ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
between
ORNI 7 LLC
and
ORMAT NEVADA INC.
Dated as of August 2nd, 2004
TABLE OF CONTENTS
SECTION 1 - DEFINITIONS, INTERPRETATION AND CONTRACT DOCUMENTS ............ 3
SECTION 2 - CONTRACTOR RESPONSIBILITIES ................................... 9
SECTION 3 - COMPANY RESPONSIBILITIES ...................................... 12
SECTION 4 - NOTICE TO PROCEED ............................................. 14
SECTION 5 - COMPENSATION AND PAYMENT ...................................... 14
SECTION 6 - TESTING ....................................................... 17
SECTION 8 - CHANGES IN THE WORK ........................................... 20
SECTION 9 - DESIGN AND DOCUMENTATION ...................................... 22
SECTION 10 - WARRANTIES..................................................... 23
SECTION 11 - REMEDIES ...................................................... 26
SECTION 12 - TITLE; CARE OF THE WORK ....................................... 27
SECTION 13 - INSURANCE ..................................................... 28
SECTION 14 - DISPUTE RESOLUTION ............................................ 30
SECTION 15 - INDEMNIFICATION ............................................... 31
SECTION 16 - ASSIGNMENT .................................................... 32
SECTION 17 - SUBCONTRACTORS ................................................ 33
SECTION 18 - SUSPENSION .................................................... 34
SECTION 19 - TERMINATION ................................................... 35
SECTION 20 - FORCE MAJEURE ................................................. 36
SECTION 21 - CONFIDENTIALITY ............................................... 37
SECTION 22 - NOTICES ....................................................... 38
SECTION 23 - MISCELLANEOUS ................................................. 39
SECTION 24 - INDEPENDENT ENGINEER .......................................... 41
LIST OF EXHIBITS
Exhibit A Scope of Work
Exhibit B Contract Price and Milestone Payment Schedule
Exhibit C Drawings and Specifications
Exhibit D Tests
Exhibit E Warranty Claim Procedures
Exhibit F Schedule
Exhibit G Final Acceptance Certificate
Exhibit H-1 Form of Interim Lien Waiver
Exhibit H-2 Form of Final Lien Waiver
Exhibit I Form of Guaranty
ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT (the "Contract")
dated as of August 2nd, 2004 is made by and between:
(1) ORNI 7 LLC, a limited liability company with its principal place of
business at 980 Greg Street, Sparks, NV 89431-6039 ("COMPANY"); and
(2) ORMAT NEVADA INC., a Delaware corporation with its principal place of
business at 980 Greg Street, Sparks, NV 89431-6039 ("CONTRACTOR").
Company and Contractor (each individually, a "Party" and together, the
"Parties") agree as follows:
SECTION 1 - DEFINITIONS, INTERPRETATION AND CONTRACT DOCUMENTS
1.1 DEFINITIONS
In addition to the terms defined elsewhere in this Contract, the
definitions of certain terms used in this Contract with initial letters
capitalized are as set forth herein.
"AFFILIATE" means, with respect to any person or entity, any other person
or entity (including, without limitation, any officer, director, shareholder,
partner, employee, agent or representative of such person or entity) that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such first person or entity. For
purposes of this definition, "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a person or entity, whether through the ownership of voting
securities, partnership or other ownership interests, by contract, by Law or
otherwise. For the purposes of this Contract, Company and Contractor shall not
be considered Affiliates of each other.
"BUSINESS DAY" means any day other than a Saturday or Sunday or other day
on which banks in New York, New York or Nevada are authorized or required by law
or executive order to remain closed.
"CHANGE IN THE WORK" means a change to the Work as provided in Section 8.
"CHANGE OF LAW" means any Law, official interpretation thereof or manner
of interpretation thereof, that is amended or modified, is enacted, adopted,
promulgated or otherwise becomes effective or is repealed, revoked, suspended or
not renewed after the Effective Date and which increases Contractor's cost of
performing the Work, delays Contractor's performance of the Work or otherwise
adversely affects Contractor's performance of its obligations under this
Contract.
"CHANGE ORDER" means a written change order describing the Change in the
Work, its effect, if any, on the Contract Price, the Milestone Payment Schedule,
the Schedule, and any other provision of this Contract that is affected.
"COLLATERAL AGENT" means Union Bank of California, N.A.
"COMPANY" shall have the meaning set forth in the introductory paragraph
to this Contract.
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"COMPANY DEFAULT" means the failure or delay of Company or its
representatives, agents, subcontractors or suppliers (other than Contractor and
its Subcontractors and their agents and employees) to meet Company's obligations
under this Contract.
"COMPANY OPERATOR" means Ormat Nevada Inc. in its capacity as operator of
the Steamboat Project pursuant to the Amended and Restated Operation and
Maintenance Agreement, dated as of December 8, 2003, among Orni 7 LLC, Steamboat
Geothermal LLC and Ormat Nevada Inc.
"COMPANY PERMITS" means Permits necessary for the construction, operation
and maintenance of the Facility which are to be obtained by Company and which
are listed in Exhibit A hereto.
"COMPANY'S REPRESENTATIVE" means the individual designated by Company
pursuant to Section 3.2 to act as its representative under and with respect to
matters related to this Contract.
"CONTRACT" means this Engineering, Procurement and Construction Contract,
together with the Exhibits attached hereto, as the same may be amended or
otherwise modified from time to time as permitted herein.
"CONTRACT PRICE" means the total aggregate price payable to Contractor by
Company as set forth in Exhibit B attached hereto, as adjusted pursuant to the
provisions of this Contract.
"CONTRACTOR PERMITS" means Permits (other than the Company Permits)
required for the construction of the Work
"CONTRACTOR'S REPRESENTATIVE" means the individual designated by
Contractor pursuant to Section 2.3.2 to act as its representative under and with
respect to this Contract.
"CORRECTION CURVES" means the correction curves as set out in Exhibit D
used to adjust Facility performance from variations from the Design Conditions
and/or other specified factors.
"DAY" means a twenty-four (24) hour period beginning and ending at 12:00
midnight.
"DEFECT" means any Work that does not conform to the warranties set forth
in Section 10.1 of this Contract.
"DEFECT REMEDY WORK" means Contractor's repair or replacement of any
Defect.
"DELAYED PAYMENT RATE" means a per annum rate of interest equal to the
lesser of (i) LIBOR plus four percent (4%) and (ii) the maximum rate permitted
by applicable Law.
"DEPOSIT AND DISBURSEMENT AGREEMENT" means the agreement of such name
executed or to be executed among Collateral Agent, the Depositary Agent (as
defined therein), Ormat Funding Corp., Brady Power Partners, Steamboat
Geothermal LLC, Steamboat Development Corp., OrMammoth Inc., ORNI 7 LLC and ORNI
1 LLC, ORNI 2 LLC.
"DESIGN CONDITIONS" means the design operating conditions for the Facility
as set forth in Exhibits A and/or C.
"DOCUMENTS" means any design, drawing, certificate, specification, report,
studies, model, program, record, pattern, sample, written information and data
and other document of whatever nature (including a record thereof in software
form).
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"DOLLARS" or "$" means the lawful currency of the United States of
America.
"DRAWINGS" means Facility drawings and system descriptions contained in
Exhibit C.
"EFFECTIVE DATE" means the date of this Contract.
"FACILITY" or "GALENA FACILITY" means the Galena project, comprising of
two ITLUs and associated geothermal piping and transmission line works, which
shall be performed at the Steamboat Project site, and will enhance and
substitute portions of the presently existing Steamboat Project, as described in
Exhibit A.
"FINAL ACCEPTANCE" means satisfaction or waiver by Company or deemed
satisfaction of the Work requirements identified in Section 7.1.
"FINAL ACCEPTANCE CERTIFICATE" means a written certificate from Company
(and countersigned by the Independent Engineer) substantially in the form of
Exhibit G confirming that the Work requirements identified in Section 7.1 have
been completed.
"FINAL ACCEPTANCE DATE" means the date upon which Final Acceptance occurs
or is deemed to have occurred as set forth in the Final Acceptance Certificate.
"FINAL ACCEPTANCE NOTICE" means a written notice from Contractor
confirming that the Work requirements identified in Section 7.1 have been
completed.
"FORCE MAJEURE" means any war, declared or not, invasion, armed conflict
or act of public enemy, blockage, embargo, revolution, insurrection, riot, civil
commotion, act of terrorism, or sabotage provided that any such event occurs
within or directly involving the United States or any individual state, or any
other country from which machinery, equipment or material for the Facility are
procured, manufactured or transported through, an act of God, including but not
limited to lightning, fire, earthquakes, volcanic activity, floods, storms or
unusual weather conditions, cyclones, typhoons, or tornadoes, epidemic, labor
disputes (including strikes, or slowdowns, or lockouts that, in each case, are
not specific to Contractor or the Facility and are widespread or nationwide), or
any other event or circumstances or combination of event(s) or circumstances
beyond the reasonable control of a Party, provided, however, that the event or
circumstances shall not be considered Force Majeure under this Contract where
they are not considered force majeure or its equivalent providing relief in
favor of the Company under the terms of the PPA, and the provision of Force
Majeure relief under this Contract would conflict with the continuing
obligations of the Company under the PPA.
"GALENA RE-POWERING ACCOUNT" means the account of such name created under
the Deposit and Disbursement Agreement.
"GOVERNMENTAL AUTHORITY" means any local, state, regional, federal
governmental, regulatory or administrative agency, court, commission,
department, board, or other governmental subdivision, legislature, rulemaking
board, tribunal, or other governmental authority having jurisdiction over, or
purports to have or asserts or attempts to assert, jurisdiction to legislate,
decree, adjudicate or enforce any decision related to, or bearing on, the
Facility or the Work.
"GUARANTEED COMPLETION DATE" means the Guaranteed Completion Date
identified in the Schedule, as the same may be amended from time to time in
accordance with this Contract.
"GUARANTY" means the guaranty of Contractor's performance and payment
obligations under this Contract provided by Ormat Technologies Inc. in the form
attached hereto as Exhibit I.
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"INDENTURE" means that certain Indenture under which certain notes or
bonds will be issued, the proceeds in part of which will be used to finance the
construction of the Galena Facility.
"INDEPENDENT ENGINEER" means Stone & Webster Management Consultants, Inc.
or such other person or entity who has been designated by Company to undertake
certain tasks on behalf of the noteholders under the Indenture.
"INFORMATION" means any Drawings or other information furnished directly
or indirectly by the other Party hereto in connection with this Contract, the
Steamboat Project or the Galena Facility, whether such Information has been
furnished prior to, during or following termination of this Contract in
connection with or pursuant to the performance of this Contract.
"INSOLVENCY EVENT" means the bankruptcy, insolvency, liquidation,
administration or other receivership or dissolution of a Party and any
equivalent or analogous Proceedings by whatever name known and in whatever
jurisdiction and any step taken (including the presentation of a petition or the
passing of a resolution) for or with a view to any of the foregoing.
"ITLU" means an Integrated Two Level Unit, which is an electricity
generating unit of two binary cycles, one of high pressure and the second of low
pressure, designed and manufactured by Contractor or its Affiliates, as
described in Exhibit A.
"LAW" means any federal, state, commonwealth, local or other constitution,
charter, act statute, law, ordinance, treaty, resolution, directive (to the
extent having the force of law), code, rule, regulation, order, specified
standards or objective criteria contained in any applicable permit or approval,
which standards or criteria must be met in order for the Facility to be
constructed and operated lawfully, and other legislative or administrative
action of any Governmental Authority, or a final decree, judgment or order of a
court, or any applicable engineering, construction, safety or electrical
generation code.
"LIABILITY" shall mean any fine, penalty, damage, loss, cost, claim or
expense or other liability (including any related reasonable fees, expenses and
disbursements of a Party's counsel).
"LIBOR" means the London Interbank Offered Rate displayed at or about
11:00 a.m. London Standard Time on the Reuters' monitor screen on "LIBOR PAGE"
in London, for the shortest period therein.
"MAJOR SUBCONTRACTOR" means any Subcontractor engaged directly by
Contractor to perform Work at the Site, whose Subcontract (individually or in
the aggregate with all other such Major Subcontractor's Subcontracts with
Contractor) is of a value in excess of $1,000,000.
"MATERIALS" means all equipment, supplies, apparatus, instruments,
machinery, parts, tools, components, appliances, and appurtenances thereto to be
supplied under this Contract by Contractor as described in or required by the
Scope of Work.
"MILESTONE PAYMENT SCHEDULE" means the payment schedule for payment of the
Contract Price as set forth in Exhibit B.
"MONTH" means a period beginning at 12:00 midnight on the last Day of the
preceding calendar month and ending at 12:00 midnight on the last Day of the
calendar month.
"MW" means megawatts.
PAGE 6
"NET DELIVERABLE ENERGY" is the electric power output of the Facility
which is specifically defined and measured as described in Exhibit D hereto.
"NOTICE TO PROCEED" means Company's written notice to Contractor directing
Contractor to commence and complete the Work hereunder, as set forth in Section
4.
"OPERATION AND MAINTENANCE MANUAL" means the operation and maintenance
manual to be provided by Contractor to Company pursuant to Section 9.6.
"PPA" means the Power Purchase Agreement for the sale of energy by the
Facility executed or to be executed between the Nevada Power Co. or Sierra
Pacific Power Company and the Company.
"PERFORMANCE GUARANTEE" means the guaranteed level of Net Deliverable
Energy, which is 2,113,824 kilowatthours over the 96 hour test period at the
Design Point Conditions (defined in Exhibit A), and which to be attained as
specified in Exhibit D.
"PERFORMANCE TEST" means the test described in Section 3.2 of Exhibit D to
be carried out to determine whether the Performance Guarantee has been attained.
"PERMITS" means the permits, approvals and licenses required from
Governmental Authorities necessary for the construction, commissioning and
initial operation of the Facility and the performance of the Work.
"PROCEEDING" means any claim, suit, demand, allegation, arbitration,
dispute or other action process, or proceeding whether actual or threatened.
"PROJECT CONTRACTS" means the PPA, and the Interconnection Agreement with
respect to the Facility executed or to be executed between the Nevada Power Co.
or Sierra Pacific Power Company and the Company.
"PUNCHLIST ITEMS" means unfinished items of Work (such as delivery of
spare parts, painting, fine-finish grading or clean-up, updating of Drawings,
manuals or other Documents) the lack of which or the failure of which to
complete (considered individually or in the aggregate of all Punchlist Items)
does not or will not adversely affect, the safety or integrity of the Facility
and does not impact the performance or lawful operation of the Facility, in each
case as agreed to by the Independent Engineer and Contractor.
"SCHEDULE" means the completion schedule for the Facility, including the
Guaranteed Completion Date, as set forth in Exhibit F, as it may be amended from
time to time as set forth in this Contract.
"SCOPE OF WORK" means the specific delineation of items of Work to be
performed by Contractor as set forth in Exhibit A.
"SITE" means the site more specifically described in Exhibits A and/or C,
together with spaces, tunnels, canals, mooring rights, reservoirs, waterways,
surface water, ground water, diversion weirs, roads, easements, privileges,
access rights, rights-of-way and other rights and interests in land and water
acquired or to be acquired by Company to develop, engineer, build, own, operate
or maintain the Facility and appurtenant facilities, including any associated
working and laydown areas for Contractor.
"SPECIFICATIONS" means the performance specifications and standards for
the Facility and the performance of the Work as set forth in Exhibit C.
PAGE 7
"STEAMBOAT PROJECT" means the project consisting of several geothermal
electricity production plants, geothermal auxiliaries and field located at
Steamboat Springs, Washoe County, Nevada, which Company, directly or through its
Affiliates, owns or holds interests in as described in greater detail in Section
1.2 of Exhibit A.
"SUBCONTRACT" means an agreement between Contractor and a Subcontractor
for the performance of any portion of the Work.
"SUBCONTRACTOR" means any person or entity, other than Contractor's
employees, engaged directly by Contractor to perform any part of the Work,
including the provision of services or the supply of goods or Materials.
"TAX" means any present or future tax, charge, levy, impost or duty of any
kind whatsoever, or any amount payable on account of or as security for any of
the foregoing, imposed by any Governmental Authority together with any
penalties, additions, liens, surcharges and interest relating thereto.
"UNCONTROLLABLE COMPANY DEFAULT" means a Company Default which is not
within Company, Company Operator, or any of their respective Affiliate's
control, but is a Company Default involving third parties or circumstances
outside Company, Company Operator, or any of their respective Affiliate's
control.
"WARRANTY PERIOD" shall have that meaning given to it in Section 10.2.
"WORK" means all of the work, services and other duties, obligations
and responsibilities that are to be carried out by or under the direction of
Contractor pursuant to this Contract, including that work specifically described
as Contractor liabilities or obligations in the Scope of Work.
1.2 INTERPRETATION
1.2.1 Where the context requires, words importing the singular shall
include the plural and vice versa, and words importing persons shall include
entities.
1.2.2 A reference in this Contract to any Section, Exhibit, Clause or
Paragraph is, except where it is expressly stated to the contrary, a reference
to such section, exhibit, clause or paragraph in this Contract.
1.2.3 Headings are for convenience of reference only.
1.2.4 Each reference to this Contract shall include a reference to each
agreed variation of or supplement to this Contract as may be amended, varied or
supplemented from time to time.
1.2.5 Where the context requires, any reference to a person, entity or
Party shall include such person's, entity's or Party's successors and permitted
assigns.
1.2.6 References to the word "include" or "including" are to be
construed without limitation.
1.3 DOCUMENTS INCLUDED
This Contract shall consist of this document and the following Exhibits,
which are specifically incorporated herein and made a part hereof by this
reference.
Exhibit A Scope of Work
PAGE 8
Exhibit B Contract Price and Milestone Payment Schedule
Exhibit C Drawings and Specifications
Exhibit D Tests
Exhibit E Warranty Claim Procedures
Exhibit F Schedule
Exhibit G Final Acceptance Certificate
Exhibit H-1 Form of Interim Lien Waiver
Exhibit H-2 Form of Final Lien Waiver
Exhibit I Form of Guaranty
1.4 CONFLICTING PROVISIONS
In the event of any conflict between this document and any Exhibit hereto,
the terms and provisions of this document, as amended from time to time, shall
control. In the event of any conflict among the Exhibits, the order of the
Exhibits as stated above shall control.
SECTION 2 - CONTRACTOR RESPONSIBILITIES
2.1 GENERAL RESPONSIBILITIES
2.1.1 Except as otherwise expressly set forth in this Contract,
Contractor in consideration of the Contract Price shall provide, furnish and
perform, or cause to be provided, furnished or performed, engineering and design
services, Materials, consumables and utilities, and supervision, labor and
services required for the development, design, permitting, engineering,
procurement, manufacturing, transport to Site, quality assurance, inspection,
erection, construction, commissioning and performance testing of the Facility as
specified in the Scope of Work and in accordance with the provisions of this
Contract. Other than with respect to the items specifically described as
Company's responsibility, it is intended that Contractor's scope will include
everything to be provided which is requisite to complete the Facility as
specified herein and in accordance with the turnkey nature of this Contract.
2.1.2 Contractor shall diligently prosecute the Work in a good and
workmanlike manner in accordance with the Schedule and in accordance with
applicable Laws, Permits, the provisions of this Contract and the provisions of
the Project Contracts. If any applicable milestones described under the PPA will
be established at a date earlier than as described in Exhibit F, Exhibit F shall
be amended accordingly.
2.1.3 Contractor shall perform the Work in such a manner as to
reasonably minimize interference with and curtailment of the ongoing operations
of the Steamboat Project, to the extent practicable.
PAGE 9
2.2 SPECIFIC RESPONSIBILITIES
Without limiting the generality of Section 2.1 and subject to the terms
and conditions set forth in this Contract, Contractor shall at its own expense
furnish, undertake, provide or cause to be furnished, undertaken or provided the
following:
(a) preparation of the conceptual design and integrated detail design
and engineering of the Facility such that the Facility conforms with the Scope
of Work and meets the performance requirements described in this Contract;
(b) obtain the Contractor Permits from the applicable Governmental
Authorities;
(c) initiate and maintain safety precautions and programs relating to
the performance of the Work necessary to conform with applicable Laws and to
reasonably protect against injury to persons or damage to property on, about or
adjacent to the Site. Contractor shall incorporate all such safety precautions
and programs in a written safety program manual. Contractor shall provide, erect
and maintain reasonable safeguards for the protection of workers and the public
from the performance of the Work;
(d) clearing, excavation, backfilling, compaction/consolidation and
removal or importation of related materials required with respect to preparation
of the Site in accordance with the Scope of Work;
(e) procurement, supply and transportation to the Site of all
Materials necessary to complete the Facility;
(f) supervision and direction of construction and other Work
activities on the Site, including construction by Subcontractors, and the
coordination of the Work under this Contract;
(g) keep the Site from waste materials or rubbish caused by
Contractor's activities and in a reasonably presentable condition given the
nature of the Work. Contractor shall dispose of all rubbish and construction
debris in an authorized disposal area furnished by Company as provided in
Section 3.1(i);
(h) training, in the operation and maintenance of the Facility, of a
reasonable number of operating and maintenance personnel furnished by Company
pursuant to Section 3.1(f). Such training shall be carried out in conjunction
with the normal commissioning, start-up operations and testing activities of
Contractor;
(i) commission and test the Facility as detailed in Exhibits A and D;
(j) clearance of the Site of temporary structures, surplus Materials
and tools that were delivered or created by Contractor through the course of the
Work, upon completion of field work;
(k) provision of monthly reports on progress of the Work to the Owner
and Independent Engineer and provision of quarterly reports to the Collateral
Agent; and
(l) review the proposed interconnection arrangements to be made by
Company under the proposed Project Contract to ensure that the Facility can
interconnect without technical difficulty, and coordinate the Work in order to
facilitate construction of interconnection facilities, where necessary.
PAGE 10
2.3 CONTRACTOR'S PERSONNEL AND LABOR RELATIONS
2.3.1 Contractor shall ensure that at all times at the Site when
Work is being performed at the Site there are sufficient suitably qualified and
experienced personnel to supervise and perform such Work.
2.3.2 Contractor shall designate, by written notice to Company, a
representative who shall act as a single point of contact with Company in all
matters relating to the Work. Contractor's Representative shall have full
authority to act on behalf of Contractor for all purposes in connection with
this Contract.
2.3.3 Company shall be entitled by written notice to Contractor to
object to any representative or person employed by Contractor (including
Contractor's Representative) or any Subcontractor in the execution of the Work
who, in the reasonable opinion of Company, is incompetent or negligent, or
engaged in misconduct, and Contractor shall promptly remove such person from the
Work and appoint a suitable replacement, or ensure that the relevant
Subcontractor does so.
2.4 REPRESENTATIONS AND WARRANTIES OF CONTRACTOR
Contractor represents and warrants to Company that:
(a) Contractor is a corporation duly organized, validly existing and
in good standing under the Laws of the state of Delaware and has the requisite
legal power and authority to execute, deliver and perform this Contract;
(b) the execution, delivery and performance by Contractor of this
Contract has been duly authorized by all requisite action of Contractor, and
there is no provision in its charter documents requiring further consent for
such action by any other person or entity;
(c) this Contract constitutes the legal, valid and binding obligation
of Contractor, enforceable against Contractor in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
reorganization, moratorium or similar laws affecting or limiting creditors'
rights generally or by equitable principles relating to enforceability;
(d) the execution, delivery and performance by Contractor of this
Contract will not conflict with any Law, Permit or agreement to which it is a
party or by which it is bound;
(e) the Contractor Permits either have been obtained by Contractor
and are in full force and effect on the Effective Date or, in the reasonable
opinion of Contractor, will be timely obtained by Contractor in the ordinary
course of business and will be in full force and effect on or prior to the date
on which they are required to be in full force and effect;
(f) there are no actions, suits, proceedings or investigations
pending or, to Contractor's best knowledge after due inquiry, threatened against
it at law or in equity before any Governmental Authority, which individually or
in the aggregate could result in any materially adverse effect on Contractor's
ability to perform its obligations under the Contract; and
(g) it owns or has the right to use all patents, trademarks,
service marks, trade names, copyrights, license, franchises, other intellectual
property and proprietary rights necessary to perform the Work without conflict
with the rights of others.
PAGE 11
2.5 USE OF SPARE PARTS
Spare parts may be withdrawn by Contractor from Company's on site supply
of spare parts for the purposes of the Work where such usage does not adversely
jeopardize the ongoing operation and maintenance of the Steamboat Facility.
Contractor shall be responsible, at its cost, for replacing any such withdrawn
spare parts as soon as reasonably practicable and in any event no later than the
expiration of the Warranty Period.
2.6 GUARANTY
In order to guaranty and secure Contractor's performance of its
obligations hereunder, prior to or upon the issuance of the Notice to Proceed,
Contractor shall cause Ormat Technologies Inc., an Affiliate of Contractor, to
provide Company a guaranty in the form attached hereto as Exhibit I. The
guaranty shall remain valid and shall not expire until the fulfillment of
Contractor's obligations under this Contract.
SECTION 3 - COMPANY RESPONSIBILITIES
3.1 GENERAL RESPONSIBILITIES
Company shall, at Company's expense, furnish, undertake, provide or cause
to be furnished, undertaken or provided the following:
(a) make available to Contractor and its Subcontractors within fifteen
(15) Days of the date of the Notice to Proceed, and continuing until the end of
the Warranty Period, the Site, including space for all construction facilities,
laydown and storage areas, and roads and other means of access to and from the
Site in a timely manner and in accordance with Contractor's reasonable
requirements regarding amount, weight and dimensions of equipment to be
transported and the size and layout of the laydown and storage areas;
(b) obtain and maintain in effect all Company Permits from the
Governmental Authorities in a timely manner as required to permit Contractor and
its Subcontractors to proceed with the Work in accordance with the Schedule, and
to execute any documentation required with respect to Contractor Permits;
(c) execute any documentation required with respect to Contractor's
acquisition of environmental impact assessments, studies and statements required
(if any) in connection with the ownership, financing, construction, operation
and maintenance of the Facility and the performance of this Contract;
(d) furnish to Contractor within 30 days of execution of this Contract
copies of any environmental impact assessment, studies and statements prepared
or obtained in connection with the ownership, financing, construction, operation
and maintenance of the Facility and provide commercially reasonable assistance,
including a power of attorney (if required) as reasonably necessary for
Contractor to obtain the Contractor Permits in a timely manner as required to
permit Contractor and its Subcontractors to proceed with the Work in accordance
with the Schedule;
(e) arrange for electricity (for office use), water and other
utilities to be available to Contractor at then current market terms for the
same for use in the construction, start-up, testing and commissioning of the
Facility, in a timely manner as required to permit Contractor and its
Subcontractors to proceed with the Work in accordance with the Schedule;
PAGE 12
(f) provide a reasonably sufficient number of operating personnel,
including their supervisors, for training by Contractor as provided in Section
2.2(h), and for participating in the start-up, testing, commissioning,
maintenance and upkeep of the Facility through to Final Acceptance. Each person
designated for training by Company shall be a qualified technician and said
trainees shall not be deemed employees or Subcontractors of Contractor;
(g) provide the geothermal heat resource in the quantity and quality
detailed in Exhibits A and C, and in the time frame as required to permit
Contractor and its Subcontractors to proceed with the Work in accordance with
the Schedule;
(h) enable Contractor to provide or make arrangements for the tie-in
point to the electricity grid (or any other defined electricity consumer) to be
ready in a timely manner in accordance with the Schedules (Exhibits A and F);
(i) maintain the geothermal piping gathering system of the Steamboat
Project fully available to Contractor for Contractor's performance of the Work,
including changes to such system;
(j) arrange and permit Contractor access and use of the fire
protection system and pentane storage system of the Steamboat 1 portion of the
Steamboat Project;
(k) provide to Contractor a rubbish and construction debris disposal
area on or adjacent to the Site;
(l) be responsible for and dispose of any hazardous materials, whether
presently existing or not, found at or introduced to the Site, other than those
hazardous materials introduced to the Site by Contractor or any Subcontractor,
with respect to which Contractor shall be responsible for and dispose of; and
(m) all activities described under Company's scope of work under
section 3 of Exhibit A.
3.2 COMPANY'S REPRESENTATIVE
Company shall designate by written notice to Contractor a representative
who shall act as a single point of contact with Contractor in all matters
relating to the Work. Company's Representative shall have full authority to act
on behalf of Company for all purposes in connection with this Contract.
3.3 REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants that:
(a) Company is a limited liability company duly organized and
validly existing under the Laws of the state of Delaware and has all requisite
legal power and authority to execute, deliver and perform this Contract;
(b) the execution, delivery and performance by Company of this
Contract has been duly authorized by all requisite corporate action of Company
and there is no provision in its organizational documents requiring further
consent for such action by any other person or entity;
(c) this Contract constitutes the legal, valid and binding
obligation of Company, enforceable against Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
reorganization, moratorium or similar laws affecting or limiting creditors'
rights generally or by equitable principles relating to enforceability;
PAGE 13
(d) the execution, delivery and performance by Company of this
Contract will not conflict with any Law, Permit or agreement to which it is a
party or by which it is bound; and
(e) the Company Permits either have been obtained by Company and
are in full force and effect on the Effective Date or, in the reasonable opinion
of Company, will be timely obtained by Company in the ordinary course of
business and will be in full force and effect on or prior to the date on which
they are required to be in full force and effect.
SECTION 4 - NOTICE TO PROCEED
4.1 PROVISION OF NOTICE TO PROCEED
Upon execution of this Contract, Company shall provide Contractor a Notice
to Proceed directing Contractor to commence and complete the Work under this
Contract.
4.2 CONTRACTOR COMMENCEMENT OF THE WORK
Contractor shall commence performance of the Work upon receipt of the
Notice to Proceed. Contractor shall not be obligated to commence performance of
the Work before receipt of the Notice to Proceed is issued in accordance with
this Section 4. Contractor shall thereafter proceed diligently to perform the
Work, furnishing sufficient forces, construction plant and equipment to perform
the Work in accordance with the Schedule and the requirements of this Contract,
on the assumption that, by June 15, 2004, the conditions precedent to the
withdrawal of amounts from the Galena Re-powering Account as described in the
Deposit and Disbursement Agreement shall have been satisfied or waived.
4.3 DELAY IN ACHIEVING CONDITIONS PRECEDENT FOR RELEASE OF MONIES
UNDER THE GALENA RE-POWERING ACCOUNT
If the conditions precedent to the withdrawal of amounts from the Galena
Re-powering Account as described in the Deposit and Disbursement Agreement shall
not have been satisfied or waived by August 15, 2004, commencing August 15, 2004
and until the day on which such conditions shall occur, Contractor shall not be
obligated to continue to perform the Work or incur obligations or expenses, and
the Schedule and the Guaranteed Completion Date shall be extended on a Day by
Day basis for each Day after August 15, 2004 until the day on which such
conditions shall occur.
If the conditions described above have not occurred by August 30, 2004,
Company may terminate this Contract with no further obligation to either party,
other than obligations which arose prior to the termination date.
SECTION 5 - COMPENSATION AND PAYMENT
5.1 CONTRACT PRICE
5.1.1 As compensation for the performance of the Work, Company shall
pay Contractor, in the manner and at the times hereinafter specified, the
Contract Price, which amount shall be the complete compensation to Contractor
for the performance of Work, including, without limitation, Defect Remedy Work;
provided that the Contract Price shall be subject to adjustment in accordance
with the terms of this Contract.
PAGE 14
5.1.2 The Contract Price does not include any and all Taxes imposed
directly or indirectly by any Governmental Authority other than income Taxes
imposed on Contractor. State and local sales and use Taxes (which, for avoidance
of doubt, are not included in the Contract Price) shall be stated separately and
shown on all invoices as a separate line item and shall be paid by Company to
Contractor. Upon request of Company, Contractor shall promptly provide to
Company evidence of its remittance to the applicable Governmental Authority of
all state and local sales, use and value added Taxes Contractor collects from
Company under this Contract.
5.1.3 Notwithstanding anything else to the contrary in Exhibit B, until
all conditions precedent to the withdrawal of amounts from the Galena
Re-powering Account under the Deposit and Disbursement Agreement have been
satisfied or waived, the Company shall not be liable to pay amounts of the
Contract Price which are in excess of $6,450,000 (Six Million Four Hundred Fifty
Thousand Dollars).
5.2 MILESTONE PAYMENT SCHEDULE
Exhibit B hereto sets forth the Milestone Payment Schedule that specifies
the payment installments payable by Company in respect of Work performed by
Contractor. The Milestone Payment Schedule shall be used as the basis for
preparation of invoices and for payments.
5.3 PAYMENT
5.3.1 On or before the tenth day of each month following the
achievement of a milestone payment event, Contractor shall present to Company,
with a copy to Independent Engineer, a progress invoice for the period ended on
the last day of the prior month, accompanied by any other Documents described
for payment of the milestones in the Milestone Payment Schedule for which
payment is sought under the invoice. Such invoices shall not be issued more
frequently than once every 90 days. Except as provided below in this Section
5.3, invoices that are presented for payment shall be paid within thirty (30)
Days of Company's receipt of such invoice.
5.3.2 Within ten (10) Business Days of Company's and Independent
Engineer's receipt of an invoice and any such required Documents as described in
the Milestone Payment Schedule, Company's Representative and Independent
Engineer, as applicable, shall approve such invoice for payment or give written
notice to Contractor of any objections that Company's Representative or
Independent Engineer have with regard to the accomplishment of such milestone(s)
for which the invoice seeks payment. If Company's Representative or Independent
Engineer fails to provide such notice within ten (10) Business Days after such
party's respective receipt, the milestone(s) shall be deemed accomplished and
Contractor shall be entitled to payment. In the case Company's Representative or
Independent Engineer provides written notice of objection to the accomplishment
of a milestone and said Documentation within the period described above, and the
contents of Company's Representative or Independent Engineer's notice, according
to the case, is not in dispute, Contractor shall resubmit the corrected invoice
and/or Documentation, and the above-described approval process shall reapply
except that the response time shall be five (5) Days rather than ten (10)
Business Days.
5.3.3 If pursuant to Section 5.3.2 above, Company's Representative or
Independent Engineer disputes any amounts invoiced by Contractor within the
specified time period, Company shall promptly pay to Contractor the undisputed
amount of such invoice in the manner provided in Section 5.3.1 above, and any
disputed amount that is ultimately determined to have been payable shall be paid
with interest at the Delayed Payment Rate from the date the item was payable to
and including the date of payment, in accordance with the provisions of Section
5.8 below. The Parties shall resolve their differences regarding the disputed
amount in accordance with the dispute resolution procedures set forth in
Sections 14 and 24.3.
PAGE 15
5.4 FINAL ACCEPTANCE PAYMENT FOR THE FACILITY
No later than thirty (30) Days after the Final Acceptance Date, Contractor
shall submit to Company, with a copy to Independent Engineer, a statement
summarizing and reconciling all previous invoices, payments and Changes in the
Work, with respect to the Work, and a waiver of liens as provided in Section 5.7
below from Contractor and each Major Subcontractor which has not previously
provided a final lien waiver for the Facility and such other data as Company may
reasonably request establishing payment of or surety for payment of unpaid
Contractor obligations which may be excepted under the waiver of liens provided.
Within seven (7) Days of Company's and Independent Engineer's receipt of
Contractor's invoice and the other documents required under this Section 5.4
("Accompanying Documents"), Company's Representative and Independent Engineer,
as applicable, shall approve such invoice for payment or give written notice to
Contractor of any objections that Company's Representative or Independent
Engineer has with regard to the invoice and the Accompanying Documents. Within
thirty (30) Days of the receipt of such statements and lien waivers, Company
shall pay Contractor the remaining portion of the Contract Price (except with
respect to amounts remaining to be paid by Company under this Contract for
Punchlist Items). If Company's Representative or Independent Engineer fails to
provide such notice within such seven (7) Day period, after such party's
respective receipt, the statement of invoices and Accompanying Documents shall
be deemed approved and Contractor shall be entitled to payment. In the case of a
dispute regarding the final payment, Company shall pay the undisputed amounts
within such thirty Day period, and disputed amounts will be paid within fifteen
(15) Days of resolution of the dispute. Any disputes regarding a final payment
shall be handled in accordance with the procedure set forth in Sections 14 and
24.3.
5.5 PAYMENTS NOT ACCEPTANCE OF WORK
No payment made by Company to Contractor shall be considered or deemed to
represent that Company has inspected the Work or checked the quality or quantity
of the Work and shall not be deemed or construed as an approval or acceptance of
any Work or as a waiver of any claim or right Company may have hereunder.
5.6 PAYMENT OF SUBCONTRACTOR
Contractor shall promptly pay, in accordance with the terms and conditions
set forth in the respective Subcontract, each Subcontractor the amount to which
said Subcontractor is entitled. Contractor shall, by an appropriate agreement
with each Subcontractor, require each Subcontractor to make timely payments to
its laborers, suppliers and subcontractors in a similar manner.
5.7 WAIVER OF LIENS
As a condition precedent to the making of the each payment (other than the
final payment) set forth in the Milestone Payment Schedule by Company hereunder,
Contractor shall be required, upon request by Company, to supply Company with an
interim waiver and release of liens and security interests to the extent of such
payment in the form attached hereto as Exhibit H-1, duly executed by Contractor,
and as a condition precedent to the making of the final payment, Contractor
shall provide Company with a final waiver and release of liens and security
interests from Contractor and each Major Subcontractor in the form attached
hereto as Exhibit H-2.
As additional consideration for each such payment, as of the date of
Contractor's receipt of such payment, Contractor shall indemnify and hold
Company harmless from and against any claims for mechanics' liens which arise
out of the performance of Work under this Contract associated with such payment
which may be asserted by any of its Subcontractors. In connection with the
foregoing indemnity, Contractor acknowledges and agrees that it shall have the
obligation at its sole expense to
PAGE 16
cause any mechanic liens filed against the Facility or the Site to be promptly
released or discharged or shall post a bond or other security reasonably
satisfactory to Company in the full amount of the mechanic lien except to the
extent that such liens have been filed against the Facility or the Site as a
result of nonpayment by Company of any valid and proper invoice or portion
thereof for which Contractor is entitled to receive payment under this Contract
and which is not deficient under Section 5.3 or is otherwise being disputed by
the Parties pursuant to Section 14 and 24.3.
5.8 INTEREST
Amounts not paid by either Party to the other when due under any provision
of this Contract, including the provisions of this Section 5, shall bear
interest, from the date payment was due to and including the date of payment, at
the Delayed Payment Rate.
SECTION 6 - TESTING
6.1 GENERAL
Development and implementation of tests procedures will be the
responsibility of Contractor. Contractor shall be responsible for providing all
supplies required for carrying out such tests, except to the extent heat
resource, testing power and water is required to be supplied by Company in
accordance with this Contract.
6.2 TEST PROCEDURES
The Performance Test shall be performed under normal operating conditions
as described in Exhibit D hereto and in accordance with all applicable Laws in
effect on the date thereof, and the test results shall be adjusted pursuant to
the Correction Curves for deviations from the Design Conditions and shall be
adjusted for other deviations as set forth in Exhibit D. Subject to Section 6.3,
Contractor may conduct the Performance Test at such time that Contractor has
complied with all provisions of this Contract relating to the installation of
all necessary components and systems or the portion of the Facility to be
tested, except for completion of insulation, painting, final grading and any
other portion of the Work not affecting the operability, safety, mechanical
and/or electrical integrity or the portion of the Facility being tested.
6.3 NOTICE OF TESTING
Contractor shall notify Company and Independent Engineer at least five (5)
Days in advance of the actual date that Contractor will start conducting the
Performance Test. Company's Representative and Independent Engineer shall be
entitled to attend at the time and place appointed. If both or either Company's
Representative or Independent Engineer fails to attend the Performance Test at
the time and place appointed, Contractor shall delay the test for up to 96 hours
via email or telephone notice in order to enable the missing individual(s) to
attend the test despite the prior failure to attend. At the end of such
additional 96 hour period, Contractor shall be entitled to proceed with the
Performance Test, irrespective of whether Company's Representative and/or
Independent Engineer are absent or not.
Without derogating from the above, Contractor shall notify the offtaker in
advance of the conduct of such testing in accordance with the prior notice of
testing requirement under the PPA.
6.4 DELAYED TESTS; DEEMED COMPLETION
6.4.1 In the event that Contractor's conduct or completion of any test
is delayed from the date on which such test would otherwise have commenced, been
conducted or completed due to an
PAGE 17
Uncontrollable Company Default then the Schedule shall be extended Day-for-Day
for each Day of delay (without need of a Change Order).
6.4.2 In the event that Contractor's conduct or completion of the
Performance Test is delayed for ninety (90) Days or more from the date on which
such test would otherwise have commenced, been conducted or completed due to an
Uncontrollable Company Default, then, as of the date on which such testing was
scheduled to be completed, the Facility will then be deemed to be completed for
all purposes under this Contract including, without limitation, satisfaction of
the Performance Guarantee, and Company shall pay to Contractor the remainder of
the Contract Price less only the cost savings of Contractor (if any) associated
with it not performing such Performance Test.
In the event that the circumstances which prevented the conduct
or completion of the Performance Test have ceased to exist, Contractor will
assist the Company to perform such test.
6.5 FACILITIES
Except as expressly set forth in Section 3.1 or the Scope of Work,
Contractor shall be responsible for the provision of necessary supervision and
equipment necessary to carry out properly the Performance Test.
6.6 REPEAT PERFORMANCE TESTS
6.6.1 If the Facility fails to achieve the Performance Guarantee during
the initial Performance Test, Contractor shall take, within a reasonable period,
corrective measures necessary to eliminate the Defects or deficiencies and to
ensure that the Performance Guarantee is satisfied by repairing or replacing
and/or re-performing the affected part of the Work. Contractor shall, if so
required by Company, submit to Company for its review details of the corrective
measures that it proposes to take.
6.6.2 The Performance Test may be repeated as often as Contractor may
elect for a period of One Hundred Eighty (180) Days after the completion of the
initial Performance Test; provided that Contractor shall be liable for the
reasonable additional fees and expenses of the Independent Engineer in
connection with the repeat of Performance Tests incurred by Company (which costs
shall be subject to offset against the unpaid Contract Price). If the Facility
fails to attain the Performance Guarantee by the end of such period, then the
provisions of Section 11.2 shall apply.
6.6.3 Without derogating from any of the foregoing, Contractor may, at
its discretion, make any adjustments or changes to any system or section of the
Work or Facility which affects such system or section or any other systems or
sections, and adjust such affected systems or sections accordingly as deemed
necessary in order to meet or enhance the achievement testing goals and/or to
repeat the Performance Test; provided, that no such adjustments or changes shall
be made by Contractor unless the Independent Engineer concurs that such
adjustments and changes are consistent with the Specifications and the
requirements of this Contract.
6.7 DISAGREEMENT AS TO RESULT OF TESTS
Within ten (10) Days of the final Performance Test, Contractor shall
furnish to Company with a copy to Independent Engineer written notification of
the results thereof, for countersignature or written objection by the
Independent Engineer within five (5) Business Days of receipt. In the event that
Contractor does not receive a written statement of objections to such results
within five (5) Business Days of the notification, the aforementioned results
shall be deemed accepted and countersigned by Independent Engineer. If, as a
result of the provision of the aforementioned statement, Independent Engineer
and Contractor disagree on the interpretation of the results of such Performance
Test or
PAGE 18
Contractor's compliance with this Section 6 in conducting such Performance Test,
the dispute shall be referred to dispute resolution in accordance with Sections
14 and 24.3.
SECTION 7 - FINAL ACCEPTANCE
7.1 FINAL ACCEPTANCE NOTICE
After all of the following conditions have been met with respect to the
Facility, Contractor shall submit to Company, with a copy to Independent
Engineer, the Final Acceptance Notice:
(a) except for the Punchlist Items and delivery of the
as-built construction Drawings of the Facility, the Facility and Work comply
with the Scope of Work, the Specifications and Drawings and applicable Laws and
the Project Contracts, and Contractor has made training available to Company's
personnel (or other nominees of Company);
(b) the Facility has satisfied or, pursuant to Sections 6.4.2
or 6.7, is deemed to have satisfied the checks and tests under Exhibit D,
including the Performance Guarantee;
(c) any amount finally determined due for payment as
liquidated damages under Section 11.2 has either been paid or agreed and will be
deducted from the final payment;
(d) the list of Punchlist Items (if any) for the Facility have
been identified by Contractor, concurred to by the Independent Engineer, and
provided to Company as provided in Section 7.3 below; and
(e) all other deliverables identified in this Contract with
respect to the Facility (except for the as-built Drawing or deliverables
appearing in the Punchlist Items provided by Contractor), including the final
Operation and Maintenance Manual and other documents and materials described in
Section 9, have been completed in accordance with the provisions hereof and have
been provided to Company.
7.2 Within fifteen (15) Days following the receipt of a Final
Acceptance Notice, Company and the Independent Engineer shall inspect the
Facility and review all Work and services performed by Contractor with respect
thereto, and Company's Representative shall either (i) deliver to Contractor the
Final Acceptance Certificate certifying that the Work requirements of this
Contract (other than the Punchlist Items identified by Contractor and the
as-built Drawings and concurred to by the Independent Engineer) have been fully
satisfied for the Facility and Final Acceptance of the Facility has accordingly
been achieved, or (ii) if reasonable cause exists for doing so, notify
Contractor in writing that Final Acceptance of the Facility has not been
achieved, stating in detail the reasons therefor. In the event that Company's
Representative (after the prior consultation of the Independent Engineer)
determines that Final Acceptance has not been achieved and Contractor has not
disputed Company's Representative's determination, Contractor shall promptly
take such corrective action or perform such additional Work or other services as
will achieve Final Acceptance of the Facility and shall issue to Company another
Final Acceptance Notice in accordance with the provisions of this Section 7.1.
Such procedure shall be repeated until Final Acceptance of the Facility has been
achieved; provided, however, that Company's Representative shall respond to any
such subsequent Final Acceptance Notice within five (5) Days following the
receipt thereof. If Company's Representative fails to provide the Final
Acceptance Certificate or the notice contemplated in clause (ii) above within
the aforementioned period, Final Acceptance of the Facility shall be deemed to
have been achieved.
PAGE 19
7.3 PUNCHLIST ITEMS
Contractor shall provide to Company a list of all Punchlist Items and the
estimated cost thereof prior to the issue of the Final Acceptance Notice which
Punchlist Items and estimated cost thereof shall have been agreed to by the
Independent Engineer. Within fifteen (15) Days following the receipt of this
list of Punchlist Items, Company's Representative shall notify Contractor in
writing whether Company (after consultation with the Independent Engineer) has
any objections to that list or the estimates thereof. If Company's
Representative has any objections, the parties shall use good faith efforts to
resolve such objections. If no agreement can be reached, the provisions of
Sections 14 and 24.3 shall be invoked to resolve the dispute. One hundred fifty
percent (150%) of the estimated value of such Work, as decided by Contractor,
the Independent Engineer and Company's Representative, shall be retained or
deducted from the Contract Price by Company or, at Contractor's option, paid to
Company by Contractor pending satisfactory rectification and/or completion.
Contractor shall rectify or complete to the reasonable satisfaction of Company's
Representative and the Independent Engineer within the time stated in the Final
Acceptance Notice any such Punchlist Items listed. In the event Contractor fails
to satisfactorily rectify or complete any Punchlist Items listed, Company may
arrange for the outstanding work to be done and the cost thereof shall be
certified by Company and deducted from the monies retained under this Section
7.3. Upon satisfactory rectification and/or completion of such Work, the money
retained, deducted or paid under this Section 7.3 in relation thereto (other
than retained amounts which were paid to third parties for the completion of the
Work in the case of Contractor failure to do so as aforesaid) shall be
reimbursed to Contractor by Company. During the period after Final Acceptance,
Contractor and Company shall cooperate to ensure that the performance of the
Work and the Defect Remedy Work does not unreasonably interfere with the
commercial operation of the Facility and at the same time allowing the remaining
Work and the Defect Remedy Work to be performed in a prompt and efficient
manner. As soon as practicable after the completion of all Punchlist Items and
Defect Remedy Work, Contractor shall remove all of its equipment and Materials
and complete the removal of all Work-related waste material and rubbish from and
around the Site.
SECTION 8 - CHANGES IN THE WORK
8.1 CHANGE IN THE WORK
A Change in the Work shall result from each of the following:
(a) changes, alterations or additions to the Work as requested
by Company and agreed upon in writing by Contractor, or as requested by
Contractor and approved in writing by Company;
(b) an event of Force Majeure or a Change of Law;
(c) an Uncontrollable Company Default; or
(d) Contractor takes measures pursuant to Section 8.3.4 below
upon the occurrence of an emergency.
8.2 REQUESTS TO MAKE CHANGES IN THE WORK; CLAIMS AND ADJUSTMENTS
8.2.1 Company, at any time by written notice to Contractor, may request
a Change in the Work, consisting of additions, modifications, substitutions or
other changes of the Work or Materials within the general scope of this Contract
and upon Contractor's approval thereof (including agreement on the terms of an
associated Change Order) Contractor shall proceed with the implementation of
such Change in the Work. Contractor, at any time, by written notice, may request
a Change in the Work
PAGE 20
consistent with the general scope of this Contract, and upon Company's written
approval thereof, subject to the Independent Engineer's written concurrence as
to the reasonableness of the scope and costs thereof, (including agreement on
the terms of an associated Change Order) proceed with the implementation of such
Change in the Work.
8.2.2 Should any Change in the Work cause an increase or decrease in
the cost of and/or time required for performance of this Contract or otherwise
adversely affect Contractor's performance of its obligations under any provision
of this Contract an adjustment will be made to the Contract Price, the Milestone
Payment Schedule, the Schedule, or other provisions of this Contract that are
thereby affected.
8.2.3 When Contractor is notified of or becomes aware of a Change in
the Work, Contractor shall promptly prepare and submit to Company an estimate of
the increase, if any, in the cost and time required to complete the Work,
together with an explanation of the basis therefor, and shall inform Company
whether, in Contractor's opinion, such Change in the Work should result in an
adjustment to the Contract Price, the Milestone Payment Schedule, the Schedule,
or any other provision of this Contract. The price of any Work required by a
Change in the Work shall be either a lump-sum fixed price or the recoverable
time and materials price plus overhead and profit in the amount of 10% of such
time and materials price. Company shall respond in writing to any request or
submission by Contractor regarding a Change in the Work within ten (10) Days
following Company's receipt thereof. A Change Order shall be entered into by the
Parties in order for the Change in the Work to be effective. If no agreement can
be reached, the provisions of Section 14 shall be invoked to resolve the
dispute.
8.2.4 Except to the extent a Change in the Work specifically amends one
or more provisions hereof, all provisions of this Contract shall apply to all
Changes in the Work, and no Change in the Work shall be implied as a result of
any other Change in the Work.
8.2.5 Contractor shall maintain, in accordance with generally accepted
accounting principles, records and books of account with respect to any Changes
in the Work or other Work involving additional costs in excess of the Contract
Price to be paid by Company on a recoverable cost or time and materials basis.
Company and its authorized representatives shall be entitled to inspect and
audit such records and books of account, during normal business hours and upon
reasonable advance notice.
8.3 CHANGES CAUSED BY FORCE MAJEURE, CHANGE OF LAW, OR UNCONTROLLABLE
COMPANY DEFAULT
8.3.1 Contractor shall give notice to Company of any event of Force
Majeure, Uncontrollable Company Default, or Change of Law affecting Contractor
for which Contractor requires a schedule or price adjustment, which notice
shall, to the extent practicable, include the length of delay, if any, in the
Schedule, and increase in Contractor costs incurred by reason of such event, by
reason of such event and any proposed increase in the Contract Price by virtue
of such event, and Contractor shall substantiate the same to the reasonable
satisfaction of Company.
8.3.2 Subject to Section 20.2, Company shall (if it accepts the
findings set forth in Contractor's notice issued pursuant to the foregoing and,
with respect to any notice which will have a material effect on the Contract
Price or Schedule, the Independent Engineer), within fifteen (15) Days following
receipt of the notice that specifies the length of the delay, and the proposed
adjustment to the Contract Price, if any, occasioned by such event, issue a
Change Order adjusting the Schedule by extending the time for performance of
Contractor's obligations under this Contract for a period equal to the delay in
completion of the Facility resulting from such event, and increasing the
Contract Price, to the extent Company agrees with the need for such a Change
Order. In the event Company or the Independent Engineer does not accept
Contractor's findings, the propriety of a Change Order for such event shall be
submitted for dispute resolution under Sections 14 and 24.3.
PAGE 21
8.3.3 Contractor shall use reasonable efforts to remove or mitigate the
effects of any event of Force Majeure, Uncontrollable Company Default, or Change
of Law and to minimize the delay caused thereby, but shall not, without the
prior written approval of Company as set forth in a Change Order issued with
respect thereto, be required to (a) subcontract additional Work or work
additional hours for which premium time is payable, (b) schedule additional work
shifts, or (c) otherwise incur additional costs, if, in any such case, such
subcontracting, additional hours, additional shifts or other additional costs
would not have been required to meet the Guaranteed Completion Date as defined
in the Schedule in effect prior to the occurrence of such event of Force
Majeure, Uncontrollable Company Default, or Change of Law.
8.3.4 In the event of any emergency affecting the safety or protection
of persons or property or the Work, Contractor, at its discretion and without
any special instruction or authorization from Company, may take all reasonable
actions to prevent threatened damage, injury or loss. Any claim by Contractor
that such emergency constitutes a Change in the Work shall subsequently be
determined by the Parties in accordance with the provisions of this Section 8.
8.4 EFFECT OF CHANGES ON WARRANTIES AND SAFETY
8.4.1 If Contractor reasonably believes that a Change in the Work
proposed by Company may negatively affect any warranty or performance
commitments with regard to any Work, Contractor shall serve Company and either
Collateral Agent or the Independent Engineer with written notice within fourteen
(14) Days of Contractor's receipt of such proposal of its reasonable belief and
the believed effect. If Company insists, despite Contractor's notice, to require
the execution of such proposal and Contractor acquiesces to Company's request
and executes the proposal, the affected warranties or performance commitments
will be adjusted to the extent agreed between the Parties or as already
determined in accordance with the provisions of Section 14, but only to the
extent related to or derived from Company's proposal.
8.4.2 If Contractor reasonably believes that a Change in the Work
proposed by Company may negatively affect safety of the Work or persons under
its supervision or for persons in the vicinity would violate any applicable
Laws, Contractor shall serve Company and either Collateral Agent or the
Independent Engineer with written notice within fourteen (14) Days of
Contractor's receipt of such Company's proposal of Contractor's reasonable
belief and the believed effect. If Company insists, despite Contractor's notice,
to require the execution of such proposal, Contractor shall not be required to
perform such proposal unless determined otherwise under resolution of the
dispute in accordance with Sections 14 and 24.3.
SECTION 9 - DESIGN AND DOCUMENTATION
9.1 OWNERSHIP OF AND RESPONSIBILITY FOR DESIGN
9.1.1 Contractor retains legal title to and ownership of the design and
engineering of the Facility and Contractor remains entitled to freely use,
modify, license or otherwise dispose of the same at its discretion without any
obligation to account to Company.
9.1.2 Contractor shall be responsible for the development of the
technical data, design and other documentation required for the performance of
the Work.
9.2 INSPECTION OF WORK
At Company's sole expense, Company, the Company's Representative and the
Independent Engineer shall have the right to inspect any item of the Work to be
provided hereunder. Company, the
PAGE 22
Company's Representative and the Independent Engineer shall have access to those
portions of the Site then under Contractor's control, at reasonable times and
upon reasonable notice. While at the Site, Company, the Company's Representative
and the Independent Engineer shall comply with all of Contractor's safety rules
and other job site rules and regulations.
9.3 AS-BUILT DRAWINGS
Within three (3) months following the date of Final Acceptance, Contractor
shall furnish to Company two (2) reproducible sets of "as-built" construction
drawings of the Facility. All "as-built" drawings shall be supplied in such
format and on such media (including electronic media) as Company may reasonably
specify in accordance with industry standards.
9.4 LICENSE TO USE
Subject to Section 9.1.1, Company shall have a non-exclusive, transferable
license and right to use and reproduce all Drawings, Facility manuals, the
Specifications and any other Contractor Documents provided or to be provided by
Contractor hereunder, including the Operation and Maintenance Manual for the
Facility and the reproducible Drawings furnished by Contractor pursuant to
Section 9.3 above, solely for the purpose of operating, maintaining and
repairing the Facility. Company shall not use any such Documents for any other
purpose.
9.5 USE OF DOCUMENTS AFTER TERMINATION
If this Contract is terminated by Company pursuant to Section 19.1 below
prior to completion of the Facility, and payment of all amounts due and owing
under this Contract in such circumstances are paid to Contractor, Company may,
in its sole discretion, use any Drawings, Facility manuals, the Specifications
or other Contractor Documents prepared hereunder solely for the purpose of
completing the Facility. If this Contract is terminated by Contractor or Company
and full payment of amounts owed under this Contract in such circumstances are
not received, Company shall not be entitled to use or continue using the
documents thereafter. Drawings, Specifications and other Contractor Documents so
supplied by Contractor shall be subject to the confidentiality clause contained
hereunder in Section 21 and shall not be copied or communicated to a third party
otherwise than as strictly necessary and permitted under this Contract.
9.6 OPERATION AND MAINTENANCE MANUAL
At least sixty (60) Days prior to the start-up of the Facility or any
portion thereof, Contractor shall deliver two (2) copies to Company and, for
information only, two (2) copies to the Independent Engineer of the preliminary
draft of the Operation and Maintenance Manual for the Facility as provided in
the Scope of Work. The Operation and Maintenance Manual shall include the
information for that manual described in the Scope of Work. Such preliminary
draft shall be as reasonably complete as available information will allow and at
a minimum with sufficient information to permit the training of Company's
operation and maintenance personnel and the normal operation and maintenance of
the Facility by persons generally familiar with facilities and plants similar to
the Facility. Contractor thereafter shall provide to Company four (4) copies of
the final and complete Operation and Maintenance Manual for the Facility prior
to Final Acceptance.
SECTION 10 - WARRANTIES
10.1 WARRANTY
Contractor warrants to Company that:
PAGE 23
(a) the Work shall conform in all material respects to the
Drawings, Specifications and the other requirements set forth in this Contract;
(b) the Work shall be of good quality, free from defects in
workmanship and shall be performed in a workmanlike and skillful manner;
(c) when built, the Facility will be capable of operating in
compliance with all applicable Laws, the Project Contracts and Company Permits;
(d) all Materials and other items incorporated in the Work
shall:
(i) be new (unless specifically described otherwise in
the Scope of Work) and shall be of a suitable grade of its respective kind for
its intended use;
(ii) be free from defects in material and workmanship;
and
(iii) meet the requirements of the Specifications and this
Contract;
(e) title and ownership to the Work shall pass to and vest in
Company, as described in Section 12.1, free and clear of any and all liens,
claims, charges, security interests, encumbrances and rights of other persons
arising as a result of any actions or failure to act of Contractor, its
Subcontractors, or their employees or representatives other than liens, claims,
charges, security interests, encumbrances arising in connection with the
Indenture; and
(f) the Work has been and will be designed and engineered with
all the skill, care and diligence to be expected of appropriately qualified and
experienced professional designers and engineers with experience in carrying out
works of a similar type, nature and complexity to the Work.
10.2 WARRANTY PERIOD
The warranty period for the warranties set forth in Section 10.1 for an
item of Work (the "WARRANTY PERIOD") shall extend for a period of twelve (12)
Months from the Final Acceptance Date. The Warranty Period with respect to any
item of the Work that is repaired, replaced, modified, or otherwise altered by
Contractor pursuant to Section 10.3 below shall be extended to the longer of:
(a) twelve (12) Months from the date of completion of such repair,
replacement, modification or alteration; or
(b) the end of the original Warranty Period for the subject item of
the Work;
provided, however, that the Warranty Period shall in no event exceed twenty-four
(24) Months from commencement of the original Warranty Period for the subject
item of the Work.
10.3 CORRECTION OF IMPROPER WORK
10.3.1 Company shall notify Contractor promptly upon discovery of any
Defect. In order to be effective hereunder, such notice must be given at the
latest within thirty (30) Days after the end of the Warranty Period. A written
"failure report," which includes available technical and logistic information to
assist Contractor to assess the damage to the equipment and to evaluate
appropriate corrective action, shall be provided to Contractor as soon as
reasonably practicable upon discovery of the Defect.-- If Contractor requests,
Company shall supply all relevant information relating to past maintenance,
repair and operational data relating to the failed Work.
PAGE 24
10.3.2 Contractor's responsibility for any such warranty claim shall be
limited to Contractor's performance of Defect Remedy Work on the Defect and
Contractor shall perform such Defect Remedy Work as soon as reasonably possible
following Contractor's receipt of notice and the relevant failure report from
Company applicable to such Work. Only direct costs and expense of Defect Remedy
Work shall be borne by Contractor. Contractor shall have the obligation in
connection with the performance of any Defect Remedy Work to provide any special
rigging, cranes or heavy equipment or any labor required in connection with
operating such equipment, except where such items or labor are readily available
at the Site at no additional cost, in which case such items or labor shall be
provided by Company or Company's operator without charge, at Contractor's
request.
10.3.3 All costs associated with the performance of any repair and
maintenance work which is not Defect Remedy Work, including the costs of the
replacement of any parts or other portions of the Work which are not defective
but which are replaced in conjunction with Defect Remedy Work at the request of
Company, shall be the responsibility of Company. Company shall provide
Contractor with access to the Facility and to utilities, tools and equipment
available at the Site for Contractor's performance of any Defect Remedy Work. If
Contractor requests Company to perform such Defect Remedy Work under this
Section 10 instead of Contractor, Company may, at its option, either agree to
cause the Defect Remedy Work to be effected and, in such case, Contractor shall
reimburse Company the costs Company has reasonably incurred as a result; or
Company may insist that Contractor perform or cause the performance of such
Defect Remedy Work.
10.3.4 The warranty and the liabilities and obligations of Contractor
under this Contract shall not extend to replacement of normal consumables or
apply to any failure to comply with the warranty that has been caused by (i) any
erosion or derosion or normal wear and tear in operation of the subject Work;
(ii) any failure of Company which is an Uncontrollable Company Default or any
failure of a third party, other than Company's operator, Contractor or
Subcontractor, to properly store, install, operate and/or maintain the subject
Work in accordance with good industry practices and the Operation and
Maintenance Manual; (iii) any modifications made to the subject Work by any
person other than personnel of Contractor or Subcontractor without Contractor's
express written consent prior to such modifications; (iv) any neglect, abuse,
malicious mischief, vandalism or event of Force Majeure (other than a warranty
failure) affecting the subject Work;; or (v) operation of the Facility, other
than by personnel of Contractor or Subcontractor, without Contractor's prior
express written consent, outside the Facility's defined operation range.
10.4 IMPLEMENTATION OF WARRANTY
The warranty claims and related Work shall be implemented in accordance
with the Warranty Claim Procedures in Exhibit E.
10.5 DISCLAIMER AND RELEASE
THE WARRANTIES, CONDITIONS, OBLIGATION AND LIABILITIES OF CONTRACTOR AND
RIGHTS AND REMEDIES OF COMPANY SET FORTH IN THIS CONTRACT ARE EXCLUSIVE AND IN
SUBSTITUTION FOR, AND COMPANY HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER
PRESENT AND FUTURE WARRANTIES, CONDITIONS, OBLIGATIONS, REPRESENTATIONS AND
LIABILITIES OF CONTRACTOR, TOGETHER WITH ALL OTHER RIGHTS, CLAIMS AND REMEDIES
OF COMPANY AGAINST CONTRACTOR, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE,
INCLUDING, BUT NOT LIMITED TO, (A) ANY IMPLIED WARRANTY OR CONDITION OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE; (B) ANY IMPLIED WARRANTY
OR CONDITION ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE; (C) ANY OBLIGATION,
PAGE 25
LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE
NEGLIGENCE OF CONTRACTOR OR ITS SUBCONTRACTORS, ACTUAL, PASSIVE OR IMPUTED; OR
(D) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO
THE FACILITY, WORK OR ANY PORTION THEREOF OR FOR ANY INCIDENTAL OR CONSEQUENTIAL
DAMAGES.
SECTION 11 - REMEDIES
11.1 LIQUIDATED DAMAGES FOR DELAY IN FINAL ACCEPTANCE
11.1.1 If the Final Acceptance Date does not occur by the Guaranteed
Completion Date (as the same may be extended in accordance with the terms of
this Contract), Contractor shall pay to Company as liquidated damages, for each
Day which shall elapse between the Guaranteed Completion Date and the Final
Acceptance Date, a sum equal to two-tenth percent (0.2%) of the Contract Price
per week (and/or the pro-rata part of two-tenth percent (0.2%) of the Contract
Price per each period of time which is less than a week, as the case may be);
provided, however, that if the Facility does not achieve Final Acceptance by the
Guaranteed Completion Date, but the Facility nevertheless is generating
electricity, then the liquidated damages payable by Contractor under this
Section 11.1.1 shall be reduced (but not to less than zero) by the amount of the
revenue to which Company is entitled during the period starting on the date
Company is entitled to receive such revenue until the date Final Acceptance
occurs.
11.1.2 If at any time after the Guaranteed Completion Date, Contractor
is delayed in carrying out the Work as a result of any event identified in
Section 8.1 or Section 20 which would have entitled Contractor to an extension
of time had it occurred prior to the Guaranteed Completion Date, Contractor's
obligation to pay liquidated damages under Section 11.1.1 shall be suspended for
such period as represents the extension of time to which Contractor would have
been entitled had Section 8.1 applied.
11.1.3 Notwithstanding anything to the contrary herein, liquidated
damages as provided in this Section 11.1 shall be not payable if failure to
achieve Final Acceptance by the Guaranteed Completion Date is due to Force
Majeure or Uncontrollable Company Default.
11.2 LIQUIDATED DAMAGES FOR FAILURE TO MEET PERFORMANCE GUARANTEE
11.2.1 In the event that, upon completion of the Performance Test, the
Performance Test result is less than the Performance Guarantee, Contractor shall
have the option for the period specified in Section 6.6.2 to undertake any
necessary actions to increase the output of the Facility to satisfy the
Performance Guarantee at its own cost. If, upon the expiration of such period,
the results of the last Performance Test are below such Performance Guarantee,
then Contractor shall, within thirty (30) Days, pay to Company one payment, as
liquidated damages, of an amount equal to one and one-tenths percent (1.1%) of
the Contract Price for each percentage point (1%) that the final Performance
Test results (as defined in Exhibit D) are below the Performance Guarantee.
11.2.2 Notwithstanding anything to the contrary herein, liquidated
damages as provided in this Section 11.2 shall not be payable if failure to
achieve the Performance Guarantee is due to Force Majeure or Uncontrollable
Company Default.
11.3 EXCLUSIVITY
The liquidated damages payable under this Contract shall, without
duplication, be the sole and exclusive remedy and measure of damages with
respect to any delay in completion of the Facility or any failure to meet the
Performance Guarantee. Once payment of such liquidated damages and other amounts
has been made, or the limits set forth in Section 11.4 below have been met, and
Contractor has
PAGE 26
performed all other Work required hereunder with respect to the Facility,
Contractor shall be relieved of any further Liability with respect to such
failure.
11.4 GENERAL LIMITATION OF LIABILITY
11.4.1 Notwithstanding any other provision to this Contract,
Contractor's maximum aggregate Liability under this Contract (including, without
limitation, for liquidated damages) from any and all causes shall in no case
exceed the lower of one hundred percent (100%) of the Contract Price (as the
same may be adjusted in accordance with this Contract) or one hundred percent
(100%) of the amount of the actual payments for the Work received by Contractor
hereunder.
11.4.2 Except to the extent of the liquidated damages provided for in
this Section 11, in no event shall either Party be liable to the other for any
indirect, special, incidental, consequential or exemplary damages (which
includes loss of profit, revenues or savings), or for costs of procurement of
substitute goods whether arising in contract, equity, tort, or other basis for
Liability, even if it has been advised of the possibility of such damages.
11.4.3 The foregoing limitations on Liability in this Section 11.4
shall:
(a) not limit Company's right to receive proceeds of
Contractor's insurance required to be maintained pursuant to Section 13 of this
Contract;
(b) not apply to limit, nor shall they include, the costs of
Contractor's or Company's indemnification obligations under Section 15; or
(c) exclude any Liability of Contractor or Company stemming
from the fraud or willful misconduct of Contractor, any Subcontractor, or their
respective employees or Company or its employees, respectively.
11.5 OTHER PROVISIONS
The Parties acknowledge and agree that because of the unique nature of the
Facility and the unavailability of substitute facilities, it is difficult or
impossible to determine with precision the amount of damages that would or might
be incurred by Company as a result of Contractor's failure to complete the Work
so that the Facility is completed by the Guaranteed Completion Date or so that
the Facility meets the Performance Guarantee. It is understood and agreed by the
Parties that Company shall be damaged by the failure of Contractor to meet such
obligations and that (i) it would be impracticable or extremely difficult to fix
the actual damages resulting therefrom; (ii) any delay liquidated damages or
performance liquidated damages that are payable under Sections 11.1 and 11.2 of
this Contract are in the nature of liquidated damages, and not a penalty, and
are fair and reasonable; and (iii) such payments represent a reasonable estimate
of fair compensation to Company for the losses that may reasonably be
anticipated from such failure. The Parties hereby acknowledge that this Section
11 represents a reasonable allocation of risk.
SECTION 12 - TITLE; CARE OF THE WORK
12.1 PASSAGE OF TITLE
Subject to the provisions of Sections 9.1.1 and 9.4, legal title to and
ownership of all Work and Materials provided hereunder shall pass to and vest in
Company when delivered to the Site and upon payment of the respective milestone
payment pursuant to the Milestone Payment Schedule.
PAGE 27
12.2 RISK OF LOSS
Contractor shall be responsible to assure safe delivery of all Materials
to the Site. Except to the extent caused by the gross negligence or willful
misconduct of Company, and provided that any actual proceeds of insurance
payable with respect to loss, damage or destruction shall be paid to Contractor.
Contractor shall bear the risk of physical loss or destruction of or damage to
the Materials and the Work, whether or not incorporated in the Facility at the
Site or located on or off the Site, until such time as care, custody and control
of such equipment or Work is turned over to Company as provided in this
Contract. Notwithstanding the passage of title as provided in Section 12.1,
Contractor assumes the risk of loss with respect to, and shall be obligated to
replace, repair or reconstruct, any portion or all of the Materials or the Work
that is lost, damaged or destroyed prior to turning over care, custody and
control of such Material or Work to Company as provided in Section 12.3 of this
Contract, irrespective of how such loss, damage or destruction shall have
occurred. In the event of a termination of this Contract in accordance with the
provisions hereof prior to such turnover, the risk of loss with respect to such
Materials and Work shall pass to Company upon the effective date of termination,
whether by Company or by Contractor.
12.3 CARE, CUSTODY AND CONTROL
Upon Final Acceptance, Contractor will turn over to Company the care,
custody and control of the Facility. It is further acknowledged and agreed that
Company shall provide Contractor, at all times, free and clear access to the
Facility in order to allow Contractor to perform its obligations under the
Contract (including, without limitation, completion and/or repetition of
testing, Punchlist Items and warranties); provided that Contractor's performance
of Work after Final Acceptance does not unreasonably interfere with the
commercial operation of the Facility.
SECTION 13 - INSURANCE
13.1 CONSTRUCTION INSURANCE
Company and/or Contractor shall:
(a) obtain and maintain in full force and effect, at its own
cost, the following policies of insurance:
(i) Builders All Risk insurance in an amount equal
to cover the replacement cost of the Facility, including transit coverage for
purchased plant and equipment anywhere in and transit within and between the
continental United States of America and Canada; such coverage will also include
delay in completion in an amount of not less than 4 months fixed cost and debt
service;
(ii) Public Liability insurance with bodily injury
and property damage combined single limits of at least US$1,000,000 per
occurrence and US$2,000,000 in the aggregate. Such insurance shall cover
liability for bodily injury to third parties or damage to property to third
parties arising in connection with the performance of the Work; and
(iii) Excess Liability insurance with a single limit
of at least US$10,000,000 per occurrence in excess of the limits of the
insurance provided in paragraph (ii) above; and
(b) procure and maintain such further coverages as Company or
Contractor is required to have by any applicable Law.
PAGE 28
In the event this insurance or any portion of it becomes commercially
unavailable, Company and Contractor shall cooperate to obtain such replacement
insurance as may be available and this Contract shall be modified accordingly.
13.2 POLICIES
Construction insurance shall:
(a) name Company, Collateral Agent and its/their respective
directors, officers, representatives, employees and agents as additional
insureds, and name Collateral Agent as loss payee for damages in excess of
$2,500,000;
(b) include the following cross-liability clause or its
equivalent:
"Where more than one party comprises the "Insured," each of the
parties shall, for the purpose of such insurance, be considered as a separate
and distinct unit/entity, and the words "the Insured" shall be considered as
applying to each party in the same manner as if a separate policy has been
issued to each of the said parties. The insurer will provide indemnity to each
in the same manner and to the same extent as if a separate policy has been
issued to each, provided that the total amount payable in respect of
compensation shall not exceed the limits of indemnity";
(c) provide that such construction insurance may not be
cancelled, non-renewed or materially changed by the insurer without giving
thirty (30) Days' prior written notice to Company and Collateral Agent;
(d) waive any and all rights of subrogation against Collateral
Agent, Company, and Contractor and their respective directors, officers,
representatives, agents and employees, and waive any other right of the insurers
to any offset or counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any Liability of Collateral Agent, Company or
Contractor or their respective directors, officers, representatives, agents and
employees; and
(e) provide that any other insurance maintained by Collateral
Agent and its respective directors, officers, representatives, agents and
employees is in excess of such Contractor's insurance and not contributory with
it.
13.3 PAYMENT OF DEDUCTIBLES
If any of the insurance described above shall have any deductibles, the
Party obligated to procure such insurance shall be solely responsible for
payment of all such deductible amounts associated with such insurance.
13.4 EVIDENCE OF INSURANCE
Within thirty (30) Days of the Effective Date, each Party shall cause its
insurers or agents to provide to the other Party for the other Party's review
and approval certificates of insurance evidencing the policies and terms
specified in this Section 13. Notwithstanding the foregoing, Contractor shall be
entitled to cause its insurers or agents to provide to Company the certificates
of insurance evidencing its builders all risk policy only when the relevant risk
arises. Failure by a Party to obtain the insurance coverage or certificates of
insurance required by this Section 13 shall not in any way relieve or limit such
Party's obligations and liabilities under this Contract, nor shall the failure
of any insurance company for any reason to pay claims accruing with respect to
such Party's insurance, affect, negate or release such Party from any of the
provisions of this Contract, including such Party's indemnity obligations. The
PAGE 29
insurance coverages to be provided by each Party pursuant to this Section 13 are
not intended to, and shall not in any manner, limit or modify such Party's
obligations under this Contract, except to the extent any proceeds of such
insurance are applied in satisfaction of such Party's obligations. If a Party
shall fail to procure or maintain its insurances, then the other Party shall
have the right (but shall not be obligated) to provide and maintain such
insurance at the defaulting Party's expense and to deduct the cost thereof from
any amount or amounts due to the other Party or in the event there are no such
amounts due and payable, the defaulting Party shall reimburse the other Party
for such costs on demand.
13.5 SUBCONTRACTORS INSURANCE
Contractor shall require its Major Subcontractors to, prior to performing
the works for Contractor which necessitate such coverage, provide proper
evidence of insurance of type and limits which are reasonable and customary.
SECTION 14 - DISPUTE RESOLUTION
14.1 SETTLEMENT BY MUTUAL AGREEMENT
Company and Contractor desire that this Contract operate between them
fairly and reasonably. If during the term of this Contract a dispute arises
between Company and Contractor, or one Party perceives the other as acting
unfairly or unreasonably, or a question of interpretation arises hereunder, then
the Parties shall cause the Company's Representative and Contractor's
Representative to promptly confer and exert their good faith efforts to reach a
reasonable and equitable resolution of the issue. If Company's Representative
and Contractor's Representative are unable to resolve the issue within fourteen
(14) Days (within five (5) Days if a payment dispute), the matter shall be
referred within two (2) Days of the lapse of such period to the Parties'
responsible officers for resolution. Neither Party shall seek resolution by
mediation or arbitration of any dispute arising in connection with this Contract
until both Parties' responsible officers, who shall be identified by each Party
from time to time, have had at least fourteen (14) Days (seven (7) Days if a
payment dispute) to resolve the dispute following referral of the dispute to
such responsible officers. If the Parties fail to settle such dispute within
such period (including a failure identify their respective responsible officers
and make necessary referrals within such period), the provisions of Section 14.2
shall apply unless the Parties agree that the dispute is to be resolved
according to the provisions of Section 14.3. During pendency of a dispute,
Contractor shall be obligated to continue performance other than where the
nature or scale of the dispute may materially adversely affect Contractor's
ability to perform, or where such continued performance may materially adversely
affect Contractor's position with respect to the dispute.
14.2 MEDIATION
If a dispute under this Contract is not resolved by the Parties pursuant
to Section 14.1, upon the request of either Party the Parties shall try in good
faith to settle the dispute by nonbinding mediation administered by the American
Arbitration Association under its Commercial Mediation Rules before resorting to
arbitration. Unless otherwise agreed upon by the Parties, the mediation shall be
held in Nevada. Each Party will bear the cost and expense of preparing and
presenting its own case (including, but not limited to, its own attorneys' fees
and costs of witnesses). Payment of the mediator and other costs and expenses of
the mediation will be divided equally among the Parties.
14.3 ARBITRATION
14.3.1 If a dispute under this Contract is not resolved by the Parties
pursuant to Section 14.2 within thirty (30) Days from the date on which either
Party first requested mediation or if the Parties agree that the dispute is to
be resolved through arbitration, then such dispute shall be finally settled by
PAGE 30
arbitration administered by the American Arbitration Association in accordance
with its Commercial Arbitration Rules. Unless otherwise agreed upon by the
Parties, the arbitration shall be held in Nevada.
14.3.2 Notice of the demand for arbitration shall be delivered to the
other Party and the dispute shall be referred to such arbitrator, if the Parties
agree upon one, within ten (10) Days of receipt of demand, and if not to three
(3) arbitrators, one appointed by each Party, within ten (10) Days of receipt of
demand, each of such arbitrators to have knowledge and experience in the
construction and power generation field, both in technical matters as well as in
the implementation and interpretation of agreements similar to this Contract,
and a third independent arbitrator appointed by the two (2) arbitrators
appointed by the Parties. If a Party fails to appoint an arbitrator within the
aforementioned term, then the other Party's appointee shall become the sole
arbitrator. The Parties shall proceed with the arbitration expeditiously and
shall conclude all proceedings thereunder in order that a decision may be
rendered within sixty (60) Days or, in the case of a payment dispute, thirty
(30) Days from service of the demand for arbitration. Each Party shall bear its
own expenses in connection with any arbitration, including but not limited to
counsel fees, and all joint expenses shall be apportioned in the award of the
arbitrator(s).
14.4 PENDING DISPUTES
Notwithstanding any provision of this Section 14 to the contrary, either
Party may commence litigation within thirty (30) Days prior to the date after
which the commencement of litigation could be barred by any applicable statute
of limitations or other law, rule, regulation, or order of similar import or in
order to request injunctive or other equitable relief in connection with any
bankruptcy or insolvency proceeding or otherwise necessary to prevent
irreparable harm. In such event, the Parties will (except as may be prohibited
by judicial order) nevertheless continue to follow the procedures set forth
herein. While any disputes under this Contract are pending, including the
commencement and pendency of any of the dispute resolution procedures set forth
in this Section 14, the Parties shall abide by all their obligations under this
Contract without prejudice to a final determination in accordance with the
foregoing provisions of this Section 14.
14.5 AWARDS
Each Party agrees that any final award against it in any proceedings of
the nature referred to in Section 14.2 or 14.3 shall be final, conclusive, and
binding upon it and may be enforced in any court of competent jurisdiction, by
suit on the award or otherwise, a certified copy of which award shall be
conclusive evidence thereof and of the amount of its liability, or by any other
means provided by law.
SECTION 15 - INDEMNIFICATION
15.1 CONTRACTOR'S INDEMNITY
Contractor shall defend, indemnify and hold harmless Company, Collateral
Agent and its/their respective directors, officers, agents, employees,
shareholders and Affiliates from any and all Liability or Proceedings arising
out of:
(a) any actual or alleged injury or death of persons or damage
to property arising out of the negligence, willful misconduct or default of
Contractor, its Subcontractor or their employees in the performance of the Work
(except to the extent that the same have been caused by the negligence or
default of Company); or
(b) any actual or alleged infringement of third party
intellectual property rights (including patents, copyright or trademark
infringement) by reason of the buying or use of any of design or engineering of
the Facility, or the Materials or other Work supplied under this Contract
(except to the
PAGE 31
extent caused by the use of the Materials or Work other than consistent with the
original purpose for which it is intended or any infringement which is due to
the use of the Materials in association or combination with any other plant or
items not supplied by Contractor).
15.2 COMPANY'S INDEMNITY
Company shall defend, indemnify and hold harmless Contractor and its
Subcontractors and their respective joint venture partners, directors, officers,
agents, employees, shareholders and Affiliates from any and all Liability or
Proceedings arising out of:
(a) any actual or alleged injury or death of persons or damage
to property arising out of the negligence, willful misconduct or default of
Company (except only to the extent that the same have been caused by the
negligence or default of Contractor or its Subcontractors); or
(b) any and all environmental related liability or cost
arising from or related to the Site, including any actual or alleged injury to
persons or property related thereto or any remedial activity (except to the
extent the same was caused by the negligence or default of Contractor or its
Subcontractors in connection with their performance of the Work).
15.3 INDEMNIFICATION NOTICE AND SETTLEMENT OF CLAIMS
A Party seeking the benefit of an indemnity under this Section 15 shall
give the other Party written notice of any claim giving rise to the indemnity
promptly after such Party learns of the same. The indemnifying Party may, at its
own cost, conduct negotiations for the settlement of such claim and any
litigation that may arise therefrom. The Party claiming the benefit of the
indemnity shall not make any admission that might be prejudicial to the
indemnifying Party unless the indemnifying Party fails to take over the conduct
of the negotiations or litigation within a reasonable time after having been so
requested. The indemnifying Party shall not settle any indemnified claim without
the indemnified Party's prior written approval (not to be unreasonably withheld
or delayed). The Party claiming the benefit of the indemnity shall, at the
request of the other Party, provide reasonable assistance for the purpose of
contesting any such claim or action, and shall be paid all reasonable costs
incurred in doing so and shall have the right to have its own counsel, at its
expense, participate in the defense and negotiation of the claim or action.
SECTION 16 - ASSIGNMENT
16.1 ASSIGNMENT BY COMPANY
(a) Company may assign or collaterally assign all of its rights, title and
interest in and to or arising out of or in connection with this Contract as
security for financing of the Galena Facility for benefit of Collateral Agent,
and Collateral Agent may further assign such rights to the extent permitted
under the Indenture; provided, however, that any such assignment shall not
relieve Company of any obligation hereunder. If Company collaterally assigns its
interests for benefit of Collateral Agent pursuant to the aforesaid, Contractor
will enter into a Consent Agreement with the Collateral Agent containing
reasonable and customary provisions.
(b) Unless specifically permitted in subsection (a) above, Company may not
assign any or all of its obligations, rights, title and/or interest in and to or
arising out of or in connection with this Contract without the prior written
approval of Contractor, which approval will not be arbitrarily or unreasonably
withheld or delayed. Notwithstanding the foregoing, Company may assign its
obligations, rights, title and/or interest in and to or arising out of or in
connection with this Contract to an Affiliate, without
PAGE 32
Contractor's consent. No assignment of Company's obligations, rights, title
and/or interest in and to or arising out of or in connection with this Contract
shall relieve Company of any obligation hereunder.
16.2 ASSIGNMENT BY CONTRACTOR
Contractor may not assign any or all of its obligations, rights, title
and/or interest in and to or arising out of or in connection with this Contract
without the prior written approval of Company, which approval will not be
arbitrarily or unreasonably withheld or delayed. Notwithstanding the foregoing,
Contractor may assign its obligations, rights, title and/or interest in and to
or arising out of or in connection with this Contract to an Affiliate, without
Company's consent. No assignment of Contractor's obligations, rights, title
and/or interest in and to or arising out of or in connection with this Contract
shall relieve Contractor of any obligation hereunder.
16.3 SUCCESSION
This Contract shall inure to the benefit of and be binding upon the
successors and permitted assigns (as provided for by Sections 16.1 and 16.2) of
the Parties.
SECTION 17 - SUBCONTRACTORS
17.1 SUBCONTRACTS
Contractor may enter into Subcontracts for the performance of the Work and
shall be solely responsible for the satisfactory performance of the Work and the
acts, defaults and omissions of any Subcontractor notwithstanding any review,
approval or other action taken by Company with regard to the selection of a
Subcontractor hereunder. Contractor shall be responsible for the actions of the
Subcontractors in their performance of the Work as if such actions were those of
Contractor. The issuance of any Subcontract shall not relieve Contractor of any
of its obligations under this Contract. All Subcontracts shall be consistent
with and in no way contrary to or inconsistent with any of the terms or
provisions of this Contract. No contractual relationship shall exist between
Company and any Subcontractor with respect to the Work to be performed
hereunder, and no Subcontractor is intended to be or shall be deemed a
third-party beneficiary of this Contract. Except as expressly set forth in
Section 17.2 below, nothing contained herein shall (a) create any contractual
relationship between any Subcontractor and Company or (b) obligate Company to
pay or arrange for the payment of any Subcontractor.
17.2 SUBCONTRACT PROVISIONS
Contractor shall ensure that Subcontracts made with Major Subcontractors
are made in writing. Contractor shall make reasonable efforts to require that
each Major Subcontract shall provide that the rights and obligations, including,
but not limited to warranty obligations, of Contractor under each such
Subcontract are assignable to Company, its successors and assigns upon Company's
written request accompanied by proof of source of payment to Major
Subcontractor's satisfaction, following any termination of this Contract.
PAGE 33
SECTION 18 - SUSPENSION
18.1 RIGHT OF COMPANY TO SUSPEND WORK
Company may suspend performance of the Work by Contractor hereunder, in
whole or in part, upon ten (10) Days' prior written notice of such suspension to
Contractor. Such suspension shall continue for the period specified in the
suspension notice.
18.2 INITIAL PAYMENTS TO CONTRACTOR
Within thirty (30) Days of the issuance of an invoice therefor by
Contractor, Contractor shall be entitled to payment for Work that has been
completed as of the effective date of such suspension or concerning which
delivery has been suspended if such suspension has not ceased within ten (10)
Days of the effective date of such suspension.
18.3 EXTENDED SUSPENSION
In the event that the duration of the suspensions by Company exceed ninety
(90) Days in the aggregate, then Contractor may give notice to the Company's
Representative and Collateral Agent requesting permission to proceed. If
permission is not granted by Company or Collateral Agent within twenty (20) Days
of the delivery of such notice, Contractor may terminate its obligations under
this Contract by so notifying Company in writing, and Contractor shall be
entitled to payments as described in Section 19.2.2.
18.4 RIGHT OF CONTRACTOR TO SUSPEND
Contractor may suspend performance of the Work hereunder, in whole or in
part, upon five (5) Days' prior written notice to Company of such suspension (i)
where Company has withheld from payment any amount invoiced by Contractor where
Company's Representative is in receipt of such invoice and the invoiced amount
has become due, unless within fifteen (15) Days of the due date of such amount
Company has released such payment or such withheld payment has been set aside
for payment to Contractor in a form acceptable to Contractor pending resolution
of the dispute in accordance with the dispute resolution procedures set forth in
Section 14 or (ii) Collateral Agent suspends disbursements of monies to Company
as the result of an event of default under the Indenture not attributable to
Contractor and Company has not provided Contractor reasonable assurance of
payment from other sources. Such suspension shall continue for the period
specified in the suspension notice.
18.5 ADDITIONAL CHANGES RESULTING FROM SUSPENSIONS
Provided that suspension is not necessary by reason of a default on the
part of Contractor that has not been corrected, in the event of suspension
pursuant to this Section 18, the Contract Price shall be increased by the amount
equal to the additional costs reasonably incurred by Contractor as a result of
the suspension (including without limitation costs for the purpose of
safeguarding, storage, personnel, Subcontractors or rented equipment costs,
demobilization and re-mobilization costs and increased costs or charges incurred
for rescheduling) and the scheduled dates specified in this Contract, the
Schedule, and all other dates and milestones herein by which Contractor's
responsibilities are measured shall be adjusted to reflect any delays resulting
from such suspension (including without limitation a period equal to the
suspension period, a period for demobilization and re-mobilization plus any
additional period required). If Contractor shall, solely in consequence of such
suspension, be required to perform any obligations under its warranty at a time
which exceeds the original schedule for warranty obligations that would have
been applied if there were no suspension, the additional cost of complying with
the warranty obligations shall be added to the Contract Price.
PAGE 34
18.6 RESUMPTION OF WORK
Upon receipt of notice to resume the Work in accordance with this
Contract, Contractor shall examine the Facility and the Work affected by the
suspension. Contractor shall make good any deterioration or defect in or loss of
such Facility or Work that may have occurred during suspension, and costs
incurred in making such examinations and making good and resuming Work shall be
added to the Contract Price, all of which Work shall be at Company's expense
unless such suspension occurred by reason of a default on the part of Contractor
that was not corrected within the time period specified in Section 19.1.
SECTION 19 - TERMINATION
19.1 TERMINATION BY COMPANY
19.1.1 Company may terminate the Work after the occurrence of one or
more of the following events of default and if, following a written notice from
Company to cure such event of default, said event of default continues to exist
for ten (10) Days in the circumstances described in (a) below, and thirty (30)
Days in the circumstances described in (b) below:
(a) the occurrence of an Insolvency Event involving Contractor;
or
(b) Contractor defaults in its performance under a material
provision of this Contract, including (i) total abandonment of the Facility and
Work; (ii) a representation or warranty provided by Contractor herein is or
becomes untrue in any material respect; or (iii) due to a Contractor failure,
the Facility does not achieve Commercial Operation (as such term is defined in
the PPA) by the date which is 150 days prior to the date for which termination
for default in achieving such milestone by the offtaker may occur under the
terms of the PPA; provided, however, that where a specific remedy is provided
under the Contract, enforcement of the specific remedy shall be the sole
recourse and remedy for such default, and provided, further, that Company may
not terminate this Contract until the date that is one hundred twenty (120) days
after such breach (which shall be reduced to thirty (30) days under clause (ii)
above, and sixty (60) days under clause (iii) above) if, after notice of such
default and prior to expiration of the thirty (30) Day period set forth above,
Contractor has commenced and is diligently pursuing efforts to cure such breach.
19.1.2 In the event of termination as provided in Subsection 19.1.1,
Company shall compensate Contractor for all payment milestones achieved plus a
pro rata portion of the payment milestone amounts for payment milestones
partially achieved as of termination, plus a proportional payment of the unpaid
Final Acceptance milestone, but Company shall not compensate Contractor for any
other costs associated with the termination of the Work. Upon termination and
such payment, Contractor shall deliver to Company possession of the Work in its
then condition, including Drawings and Specifications and contracts with
Subcontractors, and construction supplies dedicated solely to construction of
the Facility.
19.1.3 In the event of termination as provided in Section 19.1.1,
Company shall have the right, at its sole option, to take possession of all
Materials, assume and become liable for any reasonable written obligations and
commitments that Contractor may have in good faith undertaken with third parties
in connection with the Work, which obligations and commitments are by Law or by
their terms assumable by Company and are not covered by the payments made to
Contractor under Section 19.1.2. If Company elects to assume any obligation of
Contractor as described in this Section 19.1.3, then as a condition precedent to
Company's compliance with any subsection of this Section 19, Contractor shall
execute all papers and take all other reasonable steps requested by Company that
may be required to vest in Company all rights, set-offs, benefits and titles
necessary to such assumption by Company of such
PAGE 35
obligations. Company agrees to indemnify and hold Contractor harmless against
any Liability under any obligations assumed by Company pursuant hereto.
19.1.4 In the event of termination as provided in Section 19.1.1, if such
sums have not already been offset against monies payable to Contractor,
Contractor shall pay Company the difference between (x) reasonable amounts
incurred by Company to engage a substitute contractor, including overhead,
legal, engineering and other direct and necessary expenses to complete the Work
minus (y) the unpaid Contract Price.
19.2 TERMINATION BY CONTRACTOR
19.2.1 Contractor may terminate the Work after the occurrence of one or
more of the following events of default and if, following a written notice from
Contractor to Company to cure such event of default, said event of default
continues to exist for ten (10) Days in the circumstances described in (a)
below, and thirty (30) Days in the circumstances described in (b) below:
(a) the occurrence of an Insolvency Event involving Company; or
(b) Company defaults in its performance under a material
provision of this Contract, and such default is an Uncontrollable Company
Default or is a default of the obligation to make any payment hereunder;
provided, however, that, for all cases except for the obligation to make or
complete any payment, Contractor may not terminate this Contract until the date
that is one hundred twenty (120) days after such breach if, after notice of such
default and prior to expiration of the thirty (30) Day period set forth above,
Company has commenced and is diligently pursuing efforts to cure such breach.
19.2.2 In the event of termination as provided in Section 19.2.1,
Company shall pay to Contractor that portion of the Contract Price associated
with all payment milestones achieved plus a pro rata portion of the payment
milestone amounts for payment milestones partially achieved up to the date of
Contractor's receipt of notice of termination plus a proportional payment of the
Final Acceptance milestone and plus any costs attributable to and incurred in
terminating the Work, including cancellation charges owed to third parties and
additional compensation in the amount of fifteen percent (15%) for the portion
of the Contract Price paid or payable as provided above, but in no event shall
the total amount exceed the Contract Price. If all such payments are not
received within thirty (30) Days of termination, without derogation from other
remedies available to Contractor, the license granted to Company under Section
9.4 shall automatically terminate and be of no further effect.
SECTION 20 - FORCE MAJEURE
20.1 CONSEQUENCES OF FORCE MAJEURE
20.1.1 Upon an occurrence of an event of Force Majeure that materially
and adversely affects the performance by that Party of its obligations or the
enjoyment by that Party of its rights pursuant to this Contract, provided that
any such material adverse effect has not occurred due to the material failure of
the Party to comply with its obligations hereunder, then:
(a) the non-performing Party shall use its reasonable efforts to give
the other Party as soon as reasonably practicable but in any event within
seventy-two (72) hours of such Party learning of the occurrence of such event or
circumstance written notice describing the particulars of the occurrence or
circumstance;
PAGE 36
(b) the non-performing Party shall be excused from performance
provided that such excused performance is of no greater scope and of no longer
duration than is required by the event of Force Majeure;
(c) the non-performing Party shall use its reasonable efforts to
remedy its inability to perform; and
(d) when the non-performing Party is able to resume performance of
its obligations under this Contract, that Party shall use its reasonable efforts
to promptly give the other Party written notice to that effect and shall
promptly resume performance.
20.1.2 Except for the obligations of either Party to make any required
payment then due and owing under this Contract, neither Party shall be liable
for any failure or delay in complying with its obligations hereunder to the
extent that such failure or delay has been caused, or contributed to, by one or
more events of Force Majeure or its or their effects or by any combination
thereof. The periods allowed for the performance by the Parties of such
obligation(s), including without limitation the Guaranteed Completion Date in
the case of Contractor, shall be extended as required, but in no event less than
on a Day-for-Day basis, for so long as one or more Force Majeure events
continues to affect materially and adversely the performance of such Party of
such obligation(s) under or pursuant to this Contract; provided that either
Party may immediately terminate this Contract and Company shall pay Contractor
the amounts described in Section 19.2.2, deducting from such payment only the
unrealized percentage (if any) of the Contract Price, if one or more Force
Majeure events delays a Party's performance for a period greater than nine (9)
Months.
20.2 ADJUSTMENTS TO DATES AND COST
In the event Contractor is delayed or the cost of the Work shall be
increased by an event of Force Majeure, Contractor shall be entitled to an
adjustment of the Schedule and the Contract Price shall be increased to reflect
the increase in the cost of the Work and added expenses incurred by Contractor
for additional interest during construction.
SECTION 21 - CONFIDENTIALITY
21.1 BOTH PARTIES TO KEEP INFORMATION CONFIDENTIAL
Company and Contractor shall keep confidential and shall not, without the
written consent of the other Party, divulge to any third party Information of
the other Party.
21.2 USE OF INFORMATION
Subject always to Sections 9.1.1, 9.4 and 21.3, Company shall not use any
Information of Contractor for any purpose other than the operation and
maintenance of the Facility. Similarly, Contractor shall not use any Information
received from Company for any purpose other than the design, procurement of the
Facility, construction or such other Work as required for the performance of the
Contract.
21.3 EXCLUSIONS
The obligations of any Party under Section 21.1 shall not apply to
Information of the other Party that:
PAGE 37
(a) now or hereafter enters the public domain through no fault
of the receiving Party;
(b) can be proved to have been in the possession of the
receiving Party at the time of disclosure and which was not previously obtained,
directly or indirectly, from the other Party hereto;
(c) is necessary in connection with financing, including the
inclusion of a summary of this Agreement in a prospectus or bank information
book;
(d) otherwise lawfully becomes available to the receiving
Party from a third party under no obligation of confidentiality; or
(e) the receiving Party is required by law or any relevant
stock exchange or other competent regulatory authority to publish or otherwise
disclose but only to the extent that it is necessary to publish or disclose the
same.
21.4 COMPANY NOT TO REMOVE LOGOS
Company shall not and shall not permit others to remove or detach from the
Work or any part thereof any of Contractor's trademarks, designs, names, logos
or markings.
SECTION 22 - NOTICES
22.1 All notices and other communications required or permitted by
this Contract shall be in writing and delivered by hand (including by messenger
or courier) or by airmail post or special courier or by telecopier or facsimile
(receipt confirmed), at the addresses or numbers set forth below or at such
other addresses or numbers as the Party receiving notice shall subsequently
designate by way of replacement by giving ten (10) Days' written notice to the
other Party pursuant to this Section:
If to Company: ORNI 7 LLC
980 Greg Street
Sparks, NV 89431-6039
Attention: President
Fax: 702-356-9039
with a copy for any
notice of claim or dispute to:
Perkins Coie LLP
1201 Third Avenue, 40th Floor
Seattle, WA 98101-3099
Attention: Robert E. Giles, Esq.
Fax: 206-583-8500
If to Contractor: Ormat Nevada Inc.
980 Greg Street
Sparks, NV 89431-6039
Attention: President
Fax: 702-356-9039
PAGE 38
with a copy for
any notice of
claim or dispute
to: Perkins Coie LLP
1201 Third Avenue, 40th Floor
Seattle, WA 98101-3099
Attention: Robert E. Giles, Esq.
Fax: 206-583-8500
22.2 Any notice sent by telecopier or facsimile transmission shall be
confirmed within two (2) Days after dispatch by notice sent by airmail or
special courier.
22.3 Any notice or confirmation of notice sent by airmail or special
courier shall be deemed (in the absence of evidence of earlier receipt) to have
been delivered ten (10) Days after dispatch and in proving the fact of dispatch,
it shall be sufficient to show that the envelope containing such notice was
properly addressed, stamped and conveyed to the postal authorities or courier
service for transmission by airmail or special courier.
22.4 Any notice delivered by hand, facsimile, telecopier or telegram
shall be deemed to have been delivered on the date of its dispatch.
22.5 In this Section 22, notices shall include any approvals,
consents, instructions, orders, and certificates to be given under the Contract.
SECTION 23 - MISCELLANEOUS
23.1 GOVERNING LAW
This Contract (and any dispute, controversy, Proceeding or claim of
whatever nature arising out of or in any way relating to this Contract or its
formation) shall be governed by the Laws of Nevada without reference to its
choice of law principles.
23.2 SUBMISSION TO JURISDICTION
23.2.1 Each Party hereto hereby irrevocably and unconditionally
agrees that the courts of Nevada shall have exclusive jurisdiction to hear and
decide any Proceeding relating to this Contract to enforce a decision rendered
in a Proceeding described in Section 14, and, for these purposes, each Party
irrevocably submits to the jurisdiction and venue of the courts of Nevada.
23.2.2 Each Party hereby irrevocably and unconditionally waives,
to the fullest extent permitted by applicable Law, any objection that such Party
may have now or hereafter to the laying of the venue or the jurisdiction or the
convenience of the forum of any such legal suit, action or Proceeding.
23.3 NATURE OF AGREEMENT
Contractor and its Subcontractors shall be independent contractors with
respect to the Work, irrespective of whether such Subcontractors are selected or
approved by Company, and neither Contractor nor its Subcontractors, nor the
employees of either, shall be deemed to be the servants, employees,
representatives or agents of Company. This Contract does not create any agency,
partnership, joint venture or other joint relationship between Company and
Contractor. Nothing contained in this Contract shall be construed (a) to
authorize either Party hereto to act as agent for the
PAGE 39
other Party or to permit a Party hereto to undertake any contract or other
obligation for the other Party or (b) to create any agency, partnership, joint
venture or other joint relationship between the Parties.
23.4 SEVERABILITY
In the event that any of the provisions or portions, or applications
thereof, of this Contract become invalid, illegal or unenforceable in any
respect under the Law of any jurisdiction, Company and Contractor shall
negotiate an equitable adjustment in the provisions of this Contract with a view
toward effecting the purpose of this Contract, and the validity and
enforceability of the remaining provisions or portions, or applications thereof,
shall not be affected thereby.
23.5 AMENDMENTS AND WAIVERS
This Contract may not be changed or amended orally, and no waiver
hereunder may be oral. Any change or amendment or any waiver of any term or
provision of, or consent granted under, this Contract shall only be effective if
given in writing and signed by the waiving or consenting Party (or both Parties
in the case of a change or amendment).
23.6 SURVIVAL
The provisions of Sections 1.4, 2.4, 3.3, 5, 9.1.1, 9.5, 11.4, 11.5, 14,
15, 21, 22 and 23 shall survive termination or expiration of this Contract for
whatever reason.
23.7 COUNTERPARTS
This Contract may be executed in separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute but one
and the same instrument.
23.8 ENTIRE CONTRACT
This Contract sets forth the full and complete understanding of the
Parties relating to the subject matter hereof as of the Effective Date and
supersedes any and all negotiations, agreements, understandings and
representations made or dated prior thereto with respect to such subject matter.
This Agreement has been negotiated on an arm's length basis by the Parties and
shall be interpreted fairly in accordance with its terms and without any strict
construction in favor of or against either Party.
23.9 WAIVERS
Subject to Section 23.5, no relaxation, forbearance, delay, indulgence or
failure by either Party to enforce any of the terms, covenants, conditions or
other provisions of this Contract at any time shall in any way prejudice,
affect, limit, modify or waive that Party's right thereafter to enforce or
compel strict compliance with every term, covenant, condition or other provision
hereof, any course of dealing or custom of the trade notwithstanding. No delay
or omission on the part of a Party shall operate as a waiver thereof, nor shall
any waiver by either Party of any breach of this Contract operate as a waiver of
any subsequent or continuing breach of the Contract.
23.10 OFFSET
Either party may offset against any amounts due and payable by it to the
other party under this Contract by amounts due and payable to it by the other
party under this Contract.
PAGE 40
SECTION 24 - INDEPENDENT ENGINEER
24.1 APPOINTMENT
Company, Collateral Agent, and the Contractor shall agree upon the
appointment of a person or entity, to carry out such duties in issuing or
approving certificates and invoices, as are specified in this Contract. Company
and Contractor hereby approve the appointment of Stone & Webster as the
Independent Engineer. Company shall be responsible for reimbursement of
Independent Engineer's fees and expenses.
24.2 INDEPENDENT ENGINEER'S APPROVALS AND DECISIONS
The parties shall proceed with their payment obligations in accordance
with approvals and decisions given by the Independent Engineer in accordance
with this Contract to the extent such approvals and decisions are required under
the terms of this Contract. Contractor may require the Independent Engineer to
confirm in writing any approval or decision not made in writing, in which case
such approval or decision shall not be effective until written confirmation is
received by Contractor.
24.3 DISPUTING INDEPENDENT ENGINEER'S APPROVAL AND DECISIONS
If Contractor disputes or questions any Independent Engineer approval or
decision, Contractor shall provide notice to the Independent Engineer within 14
(fourteen) Days after its receipt, giving Contractor's reasons for so doing.
Within 14 (fourteen) Days of receipt of Contractor's notice, Independent
Engineer shall provide notice to Contractor and Company, with reasons, of its
confirmation, reversal or variance of Independent Engineer's original approval
or decision. Such 21 (twenty-one) Day period shall run concurrently with the
periods for resolving issues by mutual agreement described in Section 14.1.
24.4 INDEPENDENT ENGINEER TO ACT FAIRLY
Wherever the Independent Engineer is required to exercise his/her
discretion by giving a decision, opinion or consent, by expressing satisfaction
or approval, by determining value or otherwise by taking action which may affect
the rights or obligations of either of the parties, Independent Engineer shall
exercise such discretion fairly within the terms of this Contract.
24.5 REPLACEMENT OF INDEPENDENT ENGINEER
Company shall not replace the Independent Engineer without the Collateral
Agent's prior consent and after giving due consideration to Contractor's opinion
regarding the proposed replacement.
IN WITNESS WHEREOF, the Parties have caused this Contract to be executed
on the date first above written.
PAGE 41
COMPANY: CONTRACTOR:
ORNI 7 LLC Ormat Nevada Inc.
By: /s/ Ran Raviv By: /s/ Connie Stechman
---------------------------- ----------------------------
Name: Ran Raviv Name: Connie Stechman
---------------------------- ----------------------------
Title: Authorized Representative Title: Assistant Secretary
---------------------------- ----------------------------
PAGE 42
EXHIBIT A
SCOPE OF WORK
ENGINEERING, PROCUREMENT AND CONSTRUCTION
1. BASIC INFORMATION AND DATA
1.1 Scope of Work
Contractor will undertake the design, engineering, procurement,
and delivery to the Site, construction, fabrication,
commissioning, start-up and testing of the power plant at the
Site.
The geothermal fluid for the power plant will be supplied by
Company at locations specified in section 1.4.1. Spent fluids will
be provided to the locations specified in section 1.4.2 and will
be disposed of by Company to the reinjection wells.
The design and equipment configuration detailed in this Exhibit A
and the drawings and specifications of Exhibit C are preliminary
and not complete; therefore, the details of the Work, including
flow diagrams, drawings, specifications, data sheets and other
technical documentation, are subject to further revision by
Contractor in its development of the detailed design. Any such
revisions or changes in this preliminary conceptual design shall
not give rise to a Company Default or Change in the Work or to a
change in the Net Deliverable Energy or any other performance,
unless the result of a change in a parameter described in sections
1.4 or 1.5 below.
Terms not specifically defined herein have the meaning described
in the general terms of the Engineering, Procurement and
Construction Contract to which this Exhibit is attached (the
"Contract").
1.2 Site Description and conditions
The site of the Steamboat Project is located at Steamboat Springs,
Washoe County, Nevada and includes the present location of the
Steamboat Project (Steamboat 1, 1A, 2 and 3 Plants (respectively,
"SB1", "SB1A", "SB2", and "SB3")), the geothermal field of SB1,
SB1A, SB2 and SB3, and all other relevant facilities in the area
(such as Company offices, etc). The Steamboat Project site is
being expanded by Company's acquisition of additional lands and
real property rights, to include lands on which the Galena
Facility is to be situated, located approximately 1500 feet South
West of SB 2 & SB 3.
The power plant yard will have the approximate dimensions of
450,000 square feet. An adequate area for soil disposal and for
temporary use shall be provided by Company during the construction
period.
1.3 The basic Site data is as follows:
Contractor will undertake to design the Facility so as to be
capable of operating within the range of the basic Site conditions
detailed below:
Ambient Air Temperature Minimum -20 F
Maximum 105 F
Altitude 4,400 ft
Wind 80 miles/Hr
Annual Rainfall 10"
Seismic Requirements UBC Zone 4
1.4 Interface Data Summary
PARAMETER Value
--------------------------------- --------------------------------------
1.4.1 Geothermal Fluid Supply
(also termed "Brine")
Chemistry TBD
Location a) At Well H-4 Wellhead flange
b) At Well 2-2 Wellhead flange
c) At a point mutually agreed by
Contractor and Company on SB 1
& SB1A existing supply header
d) At a point mutually agreed by
Contractor and Company on SB 2
& SB 3 existing supply header
1.4.2. Brine Injection a) At a point mutually agreed by
Location Contractor and Company on SB 1
& SB 1A existing injection
header
b) At a point chosen by Contractor
on SB 2 & SB 3 existing
injection header
1.4.3. NCG Discharge not applicable
1.4.4. Water Supply At either one of the SB1, SB1A, SB2
and/or SB3 Plants and/or at Site
offices
1.4.5. Electrical a) At the 120 kV SPPC switchyard
b) At the 4.16 kV SB2 & SB3
geothermal field electrical
supply.
c) At the 0.48 kV SB 1 and SB 1A
down hole pumps MCC
1.4.6. Access and Roads At the Facility boundaries.
PAGE A-2
1.5 Design Conditions (Design Points at interface points)
Description Design Point-- Design Range
- ------------------------------------- -------- -------------- ----------------------
Ambient temperature Degree F 55 0 - 100
Brine inlet pressure psig 200 120 - 250
Brine outlet pressure psig 175 70 - 220
Brine flow stream 1 Lbs/Hr 4,846,000 80 - 110%
Brine flow stream 2 Lbs/Hr 500,000 80 - 110%
o Stream 1 comes from
existing wells of SB1 * The Facility can
& SB 1A and portion of SB2 operate at lower flow
& SB3 geothermal brine due to its modular
supply configuration
o Stream 2 comes from
existing (currently
unused) Well 2-2
Brine inlet temperature stream 1 Degree F 306.7 300 - 312
Brine inlet temperature stream 2 Degree F 280 270 - 284
Brine outlet temperature Degree F 181 160 - 200
Net Output (*) @ 55 deg F kW 22,700
(*) The net output is the sum of
the power delivered at the
high side of the main step-up
transformer and the low side of
the geothermal feed step-down
(13.8/4.16KV; 13.8/0.48 kV)
transformers
Voltage at Plant kV 13.8 +/- 5%
Voltage at interface with SPPC kV 120 +/- 5%
Frequency Hz 60 58.5 to 61.5
Power Factor 0.85 0.85 Lag to 0.95 Lead
1.6 Design Life
The design life of the Facility will be 25 years.
PAGE A-3
1.7 Availability
The Facility will be designed and constructed so that, with proper
operation and maintenance and an adequate supply of spare parts at
the Site, it will be capable of producing electricity 96% of the
time on an annual basis.
1.8 Design Standards
The design and construction of the Facility will be in accordance
with the following list of standards:
Pipe-work ANSI B31.1 & B31.3;
Pressure vessels & heat exchangers ASME VIII and TEMA
Design loads for buildings UBC; ASCE
Steel structures AISC; AISI; AWS
Concrete construction ACI
Fire protection NFPA
Electrical NEMA; NEC
2. DESCRIPTION OF CONTRACTOR'S SCOPE OF WORK
2.1 INTRODUCTION
The Work to be performed by Contractor includes that described in
Section 2 of the Contract.
The work is defined in three major areas:
a. Build a new 22 MW net plant at a new location and
connect it to the nearby 120 kV SPPC switchyard.
b. Modify (enhance) the existing gathering system so as to
provide to the new Facility 12,000gpm of geothermal
brine (from SB 1 & SB1A, from Well H-4, from Well 2-2
and the balance from the SB 2 & SB3 field gathering
piping). Spent Brine will be injected back to SB 1 &
SB1A injection wells and to SB2 & SB3 injection system.
(Actual connection points for both production and
injection lines shall be at any point
PAGE A-4
as Contractor may choose at its discretion).
c. Install new 13.8/4.16 kV auxiliary step down
transformer and hook power to the SB 2&3 production
down hole pumps.
d. Install new 13.8/0.48 kV auxiliary step down
transformer and hook power to the SB 1&1A production
down hole pumps.
PAGE A-5
2.2 ENGINEERING
2.2.1 Conceptual Design
Contractor shall perform the following activities or
prepare the following items:
o Conduct study and review the current geothermal field
performance including the field gathering and
distribution system.
o Piping and instrumentation diagrams (P&ID) with
sufficient connections for testing and recording.
o Control logic.
o Facility Electrical Single Line Diagrams (SLD).
o General Facility layout.
o Building general layout.
o Specifications and data sheet for major items of
equipment.
o Conduct study and conceptual design of the new
substation and the interconnection to SPPC switchyard.
o Identify systems of SB1 & SB1-A that can be utilized
for the new Facility.
2.2.2 Detailed Engineering
o Conduct surveys, geotechnical studies and other
analysis and preparation of drawings, specifications
and instructions for the earthwork and civil
foundations.
o Prepare detail design documents, including drawings and
specifications for the structural foundations of the
OECs, pipe supports and other equipment at the
Facility.
o Prepare detailed design documents, including drawings,
calculations and specifications for the piping and
mechanical
PAGE A-6
portion of the Facility.
o Perform detailed design of the modification and
enhancement of the existing field gathering system.
NOTE: It is assumed and agreed that Contractor is free to
use, modify and change any existing field gathering piping
Contractor shall conduct the changes, in a manner to
minimize interference with ongoing operation, to the extend
practical.
o Prepare detailed design documents, including drawings
and specifications for the electrical work within the
Facility boundaries.
o Perform detailed design of the electrical 13.8/120 kV
substations, the 120 kV line to be connected to the
nearby SPPC switchyard (about 2000 feet distance).
o Design the enhancement of the existing 4.16 kV field
distribution system (electrical lines to the SB 2&3
down hole pumps).
NOTE: It is assumed and agreed that Contractor may utilize
any existing breakers, cables, MCC and other electrical
gear and materials as exist and installed in the geothermal
field of SB 1& SB1A and SB2 & SB3 so long as such
utilization has been confirmed by Company and the
Independent Engineer, which shall not be unreasonably
withheld. Contractor shall conduct its activities in a
manner to minimize interference with ongoing operations, to
the extent practicable.
o Prepare bill of materials for pipes; fittings, and
electrical cables.
2.2.3 Manuals
o Prepare 3 sets of Operation and Maintenance Manuals.
Prepare 3 sets of Job Books, which include drawings
("As Built"), specifications, and vendor's manuals.
Prepare recommended spare parts list (including prices) prior to the Final
Acceptance Date, and procure at Company's request and cost, the spare parts
agreed to by the Company. Actual delivery time of the spare parts is subject to
Company's approval and release of order, and shall not, in any way, be a
condition to Contractor successful achievement of any Project
PAGE A-7
milestones including Final Acceptance.
2.3 SUPPLY
The Facility will contain 2 OECs (otherwise termed as "ITLUs")
units, as well as the balance of Plant equipment and materials
detailed herein.
The scope of supply includes the following:
2.3.1 OEC units
Two (2) complete OEC units, each OEC unit consists of the
following main components:
o Vaporizers
The vaporizer is a horizontal, shell and tube heat
exchanger, manufactured of carbon steel with a tube
bundle, sheet metal shell and fixed tube sheets.
Heating fluid flows through the tube side and motive
fluid through the shell side. A bellow type expansion
joint is provided to compensate for any differential
thermal expansion of the tubes and shell.
Separator is installed on the top of the vaporizer. The
separator is designed to retain the droplets of liquid
carried over the vapor, thus preventing impinging of
droplets on turbine blades.
o Preheaters
The preheater is a horizontal, shell and tube heat
exchanger manufactured from carbon steel with a tube
bundle, metal shell and fixed tube sheets. Heating
fluid flows through the tube side and motive fluid
through the shell side. A bellow type expansion joint
is provided to compensate for any differential thermal
expansion of the tubes and shell.
o Recuperator
The recuperator is a horizontal, shell and tube heat
exchanger manufactured from carbon steel with a tube
bundle, metal shell and fixed tube sheets. Liquid
motive fluid flows through the tube side and vapor
motive fluid through the shell side.
o Air Cooled condensers
PAGE A-8
The condenser is an induced draft, air-cooled heat
exchanger. The tubes are arranged in a one-pass
configuration where motive fluid vapor is fed from the
inlet box to the tubes. The motive fluid is cooled and
condensed inside the tubes by forced air flowing
outside of the finned tubes in a cross-flow pattern.
The condensed motive fluid accumulates in the hot well
collector from where it flows by gravity to the motive
fluid filters and pumps. The condenser tubes are made
of carbon steel tubes with aluminum fins.
o Power skid consists of 2 turbines, one synchronous
generator and one oil system
Each OEC power skid consists of a dual shaft extension
generator, two turbines and associated oil system.
(A) SYNCHRONOUS GENERATOR
The generator is a synchronous type, air-cooled, three
phase machine, brushless and weather protected. It is
built to NEMA II specifications and rated at kW, 0.85
PF, 13.8 kV and 60 Hz. It is cooled by a once-through
air-cooling system with an inlet filter. The generator
and the two turbines are directly coupled.
(B) TURBINE
Each of the two OEC turbines consists of a single
casing, multi-stage axial unit. The turbine is directly
coupled to the end of the generator shaft. No
speed-reducing gearbox is required because the
properties of the organic fluids produce favorable
aerodynamic matching at relatively low blade and
rotational speeds. A double, mechanical shaft seal is
used to prevent leakage of the working fluid into the
atmosphere or lube oil.
(C) TURBINE AND GENERATOR OIL SYSTEM. The oil system
has two functions:
o To supply oil to each turbine bearing for lubrication,
sealing and cooling, and
o To supply oil to the generator bearings for
lubrication.
The oil system is designed to supply each oil consumer
with the proper pressure and flow, and the proper type
of oil. Each system is equipped with an oil pump as
well as oil filters, oil coolers (forced air-cooled
type), solenoid operated control valves and relief
valves. The system is
PAGE A-9
equipped with air operated emergency pumps and air
accumulator to supply the lube oil in the event of an
electric power failure.
o Motive feed pump system including motive fluid pumps
and piping.
The feed pump is a motor-driven multi stage vertical
turbine centrifugal pump, which transfers the
condensate motive fluid from the condenser liquid
collector into the heat exchangers. A mechanical seal
separates the high-pressure motive fluid from the
atmosphere.
The pump discharge is connected to the recuperator
or preheater inlet through level control valve and
swing check valve.
A manual valve is installed at the suction strainer
inlet to allow maintenance of the strainer and the
pump.
o Organic Motive Fluid Piping system
The organic motive fluid piping system consists of
piping assemblies, in which the condensed motive fluid
flow from the feed pumps through the recuperator and
preheater to the vaporizer, vapor motive fluid flow
from the vaporizer to the turbine and from the turbine
to the air cooled condenser and in which the condensed
motive fluid return from the condenser hot well to the
feed pumps. A motive fluid strainer is installed
between the hot well collector and the pump inlet.
Expansion joints are installed in the turbine inlet and
outlet pipe assemblies to reduce the force and moments
on the turbine nozzles. Automatic and manual control
valves are supplied as part of the piping system.
o Purge system
The purge system is installed on the upper side of the
condenser outlet boxes. The system is designed to
continuously purge the OEC condenser of non-condensable
gases, predominantly air, that enter the OEC, mostly
during start-up and when the unit is not operating, and
to recover the working fluid.
o Power and control system
PAGE A-10
(OEC power and control cabinets may be installed in
either pre-fabricated power shelters (one per each
unit) or inside one main building in the power plant).
The OEC power system contains of: (i) the generator
high voltage breaker, PTs and CTs; (ii) Protection
relays board and (iii) 480 Volt auxiliaries supply
board (MCC).
The control system is based on a programmable logic
controller (PLC). The OEC control incorporates a
turbine control backup relay (TCBU), which disconnect
the OEC from the bus and shut it down safely in event
of a PLC malfunction. The PLC and I/O units with its
accessories, is housed in a control board and fields
junction boxes.
The OEC control and protection system contains the
following items:
(a) PLC: central processing unit with analog and
digital input and output modules, and communication
control units.
(b) PROTECTION RELAYS to provide generator protection
against under/over voltage, reverse power, loss of
excitation, generator differential, phase over current,
ground fault, phase balance, over speed, etc.
(c) SYNCHRONIZER, check synchronizer, voltage
regulator and VAR controller, and
(d) OPERATION MODE SELECTOR switch and reset push
buttons for local operation. Same switch and push
buttons are duplicated by soft switch at the HMI
computer screen for remote operation of the OEC from a
local control room.
The control system automatically accelerates the
generator to synchronous speed and then synchronizes
the generator to the bus. After being linked with the
bus, the control system monitors and controls the
operation of the OEC. Pressures, temperatures,
voltages, speed, kilowatts, kilovars, currents, etc.,
are checked and monitored and compared with preset
values in memory, to detect warning or failure
conditions.
In the event of a failure within the system, the unit
is
PAGE A-11
disconnected from the bus and shut down in a
pre-programmed sequence. After a failure condition is
rectified, the generating unit can be automatically
started after a manual reset signal.
o Electro-Pneumatic Control System
The electro-pneumatic control system operates the
control valve actuators and provides air pressure to
pneumatic components, either directly or through
solenoid-operated valves installed on the pneumatic
control panel. The pneumatic control panel is supplied
by air at a nominal pressure of 90 psi, the pressure
required to operate the pneumatic equipment. Pressure
regulation and filtration is also provided.
Electronic control signals for the system are provided
from the central unit control in the form of digital
(ON, OFF) or analog (4 to 20 mA). The analog signals
are converted by current to pressure (I/P) transducers
to a proportional pneumatic output signal.
o Human-Machine Interface (HMI)
The system includes a personal computer with dedicated
software to enable the operator to operate the power
plant and monitor its functions.
o Interface With Local / Remote Station Controls
The control system provides access to all the analog
and digital signals connected to the PLC through a
communication link. Using the communication link,
Company can monitor parameters inside the PLC, send the
OEC Stop Command from another PC with the proper
software. The data inside the PLC is organized in
blocks of accessible registers. Detailed requirements
for the data transfer of information are determined
during detailed design. This includes both
communication and hard-wired interface data.
o Instrumentation
All parameters that are measured to insure proper
control and operation of the OEC, such as pressure,
temperature,
PAGE A-12
voltage, current, power, etc., are measured by the
appropriate instruments.
o Special tools, equipment and commissioning spares
for OEC
Supply of special tools for turbine maintenance,
turbine-balancing kit, portable vibration instrument,
including balancing option, and commissioning spares.
2.3.2 Balance of Plant items, consisting of:
a. Motive fluid storage tank in capacity of approximately
7,000 gallons and transfer pump (it is assumed and agreed
that Contractor will be able to utilize the existing SB
1&1A pentane system, including tank, pump and valves.
b. Compressed air system for instrumentation and control - Oil
free compressed system with 100% redundancy in an
approximate capacity of 150scfm.
c. Fire water system - Water tank, fire pump, and fire loop
including valves, hydrants and monitors. It is assumed and
agreed that the Contractor can utilize the existing system,
at his discretion, located in SB-1 & SB 1A, consisting of
diesel driven pump; small jockey pump, water storage tank
and detection system, rather than acquire new equipment.
d. 13.8/0.48kV Step down auxiliary transformers.
e. Main central station control system and field
instrumentation (in addition to the existing ones) and
safety devices.
f. Power and control cables, cable trays and accessories.
g. Main 13.8 kV switchgear.
h. Main 13.8/120 kV sub station including the main step up
transformer and transmission line at a length of about 2000
feet to the nearby SPPC switchyard.
i. 4.16/13.8 kV step down transformer for feeding several SB 2
& SB 3 production down hole pumps. (In addition to the
existing electrical equipment, materials etc that already
exist in the SB 1 & SB 1A and SB 2 & SB 3 field gathering
system.)
j. Pipes and fittings for the Facility.
k. Pipes and fitting for the field gathering system (in
addition to the existing SB 1 & SB1A and SB 2 & SB3 pipes,
fittings, valves and instrumentation that
PAGE A-13
Contractor is free to utilize as he wishes).
l. Control and manual valves.
m. Electrical lighting and lightning systems.
2.4 CONSTRUCTION
Contractor shall undertake the Work as described in Section 4
herein and shall provide construction services, including all
required labor, equipment, materials and consumables necessary for
construction activities, as well as field technical construction
administration and coordination to achieve Final Acceptance.
2.4.1 Construction support activities
2.4.1.1 Working Schedule - Within 45 days after the Notice
to Proceed of the Contract, Contractor shall
submit to Company an updated detailed schedule
(the "Working Schedule") setting forth forecast
dates for performance of the various activities
relating to the Work.
Contractor will attend periodic (but no less
frequently than quarterly) Facility meetings with
Company during the course of the Work until Final
Acceptance in order to review the progress of the
Site construction work, to address any problems
that may have arisen or have been identified,
inspect testing and for general coordination. Such
periodic meetings shall also include the
Independent Engineer as necessary for approvals of
invoices or where any critical issues require
resolution. The time and place for each meeting
will be subject to mutual agreement between
Company and Contractor.
2.4.1.2 Procurement and expediting - Follow up on all
procurement and deliveries, make local procurement
as required; make inspection visits at
manufacturer's shops and take necessary action to
expedite late arrivals.
2.4.1.3 Transportation receiving and storage services -
assume responsibility for transporting, receiving,
site inspection, unloading and storing of all
equipment and materials.
2.4.1.4 Shutdown of Existing Plants - Use best efforts to
coordinate the shut down or reduction of power at
one or more of the existing plants with Company
for any electrical/control tie in and piping hook
up to minimize the impact
PAGE A-14
of any such shutdown or reduction on ongoing
operations.
2.4.1.5 Field Organization
- Provide a site management team and supervisory
personnel in all trades (civil, electrical and
mechanical) and other special technical
personnel. The personnel will be responsible
for field construction supervision, field
engineering, field inspection, local
procurement, planning and scheduling, cost
control, safety and field administration.
- Provide all construction equipment and tools
required for construction and Site maintenance.
- Provide all direct labor, supplementary labor,
journeymen, foremen, supervisory and management
personnel to carry out the Work.
- Establish a safety program, which will include
safety procedures, safety training and
contingency plans.
PAGE A-15
- Establish and implement a quality assurance
program, which will include construction
survey; soil compaction tests; concrete
strength tests; piping hydro tests; x-ray
tests; welder's qualifications; electrical
megger and other tests; equipment calibration
and instrumentation set up.
2.4.2 Construction detailed scope of work
2.4.2.1 Earth Work - Power Plant Site Preparation
o Survey and stake out (initial bench mark to be provided
by Company)
o Excavation and trenching, bedding compaction and back
fill borrowed fill for underground piping, electrical
conduits, and electrical cables.
o Excavation, compaction and back fill for concrete
foundations, concrete supports for building
foundations, slabs or any other concrete work.
o Grading, leveling, sloping, and other earth work
required for the power plant site drainage system.
o Final grading and gravel of the power plant surface.
o Install chain link fence around the Power Plant
boundaries, including main double gate entrance and
back single gate.
2.4.2.2 Foundations and structural.
PAGE A-16
o Concrete foundations and slabs, including supply and
installation of all embedded plates, conduits and
anchor bolts for all the mechanical, electrical and
other equipment in the power plant.
o Concrete slabs and foundations including embedded
plates and anchor bolts for buildings and sheds, and
miscellaneous structures.
o Furnish and install structural steel for pipe supports
and walkways (if required).
o Pipe supports for gathering system piping.
2.4.2.3 Buildings and Sheds
o Provide and erect a main office/control room
building. The building shall be pre-engineered
metal building, equipped with air conditioning
units. The building will be divided into the
following sections: office space, with
approximate size of 170 square feet, and
control room in an approximate size of 300
square feet. (Foregoing is based on assuming
no power shelters are provided. If power
shelters are provided the size of the control
roomwill be reduced to approximately 150
square feet).
PAGE A-17
o Utility building for compressed air system and
a closed storage area in approximate size of
180 square feet. Contractor may combine the
utility building with the control/office
building.
2.4.2.4 Mechanical and piping work
Contractor shall perform the mechanical and piping
Work required in the Facility. Work is divided
into the following areas:
o OEC - Erect, install, assemble heat
exchangers, internal piping, and install and
align turbo-Generator skids, oil system and
other ancillary system.
o Compressed air system - Install equipment,
piping and hook up to the air consumers.
o Motive fluid system - Install storage tank (if
required in addition to the one exist in SB
1&1A; transfer pump and piping to the OEC.
o Install all geothermal piping inside the
Facility.
o Modify the existing geothermal field gathering
piping system and add as required new piping
system, including its supports.
PAGE A-18
o Fire water system, including underground
piping loop; and all hydrants and monitors.
Work includes also testing of the fire water
system. (Fire pumps and water tank from SB 1 &
1A can be utilized).
o Initial fill up of all oils lubricants as well
as the motive fluid (Pentane).
2.4.2.5 Electrical and control work within the Facility
Contractor shall install as required all
electrical equipment including cable trays,
underground conduit systems, supporting hardware
as follows:
o Excavation and trenching, bedding compaction
and back fill for underground cables and
conduits.
o Furnish, layout, and install cable tray
systems including all supporting hardware.
o Install cables and terminate all power cables
to the main OEC electrical equipment; its
auxiliary transformers and the main 13.8 kV
switchgear.
o Install 4.16/13.8 kV step-down transformer and
connect to SB 2&3 geothermal field electrical
supply system.
o Install 0.48/13.8 kV step-down transformer and
connect to SB 1&1A down hole pump.
PAGE A-19
o Install field instrumentation devices and
connect to the main control system.
o Install, terminate and test main central
station control system inside control
building.
o Install and test fire detection system.
o Perform all required set up; calibration and
testing.
2.4.2.6 120 kV substation and transmission line
o Prepare the sub station site and install
foundations.
o Install 13.8/120 kV transformer and erect
substation including main breakers, metering
panels TPP and LPP panels and the related
structure.
o Install 120 kV line between the sub station
and the SPPC switchyard, located at
approximate distance of 2,000 feet.
o Set up, calibration and test the sub station
and protection devices.
PAGE A-20
2.4.3 Start up, Commissioning and Testing
Operation and Maintenance Personnel Training
o Contractor will conduct Operation and
Maintenance training course for Company's
personnel. The O&M course will include about 1
week classroom session for the operators and
maintenance staff.
o Commissioning and Testing - Conduct the tests
as defined in Exhibit D of the Contract.
Contractor will be responsible for plant
initial checks, the preparation of the tests,
including instrumentation calibration, filling
all required fluids. Start-up of the
generating units, running the units as per the
test procedures and test protocols stop and
restart.
3. DESCRIPTION OF COMPANY SCOPE OF SUPPLY
Company shall perform the following activities necessary to allow
Contractor perform the Work:
3.1 Equipment
o SB 1 & SB1A fire equipment including pumps, water tank,
alarms.
o All existing geothermal field gathering system (production;
injection. wellheads and electrical distribution system.
o Spare parts.
o Warehouse and storage building.
PAGE A-21
3.2 Services and Other Responsibilities
o Access roads to the Site, and to and between the production
and injection wells.
o Free access to all portions of the Steamboat Project.
o Provide all required existing technical documentation
regarding the existing plants, electrical distribution system,
field gathering system and wells, available to Company and
Operator. These documents will include drawings,
specifications, data sheets etc.
o Allocate and provide new plant site for the Facility and the
substation and provide at least one survey bench mark at the
Site.
o Allocate adequate temporary lay down and construction area
adjacent to the Site, and provide office space at either
Company's offices in Steamboat or at either one of the SB 1&
SB1A and SB 2 & SB3 plant locations.
o Coordinate the shut down or reduction of power at one or more
of the existing plants for any electrical/control tie in and
piping hook up.
o Use best efforts to prepare, submit and obtain the following
permits, licenses and rights of way (ROWs), in an expedited
manner ("Company Permits"):
o Permission for the T-Line from SPPC
o UEPA Permit
o Use best efforts to execute the PPA and obtain necessary
approvals for its effectivity in an expedited manner.
o Facility water supply at the specified interface points.
o Telephone lines to site.
o Provision of the Geothermal Fluid and receipt of the
downstream fluid at the specified interface points) in a
timely manner, as requested by Contractor subject to
reasonable advance notice.
PAGE A-22
o Provide access to Geothermal field; wells and gathering
system.
o Provision of an adjacent area for disposal of surplus fill and
construction debris.
o Any environmental monitoring or environmental assessment or
reporting as may be required by the Facility permits and
local, state and federal authorities.
o Reasonable assistance as required in importation and customs
clearance.
o Be responsible for handling and/or disposal of any hazardous
material, other than hazardous materials that were introduced
to the Site by Contractor.
o Assist as requested by Contractor in coordination with the
local utility regarding the grid connection.
o Provide operating personnel in time, as requested by
Contractor for training and to assist Contractor with start
up, commissioning and testing under Contractor's supervision
and control.
PAGE A-23
EXHIBIT B
CONTRACT PRICE AND
MILESTONE PAYMENT SCHEDULE
1. CONTRACT PRICE:
The Contract Price is US$ 25,800,000
(Twenty Five Million Eight Hundred Thousand US Dollars)
2. MILESTONE PAYMENT SCHEDULE
% OF
# EVENT CONTRACT ACCOMPANYING DOCUMENTATION*
PRICE
- -- ----- -------- ---------------------------
1 Notice To Proceed (NTP) 10.0% COPY OF NOTICE TO PROCEED
2 Upon submittal of conceptual 5.0% SUBMITTAL OF THE DESIGN PACKAGE AS
design package DESCRIBED IN NOTE B-2
3 90 days after NTP 20.0% COPY OF RELEVANT ORDERS (WITHOUT PRICE
INFORMATION) FOR THE ITEMS AS DESCRIBED
IN NOTE B-3
4 180 days after NTP 15.0% SUBMITTAL OF THE DESIGN PACKAGE AND
COPIES OF THE RELEVANT ORDERS (WITHOUT
PRICE INFORMATION) AS DESCRIBED IN NOTE
B-4
5 Commence construction on Site 10.0% INDEPENDENT ENGINEER (IE) VERIFICATION OF
VISUAL INSPECTION AT THE SITE
6 First OEC arrival at the Site 15.0% IE VERIFICATION OF VISUAL INSPECTION AT
THE SITE
7 Second OEC arrival at the Site 15.0% IE VERIFICATION OF VISUAL INSPECTION AT
THE SITE
8 Energize substation 5.0% IE VERIFICATION OF VISUAL INSPECTION AT
THE SITE
9 Final Acceptance 5.0% FINAL ACCEPTANCE CERTIFICATE
NOTES
A. GENERAL
1. In case of partial shipments, proportional payments will apply.
2. Order of payment of the above Milestone Payment events is not
necessarily sequential.
3. *In addition, an invoice is required for each Milestone Payment
Event, and, for each of Events #1-8, an interim lien waiver in the
form of Exhibit H-1 is required, and for Event #9 a final lien waiver
in the form of Exhibit H-2 is required.
4. Under Section 5.1.3 of the Contract, certain of the payments may be
delayed in whole or in part.
B. PAYMENT MILESTONES DEFINITION AND DESCRIPTION:
1. Payment Event # 1 - Upon issuance of Notice to Proceed.
2. Payment Event # 2 - Complete conceptual design package, with status
of "issued for detailed design", consisting of: PFDs; PIDs, SLDs;
general arrangements; major equipment specification; control
configuration.
3. Payment Event # 3 - Copy of purchase orders (without price information)
for heat exchangers or heat exchangers materials (tubes and shell plates
in case of manufacturing outside of Contractor Affiliates were issued.
4. Payment Event # 4 - OEC design is completed; Detailed civil; mechanical
and electrical design is substantially completed; Purchase orders for the
following major items are issued: main transformer, substation;
compressed air system; bulk of piping for gathering system.
5. Payment Event #5 - Contractor has established offices at the site and
earthwork Contractor commence with the site civil work.
6. Payment Event #6 - The majority of first ITLU items arrived at site.
These consist of the vaporizers, air coolers, internal piping, generator;
ITLU foundation work is substantially completed; mechanical Subcontractor
commences working at the site.
7. Payment Event #7 - Same as for payment # 6 for the second OEC unit;
commence erection of substation.
8. Payment Event #8 - Utility connection completed and main 13.8KV
switchgear energized successfully, all plant equipment arrived at the
site; ITLUs are substantially erected.
9. Payment Event #9 - Final Acceptance certificate issued and countersigned
by Company.
PAGE B-2
EXHIBIT C
GALENA FACILITY - DRAWINGS AND SPECIFICATIONS
DRAWING NUMBER DESCRIPTION REV.
- -------------- ----------- ----
0.002.95.661.0 OEC Process Flow Diagram P0
7.063.00.001.0 Power Plant - General Arrangement P0
7.063.00.011.0 Plant Process Flow Diagram P0
7.063.00.022.0 OEC's Gathering System P0
0.729.95.001.0 Galena Electrical Single Line Diagram (2 sheets) P0
0.729.90.910.0 OEC (ITLU) General Layout P0
[GRAPHIC APPEARS HERE]
[A graphic showing the OEC (Ormat Energy Converter) Process Flow Diagram
(Heat & Mass Balance). The diagram includes the following tables:]
- ----------------------------------------------------------------------------
OPERATING DATA
- ----------------------------------------------------------------------------
BRINESTREAM 1 : 4,_4_,000 M
21_ P
306.7 T
BRINESTREAM 2 : 500,000 M
215 P
2_0 T
AIR INLET TEMP. 55 T
- ----------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
P0 PRELIMINARY 11.DEC.2003 [Illegible]
- --------------------------------------------------------------------------------------------------
REV. DESCRIPTION DATE BY CHECK APPR
- --------------------------------------------------------------------------------------------------
REVISIONS
PAGE C-2
[GRAPHIC APPEARS HERE]
[A graphic showing a Process Flow Diagram of the Production Wells.
The diagram includes the following tables:]
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION UNITS 1 2 3 4 5 6
- ------------------------------------------------------------------------------------------------------------------------------------
FLUID INLET BRINE ADDITIONAL DISCHARGE BRINE DISCHARGE BRINE DISCHARGE DISCHARGE
TO VAPORIZER BRINE TO TO PREHEATER FROM PREHEATER BRINE FROM BRINE FROM
LEVEL I VAPORIZER II LEVEL I LEVEL II OEC PLANT
- ------------------------------------------------------------------------------------------------------------------------------------
FLOW GPM 5,290 538 2,757 2,743 5,500 11,000
- ------------------------------------------------------------------------------------------------------------------------------------
FLOW lb/hr 2,423,000 250,000 1,336,500 1,336,500 2,673,000 5,346,000
- ------------------------------------------------------------------------------------------------------------------------------------
PRESSURE psia 215 215 TBD TBD 190 18_
- ------------------------------------------------------------------------------------------------------------------------------------
TEMPERATURE F(degree) 306.7 280 187 175 181 181
- ------------------------------------------------------------------------------------------------------------------------------------
NOTES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
P0 PRELIMINARY 11.DEC.2003 R.TAMAR
- ------------------------------------------------------------------------------------------------
REV. DESCRIPTION DATE BY CHECK APPR
- ------------------------------------------------------------------------------------------------
REVISIONS
PAGE C-3
[GRAPHIC APPEARS HERE]
[A graphic showing a Power Plant Process Flow Diagram.
The diagram includes the following table:]
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
P1 PRELIMINARY [Illegible] [Illegible] [Illegible]
- -------------------------------------------------------------------------------------------------------------
P0 PRELIMINARY [Illegible] [Illegible] [Illegible]
- -------------------------------------------------------------------------------------------------------------
REV. DESCRIPTION DATE BY CHECK APPR
- -------------------------------------------------------------------------------------------------------------
REVISIONS
PAGE C-4
[GRAPHIC APPEARS HERE]
[A graphic showing a Galena Electrical Single Line Diagram.
The diagram includes the following table:]
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
REV. DESCRIPTION DATE BY CHECK APPR
- --------------------------------------------------------------------------------------------------
REVISIONS
PAGE C-5
[GRAPHIC APPEARS HERE]
[A graphic showing a diagram of Ormat Energy Converter's Gathering System.
The diagram includes the following table:]
- ------------------------------------------------------------------------------------------------------
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P0 PRELIMINARY 11.DEC.2003 [Illegible]
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REV. DESCRIPTION DATE BY CHECK APPR
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REVISIONS
PAGE C-6
[GRAPHIC APPEARS HERE]
[A graphic showing a Galena Electrical Single Line Diagram.
The diagram includes the following table:]
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REV. DESCRIPTION DATE BY CHECK APPR
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REVISIONS
PAGE C-7
[GRAPHIC APPEARS HERE]
[A graphic showing a diagram of the Ormat Energy Converter Integrated
Two Level Unit (ITLU) General Layout.]
PAGE C-8
EXHIBIT D
TESTS
This Exhibit sets forth the requirements for the conduct of the Facility tests
in accordance with the Engineering, Procurement and Construction Contract
(the "Contract") to which this Exhibit is attached and the criteria for
establishing successful completion of such tests.
1. DEFINITIONS
For purposes of this Exhibit D capitalized terms shall have the meanings
as set forth below or, where not defined below, as defined in the
Contract.
Correction Curves: As defined in Section 8 hereof.
Design Range: The design range as described in Section 6.2 hereof.
Generating Units: The two ILTUs.
Net Deliverable Energy: The actual net energy generated by the Facility as
demonstrated in the Net Deliverable Energy Test and calculated according
to formula 4 of Schedule A attached hereto.
Mechanical Completion Tests: As defined in Section 2 of this Exhibit D.
Net Deliverable Energy Test or Performance Test: The test to be conducted
over ninety six (96) hours to demonstrate the Net Deliverable Energy (as
defined in Section 3.2 of this Exhibit D).
Design Point: The geothermal fluid and ambient temperature conditions as
defined in section 1.5 of Exhibit A to the Contract and section 6.2 in
this Exhibit D.
2. MECHANICAL COMPLETION TESTS
The following preliminary tests shall be conducted at the Site during the
construction and start up process to ascertain correct execution of the
erection works and tuning of the installed equipment, and to verify
characteristics and performance of such equipment:
a. Radiographic examination of main brine line welding.
b. Hydrostatic tests of pressure parts constructed at the Site.
c. Functional test of main controls and alarms, i.e. control and
protective devices, fire detection and alarm system.
d. Setting and testing of safety valves to be performed by manufacturer
at its facility according to its procedures and applicable
standards. Based on the aforementioned tests, manufacturer will
provide certificates and documentation.
e. Balancing and vibration tests of main rotating equipment, including
turbines and generators and motors larger then 100 HP. Balancing
checks and certificates will be provided by turbine and generator
manufacturers based on tests performed at manufacturers' facilities
in accordance with their procedures and applicable standards.
Vibration measurements will be performed after installation in the
field.
f. Automatic operation of standby equipment.
g. Load tests of cranes and hoisting equipment to be performed in
accordance with applicable local regulations and manufacturers'
procedures.
h. Operation of fire fighting equipment.
i. Generator short circuit and open circuit characteristic checks.
Checks and certificates in connection with the above will be
provided by generator manufacturer based on tests and checks
performed at manufacturer's facility in accordance with its
procedures and applicable standards.
j. Generator megger tests.
k. Megger tests for power cables.
l. Setting of protective relays. Setting, calibration and testing (and
certificates in connection therewith) will be provided by the relay
manufacturers based on setting and testing performed at
manufacturers' facilities in accordance with their procedures and
applicable standards.
m. Electrical ground and/or insulation tests of equipment.
n. Check out of instrument loops.
3. TESTS REQUIRED FOR FINAL ACCEPTANCE
PAGE D-2
The following tests are required for Final Acceptance in accordance with
Section 7 of the Contract:
3.1 Generating Unit Test
The purpose of this test is to demonstrate that each Generating Unit
can be operated safely and reliably under the following conditions:
a. Each Generating Unit shall run at stable condition at 100%
(+10% to -30%) of the unit rated power, conditional upon
adequate heat source supply, for four (4) hours without any
failure or malfunction.
b. The Generating Unit shall be tripped manually with the unit
remaining in a safe condition without any damage, and capable
of immediate restart.
c. After the Generating Unit comes to a standstill and after
resetting the same, it shall be started again according to the
normal hot start procedure as described in O&M manuals, and
resume normal operation conditions.
The test will be recorded as per the attached test record of each
Generating Unit Test for each Generating Unit.
3.2 Net Deliverable Energy Test (Performance Test)
After completion of the Mechanical Completion Tests and the
Generating Unit Tests, the Facility will be tested as close as
possible to the Design Conditions, for a period of ninety six (96)
hours at full rated load to verify the Facility's Net Deliverable
Energy. The ambient temperature and the heat source conditions will
be within the Design Range.
During this test, the net deliverable energy of the Facility will be
monitored, with manual and automatic recording of readings as
specified in Section 6.4 hereof.
4. TEST PROTOCOLS
The procedures for conducting the tests, including calibration data,
instrumentation data, test records and frequency of measurement will be
detailed in individual test protocols. The individual test protocol will
be drafted by Contractor and submitted for review to Company and the
Independent Engineer at least forty five (45) days prior to the start of
any individual test. All components of the test protocol, including
revisions, must be approved by Company and the Independent Engineer at
least fifteen (15) days prior to the commencement of the relevant test.
The test protocols will be consistent with the terms of this Exhibit D.
PAGE D-3
The test protocols shall explicitly state the industry codes and standards
that will be used, the instrumentation required, the form of the expected
results, the anticipated time duration of the test and the anticipated
number of Company's operating personnel required to assist Contractor in
the conduct of the test.
PAGE D-4
5. REPEATING AND SUSPENSION OF TEST
If test criteria are not met or problems or deficiencies arise during the
conduct of the tests which require cessation thereof (including due to
Company Default, causes attributable to other entities such as Nevada
Power Co. and Force Majeure), or if Contractor opts to retest to improve
test results, Contractor will establish the actions to be taken to bring
about a successful completion of the tests. Such actions shall be taken by
Contractor and the tests shall be reconducted.
Subject to the provisions of the Contract, Contractor may repeat any of
the tests. In case one or more of the tests are repeated, the latest of
the test results will be utilized to establish the final results of
testing. Repeating one or more of the tests does not require repeating any
of the other tests, unless it affects the results of tests already
performed.
Subject to the provisions of the Contract, the tests may be suspended by
Contractor upon each occurrence or circumstance beyond the control of
Contractor which does not reflect equipment failure, design or
construction defects (e.g., a problem with the grid, supply of heat
resource not in accordance with the design range, Force Majeure, etc.),
which make conduct of the tests unfeasible. The test period may resume
after the period(s) of suspension, with the test period including
period(s) of Facility test operation both before and after the period(s)
of suspension, if Contractor so desires. Alternatively, at Contractor's
discretion, the tests may be repeated from the beginning following a
suspension.
Adjustments to the Facility during suspension shall not impact on the
availability of the Facility to resume the tests when the causes of
suspension no longer exist unless Contractor elects to repeat the tests
from the beginning.
6. INSTRUMENTATION
Permanent Facility instrumentation shall be utilized for measurement and
data collection. A list of key instruments to be used during the tests
will be specified by Contractor prior to the initiation of the test. The
instruments will be calibrated in accordance with the standards of a
recognized national organization such as the American Society of Testing
and Materials (ASTM), the Instrument Society of America (ISA), etc.
6.1 Instrumentation Uncertainty
Solely for purposes of the tests, the following as installed
Facility instrumentation will be deemed to have the
after-calibration uncertainties below:
Kilowatt meters +/- 1.5 % (of full scale)
Kilowatt-hour meters +/- 1.5 % (of full scale)
Ambient Air temperature meters +/- 1 Degree F
PAGE D-5
Heat Source flow rate meters +/- 2 % (of full scale)
Heat Source temperature meters +/- 1 Degree F
Heat Source Pressure meters +/- 0.5 % (of full scale)
6.2 Ambient Temperature, Heat Source Conditions and Design Range
As conditions for the conduct of the tests, the heat source
conditions and the ambient temperature must be within the Design
Range All conditions shall be measured at the interface points or,
in the case of the ambient temperature, at a representative location
away from plant influences for measuring the air inlet temperature
to the air cooled condensers.
Heat Source Conditions and Ambient Design Point Design Range
Temperature for the Facility-
- ---------------------------------------- ------------ ------------
Ambient temperature 55 Degree F 0 - 100 Degree F
Heat source conditions flow:
- Stream 1 4,846 kph 80 - 110 %
- Stream 2 500 kph 80 - 110 %
Heat source temperature:
- Stream 1 306.7 Degree F 300 - 312 Degree F
- Stream 2 280 Degree F 270 - 284 Degree F
Heat source pressure 200 Psig 120 - 250 Psig
6.3 Measurement of Ambient Air Temperature, Heat Source Conditions and
Electrical Power
All conditions shall be measured at the points as defined in the
table below.
Measurement Location
- ---------------------------------------------- ----------------------------------------------------
Heat Source Flow Rates Inlet Lines of Brine to Facility
Ambient Air Temperature Inlet to Air Cooled Condensers
Gross Generating Unit Power Generator Breaker Terminals
Generating Unit Auxiliary Power Consumption MCC Terminals
Net Energy a) At the 120 kV SPPC switchyard
b) At the 4.16 kV SB2 & SB3 geothermal field
electrical supply
c) At the 0.48 kV SB 1 and SB 1A down hole pumps
MCC
Heat Source Inlet Temperatures Inlet Lines of Brine to Facility
PAGE D-6
Heat Source Pressure Inlet Lines of Brine to Facility
PAGE D-7
6.4 Data Recording
During the Performance Test, the heat source conditions, the ambient
temperature and the Facility gross and net output will be measured
and recorded in time intervals as follows:
Central Station Control Manually by Facility Operator
- ------------------------------------ ------------------------------ -------------------------------
Generating Unit Test 10 minutes 30 minutes
Net Deliverable Energy Test 15 minutes 60 minutes
The results of the test shall be adjusted for variations in the heat
source conditions and ambient temperature conditions using the
Correction Curves.
7. PAYMENT OF PERFORMANCE DEFICIENCY
If the Net Deliverable Energy as determined by the Net Deliverable Energy
Test is lower than the Performance Guarantee, Contractor will pay Company
liquidated damages subject to Section 11.2 of the Contract. In such a case
the shortfall will be calculated in accordance with formula 5 of Schedule
A of this Exhibit D.
8. CORRECTION CURVES
Correction Curves for changes in the ambient air temperature and
Correction Curves for changes in the heat source flow rates and
temperatures are described in Schedule B attached hereto.
In case of deviation of actual conditions from design conditions, the
Correction Curves will be used to determine the correction factors (F1,
F2, etc.) to be applied as defined in Schedule A attached hereto.
CORRECTION FACTORS
F1 Stream 1 brine flow, net energy correction factor as defined by
Correction Curve GAL-201-R0.
F2 Stream 1 brine inlet temperature, net energy correction factor as
defined by Correction Curve GAL-202-R0.
F3 Stream 2 brine flow, net energy correction factor as defined by
Correction Curve GAL-203-R0.
F4 Stream 2 brine inlet temperature, net energy correction factor as
defined by
PAGE D-8
Correction Curve GAL204-R0.
F5 Ambient air inlet temperature, net energy correction factor as
defined by Correction Curve GAL-205-R0.
9. MEASUREMENT UNCERTAINTIES
Z1 Uncertainty factor of the electrical meter reading.
Z1 = [1 +/- Umem/100]
Z3 Uncertainty factor of the Net Energy measurement
------------------------------
Z3 = 1 +/- \ | U12 + U22 + U32 + U42 + U52 / 100
\|
Where:
U1 Effect of stream 1 brine flow measurement uncertainty in percent
change in Correction Factor per percent measurement uncertainty
U2 Effect of stream 1 brine inlet temperature measurement uncertainty
in percent change in Correction Factor per measurement uncertainty
(in deg. F)
U3 Effect of stream 2 brine flow measurement uncertainty in percent
change in Correction Factor per percent measurement uncertainty
U4 Effect of stream 2 brine inlet temperature measurement uncertainty
in percent change in Correction Factor per measurement uncertainty
(in deg. F)
U5 Effect of ambient air inlet temperature measurement uncertainty in
percent change in Correction Factor per measurement uncertainty (in
deg. F)
Note: The (-) sign in the uncertainty calculation will be used for excess
energy calculation while the (+) sign will be used for deficiency
energy calculations.
PAGE D-9
SCHEDULE A
FORMULAS
1. NE = "Net Energy"
------- i=3
\
\
NE = / [NEMi(T)- NEMi(T - 1)]*Z1
/
------- i=1
Where:
NEMi(T)="Net Energy reading of meter i at time T"
2. CNE = "Corrected Net Energy"
CNE = NE/BCF
3. BCF = "Net Energy Correction Factor"
BCF = F1 * F2 * F3 * F4 * F5 * 1/Z3
Where: F1, F2, F3, F4, F5, Z3 are as defined in Sections 8 and 9 of
this Exhibit D
If BCF >= 1.15, then BCF = 1.15
4. NDE = "Net Deliverable Energy"
= CNE summed over the 96-hour test period
5. D = Performance shortfall
If NDE < Performance Guarantee
D = Performance Guarantee - NDE
PAGE D-10
SCHEDULE B
CORRECTION CURVES
Stream 1 Brine Flow Rate Correction Curve
Stream 1 Brine Inlet Temperature Correction Curve
Stream 2 Brine Flow Rate Correction Curve
Stream 2 Brine Inlet Temperature Correction Curve
Ambient Air Inlet Temperature Correction Curve
PAGE D-11
SCHEDULE C
TEST RECORDS
Manual Reading - Generating Unit Test
Manual Reading - Net Deliverable Energy Test
PAGE D-12
EXHIBIT E
WARRANTY CLAIM PROCEDURES
Terms not specifically defined in this Exhibit shall have the meaning described
in the general terms of the Engineering, Procurement and Construction Contract
to which this Exhibit is attached.
1. Where Company has agreed in accordance with the terms of the Contract to
take corrective action, and upon notifying Contractor as set forth in Section
10.3.1 of the Contract, Company may undertake corrective action, but Contractor
reserves the right to investigate and determine the eligibility of such warranty
claim.
2. Company shall notify Contractor in accordance with Section 10.3.1 of the
Contract and provide documents per paragraph (3) below together with a written
cost estimate of the corrective action required. As soon as reasonably possible
following the receipt of said documents and cost estimate, Contractor shall
investigate the defect and shall issue written instructions to Company on the
corrective action to be undertaken, or Contractor shall undertake corrective
action by its own employees or agents.
3. The following procedures shall be observed in all Contractor warranty
claims for the Facility in connection with which Company has taken corrective
action at Contractor's request as identified in paragraph (1) above:
(a) A failure report, which shall contain technical and logistic
information sufficiently detailed to enable Contractor to assess the damage to
the Work and to evaluate appropriate corrective action in the form as agreed to
by Company and Contractor, shall be provided by Company as soon as reasonably
practicable after the occurrence of any event giving rise to a warranty claim.
(b) Warranty claims shall be submitted in accordance with paragraph (d)
below, and shall include, as a required minimum, the following documents:
(i) Applicable failure report;
(ii) List of equipment and materials purchased or used in
accomplishing the repair, schedule of operations and subcontractors hours
applicable to each claim, and a copy of any internal work orders or purchase
orders prepared in connection with each such claim;
(iii) Company's maintenance and repair records with respect to the
equipment for which the claim is being made;
Company shall include with such maintenance and repair records the
manufacturer/vendor part number and serial number and the identification by part
number and serial number of the next major assembly call-out (such as, but not
limited to, turbine, generator, electrical cabinet); and
(iv) copies of invoices received or prepared for costs and expenses
claimed.
The documentation to be provided pursuant to paragraphs (b)(ii) and
(b)(iii) above, shall be in a form reasonably acceptable to Contractor.
(c) All warranty claims pertaining to failure of the equipment for which
Company has independently undertaken corrective action during any calendar month
shall be submitted to Contractor on or before the last day of the following
calendar month. Claims shall be paid by Contractor on a net 30 basis. Work
performed by Company under a warranty claim shall be billed on a "time and
material" basis as defined below.
(d) "Time and Material" in connection with a warranty claim is defined as
follows:
PAGE E-2
(i) With respect to "Time", the product of one hundred fifteen
percent (115%) of the normal hourly wage (including fringe benefits, insurance
and taxes) Company pays with respect to its particular employee (not including
overhead) multiplied by the number of hours each employee performed the
particular Work;
(ii) With respect to "Material", one hundred ten percent (110%) of
the actual purchase price paid by Company or an affiliate to a third party for
the materials incorporated or consumed in connection with the Work; and
(iii) With respect to Work performed by a subcontractor (other than
an entity which directly or indirectly controls, is controlled by, or is under
common control with, Company, Work done by any such entity being deemed Work
done by Company through its own employees for purposes of this definition), one
hundred ten percent (110%) of the actual amount paid by Company to the
subcontractor for such Work.
(e) Accounting settlement between Company and Contractor due to warranty
claims shall occur on a quarterly basis.
(f) Company shall maintain adequate records to support all warranty
claims and allow Contractor to audit warranty claims upon no less than ten (10)
days period notice.
PAGE E-3
EXHIBIT F
SCHEDULE
DESCRIPTION DATE
- ---------------------------------------------------------- -----------------
Notice To Proceed February 15, 2004
Provide access to the Site February 15, 2004
Complete basic conceptual design April 15, 2004
Submit application for major permits and rights of way
(ROW) for geothermal gathering piping, substation, May 15, 2004
Facility site and transmission line
Obtain major permits and rights of way (ROW) for
geothermal gathering piping, substation, Facility site and August 15, 2004
transmission line
Commence work at geothermal field gathering system August 30, 2004
Commence site civil work September 5, 2004
Arrival at site of major components of first OEC November 30, 2004
Arrival at site of major components of second OEC January 15, 2005
Energize Sub station March 15, 2005
Guaranteed Completion Date May 30, 2005
NOTES:
1. Dates are based on the assumption that the Notice To Proceed (NTP) will
be provided by February 15, 2004. Any delays in issuance of the NTP,
will cause similar delays in other milestones.
2. Activities may start earlier than presented at the discretion of
Contractor.
EXHIBIT G
FINAL ACCEPTANCE CERTIFICATE
ORMAT NEVADA INC.
980 Greg Street
Sparks, NV 89431-6039
With reference to the ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
(the "Contract") dated _____________ __, 200__ between ORNI 7 LLC ("Company"),
and ORMAT NEVADA INC. ("Contractor") for the engineering, procurement and
construction of the Galena Facility at Steamboat Springs, Washoe County, Nevada,
pursuant to its inspection of the Facility and review of the Work, Company
hereby confirms and certifies that the Work requirements of the Contract (other
than the Punchlist Items identified by Contractor and the as-built Drawings)
have been fully satisfied for the Facility and Final Acceptance of the Facility
has accordingly been achieved as of ____________ _, 200_ (the "Final Acceptance
Date").
Terms defined in the Contract shall have the same meaning when used
herein.
Executed this ____ day of ________________, 200__.
_____________________
By: _______________
Name: _______________
Title:_______________
ORMAT NEVADA INC.
Countersigned for Independent Engineer:
_______________________
By: _______________
Name: _______________
Title:_______________
STONE & WEBSTER
EXHIBIT H-1
FORM OF INTERIM LIEN WAIVER
CONDITIONAL WAIVER AND RELEASE
UPON PROGRESS PAYMENT
Property Name: Galena Facility
Property Location: Steamboat Springs, Washoe County, Nevada
Undersigned's Customer: ORNI 7 LLC
Invoice Number: _____________[*]
Payment Amount: $_____________
Payment Period: _______________________
Upon receipt by the undersigned of a check in the above referenced Payment
Amount payable to the undersigned, and when the check has been properly endorsed
and has been paid by the bank on which it is drawn, this document becomes
effective to release and the undersigned shall be deemed to waive any notice of
lien, any private bond right, any claim for payment and any rights under any
similar ordinance, rule or statute related to payment rights that the
undersigned has on the above described Property to the following extent:
This release covers a progress payment for the work, materials or equipment
furnished by the undersigned to the Property or to the Undersigned's Customer
which are the subject of the Invoice or Payment Application, but only to the
extent of the Payment Amount or such portion of the Payment Amount as the
undersigned is actually paid, and does not cover any retention withheld, any
items, modifications or changes pending approval, disputed items and claims, or
items furnished or invoiced after the Payment Period. Before any recipient of
this document relies on it, he should verify evidence of payment to the
undersigned. The undersigned warrants that he either has already paid or will
use the money he receives from this progress payment promptly to pay in full all
his laborers, subcontractors, materialmen and suppliers for all work, materials
or equipment that are the subject of this waiver and release.
Dated: _____________________
ORMAT NEVADA INC.
By: ________________________
Its: ________________________
[* Engineering, Procurement and Construction Contract dated ___________ __, 200_
between ORMAT NEVADA INC. and ORNI 7 LLC for the engineering, procurement and
construction of the Galena Facility.]
EXHIBIT H-2
FORM OF FINAL LIEN WAIVER
CONDITIONAL WAIVER AND RELEASE
UPON FINAL PAYMENT
Property Name: Galena Facility
Property Location: Steamboat Springs, Washoe County, Nevada
Undersigned's Customer: ORNI 7 LLC
Invoice Number: _____________[*]
Payment Amount: $_____________
Payment Period: _______________________
Amount of Disputed Claims: $_____________
Upon receipt by the undersigned of a check in the above referenced Payment
Amount payable to the undersigned, and when the check has been properly endorsed
and has been paid by the bank on which it is drawn, this document becomes
effective to release and the undersigned shall be deemed to waive any notice of
lien, any private bond right, any claim for payment and any rights under any
similar ordinance, rule or statute related to payment rights that the
undersigned has on the above described Property to the following extent:
This release covers the final payment to the undersigned for all work, materials
or equipment furnished by the undersigned to the Property or to the
Undersigned's Customer and does not cover payment for Disputed Claims, if any.
Before any recipient of this document relies on it, he should verify evidence of
payment to the undersigned. The undersigned warrants that he either has already
paid or will use the money he receives from the final payment promptly to pay in
full all his laborers, subcontractors, materialmen and suppliers for all work,
materials or equipment that are the subject of this waiver and release.
Dated: _____________________
[ORMAT NEVADA INC. / Name of Major Subcontractor]
By: ________________________
Its: ________________________
[* Engineering, Procurement and Construction Contract dated ___________ __, 200_
between ORMAT NEVADA INC. and ORNI 7 LLC for the engineering, procurement and
construction of the Galena Facility.]
EXHIBIT I
FORM OF GUARANTY
This ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT GUARANTY,
made and delivered as of February 12, 2004 (this "Guaranty"), is by ORMAT
TECHNOLOGIES INC., a Delaware corporation (the "Guarantor"), in favor of ORNI 7
LLC, a Delaware limited liability company (together with its successors in such
capacity, the "Guaranteed Party").
WHEREAS, the Guaranteed Party and Ormat Nevada Inc., a Delaware
corporation, as contractor (the "Contractor"), are parties to an Engineering,
Procurement and Construction Agreement dated as of the date hereof (as modified
and supplemented and in effect from time to time, the "EPC Agreement").
Capitalized terms used in this Guaranty but not otherwise defined herein shall
have the meanings assigned to such terms in the EPC Agreement.
WHEREAS, the Guarantor has agreed to provide assurance for the
performance of the Contractor's obligations in connection with the EPC
Agreement; and
WHEREAS, the execution and delivery of this Guaranty is a condition
to the Guaranteed Party's further performance of its obligations under the terms
of the EPC Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
1. Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees, as the primary obligor and not merely as surety, to and for the
benefit of the Guaranteed Party, the timely performance when due by the
Contractor of all obligations, whether financial or non-financial, required to
be performed by it under the EPC Agreement, including, without limitation, the
due and punctual payment in full by the Contractor of all amounts required to be
paid by it thereunder (the obligations guaranteed hereunder hereinafter referred
to as the "Guaranteed Obligations"). The guaranty contained herein is an
absolute, unconditional, present and continuing guaranty of payment and
performance, and not of collection, is in no way conditioned or contingent upon
any attempt to collect from or enforce payment or performance by Contractor or
upon any other event, contingency or circumstance whatsoever, and shall be
binding upon and against the Guarantor without regard to the validity or
enforceability of the EPC Agreement. If, for any reason whatsoever, the
Contractor shall fail or be unable duly, punctually and fully to pay or perform
any Guaranteed Obligation as and when the same shall become due and payable or
when such performance shall be required under the EPC Agreement, the Guarantor
shall forthwith pay,
PAGE I-1
perform, cause to be paid, or cause to be performed, such Guaranteed Obligation
to the Guaranteed Party.
2. Guaranty Absolute. The Guarantor agrees that the obligations of
the Guarantor set forth in this Guaranty shall be direct obligations of the
Guarantor, and such obligations shall be absolute and unconditional, shall not
be subject to any counterclaim, set-off, deduction, diminution, abatement,
recoupment, suspension, deferment, reduction or defense (other than to the
extent available to Contractor under the EPC Agreement) based upon any claim the
Guarantor may have against the Guaranteed Party and shall remain in full force
and effect without regard to, and shall not be released, discharged or in any
way affected or impaired by, any circumstance or condition whatsoever (other
than full and strict compliance by the Guarantor with its obligations hereunder
as expressly provided herein, provided, however, that the Guarantor shall be
entitled to assert as a defense to performance any defenses to performance
available to Contractor under the EPC Agreement), including, without limitation:
(a) any amendment or modification of or supplement to or other
change in the EPC Agreement or any exhibit attached thereto;
(b) any failure, omission or delay on the part of the
Guaranteed Party to conform or comply with any term of the EPC Agreement
or any exhibit attached thereto;
(c) any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or in respect of the EPC
Agreement or any obligation or liability of the Guaranteed Party, or any
exercise or non-exercise of any right, remedy, power or privilege under or
in respect of the EPC Agreement or any such obligation or liability,
provided that the Guaranteed Obligations will be deemed waived, extended,
released, terminated, liquidated or otherwise amended to the extent of an
express agreement or consent to in writing for the same by Contractor, the
Guaranteed Party and the Collateral Agent.
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, liquidation or similar proceeding with respect to the
Contractor, the Guarantor, the Guaranteed Party or any of their respective
properties, or any action taken by any trustee or receiver or by any court
in any such proceeding;
PAGE I-2
(e) any discharge, termination, cancellation, frustration,
irregularity, invalidity or unenforceability, in whole or in part, of the
EPC Agreement or any exhibit attached thereto or any term or provision
thereof (other than as a result of the performance or payment in full of
the Guaranteed Obligations or as a result of an express agreement or
consent to in writing for the same by Contractor, the Guaranteed Party and
the Collateral Agent);
(f) any merger or consolidation of the Guarantor, the
Guaranteed Party, or the Contractor into or with any other corporation or
any sale, lease or transfer of all or any of the assets of the Guarantor,
the Guaranteed Party, or the Contractor;
(g) any change in the ownership of the Guarantor, the
Guaranteed Party, or the Contractor; or
(h) to the extent permitted under applicable Laws, any other
occurrence or circumstance whatsoever, whether similar or dissimilar to
the foregoing, which might otherwise constitute a legal or equitable
defense available to, or discharge of the liabilities of, the Contractor
or the Guarantor as a guarantor or surety which might otherwise limit
recourse against the Guarantor in respect of the Guaranteed Obligations,
other than performance in full of the Guaranteed Obligations.
The Guaranteed Obligations constitute the full recourse obligations
of the Guarantor enforceable against it to the full extent of all its assets and
properties. Without limiting the generality of the foregoing, the Guarantor
agrees that repeated and successive demands may be made and recoveries may be
had hereunder as and when, from time to time, the Contractor shall default
under, or fail to comply with, the terms of the EPC Agreement and that
notwithstanding the recovery hereunder for or in respect of any given default or
failure to so comply by the Contractor under the EPC Agreement, this Guaranty
shall remain in full force and effect and shall apply to each and every
subsequent default. If (i) an event permitting the exercise of remedies under
the EPC Agreement, as the case may be, shall at any time have occurred and be
continuing and (ii) such exercise, or any consequences thereof provided in the
EPC Agreement, shall at any time be prevented by reason of the pendency against
the Contractor of a case or proceeding under any bankruptcy or insolvency law,
the Guarantor agrees that, solely for purposes of this Guaranty and its
obligations hereunder, the EPC Agreement shall be deemed to have been declared
in default and obligations thereunder shall be deemed to be due and payable,
with all the attendant consequences as provided in such EPC Agreement as if
declaration of default and the consequence thereof had been accomplished in
accordance with
PAGE I-3
the terms thereof, and the Guarantor shall, upon demand, forthwith perform the
obligations guaranteed hereunder.
The obligations of the Guarantor hereunder are several from the
Contractor or any other person, and are primary obligations concerning which the
Guarantor is the principal obligor. There are no conditions precedent to the
enforcement of this Guaranty, except as expressly contained herein. It shall not
be necessary for the Guaranteed Party, in order to enforce payment by the
Guarantor under this Guaranty, to show any proof of the Contractor's default, to
exhaust its remedies against the Contractor, any other guarantor, or any other
person liable for the payment or performance of the Guaranteed Obligations.
In no case shall the Guarantor be liable under this Guaranty or in
respect of the Guaranteed Obligations to an extent greater than the Guaranteed
Obligations.
3. Waiver. The Guarantor hereby unconditionally waives, to the
extent permitted by applicable Laws:
(a) notice of any of the matters referred to in Section 2
hereof;
(b) all notices which may be required by Laws now or hereafter
in effect, to preserve any rights of the Guarantor hereunder, including,
without limitation, any demand or proof of notice of non-payment or
non-performance of any Guaranteed Obligation;
(c) any right to require the enforcement, assertion or
exercise of any right, remedy, power or privilege by the Guaranteed Party
under or in respect of the EPC Agreement or any exhibit attached thereto;
(d) notice of acceptance of this Guaranty and of the creation
or existence of any of the Guaranteed Obligations; demand (other than as
expressly required hereunder), protest, presentment, notice of default and
any requirement of diligence;
(e) any requirement to exhaust any remedies resulting from
default by the Contractor under the EPC Agreements;
(f) any requirement that suit be brought against, or any other
action by the Guaranteed Party be taken against, or, other than as
required under the EPC
PAGE I-4
Agreement, any notice of default or other notice be given to, or any
demand be made on, the Contractor, or that any other action be taken or
not taken as a condition to Guarantor's liability for the Guaranteed
Obligations under this Guaranty or as a condition to the enforcement of
this Guaranty against Guarantor; and
(g) any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge, release or defense of a
guarantor, or which might otherwise limit recourse against the Guarantor,
all provided that Guarantor shall be entitled to assert as a defense to
performance thereunder any defenses to performance available to the
Contractor under the EPC Agreement.
4. Expenses. The Guarantor agrees to pay on demand any and all
costs including reasonable legal fees, and other expenses incurred by the
Guaranteed Party in enforcing the Guarantor's obligations under this Guaranty.
5. Subrogation. Notwithstanding any payment or payments made by
the Guarantor hereunder or any set-off or application of funds of the Guarantor
by the Guaranteed Party hereof, the Guarantor shall not be entitled to be
subrogated to any of the rights of the Contractor or of any rights of the
Guaranteed Party hereunder or any collateral, security or guaranty or right of
set-off held by the Guaranteed Party for the payment of the obligations
guaranteed hereunder, nor shall the Guarantor seek or be entitled to seek any
reimbursement from the Contractor in respect of payments made by the Guarantor
hereunder, until all amounts and performance owing to the Guaranteed Party by
the Contractor on account of the obligations guaranteed hereunder are paid and
performed in full.
6. Reinstatement. The Guarantor agrees that this Guaranty shall
be automatically reinstated with respect to any payment made by or on behalf of
the Contractor pursuant to the EPC Agreement if and to the extent that such
payment is rescinded or must be otherwise restored, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise.
7. Representation and Warranties. The Guarantor represents and
warrants to the Guaranteed Party that:
(a) The Guarantor is duly organized, validly existing and in
good standing under the laws of the
PAGE I-5
jurisdiction of its incorporation and has full, requisite corporate
power and authorization to execute, deliver and perform the obligations
under this Guaranty.
(b) The execution, delivery and performance of this Guaranty
by the Guarantor have been and remain duly authorized by all necessary
corporate action and will not require any approval of its shareholders or
of any other person except as has been obtained, and do not contravene any
Law, or any judgment or order applicable to or binding on it, do not
contravene or result in any breach of the Guarantor's certificate of
incorporation, bylaws, or any contractual restriction binding on the
Guarantor or its assets.
(c) No approval from a Governmental Authority is required to
be taken, given or obtained, as the case may be, by or from any government
authority and no filing, recording, publication or registration in any
public office or any other place, is necessary to authorize the execution,
delivery and performance by the Guarantor of this Guaranty or for the
legality, validity, binding effect or enforceability hereof.
(d) This Guaranty has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights generally and to general principles of equity (regardless of
whether enforcement thereof is sought in a proceeding at law or in
equity).
(e) There is no action, suit or proceeding pending or, to the
knowledge of the Guarantor, threatened, against or affecting the Guarantor
or naming the Guarantor as a party that questions the validity or
enforceability of this Guaranty or the ability (financial or otherwise) of
the Guarantor to perform its obligations hereunder.
(f) The Contractor is a wholly-owned subsidiary of the
Guarantor.
PAGE I-6
8. Covenants. The Guarantor agrees that, so long as this Guaranty
is in effect, the Guarantor shall:
(a) preserve and maintain all of its material rights,
privileges, and franchises, except where the failure to preserve and
maintain any such right, privilege or franchise would not materially and
adversely affect the ability of the Guarantor to perform its obligations
under this Guaranty;
(b) comply with all the requirements of all applicable Laws,
except where the failure to comply with any such requirement would not
materially and adversely affect the ability of the Guarantor to perform
its obligations under this Guaranty;
(c) not take any action to liquidate or approve any
liquidation of the Contractor or the Guaranteed Party; and
(d) not institute against, or join any other person in
instituting against the Contractor or the Guaranteed Party any proceeding
to adjudicate the Contractor or the Guaranteed Party as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of the
Contractor or the Guaranteed Party or its debts under any laws relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking
the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for the Contractor or the
Guaranteed Party for any substantial part of its property, or consent to
any voluntary commencement by the Contractor of any such proceeding.
9. Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein or in connection herewith shall be in writing
and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by telecopy, as follows:
If to the Guaranteed Party:
ORNI 7 LLC
Attn: President
980 Greg Street
Sparks, Nevada 89431
Facsimile No.: 702-356-9039
Telephone No.: 702-356-9029
PAGE I-7
If to the Guarantor:
Ormat Technologies Inc.
Attn: President
980 Greg Street
Sparks, Nevada 89431
Facsimile No.: 702-356-9039
Telephone No.: 702-356-9029
If to the Contractor:
Ormat Nevada Inc.
Attn: President
980 Greg Street
Sparks, Nevada 89431
Facsimile No.: 702-356-9039
Telephone No.: 702-356-9029
10. Demand and Payment. Any demand by the Guaranteed Party for
performance hereunder shall be in writing and delivered to the Guarantor
pursuant to Section 9 hereof, and shall (a) reference this Guaranty and (b)
specifically identify the Contractor and the Guaranteed Obligations to be
performed. There are no other requirements of notice, presentment or demand. The
Guarantor shall perform, or cause to be performed, such Guaranteed Obligations
within five (5) Business Days of receipt of such demand. The Guarantor shall
make all payments of amounts owing pursuant to this Guaranty in immediately
available funds.
11. No Waiver; Remedies. No failure on the part of the Guaranteed
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The Guaranteed Party shall have all of the rights and remedies
available under applicable Laws and may proceed by appropriate court action to
enforce the terms hereof and to recover damages for the breach hereof. At the
option of the Guaranteed Party and upon notice to the Guarantor, the Guarantor
may be joined in any action or proceeding commenced by such Guaranteed Party
against the Contractor in respect of any Guaranteed Obligation and recovery may
be had against the Guarantor in such action or proceeding or in any independent
action or proceeding against the Guarantor, without any requirement that such
Guaranteed Party first assert, prosecute or exhaust any remedy or claim against
the Contractor. The remedies herein
PAGE I-8
provided are cumulative and not exclusive of any remedies provided by applicable
Laws.
12. Term; Termination. Subject to the terms and provisions of
Section 6, this Guaranty shall become effective upon the execution hereof and
shall continue in full force and effect until the performance in full of all of
the Contractor's obligations under the EPC Agreement.
13. Assignment; Successors and Assigns. The Guaranteed Party may,
upon notice to the Guarantor, assign its rights hereunder without the consent of
the Guarantor. The Guarantor may not assign its rights hereunder without the
consent of the Guaranteed Party. Subject to the foregoing, this Guaranty shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors, permitted assigns, and legal representatives.
14. Amendments and Waivers. No amendment of this Guaranty shall be
effective unless in writing and signed by the Guarantor and the Guaranteed
Party. No waiver of any provision of this Guaranty nor consent to any departure
by the Guarantor therefrom shall in any event be effective unless such waiver
shall be in writing and signed by the Guaranteed Party. Any such waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given.
15. Section Headings. The headings in this Guaranty have been
inserted for convenience only and shall be given no substantive meaning or
significance whatsoever in construing the terms and provisions of this Guaranty.
16. Severability of Provisions. Any provision of this Guaranty
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition of
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
17. Limitation by Law. All rights, remedies and powers provided in
this Guaranty may be exercised only to the extent that the exercise thereof does
not violate any applicable provision of law, and all the provisions of this
Guaranty are intended to be subject to all applicable mandatory provisions of
law that may be controlling and to be limited to the extent necessary so that
they will not render this Guaranty invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
PAGE I-9
18. Governing Law. This Guaranty shall be governed by, and
construed in accordance with, the law of the State of New York.
19. Submission to Jurisdiction. The Guarantor hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and any New York State Court acting in New York City and
any appellate courts from any thereof, in any action or proceeding arising out
of or relating to this Guaranty, or for recognition or enforcement of any
judgment, and the Guarantor hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such Nevada State or, to the extent permitted by law, in such
Federal court. The Guarantor hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guaranty shall affect any right the Guaranteed Party may
otherwise have to bring any action or proceeding relating to this Guaranty
against the Guarantor or its properties in the courts of any jurisdiction.
20. Waiver of Venue. The Guarantor hereby irrevocably and
unconditionally waive, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Guaranty in
any court referred to in Section 19. The Guarantor hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
21. SERVICE OF PROCESS. THE GUARANTOR HEREBY IRREVOCABLY
DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION AS ITS DESIGNEE, APPOINTEE AND
AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT
OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING RELATING TO THIS
GUARANTY. IF, FOR ANY REASON, SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO
BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS
PROVISION SATISFACTORY TO THE GUARANTEED PARTY. THE GUARANTOR IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID TO THE GUARANTOR AT ITS ADDRESS REFERRED TO IN
SECTION 9.
22. WAIVER OF JURY TRIAL. THE GUARANTOR HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING IN ANY JURISDICTION DESCRIBED IN SECTION
19 DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
PAGE I-10
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). THE GUARANTOR HERETO CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER.
23. Entire Agreement. This Guaranty constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, between the Guarantor and the Guaranteed Party with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed and delivered by its duly authorized officer effective as of the
date first above written.
ORMAT TECHNOLOGIES INC.
By: ___________________________________
Name:
Title:
PAGE I-11
