the hearing, the
arbitrators shall select the best and final offer (as amended) of one Party and
that offer shall become the award of the arbitrators. At the discretion of
Owner, any Subcontractor with whom the Contractor has a direct contract may be
joined as a party to an arbitration conducted pursuant to this Section
33.4.  Contractor shall include in each
of its subcontracts, to the extent commercially practicable, a provision
allowing for such joinder at Owner’s discretion, and an agreement by the
Subcontractor to be bound by the results of such arbitration.  Should any Subcontractor oppose the inclusion
of such provisions in its subcontract, and should the negotiations between
Contractor and such Subcontractor reach an impasse, Contractor will consult
with Owner to determine a commercially reasonable course of action before
entering into a subcontract or issuing a purchase order to such Subcontractor.

33.5         Dispute Review Board.  Notwithstanding Sections 33.3 and 33.4,
either Party may, at any time, submit a Dispute for interim decision by the
Dispute Review Board (“DRB”) in
accordance with Exhibit 17.  Should a
Dispute arise that involves the subject matter of Sections 8.6, 19.15,
23.3  33.5, 12.3.5 or 12.6.4, then the
Parties agree to abide by any decision of the DRB relating to same on an
interim basis, until the disagreement can be permanently resolved through the
procedure described in this Article 33. 
The Parties agree that the Parties will suffer irreparable harm if
either Party does not abide by a decision of the DRB relating to the Sections
listed in the previous sentence, and that either Party may enforce such a
decision of the DRB through an action for equitable relief including mandatory
temporary injunction.

33.6         Obligations Continue.  Notwithstanding the existence of any Dispute
hereunder, the Parties will continue to perform their respective obligations
under this Agreement unless the Parties otherwise mutually agree in writing.  If during the pendency of a Dispute, the Work
is in progress, Owner’s Authorized Representative will give such instructions
as are necessary for the proper performance of the Work and to prevent delays
pending settlement of the Dispute. 
Contractor will carry out such instructions and will proceed with the
execution of the Work, it being understood that in so doing Contractor, if it
gives Owner a written notice before carrying out such Work that Contractor is
doing so under protest, is not jeopardizing any claim it may have and is not in
any way renouncing or waiving any rights or recourses.

 

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33.7         Injunctive Relief.  Notwithstanding anything in this Agreement to
the contrary, nothing in this Agreement is intended to, nor shall it, prevent
the Parties from seeking injunctive relief at any time as may be available
under law or in equity.

33.8         Survival.  The provisions of this Article 33 will
survive the termination of this Agreement.

34. MISCELLANEOUS

34.1         Audit and Maintenance of Records.
               Owner shall have the right
to audit and inspect Contractor’s records and accounts covering Fees and costs
paid, payable or reimbursable hereunder for Work performed on an Open Book
basis, at all reasonable times during the performance of the Work and for such
time as may be required by Applicable law, but in no event less than one year,
after the expiration or termination of this Agreement; provided, however, that
the purpose of any such audit shall be only for verification of such
costs.  If an audit reveals that errors
have been made in connection with the Fees, costs and other charges invoiced to
Owner, then the parties will work together to correct the error and any
overpayments revealed by the audit will be promptly paid by Contractor to
Owner.  In addition, if the audit reveals
any overpayment that is greater than five percent (5%) of the amount which was
actually due for the period being audited, Contractor, subject to the
opportunity to dispute the audit findings in good faith, shall bear the cost of
the audit.

34.2         Rights to Work Product.

34.2.1      Deliverables.  All copies of the paid-up Drawings and other
deliverables provided or prepared under this Agreement, including, without
limitation, Systems designs, and any sealed original drawings, specifications,
final project specific calculations, computer-aided design and drafting (CADD)
data and files, and other engineering documents which Contractor prepares or
delivers to Owner pursuant to this Agreement (“Deliverables”)
shall be the property of Owner. 
Notwithstanding the foregoing, all Deliverables are Instruments of Service
of Contractor and Contractor shall retain all of its intellectual property
rights in and to such Deliverables.

34.2.2      License.  Contractor hereby grants to Owner and its
affiliates a fully paid-up, royalty-free, irrevocable, non-exclusive license to
use, modify, display, copy, and reproduce the Deliverables to the extent Owner
or its affiliates deem necessary to construct, operate, maintain, repair, or
alter the Systems at the Sites.  This
license grant includes, without limitation, a license under all current and
future patents owned by or licensed to Contractor that would be infringed by or
are applicable to the Deliverables and/or any such construction, operation,
maintenance, repair or alternation of the Systems at the Facilities.

34.2.3      Reuse.  All Deliverables prepared by Contractor
pursuant to this Agreement are not intended or represented to be suitable for
reuse by Owner or 

 

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others in connection with
any air quality control system for any sites other than the Sites.  Any such reuse without prior written
verification or adaptation by Contractor for the specific purpose intended will
be at Owner’s sole risk and without liability or legal exposure to
Contractor.  Owner shall defend,
indemnify, and hold harmless Contractor and its employees, agents, officers
and/or assigns, against all claims, losses, damages, injuries, and expenses,
including attorneys’ fees, arising out of or resulting from such reuse.

34.3         Compliance with Laws.

34.3.1      Familiarity with Laws.  Contractor shall be familiar with and, at all
times, comply with and observe, all Applicable Laws, including all applicable
federal, state, and local laws, ordinances, rules, regulations, and executive
orders; all applicable safety orders, all orders, or decrees, of administrative
agencies, courts, or other legally constituted authorities having jurisdiction
or authority over Contractor or the Work which may be in effect now, or during
performance of the Work.

34.3.2      No Fees or Commissions.  Contractor has not employed or retained any
company or person, other than a bona fide employee working solely for
Contractor to solicit or secure this Agreement and Contractor has not paid or
agreed to pay any person, company, corporation, individual, or firm other than
a bona fide employee working solely for Contractor, any fee, commission,
percentage, gift, or any other consideration contingent upon or resulting from
the award or making this Agreement.

34.4         Authorized Representatives.  Each Party will appoint its own “Authorized Representative” and notify the other Party in
writing of such representative’s name, address, facsimile and telephone number
within five (5) calendar days after the execution of this Agreement.  Either Party may, at any time, change the
designation of its Authorized Representative, provided such Party will promptly
notify the other Party in writing of such change.

34.5         Confidentiality.

34.5.1      Confidential Information.  From time to time, in connection with the
Project and/or the Work a Party (the “Disclosing Party”)
may disclose certain written information to the other Party (the “Receiving Party”) which is clearly marked or otherwise
designated as “CONFIDENTIAL” (such information, the “Confidential
Information”). 
Notwithstanding the foregoing, Confidential Information does not include
(i) information which is now in the public domain, or which later enters the
public domain, through no action by a party in violation of this Agreement;
(ii) information which the Receiving Party can demonstrate was already in the
Receiving Party’s possession at the time of its disclosure, and which was not
acquired by that party directly or indirectly from the Disclosing Party on a
confidential basis; or (iii) information which was acquired from 

 

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persons not under an
obligation of secrecy (whether legal or contractual) to the Disclosing Party.

34.5.2      Nondisclosure.  The parties agree that the Confidential
Information will be kept confidential by them during the term of this
Agreement, and in addition that certain identified parts of the Confidential
Information shall be kept and remain confidential for a ten (10) year period
following Final Completion of each plant’s Facility.  Notwithstanding the foregoing, a Receiving
Party may disclose the Confidential Information to those of its officers,
directors, employees, affiliates, consultants, lenders, potential lenders and
advisors who need to know the Confidential Information in order to assist that
party in connection with the Project or the financing thereof.  Each party agrees to be responsible for the
actions and disclosures of any such person with respect to Confidential
Information.

34.5.3      Compelled Disclosure.  If a Receiving Party becomes legally
compelled to disclose any of the Confidential Information, that party will
provide the Disclosing Party with immediate written notice of that requirement
so that the Disclosing Party may seek a protective order or other appropriate
remedy at the Disclosing Party’s risk and expense.  The Receiving Party will furnish only that
portion of the Confidential Information which is legally required, and the
Receiving Party will cooperate with the Disclosing Party’s counsel to enable
the Disclosing Party to obtain a protective order or other reliable assurance
that confidential treatment will be accorded the Confidential Information.

34.5.4      Use Restrictions.  Owner will only use the Confidential
Information of Contractor for or in connection with the Project and the
testing, operation, maintenance and repair of the Facilities.

34.6        Owner
Caused Project End Suspension and Other Owner Caused Events

34.6.1 “Owner Caused
Project End Suspension” shall be deemed to have occurred if:  (i) more than eighty percent (80%) of the
Milestones have been completed; (ii) Owner suspends the Work pursuant to
Section 23 of this Agreement, and (iii) such suspension is for reasons other
than Force Majeure, the discovery and required treatment of Hazardous
Substances, Differing Site Conditions or Changes in Applicable Law; acts of
omissions of the Contractor that are in breach of its obligations under this
agreement; or any other excused basis under this Agreement that would compel
the Owner to effectuate such a suspension or delay.

Within fifteen (15) business days after delivery of
the notice of the Owner Caused Project End
Suspension, Owner shall deposit into a specific escrow account an
amount equal to one hundred percent (100%) of the amount of retention related
to completed and undisputed milestones. Contractor shall be entitled to any and
all interest from the specific escrow account (the “Escrow Account”).

 

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Should all or a significant portion of the Work be
recommenced subsequent to a Owner Caused
Project End Suspension,  all
of the proceeds of the escrow account shall revert back to Owner upon the
delivery to the contractor of an official “recommencement of the work” Notice (“Recommencement
Notice”)

 In the event
that a Recommencement Notice has not been delivered to Contractor within one
hundred and eighty (180) days after the first day of the Owner Caused Project End Suspension, then
all of the Escrow Account funds, including all interest, shall be distributed
to Contractor.

In addition to Contractor’s other rights and
entitlements under the Agreement in connection with an Owner suspension, should
a Recommencement Notice be delivered to Contractor after the expiration of the
above- described one hundred eighty (180) day period, the Contractor hereby
agrees and covenants that it shall return to Owner One Hundred percent (100%)
of the principal amount of the escrowed funds within five (5) business days
after receipt of the Recommencement Notice.

34.6.2.     Owner
has no duty or obligation to seek an extension of any of the time limitations
imposed by Maryland Department of Environmental Conservation (“DEC”) or any
other regulatory rulings or requirements related to the Facilities.  Notwithstanding the foregoing, should (i) the
time limits imposed by the DEC or any other regulatory agencies related to the
Facilities for one or more of the Facilities be extended;  (ii) Owner intentionally interferes with or
frustrates Contractor’s efforts to achieve Provisional Acceptance, Substantial
Completion or Final Completion within the time provided in the Approved Project
Schedule; and (iii) Contractor demonstrates that, at the time of the
interference, Owner had a financial incentive to pursue recovery of liquidated
damages for late completion rather than allow Contractor to complete the Work
within the time allowed, then for the time period of such Owner interference,
Contractor shall not be assessed any liquidated damages relating to Provisional
Acceptance, Substantial Completion or Final Completion within the time provided
in the Approved Project Schedule.

34.7         Notices.  All notices permitted or required to be given
under this Agreement will be in writing and will be deemed duly given when sent
by overnight courier, by personal delivery (against receipt) or on the third
(3rd) calendar day following the date on which such notice is deposited,
postage prepaid, in the United States mail, certified, return receipt
requested.  All notices will be delivered
or sent to the Parties at their respective address(es) shown below or to such
other address(es) as a Party may designate by prior written notice given in
accordance with this provision to the other Party:

 

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If to Owner:

Mirant Mid-Atlantic LLC

1155 Perimeter Center
West

Atlanta, GA 30338

Attention:  Mark E. Green

with a copy to:

Robert Patrick

Mirant Mid-Atlantic LLC

1155 Perimeter Center
West

Atlanta, GA 30338

Priya Gill

Mirant Mid-Atlantic LLC

1155 Perimeter Center
West

Atlanta, GA 30338

Robert Dougherty

Mirant Mid-Atlantic LLC

1155 Perimeter Center
West

Atlanta, GA 30338

If to Contractor:

Stone & Webster, Inc.

128 South Tryon Road

Charlotte, NC  28202

Attention:   Steven Rosendahl, Vice President

with a copy to:

Richard Obadiah

100 Technology Center
Drive

Stoughton, MA 
02072

Project Director

Mirant Air Quality
Projects

100 Technology Center
Drive

Stoughton,
MA  02072

34.8         Relationship of the Parties.  Nothing in this Agreement will be deemed to
constitute either Party a partner, agent or legal representative of the other
Party, or to create any fiduciary relationship between the Parties.  Contractor is and will remain an 

 

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independent
contractor in the performance of this Agreement, maintaining complete control
of its personnel, workers, Subcontractors and operations required for
performance of the Work.  This Agreement
will not be construed to create any relationship, contractual or otherwise,
between Owner and any Subcontractor.

34.9         Amendments.  Except as provided in Article 19, no
amendments or modifications of this Agreement will be valid unless evidenced in
writing and signed by a duly authorized representative of the Party against
which enforcement is sought.

34.10       No Third Party Beneficiaries.  This Agreement is not intended to, and shall
not, create any rights in or confer any benefits upon anyone other than the
Parties.

34.11       Priority Among Contract Documents.  In the event of any conflict between the
provisions of any of the Contract Documents, such provisions shall be given
priority in the following order:  (i)
Articles 1 through 34 of this Agreement (ii) the Exhibits to this Agreement,
and (iii) the Drawings.

34.12       Severability.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity of the remaining
provisions.  If any provision proves to
be invalid or unenforceable, then Owner and Contractor shall replace such
provisions with a valid new provision having an economic effect as close as
possible to the invalid or unenforceable provision.

34.13       Remedies.  To the extent that an express exclusive
remedy is set forth in this Agreement for a particular subject matter, then
that remedy shall be the exclusive remedy for the matter to which it applies.  To the extent that a subject matter in this
Agreement does not set forth an express exclusive remedy, then the parties
shall retain and have all their rights at law and in equity for such subject
matter.

34.14       Nonwaiver.  Owner’s failure to insist upon or enforce, in
any instance, strict performance by Contractor of any of the terms of this
Agreement, or to exercise any rights herein conferred, shall not be construed
as a waiver, or relinquishment, to any extent of its right to assert, or rely
upon, any such terms or rights on any future occasion.

34.15       Interpretation.  The
following rules of interpretation apply to the Agreement and are by this
reference incorporated into the Agreement:

34.15.1       the word “or” is not
exclusive and the words “including” or “include” are not limiting;

34.15.2       the words “hereby,”
“herein,” “hereof,” “hereunder” or other words of similar meaning refer to the
entire document in which it is contained;

34.15.3       a reference to any
agreement or other contract includes permitted supplements, amendments and
restatements;

 

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34.15.4         a reference to a law
includes any amendment or modification to such law and any rules or regulations
promulgated thereunder or any law enacted in substitution or replacement
therefore;

34.15.5         a reference to
singular includes plural and vice-versa and each gender includes the other;

34.15.6         a reference to days,
months, or years refers to calendar days, months, and years, unless Business
Days are specified;

34.15.7         Article and Section
headings and table of contents are only for reference and are not to be
considered in interpreting this Agreement;

34.15.8         a reference to an
Article, Section, Exhibit or Schedule which does not specify a particular
document is to the relevant Article, Section, Exhibit or Schedule of the
document containing the reference;

34.15.9         a reference to an
Article includes all Sections and Subsections contained in such Article, and a
reference to a Section or Subsection includes all Subsections of such Section
or Subsection;

34.15.10       All terms not otherwise
defined herein will have the meaning commonly ascribed thereto in the relevant
industry;

34.15.11       “$” or “dollars” refers
to United States dollars; and

34.15.12       unless otherwise
indicated, all accounting terms, ratios and measurements shall be interpreted
or determined in accordance with GAAP as in effect on date hereof.

34.16       Entire
Agreement.  This Agreement contains
the entire agreement between the Parties with respect to the subject matter
hereof, and supersedes any and all prior and contemporaneous written and oral
agreements, proposals, negotiations, understandings and representations
pertaining to the subject matter hereof. 
This Agreement is to be construed without regard to any presumption or
other rule requiring construction against the Party causing the Agreement to be
drafted.

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

34.17.1        Due Organization of
Contractor.  Contractor is a
Louisiana corporation, duly organized, validly existing and in good standing
under the laws of Louisiana and has all requisite corporate power and authority
to own and operate its business and properties and to carry on its business as
such business is now being conducted and is duly qualified to do business in
Maryland and in any other jurisdiction in which the transaction of its business
make such qualification necessary.

 

 115
 

 

34.17.2        Due Authorization of
Contractor; Binding Obligation. 
Contractor has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, and the execution, delivery
and performance of this Agreement by Contractor have been duly authorized by
all necessary corporate action on the part of Contractor.  This Agreement is the valid and binding
obligation of Contractor, enforceable in accordance with its terms

34.17.3        Non-Contravention.  The execution, delivery and performance of
this Agreement by Contractor and the consummation of the transactions
contemplated hereby do not and will not contravene the certificate of incorporation
or by-laws of Contractor and do not and will not conflict with or result in a
breach of or default under any contract, indenture, mortgage, lease, agreement,
instrument, judgment, decree, order or ruling to which Contractor is a party or
by which it or any of its properties is bound or affected.

34.17.4        Regulatory Approvals.  All governmental or other authorizations,
approvals, orders or consents, if any, required in connection with the
execution, delivery and performance of this Agreement by Contractor have been
obtained or will be obtained in due course.

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

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

34.18.2        Due Authorization of
Owner; Binding Obligation.  Owner has
full power and authority to execute and deliver this Agreement and to perform
its obligations hereunder and the execution, delivery and performance of this
Agreement by Owner have been duly authorized by all necessary corporate actions
on the part of Owner.  This Agreement is
the valid and binding obligation of Owner, enforceable in accordance with its
terms.

34.18.3        Non-Contravention.  The execution, delivery and performance of
this Agreement by Owner and the consummation of the transactions contemplated
hereby do not and will not contravene the articles of incorporation of Owner
and do not and will not conflict with or result in a breach of or default under
any indenture, mortgage, lease, agreement, instrument, judgment, decree, order
or ruling to which Owner is a party or by which it or any of its properties is
bound or affected.

 

 116
 

 

34.19       Further Assurances.  The Parties will execute and deliver such
other instruments and documents, and take such other actions, as either Party
reasonably requests to evidence or effect the transactions contemplated by this
Agreement.

34.20       No Implied Waiver.  Unless otherwise expressly provided herein,
no waiver by either Party of any provision hereof shall be deemed to have been
made unless expressed in writing and signed by such Party.  The waiver by either Party of any breach of
any term, covenant or condition herein stated shall not be deemed to be a
waiver of any other breach, or of a subsequent breach of the same or any other
term, covenant or condition herein contained.

34.21       Exhibits and Schedules.  All Exhibits referred to in, and attached to,
this Agreement are hereby incorporated herein in full by this reference.

[SIGNATURES NEXT PAGE]

 

 117
 

 

IN WITNESS WHEREOF, the Parties, intending to be
legally bound, have caused this Agreement to be executed by their duly
authorized officers, to be effective as of the Effective Date provided herein.

	
  MIRANT MID-ATLANTIC, LLC

  	
   

  	
  STONE & WEBSTER, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James P. Garlick

  	
   

  	
  By:

  	
  /s/ R.M. Glover

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  James P. Garlick

  	
   

  	
  Name:

  	
  R.M. Glover

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice President, Operations

  	
   

  	
  Title:

  	
  President of Fossil Power

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MIRANT CHALK POINT, LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James P. Garlick

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  James P. Garlick

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice President, Operations

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MIRANT MID-ATLANTIC, LLC as Agent for MIRANT
  MID-ATLANTIC LLC AND

  MIRANT CHALK POINT LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James P. Garlick

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  James P. Garlick

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice President, Operations

  	
   

  	
   

  	
   

  

 

 

 118Exhibit
10.1

SECOND SUPPLEMENTAL INDENTURE

SECOND SUPPLEMENTAL
INDENTURE (this “Supplemental Indenture”), dated as of July 31, 2007, between
Polypore International, Inc., a Delaware corporation (the “Company”), Daramic,
LLC, a Delaware limited liability company, Celgard, LLC, a Delaware limited
liability company, and Daramic International, Inc., a Delaware corporation
(each, a “Guarantor”), and The Bank of New York, a New York banking
corporation, as trustee under the indenture referred to below (the “Trustee”).

W
I T N E S S E T H:

WHEREAS, Polypore, Inc. (“Polypore”)
and the Guarantors have heretofore executed and delivered to the Trustee an
Indenture (as amended, supplemented or otherwise modified, the “Indenture”),
dated as of May 13, 2004, providing for the issuance of Polypore’s U.S.
Dollar-denominated 83⁄4% Senior Subordinated Notes due 2012 (the “Dollar Notes”)
and Euro-denominated 83⁄4% Senior Subordinated Notes due 2012 (the “Euro Notes”
and, together with the Dollar Notes, the “Notes”), initially in the aggregate
principal amounts of $225,000,000 and €150,000,000, respectively;

WHEREAS, effective on the
date hereof, Polypore will be merged with and into the Company, with the
Company as the surviving corporation (the “Merger”);

WHEREAS, Section 5.02 of
the Indenture provides that upon any merger of Polypore in which Polypore is
not the surviving corporation, the successor corporation by merger shall
succeed to, and be substituted for, and may exercise every right and power of
Polypore under the Indenture and the Notes with the same effect as if such
surviving corporation had been named as such;

WHEREAS, Section 5.01 of
the Indenture provides that the surviving corporation in such merger shall
expressly assume by supplemental indenture, executed and delivered to the
Trustee, the due and punctual payment of the principal of, premium, if any, and
interest on all of the Notes and the performance of every covenant and all
obligations of Polypore under the Indenture, the Notes, and the Registration
Rights Agreement, dated as of May 13, 2004, by and among Polypore, the existing
Guarantors, and the initial purchasers named therein (the “Registration Rights
Agreement”), to be performed or observed on the part of Polypore;

WHEREAS, pursuant to
Section 9.01(c) of the Indenture, the Company, the Guarantors and the Trustee
are authorized to execute and deliver this Supplemental Indenture;

WHEREAS, the
Company has been authorized by resolution of its Board of Directors to enter
into this Supplemental Indenture;

WHEREAS, Polypore
and the Company have requested that the Trustee join in the execution and
delivery of this Supplemental Indenture;

WHEREAS, each
Guarantor confirms its obligations under the Indenture, the Guarantees and the
Notes; and

WHEREAS, all other acts
and proceedings required by law, by the Indenture and by the certificate of
incorporation and bylaws of the Company to make this Supplemental Indenture a
valid and binding agreement for the purposes expressed herein, in accordance
with its terms, have been duly done and performed.

NOW THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the Company and the Trustee
mutually covenant and agree for the equal and ratable benefit of the holders of
the Notes as follows:

1.             Defined Terms. 
Capitalized terms used in this Supplemental Indenture and not otherwise
defined herein shall have the meanings assigned to such terms in the Indenture.

2.             Succession. 
Effective immediately upon the consummation of the Merger on the date
hereof, the Company hereby expressly assumes the due and punctual payment of
the principal of, premium, if any, and interest on all of the Notes and the
performance of every covenant and all obligations of Polypore under the Notes,
the Indenture and the Registration Rights Agreement to be performed or observed
on the part of Polypore.

3.             Continuing Effect.  Except as expressly provided herein, all of
the terms, provisions and conditions of the Indenture, the Notes, and the
Registration Rights Agreement shall remain in full force and effect.

4.             Governing Law.  THIS
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

5.             Construction of Supplemental Indenture.  This Supplemental Indenture is executed as
and shall constitute an indenture supplemental to the Indenture and shall be
construed in connection with and as part of the Indenture for all purposes, and
every Holder of Notes heretofore or hereafter authenticated and delivered under
the Indenture shall be bound by the Indenture as amended by this Supplemental
Indenture.

6.             Trust Indenture Act Controls.  If any provision of this Supplemental
Indenture limits, qualifies or conflicts with another provision that is required
to be included in this Supplemental Indenture or the Indenture by the Trust
Indenture Act of 1939, as amended, as in force at the date that this
Supplemental Indenture is executed, the provisions required by said Act shall
control.

7.             Trustee Disclaimer.  The recitals contained in this Supplemental
Indenture shall be taken as the statements of the Company and the Trustee
assumes no responsibility for their correctness.  The Trustee makes no representations as to
the validity or sufficiency of this Supplemental Indenture.

8.             Notices. 
The following addresses are the updated notice addresses to be used for
any notice or communication by the Company or the Trustee to the other party:

 2
 

If to the Company:

Polypore International, Inc.

11430 North Community House Road, Suite 350

Charlotte, NC 
28277

Facsimile No.: (704) 587-8409

Attention: Lynn K. Amos

With copies to:

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Facsimile No.: (212) 728-8214

Attention: Cristopher
Greer, Esq.

If to the Trustee:

The Bank of New York

101 Barclay Street, Fl 4 East

New York, New York 10286

Facsimile No.: (212) 815-5802

Attention:  Global Trust Services

9.             Counterparts. 
The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy (including facsimile copies) shall be an original,
but all of them together represent the same agreement.

10.           Severability.  In case any provision in this Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be
affected.

[Remainder of Page
Intentionally Blank]

 3

IN WITNESS WHEREOF, the
parties hereto have caused this Supplemental Indenture to be duly executed as
of the date first above written.

	
  

  	
  POLYPORE INTERNATIONAL, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  	
   

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer, Treasurer and

  Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DARAMIC, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: Polypore,
  Inc., as sole Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  	
   

  
	
   

  	
   

  	
  Title: Executive
  Vice President, Chief

  Financial Officer, Treasurer and Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CELGARD, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: Polypore,
  Inc., as sole Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  	
   

  
	
   

  	
   

  	
  Title: Executive
  Vice President, Chief

  Financial Officer, Treasurer and Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DARAMIC
  INTERNATIONAL, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  	
   

  
	
   

  	
   

  	
  Title: Executive
  Vice President, Chief Financial

  Officer, Treasurer and Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Supplemental
  Indenture]

  

 

 

	
  

  	
  THE BANK OF
  NEW YORK, as Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lici Zhu

  	
   

  
	
   

  	
   

  	
  Name: Lici Zhu

  	
   

  
	
   

  	
   

  	
  Title:  Assistant Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Supplemental
  Indenture]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}]]