Sample EPC contract in PM

Solely with respect to Developer, Force Majeure shall also include thefollowing: i the receipt of a Final Validation Decision after the anticipated date for suchreceipt as set forth in t

ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

FOR POWER GENERATION PROJECT

Dated July 4, 2000

Between the City of Dreams, Dakota

and Wombat Construction LLC

ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

FOR POWER GENERATION PROJECT

This Agreement is made and entered into this 4th day of July, 2000, between theCity of Dreams, Dakota, a municipal corporation (the "City") and Wombat ConstructionLLC, a Delaware limited liability company ("Developer") City and Developer aresometimes individually referred to as "Party" and collectively as "Parties"

RECITALS

The City has determined, subject to the terms and conditions of this Agreement, toacquire an electrical generating facility, as generally described in the Scope of Workattached hereto, to be engineered, procured and constructed in Dreams, Dakota, andrequires the services of a developer for the project that is experienced in engineering,permitting, procuring, installing and commissioning of a simple cycle electric generatingfacility; and

The Developer has submitted a proposal in response to City's Request toengineer, permit, procure and construct the proposed generating facility; and

The Developer has submitted a preliminary progress Schedule to City which Cityhas reviewed and approved; and

The City desires to have Developer perform or cause to be performed for City allengineering, permitting, procurement and construction services related to the projectpursuant to the terms of this Agreement; and

The City desires to utilize private sector investment capital of Developer inconnection with the Project For example, and not by way of limitation, this Agreementprovides for the initial acquisition of the Project Site by Developer, and it is alsocontemplated that Developer will make the initial investment in connection with theEmissions Reduction Credits required for the Project, which Emissions Reduction Creditswill be made available to the City and will be paid for pursuant to an Operation andMaintenance agreement to be entered into between the City and Developer or an affiliate

of Developer

NOW, THEREFORE, in consideration of the mutual obligations and undertakingsherein contained, and intending to be legally bound hereby, the Parties hereto agree asfollows:

1 Definitions

1.1 Agreement This Engineering, Procurement and Construction Agreementfor Power Generation Project between the City of Dreams and Wombat Construction LLC,

includes all Appendices and Exhibits attached hereto, as they may be amended orsupplemented in writing from time to time.

1.1.a Authorization Any license, permit, approval, clearance, entitlement,allowance, franchise, notification, consent, registration, qualification, declaration, filing orother authorization, whether private, governmental or otherwise; or any zoning,subdivision, or similar land use ordinance of any governmental authority

1.2 Bonds The Performance and Payment Bonds required pursuant to DakotaState Law Section 3247-3248 and Section 16 hereinafter

1.2.a DEQA The Dakota Environmental Quality Act, Public Resources LawSection 21000 Seq

1.3 Change Order A written document signed by City's AuthorizedRepresentative, which authorizes an addition, deletion, or revision in the Work or anadjustment in the Completion Date or Contract Price, issued on or after the Effective Date

of the City The City hereby designates its Utility Director as the City's Representative

1.6 Construction The performing or furnishing of labor, the furnishing andincorporating of materials and equipment into the Work and the furnishing of services anddocuments for the Work, all as required by the Contract Documents

1.7 Construction Phase The phase of the Work including Construction

1.8 Intentionally Left Blank

1.9 Contract Documents This Agreement, Exhibits A through I inclusive, theapproved Plans and Specifications, Standard Specifications, the Bonds, Change Orders

1.10 Contract Price The aggregate amount payable by City to Developer underthis Agreement, i.e the sum of the separate prices for the Engineering, Procurement andConstruction Phases

1.11 Days Unless otherwise specified shall mean calendar days

1.12 Developer Wombat Construction LLC, a Delaware limited liabilitycompany.

1.13 Developer's Representative A person designated in writing to act asDeveloper's agent with respect to this Agreement Such person shall have completeauthority to transmit instructions, receive information and execute Change Orders onbehalf of Developer Developer hereby designates it's Senior Vice President of EnergyInfrastructure as Developer's Representative

1.14 Developer's Taxes Those taxes described as Developer's Taxes in Section5.9

1.15 Effective Date The date identified in the caption to this Agreement

1.16 Engineering Phase The phase of the Work including Engineering Services,Environmental Services, and Project Management Services

1.17 Engineering Services Services of Developer related to the preparation ofPlans and Specifications, and other design submittal specified by the Contract Documentsand required to be performed by licensed design professionals describing and detailingthe Project and providing criteria for the detailed design by suppers of equipment,materials and systems to be incorporated into the Project, as set forth in DakotaGovernment Law ║ 4525(d)

1.18 Environment shall mean soil, surface waters, ground waters, land, streamsediments, surface or subsurface strata, ambient air, and/or any environmental medium

1.19 Environmental Condition shall mean any condition with respect to theEnvironment on or off the Project Site, whether or not ret discovered, which results orcould result in the imposition of any cost, expense, damage, fine, penalty, liability or otherloss on Developer or the City by any governmental authority or other third party, includingthe presence of polychlorinated biphenyls or substances containing polychlorinatedbiphenyls on the Project Site, and including any condition resulting from or attributable toany other property in the vicinity of the Project Site and/or any activity or operationformerly conducted by any person or entity on or off the Project Site

1.20 Environmental Services Services of Developer performed in connectionwith project development and Authorization processing in order to comply with federal andstate environmental laws, as set forth in Dakota Government Law ║ 4525(f)

1.21 Excluded Cost A cost, expense or liability associated with the Project,which is not included in the Contract Price and for which Developer and Subcontractorsare not entitled to payment, reimbursement or any form of compensation, from Citypursuant to the Contract Documents

1.22 Final Completion The date on which the following have occurred: (a)Mechanical Completion, (b) Substantial Completion, and (c) completion of Developer'sobligations with regard to the Punch List created pursuant to the Scope of Work and (d)institution of functional automatic generation control with Dakota Independent SystemOperator (or its successor).

1.22.a Final DEQA Compliance The process mandated by DEQA shall have beenfilly complied with, in a manner reasonably satisfactory to Developer, and either (A) allappeals or other challenges of such permit have been resolved to Developer'ssatisfaction, or (B) the time for filing appeals or other challenges to such permit hasexpired with no appeal or other challenge having been filed

1.22.b Final Validation Decision A decision in the Validation Action reasonablysatisfactory to Developer has been issued and either (A) all appeals or other challenges ofsuch decision have been resolved to Developer's satisfaction, or (B) the time for filingappeals or other challenges to such decision has expired with no appeal or otherchallenge having been filed

1.23 Force Majeure Event The occurrence of: labor disputes or problems,including, but not limited to, strikes, slowdowns, job actions, picketing, and secondaryboycotts; delay in transportation; fire or other casualty loss; severe weather; acts of God;acts of declared or undeclared war or public disorder, riot, or civil commotion; epidemics;

or any other event beyond the reasonable control of the Party asserting the ForceMajeure Event Solely with respect to Developer, Force Majeure shall also include thefollowing:

(i) the receipt of a Final Validation Decision after the anticipated date for suchreceipt as set forth in the Schedule of Values, to the extent that such delay is not the fault

of Developer;

(ii) the completion of the issuance of the Municipal Bonds, and the availability ofthe proceeds thereof for payments pursuant to this Agreement, after the anticipated datetherefor as set forth in the Schedule of Values, to the extent that such delay is not the fault

of Developer;

(iii) the delivery of Major Equipment after the date on which such equipment wasexpected to be delivered, as set forth n the Progress Schedule, to the extent that suchdelay is not due to delay in ordering Major Equipment by Developer or other fault ofDeveloper; and

(iv) delay in achieving an interconnection between the Project and the City'selectrical system, water system, or other utility systems, and delay in achieving aninterconnection between the Project and Southern Dakota Gas Company's system,sufficient to permit Construction, testing, operation and maintenance of the Project,beyond the date specified in the Progress Schedule, to the extent that such delay is notattributable to actions or failure to act by Developer

1.24 Gas Turbine Generator Unit The gas turbine generator described in theScope of Work.

1.25 Grant Deed The grant deed conveying all of Developer's right, title andinterest in the Work, the Project, and the Project Site to City

1.26 Hazardous Condition Hazardous, dangerous, or toxic materials,substances, conditions, elements, pollutants, irritants or contaminants of any kind,including without limitation smoke, vapor, soot, fumes, acids, alkalis, chemicals andwaste, including but not limited to those so defined in any law, ordinance, rule, orregulation

1.27 Laws and Regulations; Laws or Regulations Any and all applicable laws,rules, regulations, ordinances, codes and orders of any and all governmental entities,bodies, agencies, and authorities (including without limitation, all federal state, local, andCity laws, rules, regulations, ordinances, codes, resolutions and orders), and courtshaving jurisdiction

1.28 Major Equipment The following major equipment components of theProject: the Gas Turbine Generator Unit, electrical switchgear, transformers, emissionscontrol equipment, exhaust silencers, and supervisory control and data acquisition("SCADA") equipment

1.29 Mechanical Completion The date when all materials and equipment for theProject (except for minor portions of the Work not affecting the operability or safety of theProject) have been installed substantially in accordance with the Plans and Specificationsand all systems necessary for power generation are ready to Commence performancetesting required by the Scope of Work

1.30 Milestone A principal event specified in the Contract Documents relating to

an intermediate completion date or time prior to Substantial Completion of all the Work

1.30.a Municipal Bonds Bonds issued by the City the proceeds of which will beused to pay for the Project

1.31 Option Agreement That certain Option Agreement between the City andJames and Frances Beckett that permits the City to purchase the Project Site

1.32 Plans The drawings, profile, cross sections, working drawings, andsupplemental drawings, or reproductions thereof, provided by Developer to City, whichshow the location, character, dimensions, or details of the Work

1.33 Procurement Phase The phase of the Work including ProcurementServices

1.34 Procurement Services Services of Developer related to ordering, tracking,expediting delivery of, receiving and storing Major Equipment (i.e., the Gas TurbineGenerator Unit, electrical switchgear, transformer$, emissions control equipment, exhaustsilencers, SCADA) and any other long lead time equipment and materials.

1.35 Progress Schedule A tabulation, chart or graph submitted by Developerand approved by City, that subdivides the Work into phases and component parts andserves as the basis for establishing Milestones for submitting, reviewing processing andapproving Submittals, for performance of the Work, and for depicting the chronologicalrelationship of principal activities of the Project The initial Progress Schedule is attachedhereto as Exhibit D

1.36 Project The electrical generating facility consisting of one individualgenerator unit and appurtenant facilities, to be engineered, procured and constructed byDeveloper, at the Project Site in Dreams, Dakota, as required by the Contract Documentsand more fully described in Exhibit E

1.36a Project Management Services Services of the Developer related to projectdesign review and evaluation, construction mobilization and supervision, bid evaluation,project scheduling, cost benefit analysis, claims review and negotiation, and generalmanagement and administration of a construction project, as set forth in DakotaGovernment Law ║ 4525(e) and 4529.5

1.37 Project Site The property to be acquired by Developer, generally locatedeast of Aqua Mini Road and south of the City's wastewater facility in Dreams, Dakota andmore particularly described in Exhibit P

1.38 Project Taxes Those taxes described as Project Taxes in Section 5.9

1.39 Punch List The list of items of defective or incomplete work to be corrected

by Developer following Substantial Completion in order to achieve Final Completion

1.40 Retention Those sums described in Section 7.4

1.41 Schedule of Values The schedule attached hereto as Exhibit G

1.42 Scope of Work The document entitled "Scope of Work" which is attachedhereto as Exhibit F!

1.43 Specifications Those portions of the Contract Documents prepared by orfor Developer and approved by City consisting of written technical descriptions ofmaterials, equipment, construction systems, standards and workmanship as applied tothe Construction and certain administrative details applicable thereto

1.44 Standard Specifications The following sections of the 1997 Edition of the

"STANDARD SPECIFICATIONS FOR PUBLIC WORKS CONSTRUCTION": 1.1 Terms;

1.2 Definitions (except as such definitions are modified herein), 1.3 Abbreviations, 1.4Metric International System, 25.3 Shop Drawings and Submittals, 26 Work to be Done, 27Subsurface Data, 28 Right of Way, 29 Surveying, 211 Inspection, 31 Changes Requested

by the Contractor, 33 Extra Work, 34 Changed Conditions, 35 Disputed Work, 41Materials and Workmanship, 52 (Utilities) Projection, 55 Delays, 56 Cooperation, 63Suspension of Work, 61 General, 62 Archeological and Paleontological Discoveries, 64Default by Contractor, 65 Termination of Contract, 66 delays and Extensions of Time,66.1 General (except no delay damages except for those delay damages that are set forth

in this Agreement), 66.2 Extensions of Time, 67 Time of Completion, 67.1 General, 62.1Labor General, 79 Protection and Restoration of Existing Improvements, and 710 PublicConvenience and Safety

1.45 Subcontractor Any person or entity with whom Developer has entered intoany subcontract, purchase order, or other agreement for such person or entity to performany part of the Work or to provide any materials, equipment or supplies on behalf ofDeveloper (including any person or entity at any tier with whom any Subcontractor hasfurther subcontracted any part of the Work)

1.46 Submittal A writing or graphic prepared by or for Developer that is required

by the Scope of Work as a deliverable or in the Contract Documents to be submitted toCity by Developer Submittals may include without limitation Plans, drawings,Specifications, revisions to the Progress Schedule or the Scope of Work, shop drawings,reports and samples

1.47 Substantial Completion The date that all of the following have occurred:(a) Mechanical Completion, (b) the Project is substantially complete in accordance withthe Scope of Work and can be safely operated for Its intended purpose, and (c) all of theperformance tests required by the Scope of Work have been successfully completed, asestablished pursuant to Section 9

1.48 Substantial Completion Target Date The date of Substantial Completiondetermined in accordance with Section 9.1 of this Agreement

1.49 Turnover The conveyance of the Project Site and the completed Work tothe City

1.50 Validation Action The proceeding described in Section 6.10

1.51 Work The engineering, procurement, construction and other servicesrequired by the Contract Documents

1.52 Rules of Interpretation The following rules of interpretation of thisAgreement shall apply unless otherwise specified in this Agreement or unless the contextotherwise requires:

(i) Words of any gender include each other gender

(ii) Using the singular or plural number also includes the plural or singular number,respectively.

(iii) Any reference to any person in any capacity includes a reference to itssuccessors and permitted assigns in such capacity and in the case of any governmentalauthority, any person succeeding to its functions and capacities

(iv) The terms "hereof," "herein," "hereto," "hereunder" and words of similar or likeimport refer to this entire Agreement and not to any particular Article, Section, Exhibit, orother subdivision of this Agreement

(v) References to a particular "Article," "Section," or "Exhibit" are, unless otherwisenoted, references to that Article or Section of, or Exhibit to, this Agreement

(vi) The words "include," "includes" and "including" shall be deemed to be followed

by "without limitation" or "but not limited to."

(vii) Unless reference is made to a Law or Regulation as of a specific date,references to any Law or Regulation shall be construed as a reference to such Law orRegulation as in effect from time to time

(viii) References to any agreement or document (including this Agreement) shallinclude all exhibits, schedules, appendices, and other attachments thereto

(ix) References to (a) days shall refer to calendar days unless business days arespecified, (ii) weeks and months shall refer to calendar weeks and months, respectivelyand (iii) years shall refer to calendar years unless otherwise specified

(x) All accounting terms used but not expressly defined herein shall have themeanings given to them under GAAP and as may be appropriate to the books, recordsand accounts established and maintained in accordance with this Agreement

(xi) In computing any period of time prescribed or allowed under this Agreement,the day of the act, event or default from which the designated period of time begins to runshall be included

2 Phasing

2.1 The Work will consist of three phases: the Engineering Phase, theProcurement Phase and the Construction Phase In general, the three phases willproceed in the order of Engineering first, Procurement second, and Construction third,although there will be some overlap

2.2 Each phase will be priced separately, and the Contract Price will be the sumtotal of the three separate prices, as detailed in Section 7.1

2.3 The City shall pay Developer for the Engineering Phase out of generalobligation funds currently held by the City The City shall pay Developer for theProcurement and Construction Phases out of proceeds from the sale of the MunicipalBonds Should the provisions of this Agreement relating to the Procurement Phase beheld invalid, the City's obligation to pay Developer for costs incurred in the performance ofthe Engineering Phase shall survive Should the provisions of this Agreement relating tothe Construction Phase be held invalid, the City's obligation to pay Developer for costsincurred in the performance of the Engineering Phase and the Procurement Phase shallsurvive.

2.4 DEQA Compliance The requirements of DEQA shall be satisfied beforecommencement of the Procurement Phase The City shall provide appropriatedocumentation demonstrating that it is in compliance with DEQA In its capacity as thedeveloper of the Project, Developer shall assist in completion of Final DEQA Compliance

2.5 In the event that Developer commences procurement of any Projectcomponents prior to the issuance of the Municipal Bonds, and in the event that theMunicipal Bonds are not subsequently issued by the City, Developer shall be entitled toretain any such component for which Developer is not actually reimbursed by the City

3 Commencing the Work

3.1 Subject to Section 3.2, Developer shall begin performing the EngineeringPhase of the Work as soon as practicable after the Effective Date

3.2 Notwithstanding the foregoing, Developer's obligations under thisAgreement are expressly subject to the fulfillment of the conditions listed below, in formand substance satisfactory to Developer in Developer's reasonable discretion; providedthat Developer may waive any such condition or may extend the date for fulfillment of anysuch condition In the event that any such condition shall not have been fulfilled by thedate indicated (as such date may be extended), Developer may, but shall not be obligated

to, terminate this Agreement, or one or more phases of this Agreement, at its option,without further obligation:

i No later than thirty (30) days after the Effective Date, Developer and the Cityshall have entered into a mutually agreeable Operation and Maintenance Agreementpursuant to which Developer will operate and maintain the Project on behalf of the City

ii No later than thirty (30) days after the Effective Date, Developer shall haveentered into an option to purchase the Project Site directly from James and FrancesBeckett meeting the requirements of Section 5.2

3.3 Developer shall notify the City of the satisfaction, extension, or waiver of each

of the conditions precedent listed in Section 3.2 Developer's obligations hereunder shall

commence upon the satisfaction or waiver of the last such condition precedent.

4 Contract Documents, Intent, Amending Use

4.1 Intent

4.1.1 The Contract Documents are complementary; what is called for by one is asbinding as if called for by all The Contract Documents will be construed in accordancewith the laws of the State of Dakota

4.1.2 It is the intent of the Contract Documents to describe a functionally completeProject to be engineered, procured and constructed in accordance with the ContractDocuments Any Work, materials or equipment that may reasonably be inferred from theContract Documents or from prevailing custom or trade usage and that is necessary tocomplete the Work will be furnished and performed by Developer

4.1.3 In the event there are any conflicting provisions or requirements in thecomponent parts of the Agreement and the Contract Documents, the Contract Documentsand Agreement components shall take precedence in the following order:

Amendments to the Agreement and Change Orders, in reverse chronological order

4.2.2 No provision of any such standard, specification, manual, code or instructionshall be effective to change the duties and responsibilities of City, Developer or any oftheir Subcontractors, consultants, agents, or employees from those set forth in theContract Documents, nor shall it be effective to assign to City any duty or authority tosupervise or direct the furnishing or performance of the Work or any duty or authority toundertake responsibility inconsistent with the provisions of the Contract Documents

5 Developer's Responsibilities

5.1 General As set forth in the Scope of Work and in conformity with theContract Documents, Developer shall render or cause to be rendered, the engineering,permitting, procurement, construction, delivery, erection, commissioning, startup, and

testing of the complete Work for the Project consisting of the performance of allEngineering Services, Environmental Services, Procurement Services, ProjectManagement Services and Construction Services required by the Contract Documents,including without limitation all necessary services, materials, equipment, machinery, tools,labor, supervision, supplies, chemicals, transportation and structures, and including thosethings reasonably inferable from the Contract Documents and necessary to complete theWork even though no mention thereof is expressly made in the Contract Documents.

5.2 Purchase of Project Site

5.2.1 Developer shall obtain title to the Project Site directly from James andFrances Beckett, the present owners of the Project Site

5.2.2 Developer shall not under any circumstances be required to purchase theProject Site prior to the later of (i) the date that the proceeds of the Municipal Bondsbecome available to Developer for such purpose, (ii) the date that a Final ValidationDecision is received, and (iii) the date that Final DEQA Compliance is completed

5.2.3 Developer shall be responsible for the payment of all property taxes for theProject Site related to the period during which Developer owns the Project Site

5.2.4 In the event that this Agreement terminates for any reason prior toSubstantial Completion, then, in addition to any amounts payable to Developer pursuant

to Section 17, Developer shall have the right to require the City to repurchase the ProjectSite for the same amount paid by Developer, plus any document fee or similar chargespaid in connection with the purchase of the Project Site and any property or other taxes,and any interest and other carrying charges incurred by Developer as a result of itsownership of the Project Site

5.3 Developer's Expertise Developer represents that it has the requisiteexpertise and skill to undertake the performance of the Work

5.4 Engineering Services

5.4.1 General Developer shall render or cause to be rendered the EngineeringServices set forth in the Scope of Work in accordance with the terms and conditions of theContract Documents and the Progress Schedule

5.4.2 Standard of Care The standard of care for Engineering Services shall bethe care and skill ordinarily used by members of the engineering or architecturalprofession practicing under similar conditions at the same time and locality

5.4.3 Developer Responsibility As between the Parties, Developer shall be solelyand totally responsible for the engineering of the Project, the professional quality,technical accuracy, feasibility, and the coordination of all designs, Drawings, Plans,Specifications, and other Engineering Services required by the Contract Documents;

provided, however, that Developer shall not be responsible for the design, technicalaccuracy, feasibility or coordination of any element incorporated into the Project pursuant

to Section 12.4 City has furnished and may continue to furnish Developer with writtentechnical information regarding the City's existing electric system as necessary to provideDeveloper the references needed to properly integrate the Project into the existing electricfacilities Developer shall have no liability for defects in the Work attributable toDeveloper's reasonable reliance upon or use of such written data, design criteria,drawings, specifications, or other written information furnished by City or City's authorizedagents

5.5 Environmental Services

5.5.1 General Developer shall render or cause to be rendered the EnvironmentalServices required to obtain the Authorizations necessary for accomplishment of theProject

5.5.2 Standard of Care The standard of care for Environmental Services shall bethe care and skill ordinarily used by members of the environmental consultant professionpracticing under similar conditions at the same time and locality

5.6 Procurement Services Developer shall order in its name and not as agentfor City, the Gas Turbine Generator Unit and other Major Equipment (i.e., electricalswitchgear, transformers, emissions control equipment, exhaust silencers, SCADA) andother long lead time equipment and materials required for the Project Developer shalltrack, expedite, receive, store and pay for said equipment

5.7 Project Management Services

5.7.1 General Developer shall perform or cause to be performed ProjectManagement Services, including design review and evaluation, construction mobilizationand supervision, bid evaluation, project scheduling, cost benefit analysis, claims reviewand negotiation, and general management and administration of a construction project, asset forth in Exhibit H and in conformity with the Contract Documents

5.7.2 Supervision of Construction

5.7.2.1 Developer shall supervise, inspect and direct the Constructioncompetently and efficiently, devoting such attention thereto and applying such skills andexpertise as may be necessary to perform the Construction in accordance with theContract Documents Developer shall be solely responsible for the means, methods,techniques, sequences and procedures employed for the Construction Developer shall

be responsible to see that the complete Construction complies accurately with theContract Documents and shall keep City advised as to the quality and progress of theConstruction

5.7.2.2 Developer shall keep on the Project Site at all times during

Construction a competent resident superintendent, who shall not be replaced withoutwritten notice to City except under extraordinary circumstances All communications tothe superintendent shall be as binding as if given by Developer.

5.8.2 Except as otherwise specified in the Contract Documents, Developer shallfurnish or cause to be furnished and assume full responsibility for materials, equipment,labor, transportation, construction equipment and machinery, tools, appliances, heat,telephone, water, sanitary facilities, temporary facilities and all other facilities, incidentals,and all other things necessary for the furnishing, performance, testing, startup andcompletion of the Work

5.8.3 All materials and equipment incorporated into the Work shall be of goodquality and new, except as otherwise provided in the Contract Documents All warrantiesand guarantees specifically called for by the Contract Documents shall expressly run tothe benefit of City If required by City, Developer shall furnish reasonably satisfactoryevidence (including reports of required tests) as to the kind and quality of materials andequipment All materials and equipment shall be applied, installed, connected, erected,used, cleaned and conditioned in accordance with the instructions of the applicablesupplier, except as otherwise provided in the Contract Documents

5.9 Taxes Developer understands that its performance of the Work willconstitute doing business in the City of Dreams, and it shall, therefore, obtain a CityBusiness License pursuant to Chapter 5.02 of the Dreams Municipal Law Developershall pay all payroll and other related employment compensation taxes for Developer'semployees, federal, state and other taxes which may be assessed on Developer's Incomefrom the Project, engineering and business license costs, and property taxes onDeveloper's construction equipment (collectively, the "Developer's Taxes") TheDeveloper's Taxes shall be Excluded Costs Developer shall administer and pay, orcause to be paid all sales, use, gross receipts and excise taxes directly related toDeveloper's Work; transfer taxes associated with Developer's acquisition and transfer tothe City of the Project Site, and Property Taxes on the Project Site applicable to the periodwhen Developer owns the Project Site (collectively, the "Project Taxes") Contract Price,

which shall be paid by City, includes Project Taxes and excludes Developer's Taxes.

5.10 Progress Schedule

5.10.1 Time is a material element in the performance of this Agreement.Developer shall at all times adhere to and diligently prosecute the Work in accordancewith the Progress Schedule and complete the Work within the designated Milestones andany deadlines in the Contract Documents

5.10.2 Developer shall be responsible for the preparation, maintenance, andupdating of the Progress Schedule and other scheduling information in accordance withthe Progress Schedule requirements set forth in Section 9

5.10.3 Proposed adjustments in the Progress Schedule that will delay theCompletion Date shall only be made by a Change Order

5.11 Subcontracting

5.11.1 Developer may subcontract any portion of the Work required by thisAgreement, without prior written approval of City Subcontracts, if any, shall contain aprovision making them subject to all applicable provisions in this Agreement

5.11.2 Developer shall be fully responsible to City for all acts or omissions of theSubcontractors and other individuals or entities performing or furnishing any of the Workunder a direct or indirect contract with Developer Nothing in the Contract Documentsshall create, for the benefit of any such Subcontractor or other individual or entity, anycontractual relationship between City and any such Subcontractor or other individual orentity, nor shall it create any obligation on the part of City to pay or to see to the payment

of any moneys due any such Subcontractor or other individual or entity except as mayotherwise be required by Laws and Regulations Developer shall be solely responsible forall payments and compensation due to any Subcontractor As further set forth in thisAgreement, Developer shall take all action necessary to prevent and/or release any liens,stop notices or other encumbrances that may be imposed or threatened against theProject or Project Site by subcontractors

5.11.3 Developer shall be solely responsible for scheduling and coordinatingSubcontractors and other individuals aid entities performing or furnishing any of the Workunder contract with Developer Developer shall require all Subcontractors and such otherindividuals and entities performing or furnishing any of the Work to communicate with Citythrough Developer

5.11.4 All services performed or provided to and material and equipment supplied

to Developer by a Subcontractor will be pursuant to an appropriate agreement betweenDeveloper and the Subcontractor, or supplier Each such agreement for an amount inexcess of $10,000 in any year shall incorporate the terms of the Contract Documents tothe extent applicable to the Work to be performed by the Subcontractor and shall

specifically bind the Subcontractor to the agreement, shall expressly preserve and protectthe rights of City under the Contract Documents and shall include a provision granting Citythe right to succeed to the interest of, or otherwise accept an assignment of suchagreement in the event of a termination of this Agreement by City due to a default byDeveloper.

5.11.5 Developer shall require that all Subcontractors for Construction of theProject shall comply with the Subletting and Subcontracting Fair Practices Act (Sections

4100 through 4114 of the Dakota Public Contracts Law) where applicable

5.12 Work Force and Equipment Developer shall maintain and shall cause anySubcontractors to maintain, at all times, a work force and equipment capable ofperforming the Work that is the subject the relevant Subcontracts

5.13 Laws and Regulations

5.13.1 Developer shall give all notices and comply with all Laws and Regulationswhich are applicable to the performance of the Work Except where otherwise expresslyrequired by applicable Laws and Regulations, City shall not be responsible for monitoringDeveloper's compliance with any Laws and Regulations

5.13.2 If Developer performs any Work that is contrary to Laws or Regulations,Developer shall bear all costs arising therefrom and such costs shall be deemed ExcludedCosts

5.14 Record Documents Developer shall maintain or cause to be maintained in

a safe place at the Project Site one record copy of all Plans, Drawings, Specifications,Addenda, and, within a reasonable time after their preparation, Change Orders, in goodorder and annotated to show all changes made during Construction These recorddocuments together with all approved Submittals will be available to City for reference.Upon completion of the Work, these record documents and Submittals, including areproducible set of record drawings, will be delivered to City

5.15 Safety and Protection

5.15.1 Developer shall be solely responsible for initiating, maintaining andsupervising all safety precautions and programs in connection with the Construction.Developer shall take all necessary precautions for the safety of, and shall provide thenecessary protection to prevent damage, injury or loss to:

5.15.1.1 All persons on the Project Site or who may be affected by theConstruction;

5.15.1.2 All Work and materials and equipment to be incorporated therein,whether in storage, on or off the Project Site; and

5.15.1.3 Other property at the Project Site or adjacent thereto, including trees,shrubs, lawns, walks, pavements, roadways, structures, utilities and underground facilitiesnot designated for removal, relocation or replacement in the course of Construction.

5.15.2 Developer shall comply with all applicable Laws and Regulations relating toworker health and safety in performing the Work Developer shall require itsSubcontractors to comply with all such Laws and Regulations during the performance ofthe Work

5.15.3 Developer shall notify owners of adjacent property and of undergroundfacilities and utility owners, with the exception of City for facilities within the Project Site,when prosecution of the Work may affect them, and shall cooperate with them in theprotection, removal, relocation and replacement of their property All damage, injury orloss to any property caused, directly or indirectly, in whole or in part, by Developer, anySubcontractor or any other individual or entity directly or indirectly employed by any ofthem to perform or furnish any of the Work or anyone for whose acts any of them may beliable, shall be remedied by Developer Developer's duties and responsibilities for safetyand for protection of the Construction shall continue until recordation of the Grant Deed,except with respect to any Punch List item, as to which Developer's duties andresponsibilities for safety and for protection of the Construction shall continue untilcompletion of such item

5.16 Safety Representative Developer shall designate a qualified andexperienced safety representative at the Project Site whose duties and responsibilitiesshall be the prevention of accidents and the maintaining and supervising of safetyprecautions and programs The Developer's Representative may serve in the role ofsafety representative without the necessity of additional individual to the Project Site

5.17 Hazard Communication Programs Developer shall be responsible forcoordinating any exchange of material safety data sheets or other hazard communicationinformation required to be made available to or exchanged between or among employers

at the Project Site in accordance with Laws and Regulations

5.18 Hazardous Conditions Except as provided in Sections 11.4, 13.4.2 or13.4.3, Developer shall be responsible for any Hazardous Condition at the Project Sitethat is caused, in any way, by any action or inaction of Developer, its Subcontractors oranyone else acting on behalf of Developer or for whom Developer is responsible

5.19 Emergencies In emergencies affecting the safety or protection of persons

or the Construction or property at the Project Site or adjacent thereto, Developer, withoutspecial instruction or authorization from City, shall be obligated to act to preventthreatened damage, injury or loss Developer shall give City prompt written notice ifDeveloper believes that any significant changes in the Construction or variations from theContract Documents have been caused thereby In the event that any such changeresults in a change to the Project that increases Developer's costs (including interest orother carrying charges), Developer shall be entitled to a Change Order pursuant to

Section 10.3 to compensate it for such increased costs.

5.20 Prosecution of the Work Developer shall diligently carry on the Work andadhere to the Progress Schedule during all disputes, claims, and/or disagreements withCity Developer agrees that no Work shall be delayed or postponed pending resolution ofany such disputes, claims and/or disagreements, which claims, disputes and/ordisagreements shall be resolved in accordance with Section 27 of this Agreement,provided that all amounts that are not subject to a good faith claim, dispute ordisagreement are paid in full in a timely manner

5.21 Submittals

5.21.1 Developer shall provide City with the Submittals for City's review andapproval Within ten (10) Days of the date Developer provides any Submittal, City shallapprove and return the Submittal to Developer, or shall return the Submittal withcomments identifying the specific reasons the Submittal has not been approved In theevent a Submittal is returned with comments to Developer within the ten-Day period,Developer and the City shall meet to discuss in good faith the City's comments on theSubmittal In the event that any such comments result in a change to the Project thatincreases Developer's costs (including interest or other carrying charges) or increases thetime required to perform the Work, Developer shall be entitled to a Change Orderpursuant to Section 11.3 to compensate it for such increased costs Failure of the City toreturn any Submittal with comments within ten Days of its submission will result in theSubmittal being deemed approved City's review and approval will be only to determine ifthe terms covered by the Submittals will conform to the information given in the ContractDocuments and be compatible with the design concept of the completed Project as afunctioning whole as indicated by the Contract Documents City's review and approval willnot extend to means, methods, techniques, sequences or procedures of construction or tosafety precautions or programs incident thereto, except as specifically provided for in thisAgreement

5.21.2 City's review and approval of required Submittals shall not relieve Developerfrom responsibility for any variation from the requirements of the Contract Documentsunless Developer has in writing called City's attention to each such variation at the time ofsubmission and City has given written approval of each such variation by specific writtennotation thereof incorporated in or accompanying the Submittal

5.22 Subject to the precedence clause at Section 1.3, Developer shall complywith all other applicable terms and conditions of the Contract Documents

5.23 Subject to the precedence clause at Section 1.3, Developer shall complywith and perform the Work in accordance with the Standard Specifications applicable tothe Work pursuant to this Agreement

5.24 Subject to the terms of Exhibit A, Developer shall secure and maintain at alltimes all Authorizations necessary to perform the Work, including, but not limited to, air

quality permits Authorizations shall be obtained in the City's name, except where by law

or practice, an Authorization is required to be in the name of the City and the Developer.Developer shall be responsible for the payment of all fees for such Authorizations To theextent that any Authorization acquired in Developer's name will be required in connectionwith the ownership, operation or maintenance of the Project following SubstantialCompletion, Developer shall transfer such Authorization to the City upon SubstantialCompletion

5.25 As soon as practicable after Final Completion, Developer will provide Citywith a complete set of as built drawings, including, at a minimum, general arrangementdrawings, loop flow diagrams, instrumentation and control schematics, electrical singleline drawings, and underground structures and piping layouts

6 City's Responsibilities

6.1 City shall pay Developer the Contract Price, in accordance with the Schedule

of Values attached as Exhibit G to this Agreement

6.2 The City presently has an option to purchase the Project Site pursuant tothe Option Agreement City shall ensure that, upon the expiration of the OptionAgreement, James and Frances Beckett, the present owners of the Project Site, grantDeveloper an option to purchase the Project Site on the same terms set forth in theOption Agreement (except as otherwise set forth in this Section 6.2), which option will notexpire prior to the later of (i) the time when the proceeds of the Municipal Bonds becomeavailable to Developer, (ii) the receipt of a Final Validation Decision, (iii) the completion ofFinal DEQA Compliance, and (iv) the groundbreaking at the Project Site The option to beprovided to Developer (x) shall provide for a credit against the purchase price for all optionconsideration paid by Developer, (y) shall require that the Project Site be conveyed to theDeveloper, upon exercise of the option, free and clear of all liens, encumbrances and titleexceptions, except for easements existing on the date that the Option Agreement wasentered into and liens for taxes not due and payable at the time the Project Site istransferred to Developer, and (z) shall not provide for the leaseback of any portion of theProject Site to the present owners of the Project Site

6.3 Communications City shall communicate with Subcontractors only throughDeveloper

6.4 Taxes and Duties Where applicable, City shall furnish to Developer, withinthirty (30) Days of the Effective Date, a certificate complying with state and localgovernmental law, regulations and ordinances identifying any components of the Work to

be considered exempt from the Project Taxes Developer shall cooperate with City toestablish appropriate procedures and minimize the amount of such taxes to the extentreasonable and practical

6.5 Safety Responsibilities City shall not supervise, direct or have control orauthority over, nor be responsible for, Developer's means, methods, techniques,

sequences or procedures of Construction or the safety precautions and programs incidentthereof, or for any failure of Developer to comply with Laws and Regulations applicable tothe furnishing or performance of the Work City will not be responsible for Developer'sfailure to perform or furnish the Work in accordance with the Contract Documents.

6.7 Utilities City shall furnish or have furnished, at no cost to Developer,electricity, natural gas, communications, and water for Construction to a single point onthe Project Site and Developer shall be responsible for further routing of electricity, naturalgas, communications, and water for Construction of the Power Generation Facility fromthe point furnished by City The City shall furnish fuel for testing, and any revenuesattributable to electricity generated during testing shall be for the account of the City

6.8 Leases and Easements City shall secure all leases and easementsnecessary for the design, permitting, Construction, operation or maintenance of theProject The City shall also secure the release or modification of all easements on theProject Site, when, as and to the extent necessary to avoid interference with the design,permitting, Construction, operation or maintenance of the Project Developer shallprovide reasonable assistance to City in connection with actions necessary to determineand obtain the necessary leases and easements

6.9 Interconnection City shall take all steps necessary to enable Developer tointerconnect with the City's electrical system and water system and with Southern DakotaGas Company's gas system in accordance with the Scope of Work

6.10 Validation Action; DEQA Permit As soon as practicable after the approval

of this Agreement by the City Council, the City shall institute a validation action pursuant

to Dakota State Law ║ 860 et seq (the "Validation Action") Developer shall provideassistance to City in drafting said validation action, at Developer's expense Developershall not be obligated to commence performance of the Procurement or Constructionphases until the Final Validation Decision and Final DEQA Compliance have occurred

6.11 Water Supply Agreement The City shall secure an agreement with thewater department for the supply of reclaimed water and process water dischargenecessary for the Construction, testing, operation and maintenance of the Project onterms which are mutually satisfactory to the department, the City, and Developer As and

to the extent requested by the City, Developer shall manage the negotiations with thedepartment and provide all legal and technical support required in connection therewith

7 Compensation and Payments

7.1 Contract Price Developer agrees to perform the Work and City agrees tocompensate Developer for the costs of such Work, as modified by approved ChangeOrders, as follows:

Engineering Phase: $7,656,000

Procurement Phase:$28,450,000

Construction Phase: $7,515,000

Contract Price: $43,621,000

7.2 Payment The Contract Price shall be paid in accordance with the Schedule

of Values attached hereto as Exhibit G, which is calculated to compensate Developeraccording to progress in completion of the Work, measured against the ProgressSchedule The Schedule of Values and Progress Schedule are subject to adjustment byChange Order

7.2.1 On or before the fifth (5th) Day of each calendar month during theperformance of the Work, Developer shall submit to City an invoice for payment of anappropriate portion of the Contract Price for the period ending on the last Day of thecalendar month preceding such month ("Invoice Period"), setting out the progressachieved by the Developer as of the end of such Invoice Period, according to theSchedule of Values, reconciling such invoice with previous invoices, payments, Retentionand other withholdings, and Change Orders Developer's invoice shall be accompanied

by a Payment Certificate in the form attached hereto as Exhibit C

7.2.2 City shall promptly review such invoice and documentation and Developer'sprogress during the Invoice Period In the event that City reasonably determines thatDeveloper has not provided adequate documentation to accompany such invoice, Citymay request additional documentation from Developer Any dispute regarding thesufficiency of such documentation shall be resolved in accordance with Section 27 of thisAgreement

7.2.3 Within twenty-five (25) Days following City's receipt of an invoice pursuant toSection 7.2.1, City shall pay to Developer the undisputed amount of the invoice, less anyRetention Retention shall be released in accordance with Section 7.4 of this Agreement

7.2.4 In the event City reasonably determines that Developer has not achieved theprogress claimed during the Invoice Period, City shall estimate Developer's progressduring the Invoice Period and shall pay Developer for the level of progress estimated byCity Any dispute regarding the amount of such progress shall be resolved in accordancewith Section 27 of this Agreement

7.23 If there is any dispute about any amount invoiced by Developer, the amountnot in dispute shall be promptly paid in accordance with this Section 7.2, and any disputedamount which is ultimately determined to have been payable with that invoice shall bepaid with interest, computed at an annual rate equal to the lesser of ten percent (10%),compounded monthly, or the highest rate allowed by law, from the date payment wouldoriginally have been due pursuant to this Agreement is there had been no dispute

7.3 Source of Funds City shall pay Developer for the Engineering Phase out ofcurrently available general obligation funds City shall pay Developer for the Procurementand Construction Phases out of proceeds from the issuance and sale of the Municipal

Bonds City shall be entitled to defer payment of amounts otherwise due under theProcurement and Construction Phases of this Agreement to the time the proceeds fromthe Municipal Bonds become available, only in accordance with this Section 7.

7.3.1 All invoices for payment shall be submitted, reviewed and approved inaccordance with Section 7.2

7.3.2 In lieu of the payment required by Section 7.2.3, City may, within twenty-five(25) Days of the date it receives an invoice, provide Developer with a written notice that ithas approved all or a portion of the invoice, but that it intends to defer payment inaccordance with the terms of this Section 7.3 to the time Municipal Bond proceedsbecome available to it

7.33 Amounts approved by City pursuant to this Section 7.3 shall bear interest,computed at an annual rate equal to the lesser of ten percent (10%), compoundedmonthly, or the highest rate allowed by law, from the date of approval until the date paid infull

7.3.4 All amounts deferred pursuant to this Section 7.3, together with accruedinterest, shall be paid on the first invoice payment date pursuant to Section 7.2.3 occurringafter the date on which Municipal Bond proceeds become available to the City to pay suchamounts

7.3.5 If, either because the Municipal Bonds have not been issued or sold, orMunicipal Bond proceeds have not been made available to City, or for any other reason,Developer has not been paid all amounts deferred pursuant to this Section 7.3, togetherwith all accrued interest, on or before September 1, 2002, Developer may, in its solediscretion, elect to terminate this deferred payment provision In accordance with theapplicable Constitutional debt limitation, all sums then due Developer shall be deemedgeneral obligations of City, and City shall pay Developer all such sums immediately

7.4 Retention

7.4.1 General From each approved payment of the Contract Price pursuant toSection 7.2, ten percent (10%) will be deducted and retained by the City ("Retention"),and the remainder will be paid to Developer

7.4.2 Payment of Retention The Retention, and any unpaid portion of theContract Price remaining to be paid to Developer, shall be released and paid to Developerand subcontractors pursuant to Dakota Public Contract Law Section 7107

7.4.3 Other Retentions In addition to the Retention, the City may deduct fromeach payment under this Agreement an amount necessary to protect City from loss("Other Retention") because of: (D liquidated damages which have accrued as of the date

of the application for payment; (2) any sums expended by the City in performing any ofDeveloper's obligations under the Contract Documents which Developer has failed to

perform or has performed inadequately; (3) defective Work not remedied; (4) stop notices,liens or an\ applicable encumbrances as allowed by state law: (5) unauthorized deviationsfrom this Agreement; (6) any sums representing expenses, losses or damages asreasonably determined h the City, incurred by the City for which Developer is liable underthis Agreement: and any other sums which the City is entitled to recover from Developerunder the terms of this Agreement or pursuant to state law, including Section 1727 of theDakota Labor Law In no case shall Other Retention pursuant to this paragraph exceed5% of the Contract Price The failure by the City to deduct any of these sums from apayment hereunder shall not constitute a waiver of the City's right to such sums Prior todeducting any amount pursuant to this Section City shall first notify Developer in writing ofits intention to withhold sums and the specific reasons therefor Disputes regardingamounts deducted pursuant to this Section shall be resolved in accordance with Section

27 of this Agreement

7.4.4 Substitutions for Contract Retentions In accordance with Dakota PublicContract Law Section 22300, the City will permit the substitution of for any monieswithheld by the City to ensure performance under this Agreement At the request andexpense of the Developer, securities equivalent to the amount withheld shall be placedwith the City, or with a state or federally chartered bank in Dakota as the escrow agent.Thereafter the City shall then pay such monies to the Developer as they become due forthe reasonably satisfactory completion of this Agreement and the securities shall hereturned the Developer For purposes of this Section and Section 22300 of the PublicContracts Law the term "satisfactory completion of the contract" shall mean the time theCity has issued notices of final acceptance of the Work and filed a Notice of Completion

as required by this Contract, which final acceptance shall not be unreasonably withheld ordelayed The Developer shall he the beneficial owner of any securities substituted orwithheld and shall receive any interest thereon The escrow agreement used for thepurposes of this Section 7.4.4 shall be in the form provided by the City

7.5 Prompt Payment to Subcontractors As required by Dakota State LawSection 3262.5, Developer shall pay each Subcontractor undisputed amounts due forsatisfactory performance of its contract no later than 15 working days from the receipt ofeach payment the Developer receives from the City for that Subcontractor's work Anydelay or postponement of payment from the above referenced time frame may occur onlyfor good cause following written approval of the City

7.6 Stop Notice If, within the time fixed by law, a properly executed notice tostop payment is filed with City, due to Developer's or Developer's Subcontractor's failure

to pay for labor or materials used in the Work, all money due for such labor or materialswill be withheld from payment to Developer in accordance with applicable laws

7.7 City performed Work Whenever any portion of the Work is performed byCity at Developer's request, the cost thereof shall be charged against Developer and may

be deducted from any amount due or becoming due from City

7.8 Precautionary Work Whenever immediate action is required to prevent

injury, death, or property damage, and precautions which are the Developer'sresponsibility have not been taken and are not reasonably expected to be taken, Citymay, after a reasonable attempt to notify Developer, cause such precautions to be takenand shall charge the cost thereof against Developer, or may deduct such cost from anyamount due or becoming due from City City action or inaction under such circumstancesshall not be construed as relieving Developer or its Surety from liability.

7.9 Payments Not Relief from Developer's Obligations Payment shall notrelieve Developer from its obligations under the Contract Documents, nor shall suchpayment be construed to be acceptance of any of the Work Payment shall not beconstrued as the transfer of ownership of any equipment or materials to City.Responsibility of ownership shall remain with Developer who shall be obligated to storeany fully or partially completed work or structure for which payment has been made; orreplace any materials or equipment required to be provided under the ContractDocuments which may be damaged, lost, stolen or otherwise degraded in any way prior

to recordation of the Grant Deed, or, with respect to any Punch List item, prior to thecompletion of such item

7.10 Warranty/Guarantee Periods Not Affected Warranty and guarantee periodsshall not be affected by any payment but shall commence on the date set forth in Section

12, Warranties and Guarantees

7.11 No Liquidated Damages Waiver No payment made to Developer or itssureties will constitute a waiver of the liquidated damages under Section 10

7.12 Waiver by Developer Acceptance of final payment of the Contract Pricepursuant to Section 7.4.2 shall constitute a waiver of all claims for payment by Developer,except (i) those claims previously made in writing and identified as unsettled at the time ofsubmission of the final payment request; and (ii) indemnification claims, includingindemnification pursuant to Section 14

8 Title and Risk of Loss

8.1 Conditioned upon payment by City of the amounts owing under thisAgreement, Developer shall warrant and shall cause any Subcontractors to warrant thattitle to all Work will pass to City free and clear of all liens, claims, security interests, orencumbrances, other than (i) liens for taxes of Developer either not yet due or beingcontested in good faith by appropriate proceedings so long as such proceedings do notinvolve material risk of the sale, forfeiture or loss of the Project or the Project Site or anyinterest therein, (ii) materialmen's, mechanic's, workmen's, repairmen's or other like liensarising in the ordinary course of business securing obligations that are not overdue bymore than 180 days or are being contested in good faith by appropriate proceedings solong as such proceedings do not involve any material risk of the sale, forfeiture or loss ofany of the Project or tie Project Site or any interest therein, and provided further thatDeveloper shall provide a bond or other security in connection with any such liens orencumbrances, as may be reasonably required by City, and (iii) liens, claims, security