Contract analysis

ARTICLE 1 — DEFINITIONS AND INTERPRETATION

Section 1.1 — Definitions As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meanings ascribed to them elsewhere in this Agreement. Terms used in the singular include the plural and vice versa. "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is un

Section 1.2 — Rules of Interpretation (a) References in this Agreement to any Article, Section, Exhibit, Appendix, or Schedule are references to the Articles, Sections, Exhibits, Appendices, or Schedules of this Agreement unless otherwise specified. (b) The use of any gender includes each other gender, and the use of the singular includes the plural and vice versa, as the context requires. (c) The headings of Article

Section 1.3 — Order of Precedence In the event of any conflict, inconsistency, or ambiguity between or among the various provisions of this Agreement, the following order of precedence shall apply, with the first-listed document controlling over the later-listed documents: (1) Change Orders, in reverse chronological order (with the most recent Change Order controlling over earlier Change Orders); (2) The body of this

ARTICLE 2 — OWNER'S OBLIGATIONS

Section 2.1 — Site Access (a) Owner shall provide Contractor with access to the Site on and after the date of issuance of the Notice to Proceed. Such access shall be provided in accordance with and subject to the terms and conditions of the Ground Lease between Permian Basin Land Holdings, LP and Owner. Contractor acknowledges that it has reviewed the Ground Lease and agrees to comply with all restrictions, condition

Section 2.2 — Permits (Owner-Responsible) (a) Owner shall be responsible for obtaining and maintaining the following permits, licenses, and approvals (collectively, the "Owner-Responsible Permits"): (i) Ector County Building Permit No. BP-2022-04517, which was obtained by Owner on October 28, 2022; (ii) TCEQ Stormwater General Permit No. TXR150000 and the associated Stormwater Pollution Prevention Plan (SWPPP), which

Section 2.3 — Interconnection and Grid Connection (a) Owner shall be responsible for the execution and maintenance of the Interconnection Agreement with Aldermere & Co., which governs the terms and conditions under which the Project will be interconnected to the ERCOT transmission grid at the Western Permian 138 kV Substation. (b) Owner shall be responsible for the payment of all Network Upgrade costs required for th

Section 2.4 — Equipment Supply Agreement Coordination (a) Owner has entered into the Equipment Supply Agreement with Harmon-Dietrich Energy Solutions, LLC, having a contract value of Eighteen Million Four Hundred Thousand Dollars ($18,400,000), for the procurement and delivery of the BESS Equipment. The BESS Equipment to be furnished by Owner under the ESA includes the Model HD-LFP-200E battery modules, ten (10) 5 MW

Section 2.5 — Owner's Representative (a) Owner shall designate a representative ("Owner's Representative") authorized to act on Owner's behalf with respect to all day-to-day matters arising under this Agreement. The initial Owner's Representative shall be identified in a separate written notice delivered to Contractor on or before the date of issuance of the Notice to Proceed. (b) Owner's Representative shall have th

Section 2.6 — Financing Cooperation (a) Owner shall use commercially reasonable efforts to cause Lender and the Independent Engineer (Norgate Technical Advisors, Inc., under the direction of Dr. Phillip S. Reardon, P.E.) to coordinate with Contractor in a manner that does not unreasonably interfere with or delay the performance of the Work. Owner acknowledges that Contractor's obligation to cooperate with Lender and

ARTICLE 3 — CONTRACTOR'S OBLIGATIONS

Section 3.1 — General Obligations (a) Contractor shall perform the Work in a good and workmanlike manner, with the degree of skill, care, diligence, and judgment expected of a qualified contractor experienced in the design, engineering, procurement, construction, testing, and commissioning of battery energy storage systems of similar size, scope, and complexity, and in accordance with Applicable Law, the Scope of Wor

Section 3.2 — Permits (Contractor-Responsible) (a) Contractor shall be responsible for obtaining and maintaining all construction-related permits, licenses, approvals, and authorizations required under Applicable Law for the performance of the Work that are not specifically identified in Section 2.2 as Owner-Responsible Permits. Such Contractor-Responsible Permits shall include, without limitation, all permits requir

Section 3.3 — Contractor's Representative (a) Contractor shall designate a representative ("Contractor's Representative") who shall have full authority to act on behalf of Contractor with respect to all matters arising under this Agreement. The Contractor's Representative shall be an experienced project manager with demonstrated expertise in the construction of battery energy storage systems or similar power generati

Section 3.4 — Subcontractors (a) Contractor may subcontract portions of the Work to Subcontractors with the prior written approval of Owner, which approval shall not be unreasonably withheld, conditioned, or delayed. Major Subcontractors (defined as Subcontractors performing Work with a value in excess of Five Hundred Thousand Dollars ($500,000)) shall be identified in Exhibit B. (b) Contractor shall remain fully res

Section 3.5 — Project Management and Reporting (a) Contractor shall provide Owner with monthly written progress reports, which shall be delivered within five (5) Business Days following the end of each calendar month and shall include the following information: (i) A narrative description of all Work completed during the reporting period; (ii) The percentage of completion for each major work element and the overall P

Section 3.6 — Safety and Environmental Compliance (a) Contractor shall develop, implement, and maintain a comprehensive health, safety, and environmental ("HSE") program covering all aspects of the Work. The HSE program shall comply with OSHA regulations, Applicable Law, and Good Industry Practice, and shall be submitted to Owner for review within ten (10) Business Days following NTP. (b) Contractor shall comply with

Section 3.7 — Quality Assurance / Quality Control (a) Contractor shall develop, implement, and maintain a quality assurance / quality control ("QA/QC") program for the Work that conforms to ISO 9001 or an equivalent quality management standard. The QA/QC program shall address inspection and testing requirements, hold points, documentation standards, and corrective action procedures. (b) Owner, Owner's Representative,

Section 4.1 — General Scope Contractor shall perform, on a fixed-price, date-certain, turnkey basis, the design, engineering, procurement (except for Owner-furnished BESS Equipment), construction, installation, testing, commissioning, and start-up of the Project. The Scope of Work includes, without limitation, the following: (a) Site Preparation, Grading, and Civil Work. Site clearing, rough grading, finish grading,

Section 4.2 — Technical Specifications (a) The detailed technical specifications for the Work are set forth in Exhibit A. The Parties acknowledge and agree that the following represent the primary technical parameters of the Project: (i) BESS energy storage capacity: 50 MW / 200 MWh; (ii) BESS duration: four (4) hours at rated power output; (iii) Battery chemistry: Lithium Iron Phosphate (LFP); (iv) BESS Equipment mo

Section 4.3 — Exclusions from Scope The following items are expressly excluded from the Scope of Work and are not included in the Contract Price: (a) Network Upgrades on the utility side of the Point of Interconnection, which are Owner's responsibility at an estimated cost of Two Million Eight Hundred Thousand Dollars ($2,800,000); (b) Procurement of the BESS Equipment under the Equipment Supply Agreement, which is O

Section 5.1 — Notice to Proceed (a) Owner shall issue the Notice to Proceed to Contractor within thirty (30) days following Financial Close. Financial Close is currently anticipated to occur on February 10, 2023. (b) No Work shall commence prior to the issuance of NTP, except for limited preconstruction activities (including mobilization planning, engineering reviews, and procurement of long-lead items) that may be a

Section 5.2 — Project Schedule and Milestones (a) The detailed Project Schedule is set forth in Exhibit C. The Project Schedule includes, without limitation, the following key milestones: (b) Contractor acknowledges and agrees that the achievement of each milestone by the dates specified in the Project Schedule is material to Owner's interests, and that Contractor shall use its best efforts to achieve each milestone

Section 5.3 — Schedule Updates (a) Contractor shall provide Owner with an updated Project Schedule on a monthly basis as part of the monthly progress reports required under Section 3.5. Each updated schedule shall reflect actual progress, identify any variances from the baseline schedule, and include a critical path analysis identifying the activities on the critical path and any activities that have negative float.

Section 5.4 — Acceleration (a) Owner may, at any time, request that Contractor accelerate the performance of the Work in order to achieve Substantial Completion or any other milestone earlier than the dates specified in the Project Schedule. The costs and schedule implications of any Owner-requested acceleration shall be mutually agreed upon by the Parties and documented in a Change Order issued in accordance with Ar

Section 6.1 — Contract Price (a) The Contract Price for the Work is Thirty-One Million Two Hundred Thousand Dollars ($31,200,000), which amount is fixed and lump-sum. The Contract Price represents the total compensation payable by Owner to Contractor for the complete and satisfactory performance of the Work, including all design, engineering, procurement (other than Owner-furnished BESS Equipment), construction, inst

Section 6.2 — Taxes (a) Contractor shall be responsible for the payment of all taxes, fees, assessments, duties, and governmental charges of any kind arising from or related to Contractor's performance of the Work, including, without limitation, all federal, state, and local income taxes, employment taxes, payroll taxes, and any applicable sales, use, or excise taxes on materials and equipment procured by Contractor,

Section 6.3 — No Additional Compensation Except as expressly provided in this Agreement, including through Change Orders issued pursuant to Article 10, the Contract Price constitutes Contractor's sole and complete compensation for all Work performed, services rendered, and obligations fulfilled under this Agreement. Contractor shall not be entitled to any additional compensation, reimbursement, or payment of any kind

Section 7.1 — Milestone Payments (a) Owner shall pay Contractor the Contract Price based upon Contractor's achievement of the milestones set forth in the Milestone Payment Schedule attached hereto as Exhibit D. Each milestone payment shall be contingent upon Contractor's satisfactory completion of the work associated with such milestone, as verified by Owner's Representative and, where applicable, the Independent Eng

Section 7.2 — Payment Terms (a) Owner shall review each payment application and either approve, approve with modifications, or dispute the payment application within fifteen (15) Business Days of receipt. Owner shall provide written notice to Contractor of any disputed amounts, specifying in reasonable detail the basis for the dispute. (b) Approved amounts shall be payable by Owner within thirty (30) days following O

Section 7.3 — Retainage (a) Owner shall withhold ten percent (10%) of each progress payment as Retainage. Retainage shall serve as security for Contractor's performance of its obligations under this Agreement, including Contractor's obligation to complete all Punch List items and achieve Final Completion. (b) Release of Retainage shall occur as follows: (i) Fifty percent (50%) of accumulated Retainage shall be releas