CONFIDENTIAL PORTIONS OMITTED

 

 

 

 

Exhibit 10-1

 

 

 

 

ENGINEERING, PROCUREMENT

AND CONSTRUCTION CONTRACT

 

 

 

between

PACIFICORP

and

STONE & WEBSTER, INC.

 

 

 

dated as of February 10, 2004

 

 

 

FOR

THE CURRANT CREEK POWER STATION

 

 

 

ARTICLE   1		DEFINITIONS	1
1.1		D EFINED T ERMS	1
1.2		I NTERPRETATION	7
ARTICLE   2		CONTRACTOR’S WORK AND OTHER OBLIGATIONS	7
2.1		C OMMENCEMENT OF THE W ORK	7
2.2		T HE W ORK	7
2.3		H AZARDOUS S UBSTANCES AND O FF -S ITE I MPACTS	8
2.4		C OORDINATION W ITH R EGULATORS	9
2.5		B OOKS AND R ECORDS	9
2.6		S TANDARDS OF P ERFORMANCE	9
2.7		T ITLE	9
2.8		F ACILITY S ITE C ONDITIONS	10
2.9		N ATURE OF THE W ORK	10
2.10		S UBCONTRACTORS	10
2.11		C OOPERATION	12
2.12		C ONTRACTOR R ESPONSIBILITIES WITH R ESPECT TO O WNER F URNISHED E QUIPMENT	12
2.13		P ERMITS	12
2.14		C OORDINATION OF W ORK	12
ARTICLE   3		OWNER’S OBLIGATIONS	12
3.1		F ACILITY R EAL E STATE R IGHTS AND A CCESS TO F ACILITY S ITE	12
3.2		O WNER F URNISHED E QUIPMENT	12
3.3		P ERMITS	13
3.4		S TART-UP P ERSONNEL	13
3.5		S TART- U P AND T ESTING F UEL S UPPLY	13
3.6		O THER	13
ARTICLE   4		SCHEDULE	14
4.1		S CHEDULE	14
4.2		A LTERATIONS TO S CHEDULE	14
4.3		R EVISION OF S CHEDULE	14
ARTICLE   5		INSPECTION AND APPROVAL	14
5.1		O WNER’S R IGHT TO A TTEND C ONTRACTOR I NSPECTIONS	14
5.2		I NSPECTION AND R E- P ERFORMANCE	14
5.3		O WNER A PPROVAL	15
ARTICLE   6		TARGET PRICE AND PAYMENT	15
6.1		T ARGET P RICE	15
6.2		D IRECT C OSTS	15
6.3		T OTAL P AYMENTS	19
6.4		M ONTHLY D IRECT C OST P AYMENTS	19
6.5		F EE	22
6.6		P AYMENT N OT A CCEPTANCE	22
6.7		T AXES	22
6.8		R ECONCILIATION	22
6.9		L ATE P AYMENT / N ON- P AYMENT	23

 

i

 

 

ARTICLE   7		COMPLETION, ACCEPTANCE AND LIQUIDATED DAMAGES	23
7.1		G UARANTEED S UBSTANTIAL C OMPLETION D ATES	23
7.2		S UBSTANTIAL C OMPLETION	24
7.3		N OTICE AND R EPORT OF S UBSTANTIAL C OMPLETION	24
7.4		A CHIEVEMENT OF S UBSTANTIAL C OMPLETION	24
7.5A		L ATE S UBSTANTIAL C OMPLETION L IQUIDATED D AMAGES	25
7.5B		E ARLY S UBSTANTIAL C OMPLETION B ONUS	25
7.6A		P ERFORMANCE L IQUIDATED D AMAGES	26
7.6 B		P ERFORMANCE B ONUS	26
7.6 C		E XCLUSIVE N ATURE OF L IQUIDATED D AMAGES	26
7.7		T RANSFER OF P OSSESSION AND C ONTROL OF THE F ACILITY TO O WNER	26
7.8		C REATION OF P UNCH -L IST	26
7.9		F INAL C OMPLETION	27
7.10		U SE D OES N OT C ONSTITUTE A CCEPTANCE	27
ARTICLE   8		TESTING	28
8.1		T ESTING	28
8.2		R ESTORING OF F ACILITY	28
8.3		O UTPUT D URING T ESTING	28
ARTICLE   9		LIMITATION OF LIABILITY	28
9.1		A GGREGATE L IABILITY	28
9.2		C ONSEQUENTIAL D AMAGES	28
9.3		P ROOF OF A CTUAL D AMAGES IF L IQUIDATED D AMAGES G ELD U NENFORCEABLE	29
ARTICLE   10		WARRANTIES AND GUARANTEES	29
10.1		W ARRANTIES	29
10.2		W ARRANTY P ERIOD	29
10.3		R EPAIR OF D EFECTS	29
10.4		W ARRANTY P ERIOD E XTENSION	30
10.5		N O L IENS OR E NCUMBRANCES	30
10.6		S UBCONTRACTOR W ARRANTIES	30
10.7		L IMITATION OF W ARRANTY	30
ARTICLE   11		CHANGES	31
11.1		C HANGES	31
11.2		P ROCEDURE FOR C HANGES	32
11.3		C ONTINUED P ERFORMANCE P ENDING R ESOLUTION OF D ISPUTES	34
11.4		P RESERVATION OF S CHEDULE AND T ARGET C OSTS	34
ARTICLE   12		FORCE MAJEURE	34
12.1		F ORCE M AJEURE E VENT	34
12.2		E XCUSED P ERFORMANCE	34
12.3		C OSTS AND S CHEDULE	35
ARTICLE   13		INDEMNIFICATION	35
13.1		C ONTRACTOR’S I NDEMNITY	35
13.2		O WNER’S I NDEMNITY	36

 

ii

 

 

ARTICLE   14		SUSPENSION AND TERMINATION	36
14.1		R IGHT TO S USPEND W ORK FOR C AUSE	36
14.2		R IGHT TO S USPEND W ORK FOR C ONVENIENCE	36
14.3		T ERMINATION FOR C ONVENIENCE	37
14.4		T ERMINATION U PON C ONTRACTOR’S M ATERIAL B REACH	37
14.5		A CTIONS U PON T ERMINATION	38
14.6		T ERMINATION FOR C ONTRACTOR E VENT OF D EFAULT	38
14.7		C ONSEQUENCES OF T ERMINATION	38
14.8		S URVIVING O BLIGATIONS	38
14.9		C ONTRACTOR’S R IGHT TO S USPEND OR T ERMINATE	38
ARTICLE   15		SECURITY	38
ARTICLE   16		REPRESENTATIONS AND WARRANTIES	39
16.1		R EPRESENTATIONS AND W ARRANTIES OF C ONTRACTOR	39
16.2		R EPRESENTATION AND W ARRANTIES OF O WNER	40
ARTICLE   17		DISPUTE RESOLUTION	40
17.1		A PPLICABILITY OF R ESOLUTION P ROCEDURES	40
17.2		M ANAGEMENT D ISCUSSIONS	40
17.3		M EDIATION	40
17.4		A RBITRATION AND F INAL R ESOLUTION	41
17.5		A DJUDICATION	41
17.5		O BLIGATIONS C ONTINUE	41
17.5		I NJUNCTIVE R ELIEF	41
17.6		S URVIVAL	41
ARTICLE   18		LABOR AND PERSONNEL	41
18.1		L ABOR AND P ERSONNEL	41
ARTICLE   19		INSURANCE	41
ARTICLE   20		MISCELLANEOUS	42
20.1		G OVERNING D OCUMENTS	42
20.2		A UTHORIZED R EPRESENTATIVES	42
20.3		A SSIGNMENTS	42
20.4		G OVERNING L AW	42
20.5		T IME IS A M ATERIAL E LEMENT	42
20.6		S EVERABILITY	42
20.7		N OTICES	42
20.8		A RTICLE AND S ECTION H EADINGS	43
20.9		N O W AIVER OF R IGHTS	43
20.10		D UTIES AND R EMEDIES L IMITED	43
20.11		N O D ISCLOSURE	43
20.12		E NTIRE A GREEMENT	44
20.13		A MENDMENTS	44
20.14		N O T HIRD P ARTY R IGHTS	44
20.16		R ELATIONSHIP OF THE P ARTIES	44

 

iii

 

 

20.17		C OUNTERPARTS	62
20.18		F URTHER A SSURANCES	62

 

List of Appendices
Appendix A :		Facility Site
Appendix B :		Approved Project Schedule
Appendix C :		Fuel Specifications
Appendix D :		Testing
Appendix E :		Payment, Direct Costs and Fee
Appendix F :		Insurance Requirements
Appendix G :		Performance Guarantees
Appendix H :		Permits/Consents
Appendix I :		Invoice
Appendix J :		Form of Contractor Parent Guarantee and Performance Security
Appendix K :		[RESERVED]
Appendix L :		Lien Release Forms
Appendix M :		Change Order Request Form
Appendix N :		Approved Bidders List
Appendix O :		Interface Points
Appendix P :		Form of Escrow Agreement
Appendix Q :		Scope of Work
Appendix R :		Owner Furnished Equipment
Appendix S :		Subcontractor standard terms and conditions
Appendix T :		Contractor and Owner Knowledge of claims or potential bases for Changes to Cost, Schedule and/or Scope of Work at time of Contract Execution
Appendix U :		[RESERVED]
Appendix V :		Adjudication

 

iv

 

ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT

THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT (this “Contract” ) is entered into as of the 10 ^th day of February, 2004, by and between PacifiCorp, a corporation organized under the laws of the state of Oregon, with offices at 201 South Main Street, Suite 2200, Salt Lake City, Utah 84111 ( “Owner” ) and Stone & Webster, Inc., a corporation organized under the laws of Louisiana with offices at 9201 East Dry Creek Road, Centennial, CO 80112 ( “Contractor” ).

W I T N E S S E T H :

WHEREAS, Owner intends to build, own and operate a 525 MW nominal natural gas fired combined cycle power plant known as the Currant Creek Power Station and located in Juab County near Mona, Utah (the “Project”); and

WHEREAS, Owner desires to engage Contractor to perform the Work for the Project upon the terms and subject to the conditions set forth in this Contract; and

WHEREAS, Contractor desires to undertake the Work for the Project upon the terms and subject to the conditions set forth in this Contract;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and agree as follows:

ARTICLE 1

Definitions

1.1 Defined Terms . As used in this Contract, the following terms shall have the following meanings (such meanings as necessary to be equally applicable to both the singular and plural forms of the terms defined unless the context otherwise requires):

“ACC” means the Air Cooled Steam Condenser to be procured and erected by Owner as more fully described in Appendix R.

“Actual Cost” or “AC” means the total of the Direct Costs at Final Completion.

“Adjudication” shall have the meaning set forth in Section 17.5, as more fully described in Appendix V.

“Aggregated Compensatory Damages” shall have the meaning set forth in Section 9.1.2.

“Aggregate Liquidated Damages” shall have the meaning set forth in Section 9.1.1.

“Applicable Laws” means the laws, treaties, ordinances, judgments, decrees, injunctions, writs and orders of any court, arbitrator or governmental agency or authority and rules, regulations, orders, interpretations and Permits of any federal, state, provincial, county, municipal, regional, environmental or other governmental body, instrumentality, agency, authority, or court having jurisdiction over Contractor, the design and construction of the Project, the Facility Site, performance of the Work or operation of the Facility as may be in effect or known to the parties to be pending at the time of the execution of the Contract and upon Final Completion.

“Applicable Permits” means all Permits (including Building Permits) as may be in effect from time to time required to be obtained or maintained in connection with construction of the Facility on the Facility Site, performance of the Work or operation of the Facility, as further delineated in Appendix H.

“Application for Monthly Payment” means Contractor’s official monthly request for payment of Direct Costs, as described in Section 6.4.2 and Appendix E .

 

1

 

“Approved Bidders List” means the list of Subcontractors in Appendix N that have been approved by Owner, as such list is amended from time to time by addition or deletion of Subcontractors by agreement of Owner and Contractor.

“Approved Project Schedule” means that certain approved project schedule set forth in Appendix B , as may be amended from time to time in accordance with the provisions of this Contract.

“Authorized Representative” means, with respect to each Party, the individual appointed by such Party under Section 19.2 to act on such Party’s behalf with respect to that Party’s duties and responsibilities under this Contract. “Balance of Plant Equipment” means all materials, workmanship, Work and equipment other than the Owner Furnished Equipment necessary to perform the Work.

“BOP Aux Electrical Load” has the meaning set forth in Appendix G.

“Building Permits” means those Permits required to be obtained or maintained in order for Contractor to perform the engineering, procurement, site clearing, civil works, construction and testing of the Facility on the Facility Site or the performance of the Work related to similar activities; provided, that if any such required Permits need to be obtained in the name of Owner and not in the Contractor’s or Subcontractors’ name, each of Owner and Contractor shall cooperate with the other as reasonably necessary to enable the party with responsibility to obtain a Permit to obtain such Permit in the Owner’s name. Building Permits shall not include Permits pertaining to (i) environmental regulation of the Facility Site (other than with respect to Contractor’s activities thereon in its performance of the Work), (ii) land use or zoning matters affecting the Facility Site, (iii) environmental regulation of start-up, testing or operation of the Facility, or (iv) ownership or operation of the Facility and the Project.

“Business Day” means any calendar day, except Saturdays, Sundays and national holidays, which are observed by Federal Reserve member banks in New York City, New York and Pioneer Day as observed by the state of Utah.

“Change” has the meaning set forth in Section 11.1.1.

“Change Order” has the meaning set forth in Section 11.1.2.

“Commencement Date” has the meaning set forth in Section 2.1.

“Commissioning Test” has the meaning set forth in Appendix D.

“Completion Tests” means all the tests required to establish compliance with the Contract in order to achieve Substantial Completion of Phase 1 or Phase 2, as applicable, and for the avoidance of doubt, includes the Performance Acceptance Tests and the Performance Tests.

“Construction Documents” has the meaning set forth in Section 2.2.2.4.

“Contingency” means the amount of [ * * * ] ^* as such amount may be adjusted pursuant to this Contract, which is available to cover Direct Costs if, in the aggregate, the Direct Costs exceed the Target Cost.

“Contract” means this Engineering, Procurement and Construction Contract, including the Appendices identified in the table of contents hereto, as the same may be amended, modified or supplemented from time to time.

“Contract Documents” has the meaning set forth in Section 20.1.

“Contractor” has the meaning set forth in the preamble to this Contract.

“Contractor Event of Default” has the meaning set forth in Section 14.4

“Contractor’s Excess Cost Liability” has the meaning set forth in Section 6.3.1

“Contractor Initiated Change” has the meaning set forth in Section 11.2.1

______________

^* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC.

 

2

 

“Contractor Taxes” has the meaning set forth in Section 6.7.1.

“Contractor’s Personnel” means Contractor, its employees, agents and Subcontractors and each Subcontractor’s employees, agents and subcontractors.

“Contractor Critical Schedule Milestone” has the meaning set forth in Appendix B .

“Contractor Guarantor” means The Shaw Group Inc., or such substitute guarantor as Owner may approve in its discretion from time to time.

“Credit Requirement” means, in the case of Contractor, that Contractor meets the requirements of any one or more of clause (i) and clause (ii) below: (i) Contractor or

Contractor’s Guarantor maintains a senior unsecured debt rating from Standard & Poor’s of [ * * * ] ^* ; (ii) if Contractor or Contractor’s Guarantor has no debt rating, Contractor meets ALL of the following credit standards: a) tangible net worth equal to the projected maximum exposure under the Contract, b) no change in the condition of Contractor’s earnings, net worth, or working capital since the effective date of The Shaw Group, Inc.’s 10Q for the period ending November 30, 2003, which would reasonably be anticipated to impair the Contractor’s ability to meet its obligations under this Contract, and c) Contractor is not in default under any of its other agreements and is current on all of its financial obligations; and in the case of Owner, that Owner maintains a senior unsecured debt rating from Standard & Poor’s of [ * * * ] ^* or Moody’s Investor Services of [ * * * ] ^* .

“Design Development Documents” has the meaning set forth in Section 2.2.2.2.

“Delay LD Cap” has the meaning set forth in Section 7.5.

“Direct Costs” means the actual allowable costs and charges incurred by Contractor in the performance of the Work to be paid or reimbursed by Owner as more particularly set forth in Section 6.2.

“Excluded Obligations” has the meaning set forth in Section 9.1.5

“Facility” means all those components, including Phase 1 and Phase 2, comprising a nominal 525 MW natural gas fired combined cycle power plant and all systems relating thereto (as further described in the Contract Documents).

“Facility Site” means that certain parcel of land owned, leased, or to be owned or leased by Owner on which the Facility will be located, as further described in Appendix A .

“Fee” means the amount of [ * * * ] ^* , as such amount may be adjusted from time to time to reflect Material Changes to the Scope of Work instituted at Owner’s request pursuant to Section 11.2.2 of this Contract.

“Final Completion” has the meaning set forth in Section7.9.1.

“Final Completion Certificate” has the meaning set forth in Section 7.9.3.

“Force Majeure” has the meaning set forth in Section 12.1.

“Fuel” has the meaning established in Appendix C.

“Full Notice to Proceed” has the meaning established in Section 2.1.2.

“Gas Turbines” means the two General Electric Frame 7F combustion turbine generators and related equipment to be procured by Owner as more fully described in Appendix R.

“GSUs” means the three generation step up transformers and related equipment to be procured by Owner as more fully described in Appendix R.

______________

* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC.

 

3

 

“Guaranteed BOP Aux Electrical Load” has the meaning set forth in Section 7.6A.

“Guaranteed Substantial Completion Dates” has the meaning set forth in Section 7.1(ii).

“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, gases), or any substances now or at any time subject to regulation, control, remediation or otherwise addressed as a hazardous substance under Applicable Laws, including those laws, regulations and policies relating to the discharge, emission, spill, release, or threatened release into the environment or relating to the disposal, distribution, manufacture, processing, storage, transport, treatment, transport, or other use of such substances.

“HRSGs” means the two heat recovery steam generators and related equipment (including the bypass stacks and dampers (if elected by Owner) and FAA lighting, if required) to be procured by Owner as more fully described in Appendix R.

“Interim Construction Agreement” means the Contract between PacifiCorp and Stone & Webster, Inc. for Currant Creek Initial Site Activities dated as of December 31, 2003.

“Late Substantial Completion LDs” has the meaning set forth in Section 7.5.

“Limited Notice to Proceed” has the meaning set forth in Section 2.1.1.

“Material Adverse Change” means that Contractor has, in the reasonable opinion of Owner, experienced a material adverse change in the ability to fulfill its obligations under this Contract, including, but not limited to, any such change that results in its failing to comply with the Credit Requirement.

“Milestone” means any and each of the milestones specified in the Milestone Fee Payment Schedule.

“Milestone Fee Payment” means the Fee payable to Contractor pursuant to the Milestone Fee Payment Schedule.

“Milestone Fee Payment Schedule” means the Fee payment milestone schedule contained in Appendix E.

“Minimum Performance Levels” means the Facility meets the performance standards applicable to the Facility for each of Phase 1 and Phase 2 required for Substantial Completion, as more fully set out in Appendix G.

“Monthly Progress Report” means a progress report containing the information required by Section 6.4.4.5

“Notice of Final Completion” has the meaning set forth in Section 7.9.2.

“Notice of Substantial Completion” has the meaning set forth in Section 7.3.

“Operation and Maintenance Manuals” means the instructions for the operation and maintenance of the Facility to be prepared by Contractor as described in Section 10.1, and as more fully described, as to form and substance, in the Scope of Work.

“Owner” has the meaning set forth in the preamble to this Contract, and shall include its successors and assigns.

“Owner Critical Schedule Milestones” has the meaning set forth in Appendix B.

“Owner’s Executive Representative” means the person to whom notices pursuant to Section 6.9.6 are to be delivered, as identified in Section 20.7 as the same may be amended from time to time.

“Owner Initiated Change” has the meaning set forth in Section 11.2.2

 

4

 

“Owner Subcontractors” means any party with whom Owner contracts for the provision of goods or services other than Contractor with respect to the Project.

“Owner(’s) Personnel” means Owner, its employees, agents and Owner Subcontractors and each Owner Subcontractor’s employees, agents and subcontractors.

“Owner Indemnitees” has the meaning set forth in Section 13.1.1.

“Owner Furnished Equipment” means the Gas Turbines, HRSGs, Steam Turbine, ACC, GSUs, Unit Aux Transformers and Switchyard, together with their related components, materials, supplies and parts, as further described in Appendix R .

“Owner Furnished Equipment Documents” means the purchase orders and other procurement documents for Owner Furnished Equipment.

“Parties ” means Owner and Contractor; “Party” means Owner or Contractor, as the case may be.

“Payment Escrow Account” shall have the meaning as set forth in Section 6.4.4.

“Payment Schedule” shall have the meaning as set forth in Appendix E, as further described in Section 6.4.1.

“Performance Acceptance Tests” means the tests for establishing compliance with the Minimum Performance Levels for each of Phase 1 or Phase 2, as applicable, required for Substantial Completion, as more fully set out in Appendix D.

“Performance Guaranty” shall have the meaning set forth in Appendix G.

“Performance LDs” shall have the meaning as set forth in Section 7.6.

“Performance Tests” shall mean those tests required to establish the extent of achievement of the Performance Guaranty.

“Permits” means all valid and effective waivers, franchises, variances, permits, authorizations, licenses or orders of or from any federal, state, provincial, county, municipal, regional, environmental or other governmental body, instrumentality, agency, authority, or court having jurisdiction over construction of the Facility, the Facility Site, performance of the Work, or operation of the Facility, as may be in effect from time to time.

“Person” means any individual, corporation, partnership, limited liability company, association, joint stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, other than Owner or Contractor.

“Phase 1” means the two simple cycle combustion turbines and all supporting equipment, having achieved Substantial Completion for such phase and operating or capable of being operated as stand-alone generating units, as described more fully in the Contract Documents.

“Phase 2” means the conversion of Phase 1 into a 2x1 combined cycle operation generating facility, including the incorporation of one steam turbine generator, the air cooled condensing unit and all supporting equipment, having achieved Substantial Completion for the Project, as described more fully in the Contract Documents.

“Procurement Documents” shall have the meaning set forth in Section 2.2.2.3.

“Project” means, collectively, the design, engineering, permitting, procurement, construction, installation, commissioning, start-up, testing and completion of the Facility.

“Project Design Book” means the index of documents, drawings and information which reflects the Facility design, including the Design Development Documents, the Construction Documents and the other documents required to be produced or delivered by Contractor hereunder, as further described in the Scope of Work.

“Project Taxes” has the meaning set forth in Section 6.7.2.

 

5

 

“Prolonged Delay Date” has the meaning set forth in Section 7.5.

“Prudent Electric Power Industry Practices” means the practices, methods, techniques and standards that, at the particular time of performance of the Work, are prudent and generally accepted in the electric power industry in the United States, or if more stringent, those practices, methods, techniques and standards that are specifically practiced by Contractor, for use in connection with the design, procurement, engineering, construction, testing and operation of power plants of the same or similar size and type as the Facility. Prudent Electric Power Industry Practices are not limited to the optimum practice or method to the exclusion of others, but rather refer to commonly used and reasonable practices and methods.

“Punch-List” means the list prepared in accordance with Section 7.8, which list shall set forth all items of work that remain to be performed in order to ensure that the Work fully complies with all of the standards and requirements set forth herein. The Punch List shall not include any items of work, alone or in the aggregate, the non-completion of which prevents the Facility from (i) reaching Substantial Completion or (ii) being legally and safely placed in commercial operation.

“Real Estate Rights” means all rights in or to real estate (including title to or other rights to use or access the Facility Site, leases, contracts, permits, easements, licenses, private rights of way, and utility and railroad crossing rights) required to be obtained or maintained in connection with construction of the Facility on the Facility Site, performance of the Work, or operation of the Facility (including the transportation of all necessary materials, equipment and other items to the Facility Site, access for the construction, and the startup and testing of the Facility).

“Required Changes” has the meaning set forth in Section 11.3.5.

“Scope of Work” means the scope of work attached hereto as Appendix Q .

“Steam Turbine” means the steam turbine generator and related equipment to be procured by Owner as more fully described in Appendix R.

“Subcontract” means any contract by Contractor with a Subcontractor with respect to performing any part of the Work or providing any services, equipment or materials in connection with the Work.

“Subcontractor” means each and every vendor, supplier, materialmen or contractor under a Subcontract to Contractor, performing any part of the Work or providing any services, equipment or materials in connection with the Work.

“Substantial Completion” has the meaning set forth in Section 7.2.

“Substantial Completion Certificate” means the certificate issued by Owner upon achievement of Substantial Completion pursuant to Section 7.4.

“Switchyard” means the switchyard and related equipment to be procured and erected on a turnkey basis by Owner as more fully described in Appendix R.

“Target Cost” means the sum of all allowable Direct Costs agreed upon by the Parties as of the Commencement Date that will be incurred in Contractor’s performance of the Work, (specifically including amounts paid under the Limited Notice to Proceed and the Interim Construction Agreement), and shall be equal to [ * * * ] ^* , as such amount may be adjusted pursuant to this Contract.

“Target Price” or “TP” is the sum of the Target Cost and the Contingency.

“Terms and Conditions” means Articles 1 through 20 hereof.

______________

^* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC.

 

6

 

“Turnover Package” means the documentation (including drawings, start-up procedures, log sheets, settings, and other items) in content, form and substance reasonably acceptable to Owner, submitted by Contractor to Owner which demonstrates that the systems comprising the Facility have been completed in accordance with this Contract and may be operated safely for their intended purposes.

“Unit Aux Transformers” means the two unit auxiliary transformers and related equipment to be procured by Owner as more fully described in Appendix R.

“Warranty” has the meaning set forth in Section 10.1.

“Warranty Period” has the meaning set forth in Section 10.2.

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

“Work Product” has the meaning set forth in Section 2.7.

1.2 Interpretation . Unless the context requires otherwise, in this Contract (a) words singular or plural in number shall be deemed to include the other and pronouns having a masculine or feminine gender shall be deemed to include the other; (b) any reference contained herein to this Contract or any other agreement or any appendix, schedule, exhibit or attachment hereto or thereto shall mean this Contract or such other agreement and such schedules, exhibits and attachments as amended, supplemented or otherwise restated from time to time; (c) any reference in this Contract to any Person shall include its permitted successors and assigns and, in the case of any governmental instrumentality, any Person succeeding to its functions and capacities; (d) any reference in this Contract to any Article, Section, Appendix, Exhibit or Schedule shall mean and refer to the Article or Section contained in or the Appendix, Exhibit or Schedule attached to this Contract; and (e) the words “include” and “including” shall mean to include, without limitation.

ARTICLE 2

Contractor’s Work and Other Obligations

2.1 Commencement of the Work .

2.1.1 Limited Notice to Proceed . Owner has issued and delivered to Contractor (i) a limited notice to proceed dated August 18, 2003 (such notice and the subsequent extensions thereto are collectively referred to herein as the “Limited Notice to Proceed” ), and (ii) the Interim Construction Agreement, in anticipation of the execution of this Contract, which authorized Contractor to perform certain work on the Project for which Contractor has been or is being separately reimbursed. Upon issuance of the Full Notice to Proceed, any of the work actually performed under the Limited Notice to Proceed or under the Interim Construction Contract shall be deemed to have been performed as Work under and pursuant to the terms of this Contract. The amounts paid under the Limited Notice to Proceed and the Interim Construction Contract identified in Appendix E constitute Direct Costs under this Contract

2.1.2 Full Notice to Proceed . Following the receipt of approvals from the Utah Public Service Commission and the Utah Division of Air Quality and such other governmental or regulatory bodies as Owner in its sole discretion deems appropriate for the construction and operation of the Facility, Owner may issue to Contractor a written notice directing Contractor to commence performance of the Work (the “ Full Notice to Proceed ”), and Contractor shall commence full performance of the Work as of the date of such notice (the “ Commencement Date ”). If Owner issues the Full Notice to Proceed after February 23, 2004, then effects to schedule and costs will be addressed through the Change Order process described in Article 11.

2.2 The Work . Contractor shall (except only to the extent otherwise defined as Owner’s responsibility in the Contract) perform or cause to be performed all of the work, services and obligations (including the satisfaction of those liabilities associated with such work, services and obligations), required in connection with the design, engineering, permitting, procurement, civil works, construction, installation, integration (as more particularly described in Appendix Q) of Owner Furnished Equipment, training for operation, commissioning, start-up, testing and Substantial Completion and Final Completion of the Project and shall provide the materials and equipment, machinery, tools, labor, utilities, chemicals, transportation (including without limitation transportation of Owner Furnished Equipment, as further described in Appendix Q, from the rail siding to the Facility Site), administration

 

7

 

and other services and items required for and related to the foregoing, all as further described in Appendix Q and otherwise to be performed in accordance with the Contract Documents, including any Change Orders (the “Work”). Contractor shall perform the Work in the most efficient and cost effective means available within the requirements of this Contract.

2.2.1 Work in General . In general, the Work shall consist of two phases, including integration of the Owner Furnished Equipment, as follows: (1) Phase 1 to reach Substantial Completion by [ * * * ] ^* ; and (2) Phase 2 to reach Substantial Completion by [ * * * ] ^* . Each phase is described in more detail in Appendix Q.

2.2.2 Engineering, Design, Procurement and Construction . Contractor represents and warrants that it has thoroughly familiarized itself with the Facility Site and the Contract Documents and agrees that it will perform the Work in a manner that meets or exceeds the requirements set forth in the Contract Documents.

2.2.2.1 Engineering . Contractor will perform all engineering services necessary to perform the Work and will cooperate with Owner’s reasonable requests to review and, to the extent Owner may require pursuant to Article 5, approve the engineering and design efforts of Contractor, including cooperating with any third parties acting at the request of Owner, (including without limitation any federal, state and local agencies or others as Owner may direct). Contractor shall determine the extent to which engineering work to be performed by Contractor, or any Subcontractor requires certification under Applicable Law by professional engineers licensed and properly qualified to perform such engineering services in the jurisdiction in which such services are to be performed, and to provide or cause to be provided all such required certifications.

2.2.2.2 Design Development Documents . As further described in the Contract Documents, Contractor will prepare, by the date specified in the Approved Project Schedule, those design development documents for the Facility listed in Appendix Q consisting of drawings, models, specifications, plans and other documents necessary to fix and describe the Facility (collectively, the “ Design Development Documents ”).

2.2.2.3 Procurement Documents . As further described in the Contract Documents, Contractor will prepare, by the date specified in the Approved Project Schedule, those procurement policies, standards and documents, including terms and conditions, (the “Procurement Documents” ) necessary for Contractor to perform the procurement services called for herein.

2.2.2.4 Construction Documents . As further described in the Contract Documents, based upon Design Development Documents or any further adjustments in the scope or quality of the Project approved by Owner pursuant to Article 11, Contractor will prepare, prior to undertaking the related Work, those drawings and specifications specified in Appendix Q setting forth in detail the requirements for the construction of the Facility (collectively, the “ Construction Documents ”).

2.3 Hazardous Substances and Off-Site Impacts .

2.3.1 Contractor shall not release or cause the release of any Hazardous Substances brought onto the Facility Site or adjacent areas by Contractor, any Subcontractor or others in the course of performing the Work. Contractor will immediately notify Owner of any known spills, emissions or other releases of Hazardous Substances that occur in connection with the performance of the Work. Contractor will be responsible for removing from the Facility Site and areas adjacent thereto, and for properly disposing of, in a manner acceptable to Owner and in compliance with the Contract Documents, Applicable Laws and Applicable Permits, Hazardous Substances brought onto or released, generated or accumulated at the Facility Site by Contractor or any Subcontractor in the course of performing the Work. As a condition precedent to Final Completion, Contractor will provide to Owner a certification in a form acceptable to Owner stating that (a) no Hazardous Substances were installed or otherwise incorporated in the Facility, other than Hazardous Substances notified to Owner in said certification, and utilized in the performance of the Work, and (b) Hazardous Substances brought onto or generated at the Facility Site by Contractor or any Subcontractor were used released, removed or disposed of in compliance with the Contract Documents, Applicable Laws and Applicable Permits.

______________

^* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC.

 

8

 

2.3.2 In the event Contractor encounters on the Facility Site material reasonably believed to be a pre-existing Hazardous Substance, then Contractor will, as necessary, immediately cease performance of any Work in the area affected and immediately will report the condition to Owner. Contractor will not thereafter resume performance of the Work in the affected area except with the prior written permission of Owner. If Owner instructs Contractor to resume performance of the Work, and to the extent that the Parties agree in writing on Contractor’s course of subsequent actions (consistent with Applicable Law) in connection with such Hazardous Substance in order to allow continued performance of the Work, then Contractor will proceed with the Work in the affected area subject to Article 11 where applicable.

2.3.3 Contractor shall, in performing the Work, control fugitive dust, storm water runoff and noise and otherwise act in a manner so as to limit all impacts of the Work off of the Facility Site in compliance with Applicable Laws.

2.4 Coordination With Regulators . Contractor shall cooperate with Owner’s reasonable requests in connection with its dealings with federal, state and local governmental agencies in regards to the Work, any Applicable Permits as may be required to complete the Work and any approvals from any state utility regulatory commission (including in connection with proceedings dealing with Owner’s rate or cost recovery applications), the Federal Energy Regulatory Commission or others that Owner determines are necessary.

2.5 Books and Records . Contractor shall maintain fiscal records and books of account pertaining to the Project in accordance with U.S. generally accepted accounting principles consistently applied and Applicable Laws.

2.6 Standards of Performance . Contractor shall be responsible for construction means, methods, techniques, standards, sequences, procedures and safety and security programs in connection with the performance of the Work. Contractor shall perform the Work (a) in accordance with the Contract Documents (b) in a professional, prudent, cost-effective, good and workmanlike manner, and (c) in accordance with Applicable Laws, Applicable Permits, and Prudent Electric Power Industry Practices, including applicable engineering, environmental, construction, safety, and electrical generation codes and standards as required under or listed in the Scope of Work or as otherwise may apply as such codes and standards exist on the Commencement Date In the case of issues that may materially impact the Work, Contractor shall act with reasonable diligence (but except as otherwise provided in the Contract not including any obligation to engage in formal dispute resolution processes) to achieve satisfactory resolution of such issues.

2.7 Title .

2.7.1 Title to all materials, supplies, equipment and machinery used in connection with the Work and which become a permanent part of the Facility shall vest in Owner upon the earlier of (a) the installation of such materials, supplies, equipment or machinery into the Facility Site, or (b) full payment therefore by Owner pursuant to Article 6. Title to water, soil, rock, gravel, sand, minerals, timber and any other resources developed or obtained in the excavation or the performance by Contractor of the Work and the right to use said items or dispose of the same is hereby expressly vested in and reserved by Owner. Notwithstanding the foregoing, title to Owner Furnished Equipment shall at all times remain with Owner.

2.7.2 Contractor shall retain title in its non-Project specific standard drawing details, designs, specifications, databases, computer software and any other proprietary property as identified as such and agreed to by Owner at the time of use by Contractor; provided , however , that Owner shall at all times (including after any termination of this Contract), have the right to retain copies thereof and is hereby granted a perpetual, irrevocable license to use such drawings, designs, specifications, databases, computer software and any other information of Contractor related to the Project and the Facility at no additional cost, fee or royalty to Owner. Owner’s use of any such documents or information for any purpose other than as set forth in this Contract, or modification to such documents by anyone other than Contractor, shall be at the Owner’s sole risk and without liability or legal exposure to Contractor. Title to all drawings, designs, details, models, specifications, reports, plans, databases, computer software and other documents produced by Contractor in connection with the Work shall vest in Owner upon payment pursuant to Article 6. All work product of Contractor, its agents and employees and each Subcontractor performed pursuant to this Contract (collectively, the “ Work Product ”) shall be deemed, to the greatest extent possible, “works made for hire” (as defined in the Copyright Act, as

 

9

 

amended 17 U.S.C.A. § 101 et seq.). Contractor agrees to execute and deliver and cause its employees and agents and all Subcontractors to execute and deliver to Owner any transfers, assignments, documents or other instrument which Owner may deem necessary or appropriate to vest complete title and ownership of any or all Work Product, and all rights therein, in Owner. Notwithstanding the foregoing, Contractor shall have the right to use the Work Product, including business methods and technical methods and processes used and developed in the course of the Work, in its general business practices and operations as long as Contractor maintains such Work Product in strict confidence and does not reveal such Work Product to any third party without the written consent of Owner.

2.8 Facility Site Conditions . Contractor has inspected the Facility Site prior to execution of the Contract and Contractor has based the Target Price on such inspection. In addition, Contractor conducted a geotechnical investigation prior to execution of the Contract based on the proposed layout of major equipment as of the date of this Contract, and the Target Price takes into account the results of such investigation.

2.9 Nature of the Work . In setting the Target Price and performing the Work, Contractor shall be responsible for having taken steps reasonably necessary to understand the nature of the Work, the general local physical, topographic and weather conditions which are anticipated to affect the Work and the costs thereof. With respect to any known pre-existing structures set out in Appendix Q with which the Work may interface or within which the Work or any portion thereof may be integrated, Contractor shall be responsible for having taken reasonable steps to fully understand the structural limitations, soundness and construction makeup of such structures. Failure by Contractor to fully acquaint itself with such conditions which may affect the Work shall not relieve Contractor of its responsibilities under this Contract.

2.10 Subcontractors.

2.10.1 Acceptable Subcontractors . Unless a Subcontractor is already listed on the Approved Bidders List in Appendix N, Owner shall have the right to approve (such approval not to be unreasonably withheld or delayed) each Subcontractor from whom Contractor or any Contractor’s Personnel proposes to solicit bids or otherwise engage in connection with the Work for any aggregate value in excess of [ * * * ]* or which is associated with a critical plant component, as identified by Owner to Contractor from time to time, such identification to be made in advance of Contractor’s solicitation for bids. Once approved by Owner, such Subcontractor shall be considered added to the Approved Bidders List for the specific classes of goods or services for which such Subcontractor is added to the Approved Bidders List. Contractor shall select each Subcontractor from among those pre-approved by Owner. Any successor or replacement of any such Subcontractor shall be subject to Owner’s prior written approval, unless such successor or replacement is already on the Approved Bidders List for the specific classes of goods or services for which such Subcontractor is added to the Approved Bidders List. All other vendors, suppliers, materialmen, consultants or subcontractors may be selected by Contractor following reasonable advance written notification to Owner. Contractor shall provide to Owner such information concerning each Subcontractor as Owner may request. Owner shall have the right to rescind its approval of any Subcontractor for cause by notice to Contractor with respect to contracts with the specific Subcontractor not executed prior to the date on which Owner provides such notice of rescission.

2.10.2 Supervise . Contractor shall be solely responsible for and have exclusive control over each Subcontractor, labor, construction means, material suppliers, methods, techniques, sequences and procedures and for supervising and directing all portions of the Work. Contractor shall be fully responsible for any part of the Work accomplished by any Subcontractor and for the actions or inactions of each Subcontractor, including Persons either directly or indirectly employed by it. Contractor shall be solely responsible for dealing with, coordinating and handling any communications, negotiations and dispute resolutions concerning each Subcontractor and the Work.

______________

* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC.

 

10

 

2.10.3 No Privity with Owner . Owner shall not be deemed by virtue of this Contract or otherwise to have any contractual obligation to or relationship with any Subcontractor. Contractor shall include a clause to this effect in each Subcontract with each Subcontractor. Contractor shall be solely responsible for paying each Subcontractor for services, equipment, material or supplies in connection with the Work and the Facility without prejudice to Owner’s payment obligations to Contractor pursuant to Section 6.4.

2.10.4 Purchase Orders and Subcontracts . Consistent with the provisions of Section 2.10.5, Contractor shall use the Procurement Documents in connection with the Work. Owner shall have the right to review and approve the Procurement Documents and Subcontracts valued in excess of $ [ * * * ] ^* or which are associated with a critical plant component, as identified by Owner to Contractor from time to time, such approval not to be unreasonably withheld or delayed. Contractor and Owner shall meet and attem