Contract analysis

ARTICLE 1 — DEFINITIONS AND INTERPRETATION

Section 1.1 — Definitions As used in this Agreement, the following terms have the meanings set forth below: "Acceptance Test" means the test procedures set forth in Exhibit D to be conducted following installation and commissioning of the Equipment at the Project Site to confirm that the Equipment meets the Performance Specifications. "Agreement" means this Equipment Supply Agreement, including all Exhibits, Schedule

Section 1.2 — Interpretation The following rules of construction shall apply to this Agreement unless the context otherwise requires: (a) The headings and titles of the Articles, Sections, and Exhibits of this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of any provision hereof. (b) Words in the singular include the plural and vice versa; words in one gen

Section 1.3 — Order of Precedence In the event of any conflict, inconsistency, or ambiguity among or between the provisions of this Agreement, the following order of precedence shall apply, with the document listed first taking priority: (1) Change Orders (in reverse chronological order, with the most recent Change Order taking priority); (2) The body of this Agreement (Articles 1 through 22); (3) Exhibit B (Performa

Section 1.4 — Exhibits and Schedules The following Exhibits and Schedules are attached to and incorporated into this Agreement by this reference: • Exhibit A — Equipment Description and Scope • Exhibit B — Performance Specifications • Exhibit C — Delivery Schedule • Exhibit D — Acceptance Test Procedures • Exhibit E — Spare Parts List • Exhibit F — Form of Change Order • Exhibit G — Insurance Requirements • Exhibit H

Section 2.1 — Equipment Scope Supplier shall design, manufacture, factory-test, package, transport, and deliver to the Project Site the following Equipment, all as more particularly described in Exhibit A: (a) Battery Modules. Fifty megawatts / Two hundred megawatt-hours (50 MW / 200 MWh) of four-hour duration lithium iron phosphate (LFP) battery modules, Supplier's proprietary Model HD-LFP-200E, including all cells,

Section 2.2 — Documentation Supplier shall deliver to Buyer all Documentation relating to the Equipment, including: (a) Factory acceptance test reports for each Shipment; (b) Installation manuals and guides providing detailed instructions for the installation, interconnection, and integration of all Equipment components; (c) Operation and maintenance manuals, including recommended maintenance schedules, inspection pr

Section 2.3 — Exclusions The following items and activities are expressly excluded from Supplier's scope of supply under this Agreement and are the responsibility of Buyer or the EPC Contractor under the EPC Agreement: (a) All civil and structural works, including site preparation, grading, drainage, fencing, and access road construction; (b) Equipment foundations, including concrete pads and structural supports for

Section 2.4 — Commissioning Support Supplier shall provide qualified technical personnel on-site at the Project Site during the installation and commissioning phases of the Project to supervise Equipment integration, BMS configuration, Acceptance Testing, and initial start-up of the Equipment, at no additional cost to Buyer. Supplier's commissioning support personnel shall be available for a period of up to sixty (60

Section 2.5 — Spare Parts Supplier shall provide to Buyer a list of recommended and required spare parts for the Equipment, as set forth in Exhibit E, together with unit pricing for each spare part. Buyer shall have the option, but not the obligation, to purchase the initial recommended spare parts inventory from Supplier at the unit prices specified in Exhibit E. The unit prices set forth in Exhibit E shall remain v

Section 2.6 — Relationship with EPC Agreement The Equipment supplied hereunder is included within the EPC Contract Price of Thirty-One Million Two Hundred Thousand Dollars ($31,200,000) under the EPC Agreement on a pass-through basis, with the Contract Price under this Agreement constituting a component of the EPC Contract Price. This Agreement is intended to establish a direct contractual relationship between Buyer

ARTICLE 3 — REPRESENTATIVES AND COORDINATION

Section 3.1 — Cooperation The Parties shall cooperate in good faith with each other, with the EPC Contractor (Meridian Power Construction, Inc.), and with the Lender's Engineer (Norgate Technical Advisors, Inc., attention: Dr. Phillip S. Reardon, P.E.) in connection with all matters relating to the delivery, installation, testing, and commissioning of the Equipment. Such cooperation shall include, without limitation,

Section 3.2 — Buyer's Representative Buyer shall designate an authorized representative in writing within ten (10) business days after execution of this Agreement. Buyer's Representative shall have authority to act on Buyer's behalf with respect to day-to-day administration of this Agreement, including approval of Documentation, coordination of delivery logistics, participation in factory and site acceptance testing,

Section 3.3 — Supplier's Representative Supplier shall designate an authorized representative with full authority to act on Supplier's behalf in day-to-day matters relating to this Agreement. Supplier's Representative shall serve as the primary point of contact for all technical and logistical communications and shall have authority to make day-to-day decisions regarding Supplier's performance, subject to any limitat

Section 3.4 — Coordination with EPC Contractor Supplier shall coordinate delivery logistics, on-site receiving requirements, unloading procedures, storage and staging, and commissioning activities with Meridian Power Construction, Inc. (EPC Contractor). Supplier shall participate in project coordination meetings as reasonably requested by Buyer or the EPC Contractor. Supplier acknowledges that the EPC Contractor is r

Section 3.5 — Lender's Engineer Access Supplier shall provide Norgate Technical Advisors, Inc. (Lender's Engineer) and its authorized representatives with reasonable access to Supplier's manufacturing facility in Pflugerville, Texas, and to factory test data, production records, and quality assurance documentation, for purposes of Lender due diligence, ongoing construction monitoring, and independent assessment of Eq

ARTICLE 4 — DESIGN AND MANUFACTURING

Section 4.1 — Design Responsibility Supplier has sole responsibility for the design and engineering of the Equipment to meet the Performance Specifications set forth in Exhibit B. Supplier warrants that the Equipment design is fit for its intended purpose as a grid-scale battery energy storage system operating within the ERCOT market, located in Ector County, Texas, and subject to the ambient environmental conditions

Section 4.2 — Manufacturing Standards All Equipment shall be manufactured in accordance with applicable industry standards, including the following: (a) UL 9540 — Standard for Energy Storage Systems and Equipment; (b) UL 9540A — Test Method for Evaluating Thermal Runaway Fire Propagation in Battery Energy Storage Systems; (c) NFPA 855 — Standard for the Installation of Stationary Energy Storage Systems; (d) IEEE 1547

Section 4.3 — Factory Acceptance Testing Supplier shall conduct factory acceptance tests ("FATs") at its manufacturing facility in Pflugerville, Texas, prior to shipment of each Shipment. Factory acceptance tests shall include, at a minimum: (a) Cell and module capacity testing to verify nameplate energy capacity and voltage specifications; (b) PCS inverter efficiency testing to verify rated efficiency at partial and

Section 4.4 — Documentation Deliverables Supplier shall deliver Documentation in accordance with the following schedule: (a) Preliminary Design Documentation: Within thirty (30) days of execution of this Agreement, Supplier shall deliver preliminary design documentation, including system architecture drawings, single-line diagrams, equipment layout drawings, interface specifications, and BMS functional descriptions;

Section 4.5 — Quality Assurance / Quality Control Supplier shall maintain a documented quality assurance and quality control ("QA/QC") program consistent with ISO 9001:2015 (or equivalent) throughout the design, manufacturing, testing, and delivery phases. Supplier shall make its QA/QC program documentation available to Buyer upon request. Buyer shall have audit rights to inspect Supplier's manufacturing processes, q

Section 5.1 — Delivery Terms All Equipment shall be delivered FOB Project Site (4800 West University Boulevard, Odessa, TX 79764, Ector County, Texas). Supplier shall be responsible for all costs and risks of transportation from Supplier's manufacturing facility in Pflugerville, Texas to the Delivery Point, including freight, insurance during transit, and any permits required for overland transport. Risk of loss of,

Section 5.2 — Delivery Schedule Equipment shall be delivered to the Delivery Point in four (4) Shipments in accordance with the Delivery Schedule set forth in Exhibit C, as summarized below: (a) Shipment 1: On or before March 15, 2023 — Battery Modules (first tranche) and Container Enclosures (first tranche). (b) Shipment 2: On or before April 15, 2023 — Battery Modules (second tranche) and PCS inverters (five (5) of

Section 5.3 — Receiving Inspection Upon delivery of each Shipment to the Delivery Point, Buyer (or the EPC Contractor on Buyer's behalf) shall conduct a visual and documentary receiving inspection within five (5) business days of delivery. The receiving inspection shall include visual examination of Equipment for external damage, verification of Equipment quantities and components against the packing list and bill of

Section 5.4 — Packaging and Shipping Supplier shall be responsible for all packaging, crating, and shipping of the Equipment in a manner suitable for overland transport to the Project Site, taking into account the nature of the Equipment, road conditions, and ambient environmental conditions during transit. All packaging shall provide adequate protection against damage from handling, vibration, moisture, and temperat

Section 5.5 — Shipping Notices Supplier shall provide written shipping notice to Buyer and the EPC Contractor at least five (5) business days prior to the departure of each Shipment from Supplier's manufacturing facility. Each shipping notice shall include the following information: (a) Shipment number and description of Equipment included; (b) Carrier name and contact information; (c) Estimated date and time of arri

ARTICLE 6 — DELAY AND LIQUIDATED DAMAGES

Section 6.1 — Time is of the Essence Time is of the essence with respect to the Delivery Schedule and Supplier's performance of its obligations under this Agreement. Supplier acknowledges that timely delivery of the Equipment is critical to Buyer's ability to achieve the Guaranteed COD of September 1, 2023 under the EPC Agreement and to satisfy Buyer's obligations under the Credit Agreement with Brazos River National

Section 6.2 — Delay Liquidated Damages If Supplier fails to deliver any Shipment to the Delivery Point by its Scheduled Delivery Date (as such date may be extended pursuant to Section 6.3), Supplier shall pay to Buyer delay liquidated damages in the amount of Fifteen Thousand Dollars ($15,000) per day per Shipment for each calendar day of delay beyond the applicable Scheduled Delivery Date, commencing on the first da

Section 6.3 — Excusable Delay The Scheduled Delivery Dates shall be extended on a day-for-day basis for delays caused by: (a) Force Majeure Events, subject to and in accordance with Article 14; (b) Changes in scope directed by Buyer pursuant to Article 8, to the extent such changes reasonably affect the Delivery Schedule; (c) Buyer's failure to provide site access, Buyer-furnished items, or other information or appro

Section 6.4 — Acceleration If Supplier is in delay or anticipates that it will be unable to meet a Scheduled Delivery Date, Buyer may request in writing that Supplier accelerate delivery of one or more Shipments. If the delay is not an Excusable Delay, Supplier shall accelerate at Supplier's sole cost and expense, including by employing overtime, additional shifts, expedited shipping, or other measures as necessary t

ARTICLE 7 — TESTING AND ACCEPTANCE

Section 7.1 — Acceptance Tests Following installation of the Equipment by the EPC Contractor and completion of commissioning support by Supplier in accordance with Section 2.4, Acceptance Tests shall be conducted in accordance with the procedures set forth in Exhibit D. The Acceptance Tests shall demonstrate that the Equipment meets the Performance Specifications, including capacity, round-trip efficiency, response t

Section 7.2 — Provisional Acceptance Provisional Acceptance of the Equipment shall occur when all of the following conditions have been satisfied: (a) The Equipment has successfully passed the Acceptance Tests in accordance with Exhibit D, demonstrating compliance with the Performance Specifications; (b) Supplier has delivered to Buyer all Documentation required to be delivered on or before Provisional Acceptance, in

Section 7.3 — Final Acceptance Final Acceptance of the Equipment shall occur upon satisfaction of all of the following conditions: (a) Provisional Acceptance has occurred; (b) All Punch List items have been completed to Buyer's reasonable satisfaction; (c) Supplier has delivered all final Documentation, including as-built drawings; and (d) Buyer has issued a written certificate of Final Acceptance. Buyer shall issue

Section 7.4 — Rejection If the Equipment fails to pass the Acceptance Tests after two (2) consecutive attempts, Buyer may, at its sole election: (a) Require Supplier to repair, replace, or modify the Equipment at Supplier's sole cost and expense within a commercially reasonable time period to be agreed by the Parties, following which the Acceptance Tests shall be re-conducted; (b) Accept the Equipment in its then-cur

Section 8.1 — Change Orders Either Party may propose changes to the scope of the Equipment, the Delivery Schedule, the Performance Specifications, or other terms of this Agreement. No change to the scope, Contract Price, Delivery Schedule, Performance Specifications, or other material terms of this Agreement shall be effective unless embodied in a written Change Order executed by both Parties substantially in the for

Section 8.2 — Price and Schedule Adjustments Any Change Order shall specify the adjustment (if any) to the Contract Price and the Delivery Schedule resulting from the proposed change. Within fifteen (15) business days of receiving a change request from Buyer, Supplier shall provide to Buyer a detailed proposal setting forth: (a) A description of the proposed change and the work required to implement it; (b) The impac

Section 8.3 — Disputed Changes If the Parties cannot agree on the price or schedule impact of a proposed change within thirty (30) days of Supplier's submission of its proposal, the matter shall be resolved pursuant to Article 17 (Dispute Resolution), provided that, if Buyer so directs in writing, Supplier shall proceed with the implementation of the change pending resolution of the dispute and Buyer provides reasona

ARTICLE 9 — CONTRACT PRICE AND PAYMENT

Section 9.1 — Contract Price The total Contract Price for the Equipment, including all design, manufacturing, factory testing, packaging, transportation, delivery, Documentation, and commissioning support, is Eighteen Million Four Hundred Thousand Dollars ($18,400,000), fixed and firm, subject only to adjustment by Change Order executed in accordance with Article 8. The Contract Price includes all costs and expenses

Section 9.2 — Payment Schedule Payments of the Contract Price shall be made by Buyer to Supplier in installments as follows: (a) Advance Payment (upon execution): Ten percent (10%) of the Contract Price — $1,840,000 — due and payable within fifteen (15) days of execution of this Agreement. As a condition precedent to Buyer's obligation to make the Advance Payment, Supplier shall deliver to Buyer an advance payment gu

Section 9.3 — Invoicing and Payment Terms Supplier shall submit invoices to Buyer promptly upon achievement of each payment milestone described in Section 9.2. Each invoice shall include a description of the milestone achieved, supporting documentation (including FAT reports, bills of lading, packing lists, and acceptance certificates, as applicable), and the amount due. Payment shall be due within thirty (30) days o

Section 9.4 — Taxes The Contract Price is exclusive of all applicable sales, use, excise, or similar taxes imposed on the sale, delivery, or use of the Equipment. Buyer shall be responsible for any sales or use tax imposed by the State of Texas or any political subdivision thereof on Equipment delivered to the Project Site. Buyer shall provide Supplier with applicable tax exemption certificates, if any, prior to or c

Section 9.5 — Right of Set-Off Buyer may set off against amounts due to Supplier under this Agreement any liquidated damages payable by Supplier under Section 6.2, any amounts owed by Supplier to Buyer under the indemnification provisions of Section 12.1, or any other amounts owed by Supplier to Buyer under this Agreement that are then due and payable or that have been finally determined through the dispute resolutio

Section 9.6 — Lien Waivers Supplier shall deliver to Buyer the following lien waivers in the forms substantially as set forth in Exhibit H, consistent with the requirements of the Texas Property Code: (a) A conditional lien waiver with each invoice, conditioned upon receipt of payment of the invoiced amount; and (b) An unconditional lien waiver upon receipt of each payment, unconditionally waiving all lien rights wit

Section 10.1 — General Warranty Supplier warrants to Buyer that all Equipment supplied under this Agreement shall: (a) Conform in all material respects to the Performance Specifications set forth in Exhibit B and the Documentation; (b) Be new, of good quality, and free from Defects in design, materials, and workmanship; (c) Be suitable for the intended use as a grid-scale battery energy storage system in Ector County

Section 10.2 — Capacity Warranty (10-Year) (a) Warranted Capacity. Supplier warrants that the Battery Modules shall maintain a minimum of eighty percent (80%) of Nameplate Capacity (i.e., at least 40 MW / 160 MWh) at the end of a period of ten (10) years from the date of Provisional Acceptance (the "Capacity Warranty Period"), based on normal operating conditions and in accordance with Supplier's recommended maintena

Section 10.3 — Defect Warranty (5-Year) (a) Scope. Supplier warrants that all Equipment, including Battery Modules, PCS inverters, BMS hardware and software, Thermal Management System (HVAC), Container Enclosures, and all associated components, shall be free from Defects for a period of five (5) years from the date of Provisional Acceptance (the "Defect Warranty Period"). (b) Notification and Remediation. Upon notice

Section 10.4 — PCS and BMS Warranty (a) PCS Warranty. Supplier warrants that the PCS inverters shall be free from Defects and shall conform to the Performance Specifications for a period of five (5) years from the date of Provisional Acceptance. The PCS warranty shall be subject to the same terms and conditions as the Defect Warranty set forth in Section 10.3. (b) BMS Warranty. The BMS warranty shall be coterminous w

Section 10.5 — Exclusions from Warranty The Warranties set forth in this Article 10 shall not apply to, and Supplier shall have no liability for, Defects, failures, or performance degradation arising from: (a) Misuse, abuse, or negligence by Buyer, the EPC Contractor, or any third party; (b) Unauthorized modification, alteration, or repair of the Equipment by any person other than Supplier or Supplier's authorized re